A Comment -- General Comments From an Expert (A Commentary)

DRIPs: Caller has planned to use DRIPs on his ETFs until age 71, then cancel them. John Agreed with this strategy.

TFSA: Amount to contribute could increase but would likely be indexed to inflation in increments of $500. If you want to borrow to invest, he will consider it if the client comes to him and wont touch the market for 10 years.

Many ETFs are at their 52-week highs: This means the index or sector is at a 52 week high. Right now pretty well any market in the world is pretty fairly priced.

TSX. $13,300 is your first point of resistance and the next level would be the peak of 2008 of around $15,100-$15,200. There are a few headwinds. GDP is starting to slow down a bit. It won’t rocket to new highs.

Cdn banks. An opportune time to move into them. Not looking for dividend increases from the big 5 until later in 2011 with the exception of Toronto Dominion (TD-T), which might go a bit earlier. Good dividend yields. (See Top Picks.)

Natural gas. Virtually every commodity on the planet has gone up except for this one because there is a ton of it and demand has been weak. Looking for this to change in 2011 and feels it is attractive. Would invest in something like Encana (ECA-T) as a way of participating. (She owns this one.)

Natural Gas. Recent technological improvements have meant that reserves are coming out in abundance so can’t see prices going up from here.

He is more concerned with valuations. REITs came back to fair valuations in 2010 and then some. The universe if fairly valued at present. If you are in REITs for short-term gains, you should take profits. If you are in them for stable long-term returns, then stay in them. He is seeing money coming out of Income trusts and into REITs. Beginning in August he saw daily net flows into his funds double. New accounting standards will increase volatility in the Real Estate sector. However intrinsic value of a company is still based on free cash flow. Fundamentals at present are great for Real Estate.

Not a lot has changed since 2009 except overnight bank rates. The Canadian yield curve has rallied. There is not really any value at the short end and the risk is too high. At the short end, rates are as low as they are going to go. Prefers corporate bonds. Investment grade bonds are very attractive. Ireland or Greek credit problems will cause volatility.

Aeroplan Bonds: 6.95% 01/26/2017 The improving economic theme and the Aeroplan card attached to purchases. Broad customer base, deep penetration. Not all miles get redeemed (over 20%). Good cash flow, modest debt, and good franchise, higher income individuals.

Foreign Debt: If he wanted it he would stick to high quality debt such as Australia or New Zealand.

Navigation Canada Bonds. Related to airports. Monopoly on managing airport landing, gate fees, etc. Regulated business with strong cash flow. You wont get a lot of spread comported to provincial.

BMG Bullion Fund. Has 1/3 gold, 1/3 silver and 1/3 platinum giving you a spread of bullion. Has done better than the gold stocks he owns. A low charge fund.

Been staying away from US but now looking at a couple of consumer stocks including Johnson & Johnson (JNJ-N), Proctor & Gamble (PG-N). Also rail with Union Pacific (UNP-N). On the assumption that they’ll lose on the Potash (POT-T) deal, he is considering BHP Billiton (BHP-N). Would like to see these 2%-5% lower.

Canadian Banks. Has a fair size weight in Cdn banks except for Bank of Montreal (BMO-T). Will be slower going forward. Expect National (NA-T) will be the first to declare a dividend followed by TD (TD-T). Valuations are not cheap, but not overly expensive either.