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

US banks: are less expensive than Canadian. But the valuation is probably appropriate. Watch out because they raised so much equity there is a possibility of dividend increases this year and that could be a catalyst for stock price increases. Prefers Canadian Banks and thinks everyone should own one.

India vs. China this year: The dominant theme is the efforts to curb inflation in both countries. Both countries have political risks. He doesn’t own their stocks at this point. Would wait for a pull back in those two markets before buying their stocks. If they ‘blow’ the control over their economies, money will move to the Americas and your investments there will benefit.

It’s just a correction. Nothing does go straight up forever. It is pretty normal to see a bit of a pullback and some profit taking. It’s a bit surprising that it’s the first week of the new year. Gold’s decline is more of a dollar story as it has not declined as much in terms of Euros. QE II will help in the first half of the year and then it could slow down a bit in the second half. If the jobs haven’t come through by mid-year, then you could see a more substantial pullback.

This is the time of year for small caps. In the resource side in the 4th quarter small caps did well. In non-resource, there are a lot of yield plays are switching from income trusts to regular corporations. He thinks there are a lot of under-valued/under-followed companies there. E.g. CGX-T, but there is a weak quarter coming first.

Markets. Expects to see the TSX at $15,000 this year and the S&P 500 close to $1,290-$1,300. Gold is more a speculative metal now rather than an inflation hedge and he doesn’t expect much from it but there are positive stories out there in exploration and development companies.

Basic Technical Analysis Books not geared to professionals? “Technical Analysis Explained” by Martin J. Pring is simple. It builds a foundation of some basic concepts and goes into more complicated aspects in the latter half.

There are a lot of forces. Stimulus spending, consumers who have a lot of debt, and some countries where people for the first time can start to have material wealth. It’s harder than usual for him to predict where markets will move. But markets will move more quickly than ever before and there will be more dangers than ever before. He thinks today was a one day thing. He tries to ignore all the noise. He is quicker to take profits in this market if they hit their target price.

Copper: He looks for stocks and sectors that are out of favour. When something is in a record price range, he hopes he has something already, but doesn’t go near it for new buys. At the time he should have bought it, it was buying other things.

Oil. Thinks it is going to stay up. Expect it will trade in a range of maybe $75 to $100. Asian demand is very strong and US demand has been picking up.

Copper. This is a 2011 story. Looking for a lot of acquisitions so choose mid-cap companies, as they will have takeout premiums. For a blue chip copper play on a global basis, Freeport McMoran (FCX-N) is the one you want.

Today's program was on wines, no stocks.

Rising interest rates. Means Bank of Canada or Federal Reserve is pushing up short-term interest rates and they feel the economy is very strong. Also, anything that gives you a nice dividend will put you in good shape. Canadian banks will do well during that period. Also companies that pay very good dividends.

Coal. Demand for met coal from China is up 50%, year over year. Should be a good space to be long for the next 6–12 months. He likes playing the revenue stream companies on the commodity side, which can diversify away from mining operational risks. Likes Sandstorm Metals & Energy (SND-X).

His clients were promised 8-10% returns and this is where he is this year. We had a trading range on TSX of 11K to 12K and we stuck in that range. He is looking in 2011 for 12k and up. 60% of his stocks increased their dividends. Banks (BNS, TD, RY, and BMO) didn’t, so he expects it next year except BMO (year after). TD’s deal should be accretive to earnings in 2012. BMO’s deal will be accretive further out.

Selling discipline? Establishes 12-month target price when buying, based on fundamental outlook, industry it’s in and earnings profile. Applies an appropriate multiple on 12-month earnings. Can be adjusted if earnings change and will alter the target price. Could result in a Sell. If target price is reached but she sees further upside, she would continue to Hold.