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

BUY
25 Year Bonds: If you trade the bond market, it’s ok. To hold to maturity it is risky because you don’t know what the company will be like in 25 years. Use Government bonds for this term.
BUY
Deflationary Environment: Look at long bonds – they perform the best.
PAST TOP PICK
US Treasury 3.625% 8/15/19 (Top Pick Oct 20/09, 7.3% Total) The whole inflation scare was over done. A Descent call on the deflationary world
BUY
Government of Canada 30-year long bonds 06/01/41: Chart looks very positive on this one. He sees an opportunity for interest rates to go lower.
TOP PICK
US Treasuries 30 year 4.375% 5/15/40. Would exit in the next 3 months. Looking for a good capital gain. Good potential with the world slowing down and the flight into US assets.
TOP PICK
Brookfield Renewable Power 6.132% bond 11/30/16. Likely to produce positive returns. It’s a company he likes. This could be part of a ladder.
N/A
It seems that Fridays are particularly perilous. It seems 100-point moves don’t count any more. You can’t tell – by closing today be could be back to flat. You might not want to jump on one jobs number. People were expecting a great number and got a mediocre number. It’s the non-senses numbers that really count in the US job numbers. You should not ignore the good news – Canadian job numbers. Hungary is a small impact on Europe. It’s an indication that there’s work to be done. Hungary is going to need funds. You want to catch a good market day to do any selling. He is mostly adding a little bit on the bottom in this market. Negative on the gassy oils but starting to change his mind. Focuses on dividends and sells off a bit of low yield stocks.
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We should have seen the correction coming. There were warning signs. If we look at copper, it was one of the first things that made a bottom, well before the markets made a test in March. There has to be volume on a market climb. Over the last year every time the market goes down, the volume goes up.
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Has been buying selectively. When the market is like this you have to get back to fundamentals. It’s a great time to buy companies that aren’t expensive.
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Markets. We are in a cyclical recovery in a secular downtrend and this will cause a lot of volatility. Great environment for those who sell options. He is an earnings investor. He looks for stocks where the earnings are accelerating.

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S&P over 5 years: ’03 to ’08 you see a very strong bull market. We had a ‘V’ bottom followed by a strong up trend from ’09. We are now in a bull market. We broke a trend line from Jan ’09 to Apr’10. He thinks this will prove to be another correction from which we continue up.

COMMENT

Nat Gas: Is the most volatile commodity there is. It’s a function of the way it trades. It has really been in a bear market. Doesn’t believe in trying to catch the bottom. One way to play it is to sell options. Take an ETF and sell a put option to make 5-10%. It is probably not going too much lower.

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It’s a difficult market to find things you want to buy, but some things are getting down to prices where you want to buy. There are going to be more and more opportunities for people with a 3-5 year horizon. If prices go up substantially in the short term it is time to take money off the table.
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The word is volatility. Now we are in a range called 11,000 to 12,500. He is defensive in portfolios. If earnings don’t come through then watch out because the market will be over valued. This could be into next year, depending on the economy. Defensive stocks are the backbone of the economy. Principals are capital preservation and dividend growing stocks.
COMMENT
Bank preferreds: Likes resets (Reset rate based on a spread between Gov’t of Canada and initial rate) and floaters (tied to yield of short term money).
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