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

Everything is oscillating. One day the market is sensitive to one piece of information and the next day not. Mainly he is holding. Moving late in to some of the new fangled plays. The electronic age has provided some brilliant tools, bit sometimes to have to take time to assess things. He sees no great advances, but there are opportunities. He fears a little because we have done so well on commodities in the last year.

Good companies are beating estimates on revenue and on costs. CPI shows the consumer is still hurt. Companies that are positioned to take advantage of this will do better. Lot of European countries are talking about helping Greece but there’s no action so until the market sees action it will continue to linger. Trying to find best companies with strongest balance sheets.

How the governments rescued the global credit crisis has come home to roust as sovereign debt problems. This will be a test of the market’s willingness to assume risk. The risk appetite in Canada has returned to the bond market. Spreads are approaching near normal conditions.

Canadian Banks. For some banks, the common is actually higher than the bond, which concerns her – is there a dividend cut coming (unlikely). It’s a case of how profitable the US banks will be with the new rules.

Bond fund managers are looking to avoid those parts of the yield curve that will be hurt the worst with the anticipated interest rate increases.

Morgan Staley senior 2/23/2017, 4.9%. Almost 2% more than equivalent Canadian bond. They are a leader in the financial services market. Changes in the financial industry will actually be helpful to bond holders.

Rates are rising in 10-year gov’t of Canada bonds. She likes the 7-10 year range. Corporate bonds offer 1-2% above these. A bond portfolio will look like the yield of the portfolio at the end of the year [I think she means no capital gain/loss]. Short-term bonds will likely decline.

GTAA 4.85% 6/1/2017. An infrastructure bond. They are not-for-profit and pass costs on to the airlines. This issue should see an improvement in their revenues if you believe the economy is bottoming and starting to improve.

(Top Pick Apr 13/09, Up 8.4%) Wells Fargo 4.45% maturing Feb 28/11. Achieved the returns she expected and sold them.

(Top Pick Apr 13/09, Up 9.4%) Government of Canada Real Return Bonds. 4% maturing Dec 1/31. . Achieved the returns she expected and sold them.

Increase in central bank interest rate was a signal that interest rates will start to rise late 2010 or early 2011. They see a better unemployment picture and rising revenues. Rates wont go very high due to unemployment rates. The first and second quarter will be easy for companies to blow away their earnings year over year. Looking for TSX to be between 12,500 and 13,000. Dividend stocks under performed the market in 2009.

It would be normal to see some corrective activity about now in the market recovery. People have to be careful about where they have their money and to have some on the sidelines. Thinks there will be a fair amount of share buybacks given the amount of cash on balance sheets.

BMO ETFs: For the most part the low hanging fruit has been picked by the people at iShares. BMO has done a reasonably good job. He applauds BMO for coming out with these.

Claymore has an advisor class of funds. They also use a lot of fundamental indexing. IShares is a Cap-Weighted approach.

Trading ETFs: The ones from Horizons are designed for active trading. If not, look for ETFs that more broadly diversified.