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

Dividend stock for an RESP for a child already in university At this stage, cash or bonds, nothing risky like stocks.

Market Outlook The market is a little scary up here. If a new client came today with cash, he would suggest only getting into partial positions and buy on weakness. Although there is some room for the market to go higher into the spring, he would be concerned after the US Presidential election. Then you will need to be more defensive, hold more cash and gold. Energy, banks and financials are all picking up momentum and he thinks these are good areas to find defensive holdings that can pay a good yield as well.

Dropped from an Index? When a stock is dropped from an Index, there will be temporary forced selling of the stock. When the selling is finished you may see a bump up as the stock then looks undervalued. It also means they are need meeting the requirements to list, so it is a warning sign.

He thinks the job of the Feds is to be forward looking and react to key economic data. It’s their job to see that it’s coming and stave it off.

Market. The percentage of IPOs for companies with negative earnings has increased and we are back to year 2000 levels. Unlike the 2008 incident that involved a housing problem with half a dozen states instigating a European banking crisis, this fund has a lot of middle eastern and their sovereign investments and so this could be more reaching than we expect. People are chasing these returns and being forced into riskier investments. He is more conservative for his clients. The more you go into the greed momentum, until that trend breaks it does not change and then there is significant change. At least MSFT-Q has a business.

Gold. It has put two or three percentage points on the index this year. He has a difficult time with the gold space. The rally leaves him cold. There have not been dividends in the sector and the companies have been terrible allocators of capital in the sector. They are expensive now. He is not about trading them. The investor is in it for the gold trade in most cases. Larger companies have done a better job.

Expecting 4% real return on banks, utilities. You want to have a sustainable income stream. These companies are not going away. If you are wrong then you should have some exposure to industrials. But otherwise he agrees with this.

Investors often panic and sell. Don't buy a stock unless you hold it for 5-10 years; you're guaranteed to make money over 20 years.

Investors do a lot of short-term thinking these days. There's always someone going to be pessimistic; if you want bad news, you'll find it, like FedEx yesterday. The key is timing. You don't know when the next correction will be. Who cares? You've made money if you've done nothing. He ignores worries and news and focuses on companies that grow quickly. Too many people sell out of fear, but many sell because they made a profit. You might have the next Microsoft. Don't average down. His investment horizon is very long, 5-10 years. You're guaranteed to make money after 20 years.

Market Outlook The attack on Saudi oil facilities has to be good for Canada as security of supply will become paramount. The oil sands are safe and reliable and available for a long time to come. We are at a very high level of valuations for the market in general. His fair market value analysis would allow for another 5% upside for the S&P500. That market has NEVER broken above that threshold in the 35 years they have been tracking the data. The 3000 mark is a key technical level, so be cautious about adding length above this level. Central Banks don't have a clue about what is really going on in the market and neither do their political counterparts. All the Central Banks are playing things by ear, but negative interest rates are taking the easy tools away as they can't really cut rates anymore. When the Fed meets again this week, the market is bound to be disappointed regardless of their decision on rate cuts. He is buying energy stocks with positive and reasonably predictable earnings -- refiners, for example, as they work on the spread between products and oil prices. If oil prices ever return in a meaningful way, there are many opportunities in the producer space that could offer 10 times returns. As a portfolio manager, he doesn't have the luxury to hold and wait for two years for energy stocks to rise as investors become impatient. So he is not jumping back into oil in a big way just yet.

Gold He still likes the gold space. Central Banks are beginning to run on fumes and have no idea what problems they are causing for investors down the road. Gold is good in deflationary times and even better in inflationary times -- it doesn't do well in between.

Silver When gold moves, usually silver moves more because of the gold-silver ratio. He does not have a formula for how much to hold in a portfolio. He would favor owning the SLV-N ETF.