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

Bond ETF fund for a 5 year hold, that would provide income and somewhat mitigate rising interest rates? He doesn't like any kind of a bond product. In this rate environment, there rates are ridiculously low and can't go lower; you are not going to make much money.

Markets. We are at an inflection point as it pertains to the US$ and oil. Today, there has been carnage in the energy stocks. We are into the shoulder season of retail shopping because of Black Friday and the holiday season. When you have the price of oil discounted by $3-$4, it puts a lot of money into the pockets of the consumer and into GDP numbers into countries like India, the US, China, Japan, who consume a lot of oil. There is an opportunity here for the economy to re-rate unemployment numbers to a more normal level as opposed to an inflated level.

Economy. Countries like Canada, Russia and Venezuela that rely very heavily on oil exports to balance deficits and budgets, they are facing the wrong end of the stick. There could be a ripple effect in certain parts of the economies. The 1st bellwether stocks, such as oilfield services and equipment, are already playing out in the stock market, and typically become the best and most important leading indicator in terms of operating efficiencies of these companies.

Markets. Currently he is having trouble finding Deep Value Stocks. He needs to Buy companies that are trading at less than their intrinsic value, where there is a large margin of safety. Companies that are strong financially and generate free cash flow, but are trading at valuations that offer a lot of upside, with hopefully minimal downside. After several years of a Bull market and an economy that is not doing very well, it is becoming difficult to find these companies. Globally stocks have been propped up by central banks’ stimulus. Low interest rates are fuelling a good part of the rally over the last 18 months. Investors are chasing yield, and many of them are buying stocks for dividends as if they are bonds that can never be cut or go down. That is always a bit worrisome. Previously had been able to find value in Europe and in Asia, but even that is getting a little tougher.

Asian/European volatility. Should equities be pulled back to North America? This is a difficult question to answer, but you would be better in North America, mainly because of the strength of the US economy, especially in some of the non-core, non-alpha names such as defence stocks, some of the retailers and leverage names to the housing cycle.

Update on your Value Japanese investments? Japan remains the cheapest market in the developed world, even in emerging markets. He has always liked that Japanese companies have very low debt levels, often zero debt. Fantastic corporate governance. CEOs are not motivated by stock options, but are motivated to build a better company to hand off to the next CEO. They have so many great engineering companies that are best in the world of what they do that no one has ever heard of before, because they are not consumer product companies.

Gold Bottom. If gold stays below $1100 for 6 months, half the mine production in the world shuts down (so he has heard). He believes it could only go down here for a spike and so now it is a great buying opportunity. He is nibbling here. We broke the double bottom and did not see a panic, so he sees this as a buying opportunity. It will be a great trading opportunity in the first half of next year.

Thinks interest rates will generally stay low, but could increase slightly in the second half of next year. Mortgage rates are driven by bond rates. You might want to lock in, especially if you want the security of having constant payments for 5 years.

Educational Segment. The US Election Mid Term Year. Thinks the democrats are not going to take the senate. You get an average of a down side of 1.5%. For the next week or two expect the markets to pull back a little. It is a buying opportunity. If you are a trader you take a little cash off the table. We are going higher into the year end.

Markets. He still sees value overseas. The correction is not over in Canada. In the US the correction was quick. Thinks in Canada and the US we still have to see a test of the lows. He is sniffing around on the energy side where he lightened up by selling a lower quality holding and is looking at a higher quality one. He likes Europe and South East Asia. He likes Chinese companies listed in Hong Kong or as ADRs in New York. He likes international companies that are headquartered in Europe, but most of the business is done elsewhere. He is watching those again now. It is a time to be in quality.

Canadian Market. You should be diversified, but don’t direct money to the resource stocks. Only buy companies that do a lot of business outside of Canada. CCL.B-T, for example, or an engineering company, or a life insurance company.

Markets. The double low in gold from last year was vulnerable. We just took it out. There is still more downside coming in gold. When it comes it could be a phenomenal buying opportunity. Get in when people are panicking.

Markets. He was set up for the correction. As the year progressed and the equities were outperforming, they became a greater and greater piece of the portfolios and he was trimming back. It forces you to do mechanically what you should do intellectually, Sell High and Buy Low. The correction was a V bottom one, which in a way, has kind of negative implication for the market. It trains investors to not worry about a correction and of being overweighted in their equity positions. Most people define corrections by percentages, and he thinks that is misguided as we have to define them by effect. The effect of the correction is intended to be to dislodge securities, stocks from hands of the weak. On balance, the market is fairly valued. Going into 2015, we are very likely going to see more volatility, which is normal. That is a constructive thing for the market and it is healthy for it.

Markets. Japan upping its investment in equities and securities from 12% to 25% is material, but will they still have that sway. Thinks we are really in a post-central bank world. We'll have to wait for the next week or 2. Looking at all the different sectors and the different markets, what has really been noticeable in the last 2 months is that the areas with the strongest strength include US health, Canadian health, consumer Staples and utilities.

Markets. He was pleased to see Japan announcing they were ramping up their stimulus program. They were stagnant for so long that it make sense. There are risks that they are taking on debt, but it kick starts the economy, so it is a good thing. On the general market, he wouldn't be surprised to see things coming back up again. He is very bullish on the US. This recovery is very real. We are getting better job reports, housing is doing better, new car sales, etc. He has been positioning his clients on a stronger US$ for about a year. He has started to dip his toes back into energy.