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

Markets. We have seen a sell off in the last couple of weeks. There is a bit of sector rotation also. Everyone is trying to figure out when the Fed is going to start raising rates. There is a perception that when they do they will keep going and possibly more aggressively. She has excess cash and is slowly putting money to work, but she is cautious and doing so slowly. It is about where there are attractive valuations. Energy infrastructure are good examples. She is watching to see how much correction there is. Financials are somewhere she is looking also. Some consumer names have corrected too. REITs will not get hit hard when rates rise because they refinanced at lower rates. There is always a sentiment selloff in REITs when rates rise and it presents a buying opportunity. You need to look for REITS with strong organic growth profiles, strong balance sheets and properties in the right classes.

Insurers vs. Banks. Prefers insurers over the banks because banks had a stronger run this year. The loan market in Canada is slowing down. Insurers are priced more attractively and growth prospects are a little better. Will benefit from rising rates. For banks she prefers banks that are active outside of Canada.

Markets. We had a bumpy ride this week. Since June the energy index is down 14 percent, but the energy infrastructure sector is only down 4%, as is the TSX. She is about 10% cash. She thinks there is a little more downside yet. The indices have broken their major support levels. You have to see if the economy will continue to recovery after liquidity is pulled off before you think of raising rates.

Markets. Over the short-term, we are seeing a bit of a correction, but not something he was surprised by. Longer-term he sees the markets very positive and he is still very constructive. He is using some of this weakness to add to and build some positions going into the Oct-May time frame, where he thinks the markets could do quite well. Before a market top, you typically see some kind of a slow down in the economy, or a forecast of a slowdown. He is not seeing this in the leading indicators right now. He also looks at sentiment for a market top and he is not seeing this. One of the 2 factors that really contributed a lot to recessions and bear markets is a rise in oil prices. If you see oil prices rise by over 80% over a 12 month, this would have to put oil in the $160 range right now. The other factor would be an inverted yield curve. We are not seeing either of those right now. October to May is the strongest period of all of the four-year presidential cycles. If it holds as it has in the past, then we are in for some good times in the next few months.

Markets. Feels comfortable that stocks will continue to well. The recent pull backs were about what was going on in the US and now we are back to where we were before. Investing in debt is not a great return. Equities continue to do well as do the earnings. Companies continue to buy back stock and the economy continues to grow slowly. The US$ will continue to become stronger. He is positive in general. There is some geopolitical noise out there, but it does not have a lot of impact. There will be pullbacks and you have to buy on that. There are lots of good opportunities in the US, UK and in Europe. European companies get a lot of revenue internationally.

Markets. Market is showing a much stronger US$ against the euro, the yen and other currencies. Japan, despite all its quantitative easing, has been horrendously weak. Also, Europe, despite efforts, has been tremendously weak. Because of this, money has been fleeing out of those 2 areas and into the US. However, what is really ironic is that the US isn’t any better. What really saves them is by being the world’s key currency. This continues to drive their stock market higher. Company balance sheets, generally, are in the best condition that he has seen in a long time. They also have the wherewithal to do anything they want. He does not see speculative excesses in the market at this time. The S&P is getting to a level that overall is going to run out of gas, but it did that back in 2004-2005 and then kept going for another 3 years. Increasingly this market is going to favour stock pickers, and less the over all market.

Economy. The Federal Reserve Board is taking the money away from the market. Psychologically, this could impact the market and investor psychology going forward. They may taper it off so quietly that it is not a big impact, but if the bond market does move quickly, that could change the tenure of the stock market quite dramatically. People should be on their toes from here on in as to how they are approaching the market. Everybody should be aware that the easy trade into high-yielding stocks may not be as good a trade as it has been for the last 4-5 years.

Markets. Alibaba IPO blew off the doors. There are signs of bubbles. You have to know how to manage your portfolio post-stimulus. The demographic trend is that we are all aging. People just want that yield and yet safety. Utility type stocks have therefore been caused to trade way above value and when will the bubble burst. Pipeline infrastructure is still a growth area.

Uranium. URA-N is a basket of companies that deal in the uranium space. A lot of commodity stocks are selling off as the Euro and Canadian dollar weaken. We should see a recovery as there is a long term base pattern developing. Right now the market is focusing on currency, rather than commodity.

Gold. Thinks we will break below $1200, below the lows of last year. Silver already took out its lows. There should be a floor below $1200 because supply starts to get shut in. We are seeing lots of basing patterns, but are still seeing lower highs. Longer term it looks interesting.

Educational Segment. Women in Investing. Woman are making more and more decisions in finance. Graphic showing age of population and how many dependants they have, increasing. Women will control most of the wealth going forward. Women are increasingly taking over the reins of investing.

Markets. Markets are overbought. Thinks it could trigger a 5-10% pullback. This is what happens around this time of year. Looking at the 50 day and 200 day moving averages of major indexes you would be hard pressed to see any sign of alarm. Thinks we are on a prolonged upswing still.

Markets. A lot of what has happened on the TSX is commodity driven. There was a breakdown in gold and silver in the last 2-3 weeks. Oil has now fallen about 10%. Coal has broken down. The commodity cycle seems to be done for now. Some things always get sold off too much when we have a correction, but that means you can find some real bargains. The correction that we saw coming out of 2009 has been a moderate, kind of grinding slow recovery. There has been a gradual growth in earnings and gradual growth in employment, particularly in the US. There have also been some negative trends. Europe is flirting with recession and deflation. China is not as strong as we would like. However, we are seeing good, solid earnings.

Canadian banks? The Canadian banks have the wonderful position of basically controlling the entire financial industry in Canada. They have been making money hand over fist. Even through the recession, all the banks just continued on. You can buy them for less than 14X earnings. With companies that have this kind of competitive advantage, paying dividends of over 3% and trading at less than 14X earnings, you would be crazy not to own them. He owns National (NA-T), which he thinks has the best growth prospects in Canada, Bank of Nova Scotia (BNS-T), which he thinks has the best international growth prospects and Toronto Dominion (TD-T) because of its expansion and retail banking.

Markets. Feels people are looking for something that is truly hedged. Believes you should be in the cyclical names, and the defensive “short” should be the classical defensive names, because he believes we are seeing a pretty powerful economic slate of data out of the US. That is where you ultimately want your portfolio to be slanted.