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

REITs. Canadian REITs still represent pretty good value and an excellent source of tax efficient income, so there are still some buying opportunities within the sector. He would be a little bit more leery about some of the energy infrastructure stocks, which are starting to represent full value, really spurred by some of the M&A that we are seeing in the US.

Telecom. Why are the players so volatile when it appears that a 4^th incumbent is coming? In Canada, this is an oligopoly. Government is pretty hell-bent on making sure that we have a 4^th player to really try to benefit consumers with much lower pricing. This is why there has been some volatility in the stocks. If the government steps in, there is lots they can do by reducing roaming charges, reducing domestic roaming charges, by positively impacting the outcome of the spectrum auction. If they wanted to, they really could create a favourable advantage for a 4^th player to come in to take market share away from some of the incumbents.

Markets. Master Limited Partnerships. There are a lot of smart people on Wall Street looking to make money for their clients. This is always a good thing except when the market gets frothy. Master limited partnerships are now a tax hindrance for the US government. Remember when Income Trust rules got changed in Canada? QE: We need the flowing money, globally to keep the global economy going right now. But the massive current debt, globally is also a hindrance to growth. If you see wage pressures come, that is a tell tale sign of trouble.

ETF for oil and gas services. HOG-T is not services exactly, but it is included. It only has a few weeks of price action. This is the closest thing we have. Not exactly like the XES-N.

Oil vs. Gold. Likes parts of the energy story over the next couple of years. Thinks we will pick up market share relative to OPEC. For gold we need inflation to take off. He thinks there is one more shakeout below $1200. Leave gold alone.

Latin American ETF recommendation. A lot are dominated by Brazil. It depends how you want to play Latin America. There is even Mexico thrown in sometimes. Etf.com is a web site to use to search for an ETF by criteria.

Medical and Pharma field. Sector has had a phenomenal run the last couple of years. Nothing is cheap now. There are a couple of ETFs (ZUH-T, for example) that gives you health care exposure.

US Tech ETF including APPL, GOOGL, etc. iShares has IYW-N, based on the Dow Technology index. This is not a great time to get in.

Markets. We saw good economic numbers recently. That is the economy. There are the Iraq, Ukraine situations. But what is really significant is China. They are now the largest issuer of corporate debt. He thinks over the short term we are going higher in the markets, however. Now is the time to get back in the market.

ETF for monthly income. PDF-T, FIE-T, HPR-T and ZMI-T are pretty solid and secure with monthly distribution.

Educational Segment. Tomorrow is the anniversary of his sleep at night portfolio and the BMO Tactical Dividend ETF fund. The portfolio, composed of ETFs, is diversified and starts with a low beta core and high yield. You need to get incremental returns for every increase in beta you assume. The Sleep at night portfolio:

Markets. Markets have had a pretty good run for 3 or 4 years. When it fell 300 points recently, people were asking “What happened?”. It’s nice to see that sense of caution creeping into the marketplace. Part of it is well-founded because the stronger economic numbers we are seeing along, with the improvement in the labour force in the US is giving investors pause to think as to how low interest rates will stay, and how much longer. At the same time we are continuing to see reasonably good economic numbers and positive earnings announcements. We are in that happy balance, but it is harder to find bargains. There are storm clouds on the horizon. Expect volatility for a little bit. There is a lot of margin debt in the system. There are signs of increasing speculation, not so much in the equity markets, but what equity investors should be keeping an eye on is what happens in the credit markets. Recently there have been more and more finance companies selling sophisticated packaged loan portfolios to unsuspecting sheep. Brokers are making a lot of money doing it. That got us into problems in the 1^st place.

Bonds. This is the biggest market in the world along with the currency market. If you want to look for trouble, it always appears in these 2 markets first. Doesn’t feel the stock market is in a bubble. Central banks are trying to encourage risk taking. We are confiscating money from savers and subsidizing borrowers. We are trying to re-inflate a new era of economic activity, fuelled by more and more debt. We seem to be in one of those situations where we are pushing on a string. Regardless of how low interest rates are, people just don’t want to borrow money.

Markets. Thinks we are going to get a correction, but he is anticipating it will be more of a sideways consolidation phase. There is so much cash on the sidelines that every time these stocks tried to pull back, there is a wall of buyers that say “I could use a 3.5% or a 4% dividend” and you see cash coming into these big blue-chip stocks. At every opportunity they try to pull back, they meet with a wall of buyers, and the market sort of flips up a little bit, but doesn’t go anywhere. Feels the fundamentals support the pricing that we are seeing in that sideways pattern. Earnings in the last few weeks have been pretty well right on with what people were expecting. The longer trends are still pretty solid. We haven’t broken down through any of the major indices in the market. Oil stocks, because they have had such a big move, might go back a little more than the rest.

Markets. He is a little concerned with rising interest rates. There is a little bit of concern with corporate debt, which is getting pretty high. In the environment we are in, where the Fed is trying to unwind QE, and maybe start increasing interest rates by next year, they’re getting more defensive because there is a bit of a disconnect. Debt levels really haven’t gone down since 2008. His concern is that 2008 was about debt, and we really haven’t solved the problem. We just transferred the problem from the balance sheet of the Corporation to the taxpayer, so not everybody is going to have to pay the cost. The US dollar is the global monetary currency reserve of the world, and a shift is occurring.