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

Mortgage investment corps. Not a replacement for fixed income. Play more toward the debt side of real estate than the REITs. He prefers them to REITs, however.

Investment savings accounts are at 1%+, GICs are a bit above that and then you can get 2-2.5% without capital risk. He would build a 1-10 year ladder where you don’t want any capital risk.

The TSX Index includes a lot of preferreds. If a bank failed then the government steps in and splits up the bank into good and bad assets into two different banks. Some investors lose everything. This is the risk with preferreds.

Preferred Share ETF. He would not recommend any of them. Talk to an advisor and put together a portfolio. ETFs lack liquidity. XBB-T and XRB-T, however, should be in all portfolios.

Markets. We are seeing the longest stretch of underlying strength since 1995. It looks like there is reasonable underlying strength to the US economy. Japan is ramping up their stimulus and Europe is doing the same. The US is going to be a stronger economy relative to other markets, which is why Japan did the surprise stimulus announcement. Europe continues to struggle, and one of their challenges is that they have sanctions going on with Russia, which is a very large trading partner. Because of a combination of slower trade and lower oil prices, Russia is on the brink of recession. Feels the Canadian market is in pretty good shape, with reasonable forward multiples at about 14.7. Sees exciting opportunities within Canadian technology, particularly in the smaller cap companies. Four to five months ago, the Russell 2000 smaller cap index in the US started to underperform a lot, so a lot of Canadian small-cap stocks, separate of the oil and gas area and/or base metals, had a tough time, and as a result, that creates great opportunity as long as you are willing to end up with lower trading volumes and less liquidity in the stock.

Markets. He is expecting growth for the rest of this year and into next. The economy, particularly the US, is doing very well. Job creation numbers this morning were terrific, both in Canada and the US. Thinks it comes as a surprise to many people that there is 56 months of job growth in the US. Has been real growth in housing starts, auto sales and jobs, and this should continue going into 2015. Doesn't see huge risks from an interest rate rise. Rates will go up gradually. There is still not a lot of tightness in labour markets, although Canada is tighter than the US. Despite all the endless rumours about China, they are still growing above the rest of the world, and are now the 2nd largest economy globally. Japan has done huge stimulus and he likes the new prime minister in India. Europe will be pulled by US and China growth, so he is not as worried about Europe. He likes pipelines, consumer discretionary, and financials. Not courageous enough to be back into mining yet. His holdings are about a 3rd US and the rest is Canada.

“Bottom Feed” on oil stocks or wait? Short term timing of when to buy things is the most difficult thing in this business. If you are patient, this is a buying opportunity for high quality producers. That's not to say they couldn't go a little lower. There is talk that oil prices may be getting to $75, or even $70. It is not sustainable at those levels, so it will come back up. He would figure out a couple of high quality oil names, be very patient and bottom feed, maybe using a Buy order of maybe 10% below market, and wait for a really bad day for it to get filled.

Canadian banks. Will an increase in rates in the US affect them? His outlook includes the US increasing interest rates, but not by a huge amount. Thinks markets will absorb it, the same way they absorbed the ending of quantitative easing. Canadian banks are really hard not to like in any kind of circumstance. TD (TD-T) is his favourite.

Markets. He had been raising cash through August and into September. His prognosis was that the markets would likely take a pull back based on the usual seasonal factors, but more importantly some of the sentiment indicators that he watches were just screaming overly optimistic, which is a contrarian indicator. A couple of weeks ago, there was a fear, and the 10 year bond yields shot higher and the major indices were plummeting and finally some money came into the market. That was his Buy signal. V bottoms have been happening a little bit more in the past few years, but they don't happen all that often. A research that he subscribes to show that when V bottoms occur, the markets get quite bullish with the average return, a year out, of around 17%. He is heavily into technology stocks. Within the Canadian market, he is almost entirely avoiding commodities, and have been for quite some time.

Gold. This broke down below $1200 today. There had been some support around $1260. Despite bounces, gold is in serious danger of going down to around $1000 an ounce, and this will drag along any related gold type stocks with it. Often with a break like this, you will get a retest, and you could easily see it come back up to around $1200. However, that does not mean it is a bullish environment. Avoid gold.

Energy. West Texas oil broke out, to the downside, of a large triangle that had been forming for a couple of years. It is now bouncing off its support level of $87. If oil can hold around its current level of just under $80, it could be okay, but you are in the danger zone and he doesn't know if he would be so bold as to say this is the bottom. Wait for a few weeks and see if it can actually hold.

Energy. West Texas oil broke out, to the downside, of a large triangle that had been forming for a couple of years. It is now bouncing off its support level of $87. If oil can hold around its current level of just under $80, it could be okay, but you are in the danger zone and he doesn't know if he would be so bold as to say this is the bottom. Wait for a few weeks and see if it can actually hold.

S&P 500? This is making new highs and it is in an uptrend. The correction in October was just that, a correction. This market is in great shape.

Markets. Lower energy costs generally benefit companies. The Christmas shopping season could be quite strong because consumers are paying less for gasoline. He is looking at players like lumber that can benefit from a weaker dollar. There is an icing on the cake for Canadian exporters with the weaker Canadian dollar.

Long Short pair trades. He focuses on fundamental attributes of individual businesses. He would focus on high quality management, netbacks, solid balance sheets, etc. Then find a similar company in the same industry where they have a lesser management team, slower growth, higher leverage and trade at a higher multiple. Make sure the assets are similar, liquidity is similar, market cap size, etc. This would be the short side of the pairs trade.