Keith Summers

Markets. Cyprus is what they should have done all along – make sure insured depositors are covered and uninsured depositors are not. We as investors have to be concerned about this. When there is a weak banking sector in any country we have to worry about contagion. The markets are in for a rougher ride than we have seen for the last 9 months.

This is the one that holds US government backed securities. He is not convinced that bond yields are going up any time soon, but doesn’t think they will go down either, so you are left with whatever yield this one is throwing off. Prefers ones that are tied to real estate and mortgages in the US or Internationally.

Generally likes mortgages. You get higher yields and there is harder collateral security. You are a step removed from the volatility of underlying real estate prices. 30% of it is in two securities, which concerns him somewhat.

The original ETF. It is almost as big as RY and BNS combined. Any other ETF trying to track the S&P is secondary to this one. If you have an investment horizon of more than 3 years you should be in stocks.

Master Limited Partnership ETF. Only type of ETF where the manager can collect a performance fee. This one is focused on pipelines, storage, etc. It is not really keeping up with its index, which leads him to think there is a problem in the structure or the management. It’s not working out.

If there is a widows and orphans ETF, this is it. There are defense contractors and tobacco to some extent, if you are a socially responsible investor. 15 times forward estimates. Pretty fairly valued. There are not too many buy and holds in ETF land, but this would be one.

He likes Mexico for a number of years. Earnings growth down there is about 22%, impressive. Valuation is a little on the high side, (17 times), but that isn’t so high in Mexico. It has a ways to go.

With Japan there is currency risk – they are actively working on devaluing the Yen. Forward earnings estimate is over 50%, valuation is 14 times. Export oriented and strong consumer sector. You will not be disappointed. Providing earnings estimates are achieved, if it goes up 10-15% over the next 3-4 months then the run is done and if not, then it won’t.

Not crazy about the Canadian market because the earnings estimates are coming down. Nothing terribly wrong with it but he would prefer something where there are upwards revisions.

Great idea because it is harder to buy bonds retail and you pay more as a retail investor. Holding them through an ETF is a much better way to go and as well you get diversification. This one is not particularly big and is focused on really long term corporate. These are not part of the QE mechanism. He is worried if bond yields go up then the price on the ETF will be hurt. They don’t tell you the credit rating, but in 10 years they must be all blue chip companies.

He looks for sectors that have solid momentum, reasonable valuations, upwards revisions on earnings, positive earnings growth, and good geopolitics. Philippines has made the grade. It has everything he likes. Since he bought it it is a little ripe as it went from $16 to $18. He will hold until the end of this month.

Projected earnings are to grow 34% over the next 12 months. Reasonably valued at 13x earnings. Bank oriented. When it is trading 16x forward earnings that is when you exit.

It’s the formula that works – positive earnings revisions and growth, plus reasonable valuation at 15x. Very financial services and real estate oriented. Will probably be in for a couple of months.