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

Market: Concerned about markets. Buffeting we have taken is giving us cause for concern. Psychology turns on a dime and it is only evident after the fact. Pessimistic about the US economy but not expecting a recession. Corporate world is doing quite well and will hit record levels in a month or two.

Market: He is somewhat bearish on the economy, on the economic outlook. Stock market had risen so high that it was discounting anything that was particularly good that could happen. You had to have an awful lot of economic good news. Ben is almost at a loss for words. QE2 had not produced the results he had hoped for. There is a lot of dissent in congress and in the fed. The only way QE3 could get underway is if the stock market takes another tumble. The problem is that the US has an insolvent balance sheet and need to clean it up. Dow transport had been leading the market all the way up. It reached a valuation level it had not seen in 40 years. It has given him a bear market signal. Thinks it is one of the leading indicators of where the markets are going to go. He put is clients in 30-35% cash. Lots of income stocks.

Economy. Seeing a rapid deterioration in high-frequency data. Market seems to have been quite resilient to these data points and is not betting on QE3.

(A Pairs trade. - Long Sea Dragon (SDX-X) and Short Bankers Petroleum (BNK-T) Dec 21/10. Down 33.44%.)

China: Great to diversify by geography as well as industry. China’s market has been hard to ignore because of the pace of growth. You don’t have visibility into corporate governance and so on. You want exposure to China by investing in companies that do business there. Prefers SGS to get exposure to China.

Market: Frustrating market for investors. Corporate fundamentals look very, very good. Balance sheets have lots of cash on them that is not getting put to work. Equity markets don’t reflect this. Fears over the US and European economy and US sovereign debt standpoint. Investors don’t need to be completely afraid of it. We haven’t priced in the worst expectations. But it is a bullish signal when bad news is taken as a good thing as it was today. This was a holiday month and was thin participants-wise. Employment numbers at the end of the week will be the big data point. June and July he went to 10-12% cash and is mostly there. During August he brought any clients down to that point if they were above.

Small Cap Market. Volatile market will continue and investors are very jittery. There is a lot of good value in a small cap market. A lot of them are still reporting very good earnings. Very much a bottom-up scenario rather than a top down. Looks for companies that are trading at lower PE’s with good visibility. Likes those that grow their earnings at 20%+ and trade at 10-12 times earnings.

Economy. He is calling for a soft economy in the 2nd half and is looking for only 1%-2% growth, possibly a little higher in Canada. Looking for the market to do reasonably well in the 3rd and 4th quarters. If you buy companies that continually increase dividends, over time this works.

Markets. Convinced there will not be a double dip recession and 2nd half of the year will show reasonable growth and earnings with a reasonable pick up in the economy. Forecasting 9% for China's GDP and expecting very good growth in developing economies.

Market: Gold for the next two years will be heading higher because of fed policies. Gold is not going up, money is de-valuing. Gold stocks are trading at a discount to the price of gold. More and more people are waking up to the fact that they have to h edge the currencies. We are watching global currency fluctuations and gold is the only hedge.

Market: He has been putting in a number of bids and mostly he is not getting filled. He does most of his buying in November/December. He is happy to buy this time of year if on dips. He holds 21 right now and goes as high as 25. He is not concerned about racing into the market. His thinking on how to approach the markets has not changed. There is more volatility right now, but with that comes better chance of gains if you play it right. Thinks market will be more erratic going forward than 10 years ago because of computer trading.

Market: We need to re-define equity investing. The way we manage them is being questioned. Asset allocation is becoming much more volatile. Now he uses Growth Payout Sustainability. We need a regret-free investing approach.

Market: Doesn’t own APPL because it is too tied to one guy and products were too trendy. He and his clients were buying because stocks were on sale. Difference between now and 2008 is that he is getting cheques in the mail from clients. This time corporate earnings are so terrific. TD bank says we had zero growth in second quarter and maybe Canada goes into recession if US does. He thinks economic is weak. He was worried about higher interest rates and inflation but now thinks it is pushed out to 2013 and later and so does not look for inflation protection. He wants dividends and growth. Utilities (e.g. telecommunications and pipelines are better than bonds). He felt he would come in one day and gold would go down hundreds of points in 1-3 days. He thought it was a bubble. Doesn’t know about long-term trend.

Market: We are lucky in Canada that we have opportunities for income stocks. You can get income yields in excess of 4,5 or 7%. US are saying they are keeping interest rates low for a couple of years.

Market: Markets have been in a lot of turmoil. From the reaction in the markets, they seem to be discounting some sort of QE 3. The benefits from QE1 and 2 are getting less and less going forward so he is not sure how much benefit there will be going forward. We need to address structural issues occurring the US right now. Doesn’t put much stock in the triple bottom of 11,020. He has been doing some buying over the last months. He is a bargain hunter and is looking for them at this time. If one takes a more sober view and horizon is more than a year or two you can get some very compelling dividend yields that can make the fixed income market look poor. He hasn’t changed his philosophy or style since 2008.