A Comment -- General Comments From an Expert (A Commentary)
COMMENT
Options: He is a writer (seller). If you buy a lottery ticket, you don’t assume you will win, but if you do you will make a lot. This is like buying options. Selling options is like running the lottery, You keep selling them for a small amount (he sells for one month and gets 3% average). 3% every month for a year is a lot of return.
COMMENT
Yield Investments: For the last two years the easiest trade was to buy ANYTHING with a yield. The spread between treasuries and securities was very wide. That easy money has already been made. All you should expect going forward is the yield, no appreciation. Going forward we will be talking about REAL rates of return, given increasing inflation.
COMMENT
Markets. After the run in the last 2 years and almost 100% return on investments by staying in the market, it gives one pause for concern, however profits have also grown 100% and forward earnings on the S&P500 will be $96 this year and maybe $110 next, so stock market is not expensive and maybe even cheap. Any time you have these types of runs, check your portfolio and maybe take some off the top and keep cash. With inflation, dividend stocks that have done so well in the last 2 years, don’t offer the same growth going forward because of inflation.
COMMENT
There have been 2 years of increasing earnings in the US and they have doubled in the last 2 years. It is unlikely that pace is going to continue in the future. Also unrealistic to expect that companies are going to continue to beat at the same rate. More likely to see companies not make analysts’ estimates as was seen last quarter. Manufacturers are being hit with big increases in commodity prices and something has to give. Either they pass these increases on or they can’t.
COMMENT
Market has been on a one way run since Aug/10. You would have thought natural disasters and higher oil prices would have had an impact but the market keeps chugging along. In spit of strong job numbers, good balance sheets, etc., she feels headwinds are increasing. 1) QE2 will come to an end in June 2) beginning of the tightening cycle 3) ECB interest rates went up this week 4) Bank of Canada rates will likely go up towards the end of summer, 5) Fed will probably go up early next year and 6) dampening of consumer growth because of higher prices.
TOP PICK
Canadian Dollar. Very steady and controlled increase against the US$, which indicates a much broader and longer term trend. A good hedge when buying US stocks. Talk to your adviser about using margins as your strategy. You could also look at some Exchange Traded Funds (ETFs). Looking for $1.10 in 12 months.
COMMENT
Given the news of the last month, it’s surprising markets have held in as well as they have. Emerging markets, which have been under performing since the fall, have all turned higher. Commodities have turned higher. Canadian and Australian $’s, which are seen as proxies on risk assets, have both turned higher. Stocks are also back into new highs. We are in a persistent broad based rally.
COMMENT
Until a couple of weeks ago gold stocks were under performing the metal itself. Increasing costs for gold miners have been bothering investors. As a gold stock investor he has been more positive in the last week as mid-cap and large cap stocks finally broke out to new highs and follow along with the metal itself.
'%20fill='%23ffffff'%3e%3cg%20id='Pager'%20transform='translate(423.000000,%201755.000000)'%3e%3cpath%20d='M243.295367,17.286474%20C243.68919,16.9045087%20244.327703,16.9045087%20244.721525,17.286474%20L249,21.4361302%20L253.278475,17.286474%20C253.672297,16.9045087%20254.31081,16.9045087%20254.704633,17.286474%20C255.098456,17.6684393%20255.098456,18.2877274%20254.704633,18.6696927%20L249.35654,23.856763%20C249.159628,24.0477457%20248.840372,24.0477457%20248.64346,23.856763%20L243.295367,18.6696927%20C242.901544,18.2877274%20242.901544,17.6684393%20243.295367,17.286474%20Z'%20id='Path'%20transform='translate(249.000000,%2020.500000)%20scale(-1,%201)%20rotate(-90.000000)%20translate(-249.000000,%20-20.500000)%20'%3e%3c/path%3e%3c/g%3e%3c/g%3e%3c/g%3e%3c/svg%3e)
'%20fill='%23ffffff'%3e%3cg%20id='Pager'%20transform='translate(423.000000,%201755.000000)'%3e%3cpath%20d='M243.295367,17.286474%20C243.68919,16.9045087%20244.327703,16.9045087%20244.721525,17.286474%20L249,21.4361302%20L253.278475,17.286474%20C253.672297,16.9045087%20254.31081,16.9045087%20254.704633,17.286474%20C255.098456,17.6684393%20255.098456,18.2877274%20254.704633,18.6696927%20L249.35654,23.856763%20C249.159628,24.0477457%20248.840372,24.0477457%20248.64346,23.856763%20L243.295367,18.6696927%20C242.901544,18.2877274%20242.901544,17.6684393%20243.295367,17.286474%20Z'%20id='Path'%20transform='translate(249.000000,%2020.500000)%20rotate(-90.000000)%20translate(-249.000000,%20-20.500000)%20'%3e%3c/path%3e%3c/g%3e%3c/g%3e%3c/g%3e%3c/svg%3e)
