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

Because markets are up anywhere from 80% to 90% off the bottom, it’s not bargain territory any more and is getting harder and harder. We also have QE2 is coming to an end in the US and will there be a quantitative easing 3 or is liquidity going to go away. Too early to know. At some point they are going to have to raise rates. He is looking at consumer type non-durable type stocks, some lagging industries and some techs.

Gold. An appropriate asset class but at points in time it gets to an over exuberant level. When you are buying gold, you are buying a piece of something back in the vault and are not earning much on it. He loves buying streams of earnings, which you don’t get from gold. Has an appropriate weighting in it. Likes Great Basin Gold (GBG-T) as a small cap (assets in South Africa). Also likes Yamana (YRI-T) as a lower cost operator with some growth profile.

Margins. This is a personal choice. You are taking on risks to get higher returns on the equity market. He doesn’t recommend it and tends to shy away from it but if you have the skills set you can make some good returns on it.

Wage inflation in 2012-2013. What assets would you hold? Doesn’t see this happening at all. If there is, it is very hard to pass these costs on.

Market: Gold and Silver made a meaningful breakout today. The stocks had been lagging the price but now there is recognition. There is still a lot of moving parts in the world (middle east, European debt, etc.) so currency safety hedging will possibly move gold to $1500. After QE 1 and 2, we now need earnings growth. Companies that continue to grow will do well but those that disappoint will be hit badly. If earnings are ok we will go 5% higher but the second half of the year we will go sideways.

Markets. All leading indicators, with the exception of housing, are improving but the rate of improvement is starting to decline a little, so Q2 could be interesting. Corporations have quite a bit of cash on their balance sheets. (About a 45 year high.) All the cash being used in M&A is nice but it would be nice to see it being used top go into new ventures and getting employment back on side, which would move this market higher. Turbulence is absolutely going to continue.

Nuclear? Doesn’t see a lot of nuclear stocks that are good plays. The beating that has been happening in Japan has not been big enough for him to find Japan or nuclear stocks that attractive. Uranium stocks are not cheap enough and balance sheets are not good enough for him at this time.

Natural gas ETF’s? Sector that is out of favour. Longer term it has to do well. One question is supply. With shale coming on line, it increases supply, which knocks down prices. Clean fuel and with the nuclear disaster it becomes more attractive and ETF’s should do well going forward. A lot of companies do not have clean balance sheets, which making it difficult to buy individual companies. Good contrarian play.

Granddaddy Bear- A bear that sweeps all asset classes so there’s nowhere to hide. Last one was in 07-08 that took everything with it. Usually followed by a rebound Bull. Many investors miss these because they are so violent on the upside. Last 3 rebounds traced at least two thirds of the bear and usually within 20 months. Thinks this will retrace to 100%. Still some elbow room before reaching the highs and would include financials, energy and technology.

New Economy-When you have long sideways congested periods, the next big thing always occurs. This was the new economy. (Internet, Apple, Microsoft, Intel and Wal-Mart could be included.) This took off in 78-79 and the Dow did nothing for another 3 years. Great opportunities. In 03 there was the global boom, commodities and emerging markets. This will include commodities, small-caps and exports. Lots of room to go.

Buying/Selling, especially High beta stocks. MACD or Point and Figure Chart? MACD is simply 2 moving averages. If you are going to MACD look for divergence. If price is going down and MACD gives you a low and the stock gives you a lower low and the MACD gives a higher low, that’s when you act. Point and Figures are basically reversal charts. The time (Y) axis is not linear. Look at your Point and Figure and if it is trending up you stay with it. Stay away if it trends down.

Not bearish on any commodities. Natural gas has been a laggard but thinks the potential is there for a surprise on the upside. From a long-term perspective, uranium is reasonable but the one caveat is that you need to see how the Japanese situation unfolds. If everything is OK, it could be positive for uranium.

Still not back to the indexes where the market was in 2007 so no surprise that the market really moved between August and February before the mini-correction in March. Hasn’t happened since 1948and 1982 when there where huge market rallies. Bulls will say that it is the 3rd year of the presidential cycle and earnings are still growing to the degree that if earnings are going up faster than prices, then obviously P/E multiples are coming down to make it a decent market for growth. On the flip side there are all the macro economic fears that Bears will put on for European debt issues, Japan’s nuclear disaster and the US housing market. If we get inflation or deflation you should have something to act as an insurance policy in your portfolio.

Market: It’s a very stock specific market. Market was very resilient in rallying after the March pull back. Likes emerging markets, aging demographics and tech stocks. It’s predicated on prospective earnings and current stock valuation. Tech companies are generally the most global of US companies.

Market: He looks for lower volatility. Thinks we will continue having a pretty good first half of the year. Thinks that while jobs are coming back into the system, they are not coming back in a big enough way to allow companies to pass price increases through to cover rising input and labour costs that are rising. Thinks we will have a marked slowing in corporate earnings growth. Vast majority of population does not have the discretionary cash flow because of higher oil prices.