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

Markets. We are witnessing a bit of a rotation in the Canadian market, with energy plus strength in the Cdn$. Even if you think it is a Sell in May and Go Away kind of scenario, within the market you can certainly make money on individual names. Consumer names have done very well since November when everybody was exiting energy and had to go somewhere. All of those stocks are now looking pretty pricey, so there is some swapping back into cyclicals. He has started to nibble away at energy in the last few weeks, and reducing his holdings on some of the consumer names. Stocks are fairly fully valued, but stock by stock and group by group there is still a little bit of value there. You don’t have to sell now and go away. When 10 year US treasuries go up, there is a nice historical correlation between that and cyclical stocks, and we are starting to see that in the last 2-4 weeks.

Cdn$? The oil prices back to $58-$59 help. It has been higher lately and most currencies are higher against the US$. He doesn’t think oil prices go immediately to $70, so this is kind of petering out. As soon as you get stronger US economic numbers, probably over the next 6 months, he expects the US dollar to reassert itself. The trading range is something like $78-$84, and we are near the top of the range.

Global Economy. There are 2 ways the monetary shift, that is occurring, is going to play out. Either through the IMF SDRs (Special Drawing Rights), or the structure that the Chinese and the new nations are creating. Are they going to go independent on their own or are we going to play along through the SDRs? SDRs are a basket of different currencies, out of which you are going to have the 7 main currencies, something like the euro. However, the Chinese are saying that without a governor we are back to the euro, so what is the point in participating? They would like gold as part of that basket. The Chinese keep storing physical gold. Whether the new structure will have some kind of a physical backing of real money, versus the game that we have with the paper money, he thinks it is clear that the basket is going to be part of the equation. This means that the countries with the most gold will have the greatest purchasing power. We are witnessing a deflationary storm that they are trying to control, and something has to give.

Markets. The bull market will bring you on side if you hold great investments. We took out the highs prior to ’08 in ’13 and you got into a secular bull that we are 5 and a bit years into. The business cycle is still in place and will force the market to have corrections. Bull markets usually die of exhaustion. The valuations just aren’t there and then the weight of the market takes over and brings itself down. We are headed for a correction within an uptrend.

Outlook for Gold. We all look at gold in terms of US$, but in terms of the Euro, CAD$ or AUS$ it has done quite well. The gold sector is the cheapest sector. It has been sold out for the longest. Smart money is coming in to position itself in golds.

Potash. He owns POT-T and has previously owned AGU-T. He is in it just for the yield. They are both good companies, although different from each other. His concern is farm gate prices on crops. They are not lifting yet. This is the quarter where both stocks will make money.

RRSP Holding Tax. You get no benefit from tax withheld. You can’t deduct the foreign tax, but you don’t get taxed on the dividend. Check with your accountant.

Markets. Doesn’t think the Fed is going to raise interest rates, but thinks that they want us to keep looking at them. He wouldn’t see a change in the scenario until the US 10 year gets above 2.30 and meaningfully stays there. Since January, the utility sector has been heading downwards while the S&P is going higher. However, it has come back to a trend. If there is something meaningful going on, what we will probably see is some really good buying opportunities in things like consumer staples, utilities, healthcare and biotech. If you think the US$ has done its thing, there might be a tailwind for some of these companies.

Currencies. From late last year into about the middle of the 1^st quarter this year, the big trade was a really, really strong US$. With the quantitative easing impact in Europe pushing down currencies along with the commodities collapse, it was very much a one-way trade. He had anticipated the impact of the QE and lower commodity prices on the globe. This had been terrific for a lot of importing countries such as India, Japan and China. Europe had the double whammy of QE, of weaker currency and weaker commodity prices, which double stimulated their markets. Economies globally are going to start responding in the 2^nd half of this year. We are starting to see the results of this with the European and Asian markets being the strongest markets. Expects there will be volatility in the US$, but it hit its peak in the last couple of weeks. Financials, particularly in the US, have been struggling year to date because yield curves have been close to zero. Because of this we are starting to see European yields come off the zero mark. As those lift, we are starting to see North American rates lift as well. This will be fantastic for financial stocks. Expects there will be a recovery in commodity prices in late 2015 and into 2016.

Markets. You are seeing a lot of FX impact on the numbers in the US. Growth has slowed a little bit, but the underlying tone has remained. Everyone is still cautious, but things seem pretty positive. The S&P is at its highs, but if you look underneath it, things have shifted. On the economic side, there are mixed data points and that is what the market is grappling with. She is avoiding interest sensitive areas.

Please note that we were unable to access this program today. The TV showed it as a Repeat Program and they replayed Yesterday's program with Stephen Takacsy as the guest. - Bill

Markets. In the last 8 years we have seen global debt increase by over 40%, and is over $50 trillion by now. This has largely been a result of low interest rates making debt very attractive, quantitative easing and Central Banks have built their balance sheets up to huge amounts. We are not immune in Canada, not so much on the government side as on the consumer side. In spite of that and all the 3^rd geopolitical turmoil, markets seem to continue to just pace ahead. We have had a pretty good run for a number of years. In his view, valuations are looking a little bit stretched. This is a time to be somewhat cautious in the market. Be prepared to act on any downdraft, but be very careful about the prices you pay going into stocks. He is always looking for things that are a minimum of 3-5 years and longer. In energy, you might well be early. You want to be in the companies that are financially strong, well-managed and companies that take advantage of the current weak environment.

Markets. The breadth of the NASDAQ is lowering even though it made an all time high last week. The Russell 2000 (mostly NASDAQ small cap stocks) was actually down on the day, which is not a positive sign. OIH-N is bottoming, but because the glut in oil supply is not getting cleaned up any time soon, this bottoming process will take some time. Maybe into next year it will come back down again as part of that bottom process. Take some long term money and put it into the energy sector for 5 years and get a good dividend. We are starting to see growth in Europe. The biggest export in Greece is refined oil products. He thinks this will be an interesting play.

Educational Segment. Couch Potato Investor. There is risk in buying and holding. RAFI smart indexes have a great track record of forecasting forward based on what the inflation rate is, on bond yields and what a 60/40 balanced portfolio might look like as we move forward. They are forecasting a 4% return in a balanced portfolio over the next 10 years. They have a web site so people can follow this. You have to look at risk and return together. Higher returns are going to come in the future from emerging markets.

Markets. The big story is that since the beginning of the year 14 countries have cut interest rates around the world. There is very anemic global growth and deflationary worries around the world. Interest rates should stay lower for longer. He likes mid cap value and small cap stocks. There are bargains out there, but they are increasingly hard to find. He is keeping more than 5% cash on the books. Over half of his stocks are benefiting from a higher US$. This approach should pay him good dividends for the remainder of the year.