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

Brookfield preferred shares E and F? He thinks these are a Hold. Brascan is now owned by Brookfield, which is a good quality company. Thinks that one of these is a floating-rate preferred and this is the one you should probably hold in a rising interest-rate environment.

Brascan Corp 5.95% maturing Jan 14/35? This is very long term and he has a preference to “not” Buy long term corporate bonds. If you look back 20 years you see all the companies that have gone out of business. There is a lot of risk in these bonds if rates do start to rise. If rates on these bonds went up 1%, the price would fall $12.

Bought Province of Ontario bonds, 4.2% coupon at a discount and are now worth $108+. Maturity is 2018. Is it better to take the gain now or ride it out? If this is a large part of your portfolio, you might think about reducing it and taking some of those capital gains. However, he is still in favour of purchasing 2018-2019 bonds for his “rolling down the yield curve” strategy.

Bond ETF's or individual corporate bonds held to maturity? The basic problem here is that ETF's do not mature. When he advocates ladders, they get individual bonds and they know when their money is going to come due, exactly how much and when. With an ETF, you are at the mercy of the market. He feels you are better off with individual bonds.

How do I find detailed information preferred shares? The most comprehensive source for preferred shares information is Hymas Inv Canada (WWW.HIMIVEST.COM) and has more information than you can ever digest about preferred shares.

Holding 2021 Real Return Bonds? He would consider holding these. These are fairly short-term and are the shortest Real Return bonds in the market. There is not much downside risk in these, even if the yield rises sharply.

Energy bonds. Some of the spreads may be widening out. Would this be an opportunity to lock in a higher yield? What names would you recommend? He would not be touching any of the convertible bonds, unless he felt the price of oil was going to rebound. An ETF might be the better way, as picking individual oil bonds is fraught with difficulty, unless you buy a package of them.

TSX. Had expected a bit of a correction going into the fall, but was really surprised at the volatility of the correction, how hard the market had sold off but how fast it has recovered as well. He has seen a fair bit of technical damage done. In the US, a lot of that damage was repaired, but in Canada it hasn't done quite as well. He is still monitoring a lot of indicators fairly closely. One of the huge catalysts for stocks going forward is the price of oil. A $0.01 drop of gasoline in the US is worth $1 billion in US consumer pockets. Gasoline has dropped $0.65-$0.75, so there's going to be a lot of money that consumers have that hopefully will triple its way into the economy. He's looking for solid earnings growth going forward. US and Canada have reported pretty good numbers so far this quarter. Expects the next quarter will see some pretty good earnings as well, because the consumer is going to be so strong. He is seeing a lot of opportunities across the board in Canadian companies. There is a lot of great earnings growth. We are going into the strongest seasonal period from the end of October to the end of May. On top of that, we are also moving into the strongest period of the 4 year presidential cycle. From a probability standpoint we have seen the correction, which has taken a lot of the froth out of the market, and we should now see fairly strong and a fairly good upwards markets for the next 6 months at least.

Global economy. US economy is doing quite well. Global economy is doing okay, but certain parts are doing better than others. Europe continues to struggle. Latin America is having some problems. China is a little bit slow, but still growing at a pretty fast pace. India seems to be doing pretty well. All in all, what we have seen here is a readjustment where a lot of strategists and analysts had global forecasts that were overly optimistic in the 1st part of the year, and have been adjusting their forecasts down. Adding that to the mix, with the threat of higher interest rates in the US, is causing some investors to refocus their attention. Given what the federal reserve board said today, the Fed doesn't seem to be overly concerned about the stock market or market volatility, and they don't seem to be too concerned about the global economy, because they think there are positive offsets that are positive. For example, interest rates remain very, very low and are going to remain at a very, very low rate for a long period of time and they have moved lower. Energy prices are significantly lower, which is a major positive stimulus for the whole global economy. The Fed is looking at this and saying they are going to remain on their track towards higher short-term “administered” interest rates some time late next year and he thinks that is a reasonable thing to do. Canada did it, and we didn't fall off a cliff. The global economy is still going to grow at about 3.5% per year.

Markets. Lots of optimism in equity markets. Fresh record highs and stocks are pretty much up across the board. We seem to have forgotten about the frenzy of the panic selling in October and it is now really a stampede of buying out there. S&P is up at almost all time highs. Canada is rebounding very nicely despite energy not contributing much. He feels this is warranted. A lot of the macro economic data is very positive, which sets up very nicely for 2015. However, he feels the bounce back has been too swift in such a short period of time. Short term this gives him a little cause for concern. US job openings are at 13 year highs, very positive. Statistics showing people quitting jobs and looking for new jobs is at about 60%, a very high number. This shows that there is a lot of optimism with people thinking they can get better jobs. Every penny change in gasoline prices is about $1 billion to the consumer for spending. There has been about a $0.50 change in gasoline at the pumps in the US, which is a significant benefit to the consumer. We are starting to see that in some restaurant and retail sales. Also, Thanksgiving is next week.

Markets. US retail sales are performing well, the employment situation is looking good and US consumer confidence is off the charts. The market correction has happened and markets are going higher. Life is good. What we don't want to do is go through another period like 2007-2008. We are always going to have market corrections, and sometimes it is tough putting in a Stop when you are just looking at a market correction. 2007-2008 made us realize that it could happen again. It changed at lot of investment advisers. Right now, markets are good and they are going higher and he sees no reason to put in any Stops. Midterm elections are now over and we are into the 4th quarter. Even with the Japanese situation yesterday, the markets went higher.

Energy. Oil price is a real wild card. There is an OPEC meeting on November 27. There is a rock, paper, scissors game going on right now between Russia, OPEC and the US. He doesn't really know what is going to happen. Doesn't think there is any consensus out there. If oil/gasoline stays around these levels for several months, that could really give a boost to GDP because the consumer will have more money to spend. Thinks that the reason for consumer confidence in the US is so buoyant because of gasoline prices.

ETF’s. 1st Trust has a basket of ETFs. These are Alphadex formulas where they look at a whole basket of stocks, and rate them all on growth and value characteristics. On growth you have price momentum. There is price-to-book and price to sales on the value side. They rank them all and look at the top quartile which goes into the ETF. The bottom quartile is also going to go in, but will be underweighted. These are new and there is hardly any volume on them yet. (See Top Picks.)

Casino stocks? Doesn't know why these companies have had such a tough time. Macau in China has now surpassed Las Vegas as the gambling capital of the world. Because of this, he feels you have to look at companies that have access to that area. If he was selecting one, he thinks it would be Las Vegas Sands (LVS-N). If you are looking for the best value, it would be Penn National Gaming (PENN-Q). Also, there is a gaming ETF that is worth looking at, Market Vectors Gaming (BJK-N). He likes the sector a lot.

Markets. Japan is in recession. Germany just skirted a recession after two quarters of no growth. He does not think the US can be completely immune to this. Having said this, earnings are great, but the outlook for 2015 is starting to come down, even if the numbers that it is coming down to are still great. 2015 could be a little bit of a tougher year.