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

High-yield corporate bonds? These will give you an equity component as well as an income component as compared to government bonds. These perform well when equities tend to perform well. The seasonal period for these is basically from October to the beginning of January.

Uranium? This is hard because the buying cycle is so long. Chart shows a downward trend since 2012 and is now showing a little bit of sideways movement. Seasonally uranium can start to do well this time of the year and into November. Technically it is okay.

Banks or insurance companies? They both tend to perform at the same time. The difference generally is that insurance companies benefit from rising rates, but the banks do not. Right now his tendency would be towards the banks. Banks tend to perform well from Oct 10th into the end of the year. Watch out. Last year, the banks had really strong earnings in August and it pushed all the way up into the seasonal period, and once the earnings came out, they fell flat.

Markets. When you look at longer term value in oil stocks you have to look at this as a pullback and a buying opportunity. Fundamentally nothing has changed in the last 5 months except punishing Russia. The US is suppressing world oil prices. Forecasts are $70 for the next year or two for oil prices. Accumulate on weakness, not run for the sidelines here. Speculators are still very long oil. The price should not stay below $80 for long. If we get the pipelines going east/west we can sell our oil more easily on world markets and get the price and this will benefit Canada.

There will be a cold war between fracking in Canada and OPEC. For the next year or so there will be playing back and forth. OPEC has said they are okay with oil in the $80-$100 range. In Canada, you have to cut costs, and be sure of your cap-X. A lot of the production in the world will not be profitable. He added SU-T on the weakness to client portfolios. ZEO-T yields 3.4% and on a risk adjusted basis, you get a better quality dividend than the banks.

Educational Segment. How to Play the Energy Sector. ZEO-T, HXE-T, CLO-T, and XEG-T are the 4 ways to play the energy sector. OXF-T and HXE-T do a covered call overlay, offering two more ways. Equally weighted ETFs usually outperform market weighted indexes. Covered call ETFs usually give you about 2 percentage points more than the others.

Markets. He saw a lot of investors selling because the market was down. Then people said the market was down because oil was down. Two weeks ago was ridicules, just full on fear. There were opportunities. This quarter doesn’t matter. It is the next 5 years that matter. There is a lag effect of 6 to 9 months for the oil price to affect markets. If oil prices stay low for any period of time it is like another stimulus to the economy. Get a weighting in the sector that you are comfortable with. Keep your weightings in the sector.

Markets. The recent correction was a little worse than those after 2008. This is because we have gone about 2-2.5 years without a 5% correction, which has been talked about for some time. We have forgotten how bad it can feel. Indexes are down, but if you take a look at some of the subgroups, they were down 15%-20%, and in some cases 25%. He is betting that the worst is over. If you look at the underlying US economic data, it is far too good relative to what we expected, and it is getting better. Feels this is going to propel corporate earnings, which we are currently getting, to propel the market higher. There are a number of catalysts to keep the economy and stocks moving forward. Real wages have gone up 5.5% year-over-year, as has CPI at 1.7%. Wealth has increased, mainly because of the stock market’s rise. Part of the problem is that it is an uneven distribution. At the banks, there is relaxation of lending standards as well as easing of mortgage lending standards. Lower oil prices eventually lead into the economy, giving the consumer more money.

Markets. Built up a fair amount of cash leading to the correction and has now put some of this to work. Had taken some of his cues from the market on the US treasury side. Also, just following the technicals in the market, he saw a couple of big rallies into the close in the US, and it looked like the market wanted to go a little bit. Also, there was a positive in the number of people being fired in the US. It was more of a tactical decision where he thought the market had overshot on the down side. Has been trimming some of those positions in the last couple of days. Doesn't think we are going to get back to new highs. We have come a long way off from the bottom, so it is prudent to take some money off the table, especially the way the oil price has been struggling.

Markets. Since the 2nd world war, most of the economies and stock markets have followed a very similar pattern. We come out of a slow period, the economy picks up, we start getting inflationary pressures, the Central Bank starts raising interest rates to dampen it and everything slows down. That is the cycle. However, in the last 5-6 years, we really haven't seen really high levels of growth coming out of the last trough of 2008-2009. The likelihood of a Central Bank going to raise interest rates to slow down growth, is very, very low. Doesn't think we are going to get a big correction in the stock market. The price of oil and the price of copper tell you there is not a lot of growth out there. Thinks we are going to be in a muddle along economy. In this correction we are going through, we are pretty much there. Feels we are going to be in a stable and soon to be rising market. Lower oil prices is like a huge tax windfall and very positive for the economy. Feels the next 3-6 months for the stock market are going to be good. We tend to get our corrections in September and October, and then we get pretty good markets from the end of October through until probably May.

Energy. We have been in this channel of somewhere between $80 and $110 range in the last 5 to 7 years. With fracing technology will we actually start setting a new lower level to that range? Most of the feedback he has heard from oil/gas analysts is that the costs of getting oil out of the ground has not changed that much. As a consequence, we are probably going to steady somewhere around $80 as a lower limit. If we shoot through $80 and into the $70's for a few months, supply is going to pulled back quite quickly. Thinks oil does become quite interesting here in the low $80's. Don't be a seller of oil stocks. Look to pick up bargains as we bounce along that $80 mark. Expect that in 18 months we will be back over $95.

Lifecos or Canadian Banks? He still likes the banks better. They seem to have a lot more latitude in terms of growth. Likes their quality of management, although Manulife (MFC-T) would be on a par. If he had to choose one bank, it would be Toronto Dominion (TD-T), but all the Canadian banks are good right now.

Markets. We were incredibly oversold and so we are having a rally now. Interest rates have collapsed this year from 3.0% to 2.2% this year. It is worse for finding yield in fixed income so you have to go back into the stock market. We really saw the hit in the mid-cap, retail investor stocks. Oil came off also so oil stocks should be looked at.

Markets. To really understand what has happened, you have to isolate what brought this market down. There were a lot of contributing factors such as Ebola, terrible events in Ottawa, but the key is understanding where Europe is going. There were encouraging data points out of Europe today and a big market rally, which was not surprising. If you can see more data points like that on its own, he thinks you have the next leg up of this bull market. Unfortunately. today is just one data point. You need more before you can be sure. Also, markets can go higher if investors become confident enough that the ECB has investors back. The ECB is mostly job owning. It might even be beyond the ECB at this point, and requires the involvement of Germany and a fiscal stimulus. This is what has markets so worried. If you can see PMI's rising in Europe like they did today, stocks look really good. Stocks do want to go higher and the Bulls do want to run, but you definitely need Europe. It is typical that there was the retracement we had today, but you wouldn't buy just based on this snap back. You would buy if you are seeing a change. If you see the weak data points that we saw in September in Europe as just a summer slowdown, and will be actually snapping back on their own, it doesn't matter that they are feeble. What investors need to see is that it is trending in the right direction. This is really a “wait and see” to see who does carry the next leg. It really does depend on Europe.

Banks or oil companies for sustainability of dividends? First of all, payout ratios on the banks are between 40% and 50%. He doesn't know if the Canadian bank has ever cut its dividend. You have the highest assurance of quality in banks. Energy names are in the penalty box with an uncertainty and a question mark around oil. Capital wants to go somewhere. If investors are not looking at oil and at telecom stocks, they're going to go to bank stocks.