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

Base Metals. A lot of eyes are on China right now, “are they growing”, “are they not going to be able to reach their targets”, so there were some sloppy trade numbers over the weekend. Imports for iron ore for China have been falling for the last couple of years. If you overlay that and the price of copper with the Chinese domestic market indexes, from 2010, all the indexes have rolled over. Copper has been in jeopardy of breaching the $3 support area for about 3 years now. If it does, that could accelerate some negativeness in the materials sector of base metal stocks. He thinks it is going to happen this time around.

Markets. Looking at the NASDAQ as it relates to the McClellan Oscillator of the NASDAQ, when we get a spike in the Oscillator to a high point and it starts to roll over, the markets may be making slight highs, but the number of stocks participating in the rally is starting to fade. That usually means we are going to go into a consolidation or have some kind of a correction. NASDAQ has been the leader for about 6 months now and it’s rolling over, so we have to watch. We used to watch Apple (AAPL-Q) but now we watch Google (GOOG-Q) and it hasn’t made a new high in March and is starting to roll over. If that plays out, then we are in for 3%, 4% or 5% correction in the next little while. He was a buyer in late January, early February for his clients when we had the last 5%-6% dip and he thinks another one is coming. This last week was the five-year anniversary from the bottom. We’ve had 29 months now of a rally in the S&P 500 without a 10% correction. That is the 2^nd longest in the history of the markets so we are due for a 10%-20% so we have to watch things carefully as these divergences play out.

Markets. TSX has lagged its US counterparts, mostly because of resources. In that 5 year period, the oil sector, gold sector, silver sector and base metals have all underperformed. They are such an important part of the TSX that, when they do lousy, the TSX does lousy. They far outweigh their peers in the American indices. Doesn’t see this changing. We are not seeing any kind of inflation or upward price pressure on the commodities with the sporadic exception of oil at around $100. There is no global shortage developing in the important metals. Statistics out of China today certainly indicate that if we are expecting China to drive the resource sector forward, it is a little disappointing. With this, it is difficult to see commodity companies making great strides forwards.

Financials. Canadian financial services is a terrific industry as a group. We have an oligopoly and when you have this, they do not compete as hard as they might and everybody makes lots of money. In the most recent quarter, all the capital ratios and profit margins are very strong. We now have the best IPO season that we’ve had for 10 years and all of them are going to make a lot of money on investment banking. He likes the technology sector in the US as it is so difficult to find these in Canada. He does own 2 US banks, J.P. Morgan (JPM-N) and Goldman Sachs (GS-N), both of which are going to benefit tremendously from this big IPO boom.

Technology. He owns technology companies in the US, simply because it is so difficult to invest in that sector in Canada. He owns companies like Qualcomm (QCOM-Q), Apple (AAPL-Q) and Microsoft (MSFT-Q). There are no equivalents in Canada.

REITs. What we saw last May when the “taper caper” started and everybody was panicking about interest rates, the REITs also fell off very sharply, mostly around 15%. While some of the utilities and pipelines and other interest sensitives came back, we haven’t seen the REITs come back. They are still at the discounted price from last summer. Buy them now and you get the great yield plus probably capital appreciation.

Biotech. This industry is characterized by really, really big companies that have been successful, brought products to market and have made a lot of money. There are hundreds and hundreds of tiny little companies that may or may not get it right. Mostly they don’t get it right. Biotech is the ultimate risky game. Picking a winning biotech company is not unlike playing the lottery.

Markets. Thinks we are still in a bull market and not surprised to see it a little soft. Had a very good run and thinks it will have a very good run come the spring. Weather conditions slowed the economy quite a bit. Looking for a year that gets stronger in the economy, which will keep markets going up. We are seeing the beginning of the cycle where economies get better so that they can stand on their own 2 feet and don’t need all the accommodation from central banks. Housing market is strengthening. Expects to see more consumer spending. Lots of room for a very conventional recovery. Liking infrastructure a lot as well as consumer discretionary. Likes the pipelines and doesn’t think the interest-rate threat is imminent enough to cause us to sell things that are held for yield purposes.

Markets. 5^th anniversary of the start of the US bull market. He is sitting on a fair amount of cash on the sidelines. US markets were a little ahead of fundamentals last year, but they are holding. Barring Geopolitical effects, the recovery is taking hold. Thinks he will get an opportunity to load up on opportunities. He thinks there are bargains in energy. Financials are okay and represent fair value. It is a stock picker’s market. Market pullbacks are a buying opportunity.

Holding only banks. If you have a very large nest egg, and can live off the dividends, you could make a case that banks are an adequate diversification. He likes to see diversification across different industries.

Tonight's show was purely on taxes and there were no opinions expressed about stocks or bonds.

Markets. Thinks TSX will outperform S&P. He moved positions back into Canada and thinks it will continue for the remainder of this year. Canadian stocks present an opportunity. Materials and Energy are attracting a lot of interest. Q2 and 3 should be volatile, but Q4 should offer opportunities.

Markets. The market is moving a little ahead of earnings and we will see disappointment when the earnings come in lower. Emerging markets are where to look for value. Don’t go in when the knife is falling, but wait until there is some stability. He is snooping around Russian and eastern European stocks. He has some dry powder. He looks at job data, Mastercard spending, but it is a bumpy ride for the US. Asia is still significantly ahead of other parts of the world and Latin America is falling into a hole. He is focusing on companies that have very good fiscal balance sheets.

Markets. Earnings are good to justify stock price. Earnings a year ago were just about under expectations so there was a lot of multiple expansions. Going forward you won’t see the same multiple expansion so we need that earnings growth to continue and she expects 9% earnings growth this year. China have announced that they want to grow GDP at 7.5%. The shadow banking environment has been a concern. The Chinese usually achieve what they want. Stocks are still the most attractive place to find growth.

Markets. It’s been 5 years since the great recession. We all anticipated some slow growth, but right now we are going backward a little. Job growth, housing starts, and retail sales just aren’t happening. We could be just a little overvalued. He’s never been a big GDP guy, but if you look at GDP percentages, we are really up there. In Canada our markets are doing okay because we were in the doldrums for so long. The risk/reward ratio does not seem to be there. Investors should rally think about and study stocks and ETFs they are thinking of purchasing. With ETFs you can see a trend in the markets and buy it. ETFs are great for that.