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

Markets. Volatility now is something temporary. Ukraine and Russia are not a large percentage of the world economy. Gas futures are up, oil is up. There are European members against Fracking and so on and now they may decide to change their attitude. This has big implications for Oil, but overall the bigger driver for markets now is China. Some economists have estimated the China housing bubble to be at the same level as Ireland when it popped. State of resource stocks today is dismal. Investors are discouraged. The sector has had the best run this year. Gold in particular and then Healthcare accounted for 60% of the gains in the first two months of this year.

Uranium. Long term it is looking encouraging. Japan is a big buyer. Uranium has made resurgence. U-T is not a bad way to play it. There is no management to worry about. CCO would be the stock to play it. He is bullish on Uranium going forward.

Markets. Markets here are at all time highs. It is surprising when we look at turmoil in south America. It is also surprising in light of the weather in the fourth quarter as well as now. Things have really slowed down because of the weather. Bonds are telling us that equities should be selling off. Equity investors are looking at second, third and fourth quarters of this year. The bond market is telling him that the economy is slowing. Thinks there is some risk in emerging markets. Experts are very concerned about the stress they are seeing in the emerging markets. There is a flattening of interest rates, but treasury bonds will not go lower than where they are today, but should go up to 3.5% by year end.

Algeco Scotsman 10.74% 10/15/2019. (Top Pick May 6/13, Up 13.50%) The price has gone up over the last year. Company cash flows are in good shape.

Air Canada Bonds 7.625% maturing 2019 Used to refinance existing bonds that were at much higher yields. He saw the company's presentation and it is still a massive deleveraging story. It may be a little hard to buy these bonds because they are predominantly held in institutional hands.

Markets. Over the last 10 years some claim they can see manipulation in the gold market. There is a spread between demand and inventories. Gold is the only commodity where no one ever looks at inventories, but it is at an all time low. This disconnect has to correct because that is how market forces work. His main theme is that we are going back to the 70s with stagflation and a lack of growth. Precious metals are the insurance against the actions of the central bankers. The markets are running up, but it could be because money is coming out of the bond market. There are opportunities and he is looking for them.

Markets. Through the ‘90s you had falling inflation, expanding multiples and if you were an investor there were themes. In 2012 you had a market that was dominated by cyclicals. Market contracted through that rally. As of 16-18 months ago, correlations started to fall and themes started to emerge. Consumer tech and technology started to lead again. Stock picking becomes more important now. The themes are more persistent and corrections are shallower. Thinks we are in a new secular bull market. The risk is that people hold out, waiting for a better pullback. The average investor has 20% cash and equivalents. Subsequent pull backs will be shallower.

Markets. Record highs on S&P 500 and Russell 2000. He thinks the stock market can have a reasonable rally through 2014 because there are a lot of positive things going on. Rates have been relatively stable and low. There has been reasonable economic growth in Europe and the US. Some numbers are negative and some are positive, but the trend is that they are positive. Thinks you will see better revenue growth and cost cutting yielding better margins. The US has the opportunity to outperform Canada.

Markets. There are compelling cases for real estate stocks. Correction was caused by them being overpriced and the fear of interest rate increases. The bottom has been tested several times. The real estate has not declined in value and in fact is up 10%. A good time to pick up companies below NAV. Thinks the US economy will outperform the Canadian Economy. There are REITs that let you play US real estate. There has been a pull back in interest rates since the tapering tantrum, but stocks did not acknowledge. Inflation is good for real estate since they can raise rents.

Real Estate and Reits. Because of interest rate concerns, REITs toppled off. When we get a re-affirmation that rates will stay low or rise only gradually, then money will come back into Real Estate and REITs. It is happening right now, in fact. Buy the dips. This will be a lumpy year.

Markets. The market pull back was not unexpected for him. He predicted short, sharp, shallow corrections. Thinks there is cash on the sidelines. There are those that have missed this run for the past several years. People have a fair amount of confidence and any time there is a correction they will step in. You want the focus to be on earnings. Companies have to earn their stock price. Given where earnings are expected to be this year, he hopes we get only a 10% increase in equity markets. If it were 15% he would worry about it ending badly. Materials were a laggard last year. His clients are balanced so they have money in US, Canada, equities, fixed income.

US Banks have not done well generally this year. They are considered from a fundamental view point as tough. Loan growth is anemic, but deposit growth is fine. If the economy moves to a normal run rate, there is a lot of opportunity in US banks. BAC would not be his favourite. Prefers C-N.

Markets. What we are seeing now in equity markets are like 2007. QE is starting to be removed from the system. He looks at market sentiment, margin debt and long term valuation and we are now seeing them in the top decile or more so. It is never a time to be a long only investor when the market is flashing these three signals. The broader deleveraging cycle will take hold after the QE is removed. You would not see a new fed chairman react to a market selloff. She wants to establish her credibility early.

Markets. People are scrambling to get their money in for the end of RRSP season. Check the most recent notice of assessment. People might want to get a jump in for 2014 to invest it now. The TFSA might make more sense than an RRSP if you are earning relatively little, e.g. near retirement. Mutual fund fees are too high. Minister of Ontario wants to get more involved in regulating financial planners.

4% rule for people retiring in 30s and 40s. 4% withdrawal per year is sustainable unless you hit an awful situation like ’08. He doesn’t recommend it unless you are in your 60s and have a balanced portfolio.