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

Markets. He gauges sentiment as ‘confused’. Worst case we go down to the 200 day moving average. Economic data was impacted by the weather so doesn’t tell you anything useful. It will rectify itself in due course. He thinks earnings will give us a good lift from here. Sugar and coffee are surging because of a drought in Brazil but this is temporary. There is some inflation, however. He thinks the market is expecting an inflation rate of 2.15%.

Insurance companies. Prefers banks to insurancDe companies.

Markets. TSX in midst of longest winning streak since 1985. It is doing a little catch up and we have been outperforming the Dow since last July. US economy had that QE and a lot of it ended up in the stock market. Some money is now coming back up from the US, being repatriated. The Loonie at $0.90 is where it will probably settle. We are going to balance our budget and our economy is probably outperforming the US a little bit. We had a bumper crop and we are not in bad shape. The dollar at $0.90 is good for the oil industry. The big move is over, however.

Markets. US economy is gradually improving but housing data is not better due to weather. We have to wait a few months and then see. If we got any unexpected inflation then the fed might react. Thinks they maintain the low interest rate policy longer than people believe. Earnings have been pretty good except for weather impacts. The market was just pausing while in a rising trend. Equities are fairly valued so you have to try to find companies whose earnings will rise above average or find undervalued companies. Thinks right now you have a bit of a rotation going on. The Canadian dollar being weaker is a positive.

Markets. Oil. $100 should be a solid floor for oil prices. Decline rates in the US are high, but he does not focus in on those plays but rather looks at the world. We are in a supply-driven market. Supply disruptions are about 2 million barrels a day. Keystone aside, we are seeing evidence that bottlenecks are subsiding. Nat Gas. 5 year high today. We are in the shoulder season. He has been selling some of his gas positions. Thinks there is not enough supply to bring up inventory levels ready for next year’s heating season.

Markets. Investors are becoming more defensive. The utility sector has done well, as has the healthcare sector. This is not normal this time of the year so that means investors are becoming a little cautious. This time of year is good into April or early May and he doesn’t see why this won’t happen again. Gold stocks are on fire. Sentiment towards gold has changed. With a breakout like this they could keep going. Materials and cyclicals the last two years have finished up in March so watch out this year, although he thinks it will go a little further.

Uranium. There are a small number of buyers and that can influence it. From a tech point of view it is right up against resistance. Biggest strong period is now through end of July. If it breaks out then it would be a good buy.

REITs. Typically do well in the summer time. We would not go in now. Prefers other places in the market.

Markets. Most of the lower hanging fruit has been sort of picked off and a lot of that happened at a much faster rate than expected over the course of 2013. The consumer durables, those companies that are tied to the housing market, got a good lift because of the low interest-rate environment as well as the uptick. Now we are probably going to see a little bit more of a movement down towards the mid-cycle companies such as industrials, technology, and to some degree, energy companies because we are starting to see a little bit of that rotation happen and a movement of CapX which was sort of locked up last year. Thinks we have a couple of years to go. Putting it into context, since 2008, $400 billion has escaped the stock market and the great depression was an unprecedented amount of central bank intervention, basically a true test of modern gains in economics. That stretched out the business cycle. Here we are, 6 years after 2008, and a normal business cycle which lasts roughly 5 to 7 years and we still have room to grow and expand in this economic recovery beyond another 12 months. There will be choppiness this year and will probably be the reason you are not going to have the same stellar 30% performance as we did in 2013. However, this choppiness creates a stock picker’s opportunity by being able to choose those companies that are fundamentally sound, but trading at irrational valuations.

Gold. Gold has done quite well this year. He looks for sustainable momentum and wants to make sure a trend is good long-term before he gets into a particular stock. Thinks the current uptrend in gold is short-term. Doesn’t like this sector.

Markets. Expecting some choppiness in the US in the next several months. Economic data has been weak. Housing numbers are not very good. Auto sales have been a little bit weaker. We are kind of back to record levels in the S&P and in order to get that market to move higher, we need to see economic data that confirms we should be paying these types of valuations. The market might just trend sideways until we see these kind of numbers in the next couple of months and what we see coming out of emerging markets. Does not want exposure to certain emerging markets right now. There is a lot of risk right now on the credit side. Has been a lot of growth through credit and that has to unravel. From an economic perspective, emerging markets have inflation and growth problems, which they are combating by putting interest rates up which he feels is a poor policy. Also, doesn’t want to be overweight Europe relative to the US.

Markets. Feels there are a lot more problems out there than they were in 2008. At the same time, we are seeing much more of a recovery in the US and Europe, which is getting a lot more people interested in the market. A lot of people were scared and moved to the sidelines, but are now saying they don’t want their low interest-rated GIC’s and are looking to get back into the market, which will boost it up further. It is more difficult for him to find opportunities as he is looking at deep values. His Stock Watch list 5 years ago had over 350 names and it is now about half of that.

Markets. 2014 will be a more difficult year. Returns will be less than 2013. Also, expects to see more volatility, but all in all, a positive year. Emerging markets created some turmoil a few weeks ago. Not all emerging markets are the same. He is concerned about countries that are running current account deficits, countries that have a lot of US$ debt. The biggest emerging market you have to pay attention to is China. He is concerned about their financial system, wealth management products and will the Central Bank of China step in. Overall, debt level is higher than some of the reports indicate. Environment for dividend stocks is still quite good. You have low interest rates with a gradual economic recovery. Also, the weather has some impact.

Markets. We are seeing a rotation out of stocks that have been working into different areas now where investors are saying, okay this is the next leg. Last year markets were very strong. Looking underneath that, some sectors did very well and others did not, mostly mining. Has been a little bit of change in the last few weeks, with a tendency to take profits from a sector that did well to a sector that did not, and that is what we are seeing right now. Thinks it is going to be a pretty positive year overall. The risk would be if the momentum in the global economy does not continue however, he feels a lot of this is due to the harsh weather we have had in North America. Thinks this year is going to turn out to be a reasonable return year of 8%-10% but sector returns will be much more closely aligned.

Canadian $? Whether the dollar is going up or down is a question that every Canadian would like to know, especially if planning a March break getaway. Cdn$ has had a pretty good run over the last few years and we went to parity with the US$. This created a lot of problems for Canadian manufacturers. However, we have benefited from the whole global commodity boom with exports to China. This is not the case today which has created some weakness. Doesn’t see a lot more downside. Over the median side he can see a range of $0.85-$0.90 because our economy is basically linked to the US economy, and to a lesser point China.