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

Markets. US shows the most promising opportunity in growth, particularly in the more cyclical side of the business. There are opportunities in companies that are tied to logistics as well as infrastructure and the consumer side. There is the overhang of gridlock in the US in the horizon but part of that is mitigated in the way you invest. He invests in larger cap lower beta names that can offset a little of that risk. Canada is a little bit more handcuffed based on what the US does. Our interest rates are going to have to remain low for companies to remain competitive. There are some pockets of opportunities, particularly in the infrastructure space. There are parts of the Canadian economy within the consumer space, as well as in the financials that are very promising and tend to lead the charts.

Do you see Canadian banks splitting soon? They are definitely approaching the levels where they normally do a split. Historically those splits have happened at around $100. It is possible but thinks they will probably still wait for that slow and steady, continuous growth.

Twitter IPO? On companies like LinkedIn, Facebook and Twitter, the consumer behaviour has changed and this social media is an important part of peoples’ daily lives. It is going to have some level of resilience whether you participate in an IPO or some months down the road after its had a little bit of a cool off. The issue is, how do you monetize. There is such wide disparity in assessing what earnings look like, which creates an opportunity for an investor. Most of time when you see an IPO, you see a lot of excitement but it doesn’t necessarily mean that the company is going to have a great showing every single day. You might be better waiting a year before participating.

Markets. Everybody is aware that China and Europe are stabilizing and seasonally the 4^th quarter is good, so everyone thinks the place to be is in stocks. He is the same, at least for the next couple of months. The market can be overvalued for a long period of time. The US seems to be scurrying from one self induced crisis to another. Now there is going to be a little break in the action before they start rumbling again in the early part of January. Load up the truck! The S&P 500 has hit 33 record highs this year. The last time there was that many was in 1995, with 77. The S&P 500 went on for another 4 years. You have to look at the upcoming trend in the market where interest rates may start to rise a little bit. Look at what sectors will do well in that environment.

Markets. The markets are melting up. Oct 9^th was the low. Shrugged off any bad news. Earnings are positive but companies are not beating to the upside. Cash on the sidelines that was waiting for a pullback is now coming into the market. Equities are outperforming fixed income. The whole rise in markets has been driven by multiples expansion rather than in earnings. Profit growth in companies is important and is the long term driver.

Markets. We need late cyclical plays. Rather than trying to time the market, the best thing to do is to enjoy the current bull and play the rotations. The order of rotation is with the front end being financials, maybe telecoms next and maybe utilities at the end will. Middle of the market is consumers, maybe some industrials. The back end would be materials and energy. Financials are still leading, and they lead every bull market. With the financials making 52-week highs, we want to enjoy them, but not necessarily chase them. Until the financials roll over, he is really not worried about the market. If there is a correction, you just live through it. There is actually no real solid definition of what a bull or bear market is. He feels that to be a bull market you need to see a new high at least every 6 months and to be a bear market, you need to see a new low every 6 months.

Markets. Earnings. Things are improving in Europe, but domestically consumers are soft. What concerns him most is top line growth. If they can cut costs and still deliver on the earnings front he is happy, but for the others he is concerned. Next year the S&P will trade up to 1830. As long as Fed does not back off too much on tapering, they can do well. Repurchasing is seen as positive and is picking up. If companies have nothing better to do with their cash then you have to wonder if the economy is not on the slower side.

REITs Rebound Sustainable? BOC last week said they were not expecting to raise interest rates until at least sometime in 2015 and so the bond market is reversing the trend. In the US tapering will resume once the debt is under control at the end of January, although he expects the can to be kicked down the road into 2015. The Fed will own 50-60 percent of all long bonds by then. He sold his position back late last week.

3:1 ETFs. If they are going up they rebalance to your advantage, but if not then they don’t. Fine for short term trading strategies. Don’t average down. That behavior means you should run from these as they are toxic for you.

Banks. Have had phenomenal runs. The most overbought he has been in years. Should be taking money off the table but he has been saying that as they charge higher.

Markets. Growth is being able to grow faster than the industry and faster than the economy. Focus on revenue growth as they are bringing something new to the economy and then for the ability to do that profitably, with better margins than competitors. In emerging markets we may find lots of revenue growth but it is a different benchmark than the US companies. Canada has the potential to grow faster than the US. It has to be driven by golds and commodities and it is interesting to see if we get that super cycle.

Economy. Does not expect the US government will proceed with tapering. There may be some evidence of weakness of US numbers in the last few months and the feds credibility was severely damaged. If they weren’t going to do. Tapering, why did they freak out the market and push up long-term bond rates by 1%. It may well be that we are seeing the feds starting to lose, at least, in the long end of the bond market. People are now going to look at anything they say with a very large grain of salt. Tapering could very well be delayed until this time next year. The Fed essentially goes on hold usually after August or September when there is an election year. The new Fed chairperson has about 6 months. Margin debts are back to record highs. This is all looking dangerously close to at least an interim peak for the S&P 500.

Markets. Looking dangerously close to an intern peak for the S&P 500. TSX is way better because we have been the big laggards. Emerging markets are down over the last year and we are up only 7%-8%, and every thing else is up 20%-25%. $85 billion worth of bonds and mortgage-backed bonds are being purchased by the Fed every month. Bank of England, European Central Bank and the Japanese central bank are all purchasing bonds. That money is going to the stock market, but is also starting to feed back into commodities. Chinese leadership is now starting to loosen up again. He would say the emerging markets 1^st and Canada. 2^nd as a play on that.

Twitter IPO? As a retail investor, you won’t be able to get in right at the beginning. That doesn’t mean necessarily that it is a bad thing to buy right after it pops, especially if it is reasonably valued which he understands this one to be. With something as hot and high profile as this, the pop will probably be fairly large. He wouldn’t be chasing this one personally.

Markets. US is officially in bull market territory. There was a threat of war, a complete shutdown of the government and came very close to having a debt default. Meanwhile, the market just chugs along. There are a few reasons why we might get a better market. Low interest rates, good earnings, confidence and too much cash. We have all 4 of those items in place right now. Stocks are better than cash and better than bonds. If the economy does gain any more traction, you could actually see a multiple increase and that is what a bull market does. Cdn market has been killed by the gold sector. Fourth quarter is typically good for the gold sector but is kind of slow in starting this time around. In energy, oil has kind of rolled over a little bit. Cdn market has to play in a lot of catch-up with everything other than resources. Feels Cdn market will do okay but will be better in the US.