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

Doesn’t think any government will confiscate anyone’s gold. For trading purposes, liquidity of ETFs is fine.

Education Segment. He is looking at the spread between WTI and Western Canadian Oil. On his blog is a link for tracking this. CLO-T is an ETF, the oil sands ETF. Showed a chart of this against spread and it is inverse. The sector is not responding yet. A bottom is starting to come in. 3-5 years the sector is fairly cheap right here but there will be volatility here right now.

Markets. Firm believer gold will go a lot higher than where it is today. We may be setting up for a bottom. We tested the current level a couple of times. We could be higher by the end of the year. 66% of silver is industrial demand. Supply / demand is very tight.

Markets. US market has risen to a point where, historically, there has been a lot of resistance to going any higher. The leading sub index, transportation, has hit a valuation level that it hasn’t reached in 40 years and, when it got there, it just seemed to start to come back. Doesn’t know if it can go any further at this juncture or not. 60% of the stocks that he is following have earnings forecasts downtrends. At the same time, there are some questions about what is happening in China which worries people in the global trade implications. In Canada, we have the issue that if China slows down and the US is just dabbling along, what happens to our resources. In the last month or so, he has been taking money off the table.

Markets. Seeing good signs on the economy in the US. Europe is showing signs of bottoming. Things are definitely improving in Japan. China doesn’t have as fast growth as they’ve had in the past but still growing, 6% to 8% instead of 8% to 10%. This is definitely a great time to be investing globally, outside of Canada, which is going to be faced with a slowdown because of what is happening in China. Resources are going to grow slower. Also, housing growth in Canada is moderating whereas in the US there is acceleration in housing.

Markets. Markets. Right now we are seeing a shift of money out of the Canadian market and into the US market. This will change in time. Feels the US market is being very influenced by the QE3. Until that ends, maybe they’ll continue to outperform. The fundamentals in Canada are fine.

As a very conservative “buy and hold” investor, is it time to start adding to my REITs? Thinks REITs are at the end of a long cycle. They did get overpriced in this particular cycle. You can still hold onto them on a long-term basis but don’t expect the kind of capital appreciation we have had. He also does not expect to see any additional payouts.

Markets. Be cautious during the summer. It seems the economic data is one step forwards and 3 steps back. We need to see more solicitation on things like Chinese growth. There is no rush to get in. There is a lot of value in the opportunities. Be opportunistic but don’t be fully positioned for the seasonal play. Wait until the kids go back to school. Differentials in oil prices have contracted and there is a risk that they will blow out. That is an opportunity. Pipelines under construction, aside from XL will protect the differential from blowing out.

Economics. Looking at the S&P versus the yen, there is a perfect correlation to the weakening yen. Sort of started last year and in November it really blew outwards. Today, the yen continued to selloff but the market did a little spike up. This indicates the market is being wagged by the weakening yen against the S&P.

Is it better to use charts that are adjusted for stock splits/dividends or charts that are only adjusted for stock splits, when doing technical analysis? Dividends are already factored into the price movements. However, splits should be adjusted because otherwise you get a very distorted chart.

10-year Government Canada Bond. In 2010 and 2011, economists and much of the mainstream media were saying that rates have to rise but it didn’t happen. This market is where it is because of all the money that has been pushed at it. Risk/reward is really good from here. This could just be a short term play that carries you over into October.

Energy. Feels energy has turned the corner but candidly it is still the same old, same old. There were some big changes in Cdn. domestic oil and natural gas prices but it doesn’t appear to have shown up in the stock market yet. Thinks the winds of change are shifting in favour of the sector. US institutional community essentially abandoned Cdn. energy, which is part of the reason stocks have been so horribly underperforming. Feels Bay Street will react when they see some buying volume coming out of the US. Seems the Keystone issue has the whole market on hold. On 1^st quarter numbers, oil prices don’t look that great relative to where they are today. 2^nd quarter numbers might actually look pretty good on a relative basis. Doesn’t expect to see too much of a change in WTI pricing but thinks the spread between WTI and Cdn. prices will narrow and expects the spread between Cdn, light and heavy oil will continue to narrow. Also, positive on natural gas prices.

Markets. Expects to see this bull market continue for a couple more years. Bull markets tend to follow themselves in serial form for many, many years. Believes the turning point was in March 2009 where sentiment indicators, return indicators, etc. all pointed to all-time record lows in equities. They were hated and had 10-15 years of underperformance. Bonds have not felt the pain yet but they will. There will really be only one place to go and that is into equities. He believes the US is going to lead the rest of the world out of a very negative growth cycle. He likes US financials, technology and industrials.

US banks? He likes US banks. They are still in the midst of recovering their multiples and, on average, still trade at a 30%-40% discount to Canadian banks.

Markets. Expects stocks to be sharply higher over the next 2-3 years. He is bullish on the global economy. Feels that economies are like giant ships, they have momentum in one direction. Feels 2009 was the bottom and we are slowly moving out. Seeing some rotation into more cyclical stocks. Once there is more of a belief that we are getting a more global recovery, money will shift to companies that are still trading at discounts and that are more tied to global economic growth.