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

Markets. You have to be careful when the market has been up 80% of the last number of days. There is no weakness to buy on. You have to chase the market higher. He has not been selling either. It is harder and harder to know what the risk is. A lot of Canada is determined by global growth. He is not seeing a lot of growth in the short term. He finds good things to buy in Canada. There is even some things to buy today. We may not get a correction for 4 or 5 months.

Banks. Looks at tech analysis but it is not a key platform. Based on fundamentals. Does not own any Canadian banks. US regional banks have more leverage to US economy improving. He believes Canadian housing has peaked. Prefers West coast US Banks. He is buying some today.

Markets. 23% of junior mining companies on the TSX would run out of cash in 3 months or less. Private equity is starting to move into this however. Private equity has a 5 year time horizon. It is an interesting development. It is interesting that so many are looking at the resource space.

23% of mining companies on venture exchange of 3 months or less of cash. There are 8-9 hundred companies in platinum, silver and gold on TSX Venture. Not all of those companies all scrambling for the same investor dollar are going to make it. With juniors you have financing risk, commodity risk, and management risk. Thinks in the next few years 50% of them will be gone.

Markets. Thinks the timing and sentiment is starting to change. Some major pipeline projects will tend to alleviate some of the bottlenecks. If/when keystone happens it will be a big positive. Keystone should get resolved in late August. Has heard rumours that it could leak over into 2014, though. Differentials in oil prices have narrowed quite nicely. It is now about $8 and he thinks it will narrow to $5 by year-end.

Gas inventories are tracking a little below their 5-year levels and that has been quite positive. We need an exceptionally hot summer from here. We are seeing some switching back from Nat Gas back into coal. The magnitude is not immaterial in the grand scheme of things. His fund is 2/3rds focused on dividend paying stocks and the rest is small cap (with significant cash flow growth) companies that should eventually get taken over by dividend payers.

Markets. Fundamentals in the oil sector are quite negative. New oil production growth in North America is more than global demand growth. Thinks normal seasonal patterns will occur this year. We are now seeing gas inventories build and if they get more than historical then prices could drop $1 for Nat Gas. You may want to take profits in Nat Gas if you are overweight and wait for a buying opportunity.

Money has moved out of the Bond market, and into large cap defensive equities. They are defensive in terms of the volatility of their cash flow, but there comes a time when they are less defensive. He thinks that there are specific stocks that are worth adding to a portfolio. Something that has a strong balance sheet that can survive a slow growth market, but still able to grow if the market improves.

Doesn't see a correction in the near future, and if we do pull back, that represents a buying opportunity

Rally in the US, Europe, Japan, practically everywhere but Canada, which shows you have to diversify outside of Canada. For 10 years, Canada was the place to invest, but that's not the case anymore, you have to look outside. Almost all the new money they are investing is outside Canada.

Sees the US economy stronger then expected. Europe is in recession but expects that to end by the end of the year.

We are long overdue for a correction, which he would like because it takes the froth out.

Canadian market is 75% to 80% resources, materials and financials. Resources are depressed now. Financials which were really strong, are no longer bargains. US banks are where the growth will occur.

His investment style is value driven, staying away from the index. So very low banking and resource exposure. Tends to invest in sectors that are underrepresented in the index. Won't be talking about banking and resources because, resources are very volatile, and there are better opportunities then banks for dividend yields. The world stock market is anticipating too optimistic an economic scenario. China is devaluing their currency, US is pumping money into the economy and it's barely growing. Try to avoid companies that depend too much on export market. Tend to stick to domestic companies that rely on the Canadian economy. The European and German money is starting to come to Canada these days.

20 something odd dow records this year so far. A bit over blown, but it is sustainable. Employment is still getting better, commodity prices are falling. Still a fair amount of caution. People are buying defensively. Most of his growth portfolios are 45% in the US. Seeing value in the large cap growth names.

Canada is dominated by energies and financials and also the gold sector. He feels that financials have relativily weak earnings going forward. Energies depend on the keystone pipeline being built. Gold has been under a huge strain, gold has been "more or less washed out".

In the US the market is doing very well, up 15% year to date. Will likely continue to do ok.

Large cap investers in Canada need to think long term, 3 to 5 years. Find companies that trade below average multiple of earnings relative to their long term averages. Look for earnings growth and dividend growth in their forecast for the company. If all three things are good then they will take a position.

You don't want to concentrate in any one sector, you should have 6 or 7 sectors to be diversified.

Feels that the market is picking up due to the alternative to buying stocks is so poor. Corporate profits appear to be growing. He looks at longer terms, like 10 years. Never understood why gold was so popular, it was at $800 before the crisis so maybe it should be back at $800 now.. North America may become self sufficient in oil which will change things as well.

GOLD: Gold has had a wild ride. This is due to three reasons: 1) Central bank sales and the potential bank sales out of Cyprus. 2) ETF sales, retail investors dumping ETFs for equities. 3) downgrade of central prominant investment banks.(ie. Goldman Sachs)

Bullion seems to have found a new floor. There has been a huge supply shock coming into the market. He is surprised that it has done as well as it has. There are buyers coming from the Asian markets.

Prospects for Canadian Companies: Used to be that a lot of investors particulary international investors were staying away from Canadian energy stocks and in the last few weeks she is seeing some of the investors coming back. Stimulus from central banks around the world are helping oil prices and oil companies in Canada.

Natural Gas: This is a shoulder season for natural gas, she doesn't foresee a lot of gas coming out of storage in the next few weeks. We will just have to keep our eye on gas prices.