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

Markets. Optimistic. It will be a solid year for equities. US economy is recovering. China is bottoming and coming out. Europe is a train wreck. The two biggest economies in the world are going to show decent growth. We may not be a leading indicator in Canada. He was in Switzerland recently and had to say that that part of Europe seemed to be fine. In Canada, he likes the consumer sector, and energy.

How do year end capital gain distributions on ETF products impact both registered and unregistered accounts? Do mutual funds treat this process the same? Both mutual funds and ETF’s are treated the same way. It is not surprising to see 10 times as much trading activity in the mutual fund as there is in an ETF. This does not affect registered accounts, but in a taxable account, that increased trading activity leads to increased capital gains and capital losses.

Pros and cons of index ETF’s versus those that are fundamentally based such as CUD-T? 6 of one and half a dozen of the other. Fundamental indexing is basically a screen where you have 4 equal weighted screens (25% each) that basically create a value tilt to your indexing and is not weighted like a traditional index is. If you like a value bias, then you should like the fundamental indexes more. If you want to track what you are reading in the paper, then you would want a cap weighted index.

What is the best product for investing in a Registered Disability Savings Accounts (RDSP)? Government puts in double what the payee puts in. If you are disabled, this is a good thing to use because of the matching money you get from the feds. If you are disabled and can afford it, he would strongly encourage you to do it.

Should a person be worried about having their portfolio spread between different ETF families? There is no reason to worry at all. They are companies that are very credible and long-term players. He would recommend you stay with the larger players.

ETFs that are hedged Cdn $’s. What happens to the value of the ETF if the Cdn$ goes down? If it is unhedged, you are doing even better because when the money is converted down to Cdn$’s, you are better off.

Are ETFs priced off market forces or underlying asset value? ETFs are priced off asset value. If stock prices are going up, then your ETFs value is going up.

Markets. He is constructive on the markets but in the near-term, it looks a little overbought. Fundamentals in the global economy have been improving. A lot of the "tail risks" have been removed. Buy on weakness.

Markets. Likes the fundamentals of the US economy, which are okay but not fantastic. Thinks there’s going to be a drag from some of the actions taken by the US federal government. US industrials, automotive and tech look pretty good. Doesn’t like Canadian financials or Canadian energy right now. Also, there are some elements of the energy infrastructure market that he likes a lot. (See Top Picks.)

Gold. With the Cyprus situation, would the Russian laundered money now be looking to switching into gold? They are stuck there now so they are going to have to pay their 10% levy regardless. What will they do with their money if they decide to take it out of Cyprus, no one knows. The Russian government, Chinese, Brazilian are buying gold. He does not own any gold stocks at this time. Believes the major governments globally will continue printing money, which, over the long-term will be very good for asset prices and gold will participate. 3, 4, 5 years from now gold will be worth more money than it is today so at some point you will want some in your portfolio.

Markets. Cyprus has sent a bit of a chill through the markets. Some of the proposals are frightening. Fortunately that was defeated but who is to say it won’t come back. It points to more unsettled conditions in Europe. It adds to the uncertainty, which markets generally don’t like. Thinks they will be very vulnerable to negative news coming out. Despite private economy in US forging ahead, issues out there will frighten markets. It may just represent a buying opportunity. More demand may come from China as inventories are worked down. He has not been that well positioned in the US and missed some of it. He had concerns about the valuation of the currency. Thinks we will see some more recovery in the US dollar. Hopefully, by the middle to the end of the year, we will have enough confidence in the recovery that we see futures pick up. To invest today you have to be looking to invest into the next cycle.

Markets. The news from the EU about Cyprus made him nauseous. If you are going to tax wealth, ok, but if you go into bank accounts and just take money from people’s accounts, that is just a major failure of a government. Perhaps a lot of the money is related to the Russian Mafia. He is not worried about it being a contagion. This is a reason for the markets to pause. Be cautious over the next couple of weeks. If the S&P pulls back to 1475, that is a healthy thing. A pullback makes sense.

Global Dividends. Dividends are generally higher globally than domestically but you don’t get the dividend tax credit. You have to put it in a registered account.

Educational Segment. Behavioral Finance. People make investment decisions emotionally rather than rationally and that can be problematic. How you think about pulling the trigger on buy and sell decisions has a lot to do with your outcome. Let’s say you buy a great stock you saw talked about on TV for $53 and a couple of weeks later a scathing report comes out by a bear guy and the stock is now trading at $40. Then a guy comes out on TV and says it's going to $15 but another says it will return to the 52 week highs. Do you double up? Do you put a stop loss in? Do you wait a week and call in to this show? Only the stop loss is a rational choice. You have to have a plan.

Markets. On March 6^th he talked about a head and shoulders pattern and predicted S&P would hit 1560 then last week it hit 1563. We are in an upward channel and the trend is upwardly positive, even with this Cyprus disruption. The trend finds support at 1520 and we could go there and still maintain the upward trend. He is bullish. The TSX broke out of a long term range from 11500 to 12500 and we are holding above that range. It is probably not your go-to play at this point as there are better opportunities out there. Everything cyclical is seasonal at this point – Avoid defensive. The risk on trading in the markets started last week.