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

Uranium. Feels there is quite a bit of interest returning to the uranium sector. He is not there yet but is looking. If you own, continue to hold.

Markets. We are at the tail end of the reporting season and, thus far, he thinks people are somewhat disappointed in the returns that have been coming in. ROE’s have not been quite as buoyant as had been hoped. This is a reflection of the underlying economy.

Banks. Hoping to see some modest improvements such as 3%-4%. As well, hopefully a couple of dividend increases. Probably from Toronto Dominion (TD-T) and CIBC (CM-T). Financial services in Canada is a pretty crowded play. We are back up to almost 2X book on financial services stocks now. People have overplayed the dividend. Dividends are a good place to be but isn’t expecting to see a whole lot of appreciation for the time being with the economy struggling.

Energy. Longer-term, this is the place to be. Have pulled back a little bit from the multiples we have seen before. Things in the oil patch have been a bit slower as weather conditions have hampered them to some degree. However, you have to take a 2, 3, 4 year time horizon when investing in energy because no one can tell you what the commodities are going to do short-term.

Gold. Has some moderate exposure. Views it as somewhat of a hedge against possible inflation or currency fluctuations that are taking place. Gold is always a tough one for a value investor because of the multiples those stocks tend to sell at but it is prudent to have 5% of your portfolio exposed there.

Base metals. Has been quite a setback in base metals and he is currently scouring looking for where he would like to position himself. Has a small exposure at the moment but would like to broaden it out.

Bank reset preferreds that reset in 2014 are generally renewing around 440 bps over the BOC rate. Preferreds that renewal in 2013 and 2015 renewal of much lower rates. Why? Bank bonds were at a very wide yield spread in 2014. These will reset in 2014, however, the banks have a call on them that will come into effect before that.

Markets: Thinks they are going to institute QE3. Would be surprised if they don’t. Heard number as high as 90% probability. Thinks it has been shown that QE1, 2 and operation twist didn’t issue returns. It will help the market but not the economy. There were some really good data that came out prior to their last minutes and then after. Housing data looks good. You should look at the defensive stocks; the high income stocks with great yields. People are buying income opportunities. If you saw better economic data you would see the income stocks not do as well or maybe even go down. You might want to start getting into the higher beta stocks now.

Drillers: have suffered with the downturn in energy. They have not done well. Some had weather problems; US situation is not as good as in Canada. You have to be sure of which company you are buying. They are generally looking good in this environment. Trican and Calfrack look good.

Market. Not sure there is much ride left in the TSX. If you do a nice zone analysis, we are at the top. Whether we go back down to the bottom and then back up to touch again and keep going depends a lot on what happens in Europe. Next week should be quiet and then after that all bets are off. There are a lot of headwinds. Before doing too much investing, he would wait to see what happens in Europe. In this kind of environment you still stay with good dividend payers such as B.C.E., telcos and pipelines.

Oil/gas service companies. A number of companies have cut back on their CapX. Also Cdn$ has gone back up, which has cost. Gas situation has improved but not enough to really encourage the drilling.

Sprott Gold Bullion Fund (Series F- SPR226). He sees bullion taking another good run here.

Markets: After a bit of a quiet period, the markets are beginning to rally. The policy tools will come back into the forefront and QE3 may occur, but they are hesitant to enact it. The impact is reducing as time goes on. There is lots of runway in dividend paying stocks. Especially if they are growth, dividend-paying stocks. In the REIT space there is a difference in the space and you are seeing some dividend increases. Overall, they have been pretty dramatic out-performers but fundamentals remain strong. He has been trimming some profits as they continue to run and out perform in general.

Banks as a fixed investment alternative: Thinks there is good value in them today. Europe concerns are well known and discounted. They are not a direct substitute for fixed income investment. Should outperform fixed income short term. TD and BNS are his preferences if you don’t use an ETF.

Markets. It looks like QE 3 is on the closer side of happening in September. Rates are going to stay incredibly low for at least another year to year and a half. That is really not going to move the needle. Creating new liquidity is not going to create more employment in the US. Banks have plenty of capital and it is up to them to push it out. The summer rally has taken a breather. This is also an election year and usually the market rallies into it. US company earnings have come through incredibly well.