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

Thinks we are getting to the end of the Greece story. It’s a slow process when they all have to agree in the EU. The market hates uncertainty. One layer of uncertainty peeled off the onion. He is cautiously optimistic that we will miss a double dip recession. Everyone in OPEC Everyone goes full guns except for Saudi Arabia. It took about 6 months when they put extra oil on the market for it to get refined and hit inventories. He sees Oil at $80. The wild card is Libya. If it comes on by end of December we test $70-$75 oil. It would be the best buying opportunity since 2008. China’s demand is changing energy generation from oil to Coal and then to Natural gas and nuclear. The oil will go for auto fuel. If you can stomach the market for 3-5 years there will be LNG exported to China in larger quantities.

Natural Gas: $4 is the place where a lot of companies can’t make money. Certain gas plays are profitable at that rate. Liquid rich gas producers get revenue from the condensates. Dry gas producers cannot make money at $4. $6-$7 is what you need to pay for the costs for all stake holders in a gas company. Bullish on Natural Gas. It will move up $2 in 18 months.

Are Canadian banks good value at these levels? He is a bargain hunter and doesn't think the banks are particularly cheap. Trading anywhere from 1.5-2 times BV. Sees better things in the market place.

Due to technical difficulties I am unable to record Market Call Tonight but do have the Top Picks. The program remarks will be available, but not until tomorrow. My apologies. ---Bill

Can indices go into a bear taking down overall key ratio without the economy being in an a technical recession? Yes. We’ve had the markets go down from 28X PE to 13X PE for the last decade in the developed markets. A recession would contribute to the PE ratio going down further.

S&P 500 dividend yields have recently moved above the 10-year bond yields. Very significant and is telling you that if you can stand the volatility, you have to at least consider equities as being overly cheap. If you extend back and look at where earnings yield is, it hasn't been this high in 20-30 years. When you are buying companies, you are buying their earnings power. You should consider large-cap dividend stocks, those with reasonable balance sheets.

Market - Expecting volatility will continue for a long time. This can give you opportunities as well as problems. There is a shortage of quality income. The only way you can get a growing investment income is through companies with dividend growth.

Payout ratios of banks. At what percent is a red flag go up? Banks currently devote 40%-45% and he would not disagree with this. Looks at what internal capital requirements are and what do they have to spend to sustain the business. What internal growth potential is there and how much is it going to cost to access that and will internal growth give a higher return on equity.

Markets - Range bound and investors are going to have to make decisions on what they want. Be prepared that if the market is up 200 points, it may not be there tomorrow. In a trendless market, dividends will play an important role. When the markets get to their upper range of about 1400, start reducing and raising cash in your portfolio. When it gets down to around 1000-1100 start adding, but always focus on dividend payers.

Gold - With the move by the Swiss franc today, European investors were probably pulling their deposits and going to gold as the Swiss franc is no longer an option for them. This will probably be more positive for gold going forward.

Markets – With monetary issues in Europe, liquidity in the global markets could easily become a crisis. He is Short a lot of the European banks.

TSX: Broke trend line, triangle formation, and it made a breakout. But it is in a downtrend. There is a lot more problems on the downside.

Gold: His target is past $2000 with point and figure chart. To see a double top you would need to have volume and momentum confirmation. Pay attention to trend lines and moving averages. We are very clearly in an up trend and yes, it could pull back. Don’t get out of gold stocks too soon.

Market: European news, unemployment caused another day of sell-off. We could have a rally and he will use that to generate cash. September is the worst month of the year with the end of the sell-off in October. WE have sold off quite extensively, so a bit of a rally wouldn’t surprise him. Use it to get rid of weaker stocks. The bottom is not in. For TSX it is about 11,000. We have not been in a bear market long enough to wash everything out.

Economy. US won't see the job growth that was there many years ago. When there are such heavy government debt levels around the world, there won't be economic growth that people are expecting. Feels the US is too focused on job growth rather than the restructuring of the economy. This applies to many countries. They lack the political will.