Monday, October 26, 2009

Money Show 2009 5

On Friday, I said I would talk about the 2nd panel I went to at the Money Show. This panel was on how to invest for safety and growth. This panel was composed of Roger Conrad, Aaron Dunn, Benj Gallander and John Stephenson. Roger Conrad was the moderator and also a panelist. He was the one asking the questions for the panelist to answer. He wanted to know what stocks they recommended, where they saw the market going and what stocks they did not like. Roger Conrad is the editor of Utility Forecaster and the Canadian Edge, two US publications. Aaron Dunn is the Senior Equity Analyst for Keystone Publishing Corp, a publisher of Canadian investment newsletters. Benj Gallander is President of Contra the Heard Investment newsletter. John Stephenson is Senior Vice President and Portfolio Manager with First Asset Investment Management Inc. He has recently published a book called “Shell Shocked – How to Invest after the Collapse.

John Stephenson was first to answer the questions. The stock John liked best was Enbridge (TSX-ENB). He said Trans Canada Corp (TSX-TRP) was ok and said he also liked Suncor Energy (TSX-SU) and Canadian Natural Resources (TSX-CNQ), but that the last too were riskier. John expects the US market to go sideways for a while with a lot of consumers sitting on the sidelines. Apparently, in the US, until recently the financial services sector represented 40% of the GDP. This sector was hit by the current recession and will be a problem for sometime to come. He expects the Canadian market to be more volatile, but to go higher. When asked what he recommends people not to buy, he said US Financials. He also said we should be very selective with Income Trust stocks. He said that the high yields are a warning. We should stay away from small business income trusts and power trusts and REITS.

The next panelist to answer questions was Aaron Dunn. He said that his company likes to focus on small cap stock with real business. They are not bullish at this time, and they feel you must currently stick with quality. He recommended K-Bro Linen Income Fund (TSX-KBL.UN), which he said was the largest independent linen service company. Aaron was not optimistic about the market. He said that the US has over consumed for years and years and now must under consume for years and years to get back to a health balance sheet. He is a bit bearish. He said to be selective in stock purchases and to expect another correction. Aaron does not like retail stock, index stock, junior mining and high tech stocks. He also said we should stay away from any company that will depend on the equity market for capital.

The last panelist to speak was Benj Gallander. He recommended Bell Canada (which I assume he meant BCE; TSX-BCE) and Consumers Waterheater Fund (TSX-CWI.UN). He considers Consumers more risky as they just cut their dividend. He said that analysts often like stocks that have gone up in value, but he considers this risky. Benj said that he has no idea on where the market is going. Government spending to stimulate the economy was good. However, the Ontario and our Federal governments are going to have big deficits and this will have to be fixed. He said the US government has thrown all sorts of money all over the place. Their high deficit and debt cannot continue. He expects much volatility in the US market. Benj does not like guaranteed mutual funds and bond funds. Interest rates are going to go up and bond funds always do poorly when interest rates rise.

Roger Conrad recommended Ag Growth International (TSX-AFN), Arc Energy (TSX-AET.UN) and Pembina Pipeline (PIF.UN). He said that the dividends paid by Arc Energy would be determined by the price of oil and gas, not the change to the company’s structure. (Also, note that he was one of many who recommended Pembina Pipeline. This Pipeline has promised not to keep their dividend the same for the next 5 years.) Roger feels that the US unemployment picture will remain bad. He said that in the US Corporation debt, even for utilities, was, not long ago, 600 basis points over government debt. This has now come down to 200 basis points over government debt. This is a positive sign. However, he feels that US citizens are still very worried. Rogers feels that we should be carefully looking at company earnings and ensure our companies have enough to cover dividends and debt servicing. He also said to stay away from long term bonds. He thinks that the US government is motivated to understate inflation. He also feels that the US will use inflation to buy off it debts. This is what it did for debts of WWII and the Vietnam War.

Tomorrow I will go back to looking at stock.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets.

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