Jane M. Smith

President & CEO

Beacon Securities Limited, Halifax NS

1) Is this a good time to invest?

Yes.  However, please let me qualify that answer.  If you need access to your money in the short term, up to approximately two years, you would be wise to stay with low risk investments and accept a modest interest rate (Example: GICs).  If your time horizon is longer, for example retirement in five years or more, moving out the risk curve to good quality dividend bearing stocks with a portion of your portfolio makes sense for many people.  With interest rates at historic lows the average investor, in order to reach investment goals, is being forced to either save more money or move out the risk curve.

2)  How do you think the market will perform in 2010?

If, of course, I knew that answer, life would be much simpler.  Because I don’t; here are my thoughts.  We came back from the edge of the abyss and the stock market rallied. The system was very close to broken.  We have had a very strong recovery from the bottom, arguably stronger than most had expected.  I think it is entirely possible that we will have a relatively sideways market that could experience continued volatility both up and down.  With a sideways market, not all stocks will perform well.  To this point stocks have performed well by trimming expenses, now they need to increase revenue to boost the top line.  Some companies will be better able to accomplish this than others.  Even small, incremental improvements to revenue could result in a positive earnings surprise.

3)  What will be the strongest /weakest sectors?

The strongest performance will come from the areas where there are positive earnings upward revisions.  Stocks should be overweight and bonds underweight.  In Canada, in terms of sectors, I would overweight energy, materials, financials, and technology, where earnings recovery should be substantial.  I would underweight the more defensive areas including, consumer staples, telecom and utilities.

4) What is the most important question I should ask before selecting an investment advisor?

By whom are you regulated and who is the custodian of my securities and money?  This may sound simple.  However the scandals of late are perpetrated in part because the “advisor” and firm have not been licensed, therefore not regulated, by anyone like the NS Securities Commission or Investment Industry Regulatory Organization of Canada (IIROC).  After these important questions, ask what the advisor’s approach is to investing, what products they have access to and make sure you share the same philosophy.  For example, Beacon is an independent, full service investment firm licensed by both NSSC and IIROC and our clients’ assets are held in custody by TD Waterhouse Institutional Services and MRS Security Services Inc.   I prefer a more consultative approach and offer a full range of investment products without any pressure from my firm to sell any particular products.  Clients need to take responsibility.  It is their money.

5) Where and how are you personally investing at the moment?

My investment account is primarily in dividend bearing stocks because I like to get paid dividends while I wait for markets to move higher.  To that I add managed money to get the diversification and the potential for performance.  If we have a sideways market, I want a portion of money that is actively managed.  In my RRSP, it is similar but with the addition of bonds, some direct holdings and some via mutual funds.  This works for me but may well not be suitable for others.

Jeff Burt, B. Comm., MBA(FS)

Vice President

BMO Nesbitt Burns

Newfoundland

1) Is this a good time to invest?

Assuming that the question is whether now is a good time to invest in stocks, our answer is yes. North American stock markets are consolidating at the present time, but we believe that once the consolidation is complete stocks will continue to move higher.

2) How do you think the market will perform in 2010?

In broad terms, we expect that 2010 will look much like 2009 – equities performing well, and government bonds performing poorly. BMO Capital Markets Equity Strategist Ben Joyce has set a 12-month target of 12,250 for the S&P/TSX Composite Index and 1,150 for the S&P 500.