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Behind the scenes, rivals are racing to trim thousandths of seconds from routes to Moscow, Hong Kong and Tokyo, while also scrambling to find new technologies, including the use of drones as platforms for wireless links. The race to transmit at nearly the speed of light comes as regulators in Europe and the United States debate cracking down on a sector accused of increasing market volatility and multiplying the risk of a market meltdown.Brian Jackson

Craig Fehr, investment strategist at Edward Jones, stopped by the Globe and Mail on Wednesday for an in-depth look at markets – and the opportunities ahead. He warns of a pickup in volatility, likely driven by the Federal Reserve's attempt to move the economy off stimulus and on to more sustainable drivers, but believes investors can navigate the transition. He prefers life insurers over Canadian Banks – but read on to find out what he means by "resource-lite" ideas.

First, let's look back at the year that was. Were there things that surprised you about 2013?
I would say that the strength of the market was surprising. We know that a lot of the gains we saw are not necessarily a reflection of the year, though. It was the best market performance since 1997. Well, in 1997 the North American economy was growing at almost 5 per cent; today, we're growing at roughly 2 per cent.

But it's really about that expectation moving forward. I think we're likely to get a little better growth in Canada and more so in the U.S. But it's not just a North American story: 2013 was as much about the international landscape. Japan is attempting to orchestrate a revival after decades of being stuck in an economic malaise.

Are you concerned that expectations may be too high now?
The market is pricing in ongoing improvement and very high expectations against an economy that is unlikely to deliver against those expectations immediately. Now this is where you get some bifurcation between Canada and the United States. Expectations aren't necessarily too high in Canada, because Canadian investors are still feeling like the early half of 2013 was the market environment, not the latter half [when stocks performed well]. Conversely, when you get a 26 per cent gain in the S&P 500, I think the most likely path from there is one of more tepid gains.

The Fed was an important part of the market story in 2013, but is likely to take more of a supporting role rather than lead actor in 2014. I think that changes the dynamic in terms of what investors should expect. Incredibly strong stock market gains against multi-year lows in volatility is a nice environment to invest in, but not one that will persist forever.

By volatility, do you mean we could be due for a correction – something we haven't seen in more than two years?
Volatility, by definition, swings both ways. It's not just downturns, but upturns as well. I think the swings up and down will be higher, but I also think we're likely to see more market pullbacks. I don't think anyone would have a hard time dealing with a pullback of 3 to 5 per cent. It's the pullbacks of more than 10 per cent that are going to challenge investors' resolve – even though it is normal to see them once per year. So even just to return to normal volatility will seem like a monumental shift to some investors.

Do you have a sense of what could trigger a correction?
I think the most clear and present risks are the Fed, and just how smooth they can transition the market from their medicine and on to more sustainable drivers of economic growth. I think that is likely to be a challenging endeavour for them. But even that should be a relatively mild and short-lived pullback if the economy is improving.

You see a softening Canadian housing market affecting discretionary consumer spending in 2013. Should investors favour U.S. opportunities over Canadian banks then?
I think the better growth and value opportunities are in U.S. banks. Canadian banks continue to provide a good, long-term option for investors, thanks to the combination of attractive and safe dividends, in addition to what will continue to be reasonable earnings growth. But that's countered today by the fact that valuations are a bit full – what you have to pay for that dividend and what you have to pay for those earnings is certainly higher than U.S. banks.

I would say there are better opportunities within Canadian financial services, such as life insurers. They are positioned well. They are incredibly sensitive to rising interest rates – in that they'll benefit. An environment where they can generate higher returns from their bond investments will be incredibly positive. We've already seen that play out a little bit, but I don't think the story is exhausted.

Where else do you see opportunities in 2014?
We are likely to see better global trade. I think we are likely to see much better demand for resources, which will provide some support for commodity prices. We like the "resource-lite" play of industrials: You get the sensitivity to the global economy without as much sensitivity to the fluctuations in commodity prices. So, consider the equipment suppliers – companies like Toromont Industries and Finning International.

I think you can also look at areas tied to aerospace. Be more agnostic to the final product and more sensitive to the broader trends: Companies like Parker-Hannafin, which manufactures parts for airplanes; or CAE, which is the global leader in flight simulators. It's a niche type of space, but it speaks to the broader trend that we're seeing – an improving economy and all the things that come with that.