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

Construction of corporate strip bond portfolio and how far out should the term be? Effectively this is a leveraged bond. If looking at a long-term, such as 30 years, it really trades at about 120%-130% of your actual bond. If you think interest rates are going down, you should buy them otherwise, sell them.

Canadian bank preferreds? Essentially an equity investment that pays a fixed coupon. Some coupons are perpetual, which don't have the maturity date and will behave just like a bond, i.e., will go down in the lower interest rate environment.

24-year Gov. of Ontario bonds at 4.6%? No danger of bankruptcy so will probably pay all your coupons and your principal back at maturity. 4.6% has to be within 50-75 basis points of the lowest yield you could ever receive. Over the next 5-10 years, it will yield around 7%-7.5% but you would see a capital depreciation of about 35%. He always tries to avoid capital loss.

Floating-rate bonds? Securities where interest rates changes every 3 months. The problem with them is that they are extremely illiquid. Also they look more like bank loans in terms of how they are structured and tend to have bank loan spreads. You could take the same risk and invest in a fixed rate product and get a better all round risk return.

Buy Videotron 6.78%, 2021 and Short GOC 3.25%, 2021. Videotron has all the fundamentals of an investment grade company and yet still are high yield. They're on the move and doing good things and spread is almost double what the other cable companies are offering.

(A Top Pick April 12/11. Up 0.6%.) Buy Cdn$ and Sell US$. Buying Cdn$ at around $1.01 or $102.5 and selling it at $1.05 is a good, low risk way to earn some income. 0% interest rate policy in the US is to 1) inflate asset prices and 2) devalue the US$.

(A Top Pick Apr 12/11. Down 4.3%.) Short 10-Year GOC bonds. Still likes this strategy.

Markets. Expecting a strong rally in the 2nd half of the year. Feels the global economic recovery is still intact and there is a lot of negative news packed into the market. He has a lot of stocks in his coverage lists that that are trading at very reasonable multiples for 2011-2012. Once all the issues relating to the different European problems blow over, people will realize that there are great values available.

Value investing. Entails a lot of things, discipline, patience and focus. Right now, there is incredible volatility and a lot of irrationality and emotion in the marketplace. The least path of resistance is to Sell. He looks at discount to book value and tangible book as well as P/E and cash flow multiples. Also look for hidden assets. Goodwill is worth zero.

Markets. Expects a slow summer with acceleration in the 2nd half. Something like last year. Inventory numbers indicate that Q2 grew about 3% in the US, which is good, but it is slow growth. The only way to make money is to be active in the market.

Markets. He was looking for a bit of a pullback in the 2nd quarter, which he got along with bad weather and Japan's earthquake. Some of those things will impact the economy for the balance of the year, but the market discounted them almost immediately. Still looking at technology and Canadian financial services companies. They both suffered badly in the 2nd quarter.

Mutual funds. Only 2.5% of Canadian mutual funds outperformed the S&P/TSX compensate. Only 11.6% of international funds and 14.1% of US equity funds outpaced their indices. Approximately 1/3 of all funds in existence at the beginning of 2006 performed so badly that they where closed down by the end of 2010. If you can't beat them, why not just buy the benchmark? And

TFSAs. With the first $5000, would be better to put money in 1 or 2 high dividend stocks or into a dividend paying ETF? Wants to channel dividend payout into a DRIP in a TFSA. The idea is good but there are a couple of other things you could do. Look for small or value companies that generally outperform the benchmark.

Economics. Waiting for the next downturn in order to be able to scoop up more bargains. Earnings season is coming shortly and he expects more good results will be reported. Sees the whole year as being very strong. If we can get through the debt ceiling, Greece, Portugal and the current slowdown, we are off to the races in terms of corporate profits.

Markets. To deploy money today, you would probably have to be more defensive. Markets peaked in April and May but are down. Canadian resources are down and we are in seasonal rotation. If we can get through 13,600-13,900 on the TSX, the summer might be a bit more exciting. If we don’t get there, we are probably looking at 12,500-12,700 range.