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

Markets: have been very well behaved, given the earthquake in Japan. Thinks they were more focused on the middle east – political instability, risks of supply interruption, slowdown in China and European debt problems. Previously he said he expected a 3-5% correction. Doesn’t think they will have a more serious correction but if we did he thinks we would see another 5% down to the 200 day moving average. He previously said he would use a pullback to pick of stocks that he thought was undervalued. Following earthquake in Japan he thinks there will be massive re-construction, perhaps not as quickly as people might have hoped. Japan has always proved to be resilient. There will be immense opportunities. The one thing to worry about is uranium.

Market: The short-term indicators are important to him in these times of rallies. There is concern about profit taking. Market tried to break below 50 day moving average late last year and is trying to do it now. It would have to sell off more before it would be an indicator of a bear market. If we don’t see good news soon, we are going too a sell off. The 200 day moving average is a much more significant indicator. He started selling off energy in the last couple of days.

Markets: The Japan situation does not affect the markets yet because it is not yet clear what the impact is, except money is running to the US$ as the currency of safety. Europe: When you look at the kinds of regulatory issues that have to be resolved, 16 countries with competing interests, it is going to be very difficult for them to come up with an agreement. Grease will probably default, Spain probably not, Ireland probably not, Portugal, who knows. It is time to be looking at the European sector (good businesses). There could be good opportunities to be buying good ETFs. Don’t mix it up with the European economy.

Buying Back Calls: He is looking at buying back some calls that are deep in the money. He looks for the time premium to be squeezed out of the option value. He waits until he has gathered up as many dividends as he can.

ETF Strategy for an RRSP: XIU, XSP, everything dollar hedged. Put some bonds in, in case market turns against you, e.g. CLF. Stay in North America. Half dozen ETFs only.

ETF Fees: They make money from their management fee (MERs), which vary.

Covered Calls: His clients are looking at covered calls as income. He wants option price and stock price as close as possible to each other. He also goes 6 months out. He sells but does not buy.

There are no real signs of interest rates coming up any time soon in North America. The REIT index is tired. Everybody has already raised money and that often tires it off. Generally numbers coming out are pretty good. Yields are pretty good on distributions and are covered better than every before.

4.5% down from Mar 4. It is not panic selling. We were due for a pull back. Very possible there is only a couple more days and then back up. S&P bounced off 50 day about 3 times today. We should thrash around for a week or two. He did some buying already. Energy is a good sector. Believes oil will go back into the 90s. Some have pulled back 10% or so in the last week.

Market: It’s all about small caps right now. Small cap market is very resource oriented. Volatility is in the commodities. She focuses on growth opportunities. She sees the strength on the commodities as well as tech sector.

Markets: Canadian $ getting stronger and equities going down. Forex traders have been dumping the US$. Maybe at some point this will settle down. Maybe when it is $1.04 Canadian. When European situation comes down to the forefront you could see more bit back into the US$. There will be a lot of volatility. The markets have been waiting for a bailout in Europe. You could see a haircut in a couple of sovereign debt issues. Portugal refinanced at 7%. The key issue is going to be Spain. Favourite part of debt market is the 2-5 year corporate debt. Likes the banks. He has never seen the balance sheets so strong.

Bond Funds: depending on the type of the manger and the duration of the bonds. 2-5 years is good since the manager can mitigate the interest rate risks. Typically these funds under perform as interest rates go up. He prefers to hold the bonds directly.

We were in this secular bull market in commodities driven by the emerging developing world and now we have a shock factor on top of it. You have to pull those 2 things apart and make sure you analyze the right pieces. The secular trend in resources we have from the developing world is ongoing but the middle east is an event and should be a shorter term thing. Don’t get caught up in it too much. He has started to lighten up on oil stocks.

Natural Gas. There is actually a Bull market in natural gas. We have gone from a 6 year reserve life to a 100 year reserve life. We just have too much of it so the price has gone down.

Natural Gas. There is actually a Bull market in natural gas. We have gone from a 6 year reserve life to a 100 year reserve life. We just have too much of it so the price has gone down.