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

Foreign Debt: If he wanted it he would stick to high quality debt such as Australia or New Zealand.

Navigation Canada Bonds. Related to airports. Monopoly on managing airport landing, gate fees, etc. Regulated business with strong cash flow. You wont get a lot of spread comported to provincial.

BMG Bullion Fund. Has 1/3 gold, 1/3 silver and 1/3 platinum giving you a spread of bullion. Has done better than the gold stocks he owns. A low charge fund.

Been staying away from US but now looking at a couple of consumer stocks including Johnson & Johnson (JNJ-N), Proctor & Gamble (PG-N). Also rail with Union Pacific (UNP-N). On the assumption that they’ll lose on the Potash (POT-T) deal, he is considering BHP Billiton (BHP-N). Would like to see these 2%-5% lower.

Canadian Banks. Has a fair size weight in Cdn banks except for Bank of Montreal (BMO-T). Will be slower going forward. Expect National (NA-T) will be the first to declare a dividend followed by TD (TD-T). Valuations are not cheap, but not overly expensive either.

Coal. An absolutely terrific time to Buy coal companies. Commodities are going to do well in this environment. Likes Alpha Natural Resources (ANR-N).

The market has been going up for a while, especially since US announced the quantitative easing, which causes commodity and stock markets to go up. The US$ has been weak. But in the last couple of days there has been a reversal. It caused the stock market to reverse today. Thinks QE2 is off base. Companies are flush with cash and don’t want to borrow it. They need consumer confidence. What is need is fiscal policy. His stock picking methodology is just staying the same.

Preferreds: Owns preferred shares for some of his taxable income accounts. He only owns some preferreds. Lower percentage than bonds. They trade like junk bonds. It’s getting harder to find good quality preferreds.

He has made money off gold stocks. It hit 1400 today. 3 things the US wants to do is inflation, lower currency and introduce austerity measures. When the gold bubble bursts there wont be many exits. It will be brutal. He’s 10% in Gold with half of that in ABX.

Gold isn’t going up so much as paper currency is going down. It is very positive when the US$ goes up at the same time as gold. Gold $1300-$1500 by year-end. He’s not looking for a pullback but it certainly could happen. Loves silver. Over 650 years, Silver has been 1/16 th the price of gold. It is 1/50 th now, so silver has quite a way to run.

He has been as bullish as anyone but he is cautious now. Economy things look fine. What’s driving the market is QE2. Would prefer that the market was going up because of good fundamental reasons. On a global basis CEOs are very bullish. He thinks we get into a normal recovery and then in the long term, the commodities should correct. He has lightened on gold and oil stocks; he is bumping financials.

Supply and demand fundamentals in Canada are excellent, except in Calgary and Toronto. Single digit vacancy rates. People are going for yield and REITs are a yield play. Investors have to be careful that they are not fooled by yield. It should be judged on the cash flow. He looks at total return. New accounting rules (IFRS) will affect real estate. Beginning in January, you have market value accounting, not book value. It will highlight where value is lower or higher than share price. As trusts convert to corporations, he is seeing money flowing into REITs.

Canam Group Convertible Bond 6.25% 10/31/2015. If you get a bond, get one that has some sensitivity to the equity market. If the economy picks up you have some upside on your bond. Risk is that it is a small company and if the economy tanks again, you have a problem.

(Top Pick Nov 10/09, Up 10.50%) Canadian Real Return bond. Get paid to wait. Not as attractive as they were but the only insurance product that pays you money while you wait.