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

Real return bonds (RRBs) as a long-term investment? Interest and principal payments are both indexed to CPI. If you buy one today with a yield of 1.15% and you hold it to maturity you will get 1.15% after inflation. If you want to sell in 2 years and yields have risen to 3% you will love lost a lot of money.

Cdn Bank Tier 1 bonds and the Call feature? When Basil 111 comes into being, high yielding capital trust securities issued by the banks, 10% a year will not be allowed after 2013 so will be phased out by 2023. Could be called at par. He would be nervous and would look to see what the bid is. He doesn't have an answer.

TD Real Return Bond Fund? Expensive fund because it charges a higher management expense ratio than if you bought the ETF that iShares has (XRB-T). Has had a great track record because real yields have been falling and bond prices have been rising but there is no guarantee this will continue. You pay more in fees than if you buy an ETF or your own individual RRB.

Ten-year bond ladders. He is a staunch advocate of maintaining the discipline of laddering because you don't know what rates are going to be in the future. You always have a 10th of your money maturing every year and that protects you from inflation as well as credit risk diversification.

Brookfield Renewable Power Bond. 2018 @ 5.25% or 2020 @ 5.14%? Likes Brookfield as an equity investment and their bonds. He would buy the shorter term Bond, 2018.

Uranium: You will get spikes and it will come back down. Look for low cost resources, undermined resources that can be brought to the market as uranium prices move higher.

We have recovered from one of the worst economic environments of his career. He is disappointed that the economy is not stronger than it is. There are some factors that could see the US economy move ahead in the next couple of months. Next year we will have some fiscal drag as the stimulus programs end.

People are giving up on Hat Gas. He thought we may get a bit of a bounce, but not so. It is inescapable not to have some holding of Nat Gas, but he has tried to minimize that. He is bullish on the price of oil on the next 12-24 months. Expected a pullback but did not get what he anticipated. It is putting in a nice base. $90 will be the next stop and before the new year probably. Chinese raising rates had bit of an impact. He is optimistic that the markets are firming here. Sees value in the junior space, rather than the senior space.

There is a lot of noise out there. Just keep in mind what your asset allocation is. Multinational companies are looking attractive. He would not want to buy the US economy but he will buy US stalks because of their global exposure. There are some new ETFs.

Leaps: Long term options. He tends to do options 6 months out, but he doesn’t like to do them longer out.

If your advisor says they want you to take a loan out on your house to invest, just get up and leave. Doesn’t understand why the mutual find companies allow this advice to be given.

Tracking errors in ETFs: There’s always going to be tracking errors, especially in more complicated situations. He is not that concerned about it.

Closed end funds and ETFs: Closed end funds trade on an exchange but other than that there is no similarity. They are not trading at net asset value. He recommends forgetting them.

Jobs are a lagging indicator. The stock market is a leading indicator. It is a bit overbought right now, as are all the stock markets. Is there a correction – the million-dollar question? He is optimistic on next year. We may get a time correction, with a sector rotating market. Commodities have had little rollover here and are pulling back a bit.

You could get a pull back but he is not sure it will happen in the next little while. The market is at a level where you can make some money and fixed income is not going to provide you with that rate of return. He is against QE. Thinks they should step back and see where growth settles back to.