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

We represent about 3% of the world and should not limit our opportunities. The US is an international market with 50% of earnings coming from outside the US. He overweights financial services.

Tries to ignore the noise and concentrate on investing in good companies. “In the short term the market is a voting machine and in the long term it is a weighing machine. Volatility is your friend,” Warren Buffet. He was not buying yesterday. He keeps a list of companies and prices he would like to buy or sell them at. Overall he has not seen too much recently that he has taken an aggressive stand on. Generally things look pricing, given the market we are in. The money flowing into commodities is somewhat hopeful, based on the idea that we have a global recovery of some sort.

Got a bombshell from Bank of Canada that economy is not going to return to pre-recessionary levels for another year. Things go in and out of favour. If things continue to slow down in the economy then you want to be in value stocks but otherwise you want to be in growth stocks all in. We don’t expect growth to take off until 2012.

We are a bit above the end of the range where he thought we should be so we could pull back 3 or 4 percent. He is a little more bullish on commodities. Today’s sell off gives you a chance to buy things a little cheaper. For his clients he is adjusting because of money they have made and putting more money into income.

Investment Mix: 60/40 is seen as the default portfolio. He thinks this is a bit on the conservative side. He thinks it should be 70/30 stocks to income. As you get older you move more into income from stocks.

ETF Tracking Errors: He is not fussed about tracking errors. He feels it all comes out in the wash – over time. If you are consistently lower than the benchmark then you could consider getting out.

ETF Balancing problem: This applies to leveraged and should be held 6 days max. He doesn’t recommend leveraged ETFs. The rest can be held for the long term.

The big theme in the gold sector is consolidation. Focuses on smaller companies that might be take-over targets.

He is bullish on Uranium in the 3-5 year time-frame. The bull market cracked because of investor expectations.

People are tired of getting no interest on their savings. Not excited about bonds. So they are buying stocks. Sept and Oct are supposed to be scary months but haven’t been. Markets have gone up for 4 months and at some time there has to be a correction. Stay short in bond durations. He is very cautious about going out beyond 4 years.

Silver: Thinks it is overvalued. There is a huge production in the world. But people think there should be a ratio between gold and silver. Thinks it is ripe for a pullback.

A little weary of where we are. Globally we are at our near term highs. Except in Canada where gold might go a little higher. You need to pare back those ears of the portfolio that have grown out of proportion. The economy really needs support in the US. He has been taking some profits.

Silver. Probably tied to gold, which has gone up too fast in too short a time. One thing silver has that gold doesn't is that it is consumed because of industrial purposes. Believes in its strength because of the industrial component. Look for companies that have not followed the commodity.

Canadian Natural Rsrcs (CNQ-T) or Suncor (SU-T)? Likes and owns them both but probably prefers CNQ a little more at these levels. Has more diversification in its operations.

NAV Canada Bonds. Basically an infrastructure play. Very good structure. Fairly low yield but very dependable and a good bond. AA