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

He is not a big high yield guy. You have to do it in small doses. Prefers government and investment grade bonds. But this is a time, if there is one, to get some high yield bonds through an ETF, for example.

Choosing between common, preferred or bond depends on where you want to stand in line. Dividends get cut, e.g. BP.

Advantages of a bond fund: Access to inventories at all the dealers, competitive pricing, expertise, and credit management (which companies to buy). Prices you get as a retail investor are not as good as those a professional can get.

If you only have $10K to invest, the built in commission is not going to be significant for the broker. Retail investor needs to go into a fund or an ETF.

What do you do with a bond that you got above par that is approaching maturity and you old it in a non-tax account: This is why a lot of retail investors use ETFs.

Term deposits vs. deposit notes. Later are backed by deposits of banks. A term deposit is a retail product issued by a bank. Term deposit is redeemable. Deposit notes have a secondary market so can be sold.

Ontario strip bond due 2021. Value will fluctuate on a secondary market but it will mature at $100. If you are going to hold to maturity, the day to day fluctuations can be ignored.

Future of interest rates and impact on fixed income investors: Interests rates will stay low for some time. There’s a 5-year cycle in bonds. First year is crummy year when yields go up sharply. Second year is best year in bonds after all easing takes place, the best in the 5. Following years go sideways – clipping your coupon time. You have to watch the disconnect between government and financials.

Even though we are in the summer doldrums there are exciting things. US Fed making some comments. Don't have a lot of weapons left to use. They are buying bonds and stock piling up. They will be maturing and what do they do with the cash. With corporate bonds we are seeing lots of issuance. Yields are all over the place. The Canadian banks are issuing bonds in the US. Preferred shares offer some advantages. Fixed rate resets as well as perpetuals. More tax efficient (dividend).

Market. Currently in a sideways range but in this kind of a situation, when there is a breakout, it is usually pretty strong. Doing very little trading and has 50% exposure to the market right now. Trigger point on the upside is 12000 for the TSX and wants to stay above 1100 on the S&P 500.

The market is going sideways. Little up days and then some backpedaling. He looks for special situations in this market: mergers, deals. He has faith that we will stagnate 'nicely'. Dividends will stay loved. They are up to half of total returns over long terms. Stay invested in quality situations with dividends.

REITs. Since this is the only area that will not be affected by the legislative changes on trusts, money has been flowing into this area and should continue to do so.

REITs. Real estate has typically been a good long-term investment. As trusts go away in January, there will be more desire for investors to find yield. This will be one space that investors naturally look to.

Natural gas. He would be inclined to go Long rather than Short on natural gas. A very out of favour commodity right now and there is a huge concern about shale gas supply but longer term, it is a very clean fuel.

You have a strong, steep yield curve, which is strongly simulative, Federal banks are fairly accommodative and earnings are growing. But we have had this big move off the bottom and then we have this pause, which is the market adjusting to lower rate of growth. Markets will not necessarily go sideways for an extended period. Emerging economies will lead us up. Is thinking of putting money back to work.