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

Corporate Bonds: He favours them in North America. They offer an even more attractive yield in the last couple of months. 3-8 or 10 year term. Favours non-cyclical companies. No more than 10% in any one name.

Step Up Bonds: Pay you a certain rate for a certain time and then it steps up. If rates fall then will call them and you have to re-invest. If they rise, then you are stuck with them.

Loonie: Will edge up toward parity. Exporting companies get used to dealing with a stronger loonie. People have to be prepared for it to be beaten up because it is only 3% of the currency in the world. It is one of the currencies that world banks turn to when they want to diversify.

Dividend-Paying Stocks: Likes high dividend paying stocks. Seldom do they yield more than bonds, like they can now. Would rather own common than preferreds. Certainly would have some dividend paying stocks in taxable accounts.

Bond prices and interest rates move in opposite directions. Don’t put all your money in one bond. Spread it out with a laddered approach. Likes a 1 to 7 year ladder. Interest rates should go to 2% in next 12 months (Bank Rate).

25 Year Bonds: If you trade the bond market, it’s ok. To hold to maturity it is risky because you don’t know what the company will be like in 25 years. Use Government bonds for this term.

Deflationary Environment: Look at long bonds – they perform the best.

US Treasury 3.625% 8/15/19 (Top Pick Oct 20/09, 7.3% Total) The whole inflation scare was over done. A Descent call on the deflationary world

Government of Canada 30-year long bonds 06/01/41: Chart looks very positive on this one. He sees an opportunity for interest rates to go lower.

US Treasuries 30 year 4.375% 5/15/40. Would exit in the next 3 months. Looking for a good capital gain. Good potential with the world slowing down and the flight into US assets.

Brookfield Renewable Power 6.132% bond 11/30/16. Likely to produce positive returns. It’s a company he likes. This could be part of a ladder.

It seems that Fridays are particularly perilous. It seems 100-point moves don’t count any more. You can’t tell – by closing today be could be back to flat. You might not want to jump on one jobs number. People were expecting a great number and got a mediocre number. It’s the non-senses numbers that really count in the US job numbers. You should not ignore the good news – Canadian job numbers. Hungary is a small impact on Europe. It’s an indication that there’s work to be done. Hungary is going to need funds. You want to catch a good market day to do any selling. He is mostly adding a little bit on the bottom in this market. Negative on the gassy oils but starting to change his mind. Focuses on dividends and sells off a bit of low yield stocks.

We should have seen the correction coming. There were warning signs. If we look at copper, it was one of the first things that made a bottom, well before the markets made a test in March. There has to be volume on a market climb. Over the last year every time the market goes down, the volume goes up.

Has been buying selectively. When the market is like this you have to get back to fundamentals. It’s a great time to buy companies that aren’t expensive.