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

Canada Housing Trust 1 3.75% maturing 2020. Good holding for a Tax-Free Savings account? Yes because all the income is taxable and this is not too long of a holding. Better than having money in a bank.

Case New Holland 6.15% maturing Dec 15/12. This will reset at CEDOR (Canadian Deposit Overnight Rate) every month plus 575, which is currently at around 40 basis points. Likes this is a hedge because of its floating-rate.

He is thinking of an ‘L’ shaped recovery. The market came back too far too fast. Wont re-visit March lows. 0-2% GDP growth, slightly more globally. 10-20% cash. Three areas: 1. Emerging Markets - Brazil, India, China; 2. Commodities - Canada, Mexico, Australia; and 3. Laggards – US, Europe and Japan, where the growth will be slower.

Biggest Green investors: Spain – real estate bubble has burst. Spain has leaders in solar panel manufacturers and some utilities are among largest of the green spaces. German, Denmark, and Spain are leaders for wind and solar power.

Gold. Had been overdue for a pullback. US$ had a bounce, which he thinks will be short-term. Looking for $1200 to $1250, will consolidate and then go to $1500. Gold stocks are a great opportunity as they are not reflecting $1080-$1100 gold prices. His selections would be Barrick (ABX-T) in the seniors and Red Back (RBI-T) and Yamana (YRI-T) in the midsize.

Canada bond 3.75% due June/2019. Government yields have risen almost 50 basis points this month, which he didn't think would happen. There really is no bear story for bonds. This will be a trade in probably 2 to 3 months as he thinks there is a good chance they will go down to 3%-3.25%.

Top Short Short Canada 1.25% maturing Dec 1/11. Yield curve will flatten in 2010 with these yields rising back to where they should be.

(A Top Pick May 08/09. Up 39.2%.) Trinidad Energy Services 7.75% maturing July 31/12 yielding close to 9.5% to maturity.

Real Return Bond ETF or Fund? The yields on these are currently at 1.6%, which is too low for him. He would prefer seeing them at 2%. Also doesn't think the inflation rate is going to be 2.4% over the next two years, but will be under 2%.

All along investors have been desperately seeking good news and are latching onto any news that is positive. People are trying to end on a positive note. Housing numbers were good, but we know there are still structural problem south of the border and there is a lot that could happen to upset that balance. Canada weathered the storm much better than a lot of other countries. People expect us to come out of the recession stronger. Politicians are worried about how fragile the recovery is at this stage still. He is relatively cautious. Markets were ahead of the fundamentals. Trying to buy more strategically.

Using ETFs you can build a diversified portfolio. Within the bond allocation, he would consider a broad bond one such as iUnits Cnd Bond Market (XBB-T) and to complement this 1-5year Ladder Corporate Bd (CBO-T). On equities he would use S&P/TSX Comp (XIC-T), S&P 500 $ Cdn (XSP-T) and MSCI EAFE $Cdn (XIN-T).

Investors need to see earnings right now. Technology was his favorite sector and now he has rotated out and into consumer staples and healthcare. He needs sustainable earnings. He is a fundamental value investor with a bottom up approach. Looking at sideways type of market. Uses options to increase portfolio income.

M & A activity: Low cost of financing and with the market being positive to new issues, there should be increased M & A activity. Energy sector, CF and Agrium, Kraft/Cadbury. Canadian banks are looking for US acquisitions.

There is now some major questioning about reserves for XTO in shale in Texas area, making natural gas area look much better than it used to be. A great number of companies will go back to natural gas from coal, which used to be very cheap. In 2 to 3 years we will see the oversupply reduce. If you are going to buy a Nat Gas company, now is the time to do it. TSX will go up 10% from here as a result of recent US economic data released (inventory, retail sales numbers).