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

March 9’th lows were a good low, but would not rule out a test of those lows. There are signs of improvement but we need signs of stabilization. Recent up turns would be put into the context of a bear market. Some of the conditions are starting to materialize. People should re-visit their asset mix and there should be rebalancing going on.

Is one of the of the three ETF companies better than the others. IShares are only on the long side. Horizons has some inverse and leverage products. Claymore has a broader range of products including theme based. Leverage is a two-edged sward.

We are in a bear market rally. They can go for a pretty long time. Looking back on history, you can get 40-50%. Good news is being rewarded. What keeps him up at night is Bank loans, derivatives, etc. We are not out of the woods economically.

There is more pain to come – we have not bottomed. But now the pain is getting less. Still a ton of foreclosures to come. Manufacturers will continue to chop inventories and output. 4’th Quarter this year or at latest next summer will be the bottom before the Bull Market. He holds 40% in growth portfolios because this is a rally in a bear market.

There’s a lag from the time a retail store hurts until the mall hurts. Commercial real estate is soft. New buildings will likely fill up by sucking tenants from older buildings. Money is short for re-financing and the cost of money is high. Houses got so cheap, they robbed tenants from apartments.

We in doldrums. We don’t have direction anywhere. There is too much financial distress. Not changing his strategy because of Swine Flu. He is sitting tight.

The US Fed will say that they will remove the stimulus when it is apparent that the economy is growing again. He thinks they will mean that but wont ultimately do that. They could announce an increase in the quantity of securities that they are purchasing. They would be just printing money. Value exists in US corporate bonds below investment grade (US Junk Bonds) – diversified.

Strip bonds as part of an RRSP: Excellent way to get exposure to bonds, especially in a small RRSP.

Real Return Bonds: Pay am interest rate on top of the inflation rate. Around 2% so total coupon rates are 2%+3%=5%. Want them at or above 3% above inflation.

How bonds are priced: Interest rate used on bond is the “coupon rate”. They trade at either a discount or a premium to face value, depending on prevailing interest rates.

No opinion on Swine flu as we have to wait and see how dramatic the spread of it is. Doesn’t think recession in Canada will be that deep. We may see a downturn in commercial real estate in IS. Retail malls will not be hit as hard as commercial real estate.

Now is a good time to invest in Canadian Banks. You don’t have the risks of the US banks.

Gold is over $901 because (1) Financial crisis has abated. (2) Inflation has not been resurgent and it has been a weak seasonal period for gold. Ended a late January/Early February for gold. We are confirming we are in a new higher range for the resource cycle. Has contrairion view on Natural Gas. Futures prices are higher than spot price and producers are moving up. We are starting an economic recovery of some sort. An up-tick on cyclical demand. Green shoots to cyclical demand.

Bank stress test is just as much a public relations campaign as a real test. Following tests, there might be a run on the worst of them.

Canada’s decline in GDP is in line with the rest of the world. It’s going to take 3-4 years to take out the previous highs. Mediocre outlook for rest of this year. Concentrate on firms with good dividends and solid balance sheets. Financials and consumer discretionary stocks will lead us into the recovery.