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

Bullion: See Comments on US$. These are the same reasons you want to be long on gold. Also a seasonality factor that suggests you buy gold at the end of August for a strong end of year. Wouldn't be surprised if it tested $1000.

Q: Would you buy Telus (T-T) Bell Aliant (BA.UN-T) and Manitoba Telecom (MBT-T) for a combination of growth and income? A: Interesting question because there is no growth. Telcos don't give you both growth and income. There is yield but don't expect growth.

Canadian Banks: If you decide that you want to own financials, he personally likes US banks right now, as yields are almost 30% higher. Canadian Banks continue to issue a lot of preferential shares, which is dilutive.

Preferred Shares: Perpetual preference shares have been a mainstay of Canadian investors for a long time, until the beginning of this year. Bank stocks underneath them fell so many are trading down 8% to 10%. Starting to look interesting. When he starts to see series north of 6% with a re-pricing 5 years from now he will be interested. Inflation kills preference shares.

Inflation: Not a problem yet. There is only one index he cares about, the long bond. This is the smartest index for where inflation is going.

Canadian Financials: Doesn't see any good news coming from the banks in the short-term. Loan loss provisions are going up. Problems in the credit market are going to impact Canada ultimately. World growth has slowed down. There will be decent tradable rallies but we haven't hit the bottom.

Preferred Shares: When income trusts came out, they took a back seat because of the yields. The problem is, you are taking stock market risks for bond returns. They get preferred tax treatment, but tax rates have come down so the relative attractiveness has diminished.

Gold: Has been negative on gold for most of this year but has come back to it recently. Technically, a lot of commodities have broken their short-term support but they haven't broken long-term support. US$ could rally at little bit further and then start fading away and that could give another lift to the gold sector. Would shy away from seniors and be more into intermediates, which could be acquired.

US Banking: The good news is that the US banking sector is not going to zero however, the credit crisis is still ongoing. Credit spreads are still widening. Even the banks don't know what is going to come out. The problems will take a long time to work out.

US$: There has been a 5-year decline in the US$. This is the first time in 2 years that it is broken back through the 200-day moving average. Other parts of the world are now getting into more difficult economic waters.

US Financials: Not a time to be buying. If you own, use any strength in the next few months to reduce your position.

Junior Stocks: The juniors are currently down because the banks are not lending money to anyone. This will take some time, maybe a couple of years.

Cdn banks & lif insurance (A Top Pick Feb 13/08.) Little early on this one. Have had a good run since June. Banks continue to be a little bit of a value trap. 18 months to 2 years from now you will have wished you had money there.

Natural gas. (A Top Pick Feb 13/08.) Up 60% since early February but came down the same amount since July.

(3 Top Picks theme is on thwarting inflation.) Seeing a lot more movement in infrastructure by institutions as an inflationary hedge product.