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

Coal Plays: With acquisition of Royal Utilities Income Fund Sherritt (S-T) is more coal than it used to be. Other pure plays would be Grand Cache (GCE-T) or Western Canadian (WTN-T), which are the small ends of small caps. These 2 would be raising your risk quite a bit because if coal pulls back, they will drop quite a bit.

European Utilities: Can be divided into 2 categories. Energy market is deregulated so with higher energy costs they have higher power costs. There is also the regulated utility, which is the more defensive one. The utility sector is providing the traditional defensive haven. There are a lot that would yield 4% to 5%.

Australian Banks: Not bottoming as yet. 2 of them have issued profit warnings in the last few days. There has been a bit of a housing bubble in Australia, interest rates have gone up and housing prices are starting to roll over. Yields are attractive, but not sure they are safe.

British Gas: Probably one of the highest quality oil/gas companies in Europe. Has the fastest growth rate of all the major European energy companies. Very much focused on gas and LNG. Good long-term holding with strong fundamentals.

Markets: What we have seen over the last 3 weeks is a little bit of a head fake. Fundamentals are not quite there yet. Things will get worse for the next couple of months. Look for a market bottom late August or early September and would be a good time to start moving into the market.

What oil company to own? ETFs are an absolutely brilliant way of playing the market if you don't know what company to own. Low costs.

Canadian Banks: If you compare these with the global situation, they are good businesses. Profitability over the last few years has been due to the elevated credit. As a credit unwinds, the profitability will not be there.

Healthcare & Diagnostics Area: With health care, you have to be very specific. US$ will continue to drop. The ability of the US to pay concerns him. He would avoid the drug makers and focus on the diagnostics. He would play this through GE (GE-N).

Principal Protected Notes: Good vehicle. Offers a very good way to participate in specific investments. Note of caution. The issuer protects it. In other words, if you have a note by a company that went broke, your note would be worth zero.

Oil Prices: $147 was pushed up for speculative reasons as well as concerns about US storage and Iran’s sabre rattling. He is looking for a price between $100 and $125 for the next few quarters and then the upside will probably be moved to new highs above the $147 in the winter of 08/09. This is a short-term window of lower prices. Enjoy it. Keep your tank full on cheap days.

Natural Gas: Was trading at $13.69 and backed off to about $9. $9 to $9.50 is a very cheap price and stocks are very cheap. Winter of 08/09 we could see much higher prices. Hurricane season really starts in August and September. Inventories are still very tight in the US and we could see prices rebound and even quicker than for oil.

US Economy: Seeing decoupling taking place from the rest of the world. Many emerging markets, China particularly, have been accelerating over the last 2 years as the US has slowed. The one area that is not decoupling is the financial market. There will be slower economic growth in the emerging markets. China has dropped from 12% growth down to 10.1%.

Toshiba and Hitachi: Both are very well positioned for the growth and demand for nuclear power going forward. This is a very small part of their business so you won’t get a great bang for your buck.

India: When talking about economies that are going to succeed or fail, this is on the cusp. Had tremendous growth in the past 5 years but started to run into much higher inflationary pressures. Started running into a current account deficit situation. Will require some very tough policy choices for the government, particularly in an election year. Stock market in the last 5 years has been driven by a massive amount of foreign equity inflow, which is now starting to leave.

Extremely positive on the infrastructure building processes taking place globally. He is trying to find more direct plays than this one would give.