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

Oil: Supply/demand currently is not the major factor in what is going on in the oil market. Speculators, hedge funds etc. are having a huge impact on the price of oil. In the near term, it looks like it wants to keep going higher, but beyond the near term he is sceptical that it continues to go up a huge amount higher because it will completely slow down the world's economy and demand will dry up.

Inflation: - Taking a picture over the next 2 or 3 years inflation could be rising. PE’s and profits could go down. Consumer will be hurt and if they need to spend more money on basic necessities, other things have to be cut. Interest rates could go up substantially, possibly double-digit. The best way to insulate a portfolio is to either have cash (CDN$), buy hedge funds or by energy which will continue going up.

Oil: - In the long run, oil prices are going to go up. In the short run, it’s driven by speculation. There may be some hedge funds liquidating their positions over the last couple of days in May, which could force oil back down to $120 or lower and that could present a buying opportunity. If you’re an investor it doesn’t matter, it’s noise.

Banks: Canadian banks start reporting tomorrow and the numbers are going to be weakish. Likes them longer-term but if you want at a Canadian financial he would go to Manulife Financial (MFC-T) or the Toronto Dominion (TD-T), which he expects will be the only bank that shows up earnings. Too early to look at the US banks.

Thing going on in the market he calls ‘small cap disease’ where companies are doing very well but stocks are going down. People are scared – they don’t know where the economy is going to go. People are buy safety and Liquidity. Stock Strength does not follow company strength. Prefers to buy in the January or August panic.

Uranium; - Technically there should be a big boast because of the high oil prices but we’re not big on building nuclear plants. Doesn’t see nuclear energy as being a major push in North America because of the fear of it.

Oil Stocks: - If you don't have a position, you should wait a little bit. Investors may be taking some profits now. It's good to hold some cash as the market crests into new territory.

Canadian Financials: - Market has slowly taken confidence from all the rig fencing of the credit crisis. Royal Bank’s of of write-downs was less than expected. Market is starting to climb the wall of worry. Perhaps the money and resources will start rolling back into this sector. The road to recovery will be bumpy, but wouldn’t be afraid to Buy with a longer-term perspective.

Taxation on Trust Income in RRSP and RIFs: - There will be double taxation on trust income going into RRSPs and RIFs and no benefit of dividend tax credits. He has been trying to lobby the government and would ask anybody in this situation to contact his or her Member of Parliament to try and get this changed.

Carbon Capture (CCS): - Capturing carbon dioxide (CO2) from fossil fuel sources (power plants). Regulations around it are reasonably vague but it is such a new industry that the technology is not available. A market that you should be extremely leery of as there could be a lot of hype.

Canadian Banks: - Even though they are a large part of the TSX, there is no hurry to buy these. If you want to be in the financial sector the life insurance companies are a better place to be. (See his top picks.)

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Seasonal Investing: - As a seasonal investor, you would take small investments and rotate through the different sectors of the market. When does oil too well, when does Gold do well, when does technology do well etc.? You end up with a basket of these and you are averaging out over time. If you can get 70%-80% of those trades working, then you will be in the market.

Gold: - Has been a fairly reliable trade every fall. About 70% of gold is consumed by jewellery. India has a Diwali festival, which has a huge consumption of gold. Fabricators start to buy the gold in July, which tends to drive gold up until the end of September. He is a Bull on gold and thinks it will go back above $1000.