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

REITs were not hit with the rest of the income trust. As a result, their prices went up and their yields came down. Yields are just barely above Canada bonds. Wouldn't buy at this price.

Corporate bonds in North America are not very attractive because yields are so low. The spread between corporate bonds and government bonds has narrowed as everyone has been reaching for yield over the last number of years.

In the US, small caps have been significantly overpriced compared to large caps for a number of years. For the past several quarters, for the first time in a long time, there have been a number of very high quality large caps at prices below what their intrinsic value suggests. Large cap is quite timely right now.

The Japanese market is one of the few markets in the world where small-cap stocks are cheaper given their relative growth opportunity, relative to large-cap stocks. The Japanese consumer stock should lead the way in the next few years.

REITs: - Rational way to evaluate them is in terms of the income stream, the capitalization rate. What can happen in a boom is that rates can be bid up and up as investors speculate. Income stream from high-quality ones are assured and is tax efficient. Valuations have gotten a little ahead of themselves.

Convertible Debentures on Royalty Trusts:- Not a fan of energy trusts because their pool of assets shrinks unless they make acquisitions. Not a great investment.

Downside: - This has to be looked at on a case-by-case basis. If 100% of the cash flow is income, then the value will go down by the tax of 31.5%. A lot of the trusts have tax pools. E.g. on energy trusts it is only the taxable portion that is subject to 31.5% in 2011.

De-conversions: - Expects you’ll see the dust settle first. It will probably be some of the more senior players leading the way. One of the issues is that when they converted to a trust, it was a taxable event and the government received a one-time capital gains tax form investors. Will they tax again on the way out?

Buy/Sell Income Trusts? – There will be some attractive buying opportunities due to a lot of panic selling.

Timing: - Could be some additional downside between now and December 31st, partially due to tax-loss selling by individual investors as well as US selling.

Hybrid Income Trusts: - Companies like Student Transportation (STB.UN-T) or Keystone (KNA.UN-T) are not captured by the legislation. Doubts if you’ll see income trusts converting into hybrid trusts.

Junior oil/gas: - Expect they will really feel the affect of this. Typically, when they start to get near the 10,000 BOE’s a day, exit and sell to an oil/gas trust and then went back into a junior. An effective allocation of capital. This will create less demand for the juniors.

Oil - Thinks that oil has bottomed and that inventories are going to come down. Doesn’t think stocks come anywhere near to reflecting $60 oil price.Gold - Is still fond of gold. US currency issues will continue to hit the US market and as a result feels that gold prices arte poised to go higher.Base metals – Zinc is his favourite right now. Inventories are very low and no new production coming on in the next couple of yearsUranium – Has been granted a freebie with the flooding of the Cigar Lake mine. This took about 2.5% of global capacity out of the equation.

His 2 Top Picks include Ford Credit maturing March/08 and Government of Canada 5.75% Bond 2029.

(Government of Canada 5.75% Bond 2029 was his Top Pick July 7/06. Up 6%)