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

Likes the i shares and its sector. When you are in a volatile sector, this is probably a good choice. Had a rally, pulled back and thinks there’s another advance to come.

Massmart Holdings, a South African stock under the symbol ofMSM-SJ. Large retailer which includes food stores, etc. South Africa and is a leading exporter to the rest of Africa. 4% yield. 20% increase in earnings.

Macquarie Bank is an Australian investment bank listed on the Australian exchange under MBL-ASX. Stock has gone virtually sideways over the last 52 weeks which he likes allowing him to accumulate more.

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

Concerned about gas prices. Had a slight rebound in the summertime reflecting the 2 first time withdrawals during the summer months to use for cooling. Have very full inventories, 3 months of a shoulder season between winter and summer when temperatures are comfortable, so gas consumption will be very low. Will run out of storage space, and when that happens, there will be some softness in gas prices. This will be a buying opportunity and, over the long run, he is very bullish on gas.

A general comment on oil. Because China and India are coming to the point of becoming self-sustaining and are having a significant impact on the commodity price as well as geopolitical risk, oil prices will stay higher than people have been accustomed to. $85 oil is a possibility later in the year. Oil prices have been stuck around $70 for a year and a deterioration of corporate profit growth has started in the energy area. A little concerned that the profitability of the energy sector is not as strong as it was.

Believes we are only 60% through the economic and equity cycles. Doesn't think the Fed will be forced to intentionally cause a recession before 2009/2010.

Usually, when companies are trading below 5 X price to cash flow, it's a signal to buy. When trading at 10 X price to cash flow, that is a signal to sell.

We are near the top in the metals cycle. There has been phenomenal economic growth in North America that has spread to Europe. During this period, there has been a displacement of manufacturing capacity to Asia. Commodity demand in Asia is “displacement demand” with products going back to North America. In spite of the fact that China is growing phenomenally and they have 4 times as many people, their economy is much smaller. Expansion may have already rolled over so there will be less demand for metals. He has sold all his base metal stocks.

Had an intermediate cycle bottom in July and we are in a rotational bear. An official bear is not here until most of the subgroups have violated the July lows, so technically it is still a bull market. Major trend lines have not been broken. However, we might have had the first Down leg, but won’t know for sure until the bear is violated. The average investor should just stay long, grin and bear it. Thinks it will go higher through the fall. See what happens when we get there.

Unsecured REIT bonds. Retail investor doesn't often get a chance and this is one of the last cheap bonds out there. Whether it’s Summit (SMU.UN-T), RioCan (REI.UN-T) or Boardwalk (BEI.UN-T), they all issue bonds. They are considered investment grade. You can get them 1%, 1.5% over Government of Canada's.

Government of Canada 2029 bonds. Thinks that deflation is more of an issue than inflation and longed maturity bonds will outperform. Caveat. They have a volatility to them and can be up or down 10%.

Government of Canada 10-Year Bonds. Interest rates have peaked and are probably going to weaken, especially as the economy itself has peaked and will weaken. These yield about 4.4%. Gives good diversification in your portfolio. As interest rates come off, you will make a capital gain as well.

Fairly good environment for gold however, the trading pattern of gold for the last 12 months has had an enormous amount of institutional money investing in hard assets (metal) as a hedge against the US$. Copper, zinc and nickel doubled. Gold went up about 55%. Concerned about base metals, because if the economy is moderating it will mean lower demand for base metals. Question; If metals drop, will gold be dragged down as it was dragged up with base metals?The other side of the story is if there is pressure on the US$ and it drops, everything priced in US$ goes up and gold could go up. He believes in the latter.

(A Top Pick on Apr 4/06 was Government of Canada 5.75% Bond 2029. This is again a Top Pick.)