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

Canada 5.75% 2029 Bonds 15% annual return. This risk is that lot could happen in 23 years, but he would exit before that.

Views the following as the most important things to consider when choosing a stock. 1. Rate of profit growth 2. Return on Equity (The level of profitability) 3. Valuation

If a recession is on it's way 1. Increase your cash position. 2. Focus on short term bonds no longer then 2 years. 3. Buy quality prefers.

Preferres US Oils over Canadian Oils.

Mark's other 2 Top Picks are not listed on the North American exchanges, therefor are not shown.

Q: Is Central Bank buying of gold an issue and should people pay attention to it? A: Absolutely. If you've noticed, the gold price has had a significant rally since about June/July of last year, this rally outperforms any kind of correlation you could put between the gold price and say the US$ exchange rate. That indicates that something else entirely is going on in the market right now. My belief is that this rally in the gold price is absolutely telling us that there is uncertainty. Gold performs well during periods of uncertainty. The question is, what is that uncertainty. That is sometimes easier in hindsight than in foresight. But a big part of that uncertainty, in my opinion, revolves around Central Bank boring reserve allocation. We'd seen Argentina come into the market and buy gold. I've read somewhere recently that South Africa has come into the market to buy gold. We've heard Russia publicly state that it's going to double the gold in its foreign exchange reserves.Q: Why this after the trend has been to sell gold? A: because the trend has been to sell gold and invest in US$. Now we’re coming into an environment where people are saying the US dollar has been falling for four years. Maybe this is going to continue or resume and so we are seeing uncertainty on a large scale revolving around the US$ and Central Banks rethinking their strategy of selling gold and replacing it with US debt instruments and diversifying out of their US$ instruments, especially the large Asian Central Banks, Japan, China, South Korea. Of those, Japan and China are the 600 lb. gorillas.

A lot of people are bullish on silver. There are many people who would like to see the silver price do what the gold price does. But silver and gold are not the same right now. In the old days, both were used as coinage and so both were money but in today's world we are seeing silver being priced as an industrial commodity and gold being priced as a monetary asset. It does not mean that silver does not have a monetary aspect to it, it does. It does not mean that if the gold price runs, the silver price won't run, it probably will. But the silver market is very different from the gold market today. One thing he does expect to happen is that the silver market is a very illiquid market on a global scale and, if we see the gold price rally, and investment demand come into the silver market, it is entirely possible that investor demand will cause the silver price to outperform the gold price on a percentage basis. If it goes in the other direction, there is a squeeze. As much as he thinks the silver price can outperform gold on the upside, he believes its volatility is going to be much more severer than gold. If you see the silver price run, as with the illiquid junior mining stocks, take money off the table. You have to be invested in these things before they run. When they run is not the time to get greedy.

(This is a question on the platinum market.) Platinum is purely an industrial commodity. There is some jewellery component to it but it is mainly industrial. If we see a slowdown in economic activity, which is his belief that we are going to see at some point, then we could see a reduction in catalytic demand for platinum and that could have negative consequences for the platinum market. He does not invest in platinum for that precise reason. The other thing to keep in mind is that there’s convertibility between platinum and palladium and right now palladium is in the $300 range and platinum is at a $1,000. That means there is an economic pressure on converter manufacturers to switch the ratio of platinum and palladium. It used to be that they used more palladium when it was $1000 an ounce and platinum was $200. They switch the ratios and now it's the opposite. Just because gold is running, it does not mean that platinum and palladium have to run also. If he owned platinum, he would bale out of that market. It's been too rich for him for a long time.

World indices are double-digit is because of Japan. Japan is flooding the world with yen. What usually happens with this is that all the regional 2nd-tier stock exchanges do very well. This is excess liquidity floating around the world. Japan will tighten rates and start sterilising their currency in the New Year and all the stock exchanges, including TSE will go through violent changes. The strong stocks will survive as usual. A lot of the liquidity has gone into the commodities market, and when the tap gets shut off, it will be gut check time for a lot of investors.

The subject today includes many exchanges outside of North America and since this site deals only with North American exchanges, a lot of stocks discussed are not shown. The 3 Top Picks are on Asian exchanges.

Given the heat that Ottawa got on the trust sector, the market has discounted this and he is a buyer again. Has moved from the oilier trusts to the natural gas trusts.

2006/2007 could be dangerous years for the market. The Dow Jones shows a mirror image pullback and these can pull back to where they started. The rally in the past 3 years has just been an extended bear market rally. We are near the end of this run. The seasonal period could be the end of it. US treasury bonds have a series of lows every 3 years or so and in the last 3 years lows came in at 2000 and then there was a mysterious low in 2002 and again in 2004 which seemed to be breaking a normal 6 year cycle of 2 years instead of 3 years. Now in the process of breaking down into the lows again and might even break it.

LIMIT ORDERS - Rather than putting in a market order to buy a stock, use a limit order of a price you want, all or nothing, good until cancelled. If the stock gets there, it will get filled at a priced you want.

Outlook for the technology sector is bleak. One of his concerns is that it is heavily oriented in the end to the consumer and if there is going to be a major weakness, particularily in the US, that's the sector. Would avoid for the time being.

Had been waiting for a correction, but didn't think it would happen in one week. The correction was very much needed by the market. Thinks it is now 50%, maybe 60% over. Expects in the next week or two, the price of oil will break $60 on the downside and will have one more waterfall down. Recommending to buy favourites on weakness which could set up the next leg on the bull market which could go into the 2nd quarter of '06. Small caps have also been hit hard which is creating very, very good buying opportunities.