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

Copper. COPX-N is all the big copper producers. Over 5 years there is nothing remotely bullish. Demand will cause copper to increase and that will require global growth. He is not bullish on copper.

Falling Knives. If he really likes a sector, he sets a maximum position. He buys part of it and then if it goes lower he buys the rest of the position, otherwise he just makes money on a half position.

Oil. He thinks the Iran deal will happen and next year there will be more supply.

Educational Segment. Health of US Economy. It is not nearly as healthy as the bulls would have it. A Chart of Debt to GDP was displayed. Since ’09 it has increased dramatically to 105%. The US public debt was $9.2 Trillion in ’08 and is $18.2 today. It is starting to become a big problem. He thinks interest rates will stay low for 25 years because of the US public debt. He does not think the US economy is actually in good shape.

Markets. He is expecting a gradual cyclical rise in US interest rates because he thinks the US is moving through a faster growth clip, still muddling through, but getting better. The employment is getting stronger and getting closer to full employment levels. Starting to kick in a little inflation. It has been slow and drawn out. Feds will likely raise rates in Sept. and also in Dec.

Fixed Equities and Bonds: He feels that this is a big transition period because the rates of return available on the fixed income market have been very poor. People will be switching out of bonds to stocks as time goes on. His focus is on preservation of capital and not reaching for yield.

US Growth. He thinks we are heading for 3% plus territory here. Starting to see wage increases, We have strong employment, strong housing market and consumer confidence is strong.

Cdn Bond Markets. Preferred share holders have been suffering. Prefers are not his favourite investments. He likes the bond and equity camp . Bonds are ranked senior to prefers, which means bond interest gets paid before prefers dividends do and prefer shares don't grow with the growth of the company. No earnings upside for growth. Too late to sell though and feels that there could be some opportunities. Feels that the preferred share holders should hang on here.

When the Fed raises rates, long term US bonds will drop, but would Canadian bonds follow suit? There is no guarantee that long term US bonds will drop if Fed raises rates. The yield curve could flatten, bonds don't fall as much as you think they would. Canada will probably underperform here. Can't see anything happening here with bonds and our weak economy.

Sherritt bonds 8% 2018 It is always a challenge to hold individual high yield bonds and Sherritt is in hard times and he doesn't like the credit. He thinks it is one of those cases where you might want to get your money back, half of it or all of it. . Real risk here, the nickel market is extremely weak here. They have nickel in Cuba and they have a new project which isn't doing very well. They paid their dividend last quarter, but they recorded a sizable loss. He doesn't like their credit. A speculative security at this time.

Bombardier 7.35% , 2026 bonds (B BBD'B-T) He doesn't like to see individual investors buying specific high yield bonds. It could blow up on you. Bombardier will survive. They will pay their interest and they have good sponsorship. He recommends holding these bonds, but it is a weak hold.

What would a bond portfolio for new clients look like? He recommends 20% in ETFs and high yield managed funds and 80 % in laddered funds.

Telus Bond matures in January 26, 2021, 3.60% Recent shift at the top was a surprise, and could be unsettling for shareholders. However, he feels that it doesn't change the credit and the new CEO, a former CEO, should be able to regain the reins pretty quickly. It fits in with his overall rolling down the curve strategy and having a varety of well diversified group. He favours non-cyclical companies, consumer oriented if possible. He avoids the energy, metal and oil sectors. He respects the new CEO.

Bank of Montreal Bond matures March 16, 2022, 2.12% This is a safety of principle.. The maturity made sense to him. The bonds are relatively close to par, not giant premiums. He feels the bonds are safe because it is with a bank, especially if you own other bonds with shorter maturities.

Shoppers Drug Mart Bond, matures May 24, 2018, 2.36% Likes the credit. They are either A or A+ or A-. They are staying away from triple B securities.