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

Due to technological improvements in drilling, (Sideways drilling and fracking) The US oil reserves are starting to look good. Is becoming more independent as far oil is concerned.

Markets: High profile investors talking about housing sector, showing signs of life. A lot of people are not fully invested. We got a scare earlier this week. We needed a 3-5% pullback. We will see how it plays out.

Canadian Junior Biotech: Two negatives. 1. He is not a research scientist so has to rely on other people’s research; and 2. There are not a lot of companies in the space. Make sure you buy a basket that come highly recommended. Big pharmas are desperate to add things to their pipelines.

REITS: For US high income REITs, they buy backed mortgages. Find out how they are hedging their interest rates. Sensitive to rates going up or down. Be careful.

Markets: The Greek debt deal will be positive for markets, which are sensitive to any bad news. It has gone through and now we can focus on economic growth. Never thought US would go back into recession. Slow positive growth. China is targeting a slowdown, so that will materialize to a 7.5%-8% range. Europe is in a recession, which we expected. A market pullback or consolidation would not be surprising being the strength we had but she remains constructive for the remainder of the year.

Markets: Canada is very good at financing people to go out and find things, but biggest challenge is ‘where is the money coming from to go and build your project?’ We have another year of financial crisis in Europe. Canadian banks don’t debt finance mines. The money comes from odd places. You have to ask if the team is capable of actually building the mine.

Graphite: Buzz about it. If it is a minor metal or industrial product then you have to be careful of the market cap. You have to buy it with a 5-10 million dollar market cap.

Markets: The cost of production across the board has risen in tandem with the metal itself. Margins are not expanding. They need to find deposits they can put into production at less than the normal cost. Cash costs have doubled in the last 5 years. Reserves are tough to replace. Discoveries have been declining over the last couple of decades. The odds of discovery are really quite low, stunningly poor. The chances of finding a 4 million oz deposit are 1 in 10,000.

Markets. Feels they are down because of the stronger US$. From the point of view of a buyer, this is not an ugly day. This is a wonderful day as stocks are on sale.

China. If Chinese people are allowed a little bit of freedom, they generate a lot of wealth. To the extent that they are allowed a little more freedom at home, he suspects they could carry all of us but they have a financial services system and a political system that makes decisions in a closed loop. Planning doesn't work. It’s markets that work.

Market. There has been a tremendous rebound rally that started in October but during that time, buyers didn't get much chance to enter. All sold a lot of Shorts were squeezed out of their positions. Some of the riskier sectors like materials, golds and industrials, their longevity has been in question. They've only recovered half to two thirds of what was given up last summer while the leading sectors went on to make new highs. There now is a vacuum in the market. He believes the long-term leader in this market continues to be defensive, yield driven securities.

Gold. Thanks this is in limbo/consolidation right now and may be able to trade to 1600 on the low-end. He prefers buying parts of the market that are seeing new inflows of capital and he doesn't see that in this group right now.

How would an average investor “follow the flow of money”? You make money when investors come in behind you and are willing to pay higher prices so he is always looking for neighbourhoods in the market that are seeing net inflows of capital. A very good place to find data is on the Internet at www.dorseywright.com/. He will only invest in sectors that are seeing expansion and breadth.

Bonds or preferred shares? If you went back over 20-30 years, the very best performing part of the equity market hasn't been the highest dividend payers but are those with a good dividend but one that has grown substantially over time. Preferred shares, for the most part, offer a fixed rate of return so it is like buying fixed income. He prefers common shares that have growing dividend yield.

Market. Pessimists are now coming around to the realization that the US is getting its act together, Europe is slowly getting its act together and even China is having a soft landing. You should be prepared for China's growth to be in the 7% to 8% level versus the 9%-10% that has been in the past. Expect that corrections this year will be shallow.