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

US financials. Hasn't touched these since 2006. Even though they look extremely cheap, you know something is wrong when they are not increasing their dividends. Cheap on a PE basis and a Price to Book basis, but their balance sheets are too opaque to know what is going on. There is still more trouble to come in the housing market. Could have recession next year.

Canadian banks for the next 3 years? Has always liked the banks. His favourite right now is National Bank (), which has no exposure to Greece and next to nothing in the US. Cheap at 10-11 times earnings. Flush with cash.

Markets. Market has stopped going down on bad news and we are in an oversold balance on risk assets. Global economy is slowing and likely heading to recession. Would use rallies to sell into them. Deleveraging process is going to take a very long time.

Market: Cameco is only one mine. If something goes wrong, the stock drops dramatically. CCO is a really super power in uranium. He thinks Rio will stick to their price. These won’t get political.

Market: Overnight risk out of China and Europe. Is China taking a hard landing? There are seasonal patters and descent stock valuations. Corporate earnings are quite good, especially in the US. Don’t know when Europe will fix itself so you want to be defensive. US will continue to do well this year.

US$ has become the safe haven trade. Moves up every time there is a scare. Questions if this is sustainable given the underlying fundamentals of the US economy and the weak fiscal situation. As the economy improves and corporate earnings come through and the stock market improves, this safe haven trade may be abandoned to some degree.

REITs. Obviously, we don't know where the world is going from here but right now, they are a perfect investment. Relatively high yield and very safe returns in most cases. The earnings you are getting are safer than they were getting 4-5 years ago, because they have been able to bring their payout ratios down and have been able to extend the term of their debt.

Why did preferred shares drop in March 2009 but are currently doing just fine? It was just a panic in 2009. Currently it is a different situation. Europe is so far away. Also, we didn't have rate resets, shorter-term preferreds that are usually issued for 5 years. Also interest rates are dropping.

For a 55-year-old retiree, what percent of portfolio should be in bonds? The old rule of thumb is that fixed income should be equal to your age, which would be 55% in this case. You should check with your advisor.

Phillips Hager North High Yield Bond fund. Very well-known bond manager with all kinds of awards. Definitely know what they are doing. Probably has had difficulty over the last 3-6 months with the high-yield market being driven up in yield and down in price.

Claymore Advantage High Yield Bond ETF (XGB-T) and Cdn Corp Bond ETF (XCB-T) for someone starting retirement?. This is definitely a way to do it, but the big question is what the weight should be between government and corporate. You should talk to your advisor. Another option is the DEX Universe Bond ETF (XBB-T). This may not optimize what you are doing in your portfolio as these are passive.

Market. Likes valuations a lot but we have all these macroeconomic issues. As long as the market is going sideways he is not doing anything particularly aggressive on either the Buy or Sell side. He is light on cyclicals and long on growth stocks with good dividend yield.

Canadian banks? Feels the banks are pretty solid. Would be more down on the lifecos and a lot of the large asset managers. You have a lot of good choices. Over time you should be able to get a 12%-13% per annum return.

(A Top Pick Sept 29/10. Up 27%.) Gold Bullion.

Market. Some indications this may be a turning point. Haven't quite broken up through the 50 day moving average on the TSX composite, which is approximately 1250. There is a divergence between US and Canadian markets. One makes a peak where the other doesn’t and vice versa. S&P 500 is breaking up into new territory.50 day moving average on the TSX is at about 12,134 but he would want to see it at 12,200-12,250 before starting to buy.