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

Markets. We’re probably halfway through the up leg of a new bull market. Dow theory states that averages must confirm. Dow internally is stronger now than it was on August 8. Fibonacci Retracement on Dow has retracement of about 38% but on TSX it is about 50%.

S&P 500. Chart shows a rebound bull (from the bear) market from the beginning of 2009 up to early 2011. Rebound bulls are sometimes followed by short bears. Current low is around the corrective period of about a year ago and thinks it will find support here.

Copper. Looks like it is heading for a slowdown globally so the price is down significantly and is fairly oversold. Could see a rebound in the short term but the commodity has to base for 6-9 months. Doesn't see $4 for 6 months.

Gold. Thinks it will get back to $1800 fairly soon. With all the issues going on in the world, she doesn't see any quick fixes and monetary policies are going to be very loose. However, it could pull back to $1300 even in an uptrend. In the short term, she would be cautious.

Markets. We are off 7%-10% just in the last month, down more than 20% in Toronto, US, Europe, Japan so we are officially in bear market territory already. The downside from here is probably another 5%-15% so maybe we end up losing a quarter to a third. When the Europeans do their QE2 and maybe when we get QE3 from the US, maybe we’ll get a turnaround.

Precious Metals. Gold fluctuated within a 10% range within 2 weeks of its all-time highs and then dropped 10% from its all-time highs in 2 weeks, 4 times since (?). After each major correction there is a little bit of consolidationand then it moves to set another high.

Silver. Ratio of silver ounces to buy 1 ounce of gold has widened again. Everyone in the metals market is confident this ratio should be going the other way. Silver is highly influenced by the paper silver market (futures) versus spot silver market. Futures market is so over-participated that if all silver futures contracts globally had to be unwound, silver would have to be over $100.

Markets: Defensive themes stressed. Reality is that Europe has huge problems. Issue is whether Europe can come up with a large enough stability fund that it addresses all of the market’s worries. They are not all singing from the same hymnbook. Greece is spending more money than last year and economy is slowing from last year. More Carnage is possible in October. The risk is that you are not defensively prepared. There will be some sort of government intervention but this time round they are all heavily indebted. We don’t know who will be the last entity standing. Commodities will be weak until all of this is resolved.

Markets. It's basically panic right now. Investors are fearful of double-dip recession, specifically on what is happening in Europe and the contagion of their banks. Feels that panic is unwarranted. On top down analysis, the leading indicators are starting to turn up. There is definitely a growth slowdown in the US but it is not pointing to recession. He focuses on quality growth companies.

REITs. Commercial real estate sector in Canada has single digit vacancy rates in virtually every property type in every region of the country. Bodes well today, but the question is what is going to happen tomorrow. Supply/demand is probably better now than in the last 30 years.

Evaluating REITs? P/E, Price to Book, NAV, etc? If you are going to use it in multiple, use “Price to Cash Flow”, but he prefers is Net Asset Value (NAV).

REIT convertible debentures? You get a fixed income stream with the opportunity to convert into the units. You are higher in the food chain if something goes wrong. They don't make a lot of sense he has a hard time rationalizing them. The underlying security typically pays a higher amount than the debenture.

Last time she came was the first time she didn’t pick a gold stock. Gold has work to do. She thinks we are peaking and is too risky. You are going to look at a difficult economic environment so why look at copper. Why bother.

Gold: Nothing can go up parabolically. Then there is the strength of the US dollar. Gold is viewed as a currency. The markets are selling everything indiscriminately. US is the reserve currency and where people flee for safety.

Market: That was the week that was. The volatility is something that has not been seen before. Day after day. It makes life difficult for a money manager with long-term focus. Europe – you are getting some realization that you have to amputate instead of band-aids. The US Fed is saying things are not that good. They are trying to bring down long-term interest rates. They are admitting that the problems are bigger than they used to admit. His portfolios are defensive. People decide to panic and sell and a lot of really good stocks that shouldn’t be sold are sold. Margin clerks sell what they can. The good stuff gets sold with the bad stuff and that creates opportunities. He has not been buying – it is too early for that.