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

Markets: There has been a bit of a pour on with PMI coming out plus other news. You are seeing investors protesting until they see a viable contagion blockage. A Eurobond would be a bond that would be backed by Germany and issued by the weaker countries.

GOLD sell off: You need to realize that comedies are the most volatile asset class. Juniors are just another layer of volatility. It can be purchased on margin and we saw people going to cash quickly today because of margin. People parking money have to do it in the US treasuring market and this explains the strength of the US dollar.

Markets: Panic selling was going on. A multitude of fears. Default by Greek government and fears around recovery in the US. The expectation that markets are always going to be rational is not valid. The market is starting to price in a US recession. If growth is merely lousy, then stocks are relatively cheap. This level should hold fundamentally, but there isn’t a lot of concern for fundamentals. Market is driven by fear. We could see short-term volatility.

Operation twist by the fed was expected. It was not net new money but it was the emphasis. We have about another week or two to go to see where the market is going. If we break down from here there is a long way to go. There are no net new things going on today. He thinks we are getting an investment bottom.

Deep value means not relative value investing. Only buy things when they are very, very cheap otherwise stay in cash. If market gets hammered and you bought relatively cheap, you still get hammered. Since 2000, Canadian investors have not made money in equities. The real key is to only buy when it is really, really cheap. His outlook is gloomy. The economic news is going to be pretty bad going forward for the next 12 months. Patient investors who hold cash will do well.

Market Bottom. You never realize it would happen until 6 months after the fact. You need to start buying when they are cheap and then continue to add positions until the bottom. The great thing about companies that can still pay their dividends is that the dividends get really attractive.

Economy. It's all about too much debt. 3 years ago, banks had too much debt and they transferred it all to the governments. Now the government has too much debt. How do they get rid of it? Either the taxpayer pays for it on the banks consume it. All it does is slows things down. It is the velocity of money and there is no demand for money. You want high-quality companies that have free cash flow.

If Keystone pipeline goes through, what resource stocks would benefit? It should impact all heavy oil-light oil producers in Western Canada. It's incredibly important.

Convertible bonds? Doesn’t own them in his portfolio but in a high yield portfolio there is a place for them. It is always to how much yield you are getting, not relative to being funded on a senior basis versus the value of your equity. Not liquid at all.

Why do brokers change the subject from absolute yield to “yield spread” over Treasuries? A bond will change in price with the “all in” yield. “All in” yield is comprised of “risk free” yield (government bond) and “credit premium” (the spread). If yields remain the same but government yields come down 1% and credit spread widen 1%, price will remain the same.

Ford Credit Canada 2015. Hold or Sell? Ford itself is doing the right thing to get back to investment grade. They will probably come back pretty soon. Still attractive from a safety standpoint. The only problem is if the economy is going into a double dip, they will under perform. He's buying through the US now because of the strong Cdn$.

(A Top Pick Aug 19/10. Up 3.56%.) BMW Corp. 3.22% due 3/28/13 bond.

(A Top Pick Aug 19/10. Up 10.12%.) CDP Financial 4.6% due July 2020.

Markets - He has a feeling that the US markets want to rise. Whenever there is some European statistic, it knocks the US down. Feels the Europeans are on their way to trying to sort this out. Heard that the US had junk and fraudulent mortgages. In Europe, you are dealing with real assets.

Strategy of selling an option on a dividend paying stock you own? It's a great idea and he does it all the time. He goes 6 months out. It not only gives you your dividend, but an additional amount. Be aware that it is based on the volatility of the underlying shares.