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

Economy. There is a strange phenomenon of a number of sovereign bonds showing negative yields. Bond market is a preservation of capital and this indicates people are fleeing to safe havens. This is unprecedented right now. Europe is going to come to grips with their situation at some point. They're getting more serious about it on a daily basis. Nothing is going to happen now until September at the earliest. There is still a huge fiscal issue out there and a huge bank recapitalization issue that has to be addressed as well.

Factors of Shorting equity versus Shorting a bond? 1st of all, can you borrow the bonds? Next, you are liable for the interest that is accruing on a daily basis. If that interest is greater than the cost of borrowing, then you will lose on a daily basis. You don't short bonds unless it is in the quantities of 1 million or multiples thereof. There are a lot of risks involved.

Good information source on current fixed-income issues in the market? First place to turn to would be SEDAR. When you go in there, you can access any document issued by a public company.

Province of Ontario 3.15% bond maturing 2022. This will stand to benefit on the further increase in the flight to quality.

Markets. Doesn't know if we will have another severe correction unless the euro zone situation really collapses. Right now, she is waiting for more visibility as to what government intervention she'll see and what the global growth indicators are, going forward.

Preferred shares. Good to have as a part of your fixed income component. She targets 20%-30% for a balanced portfolio. She prefers the retractable ones, which act like a short-term bond. Also likes the reset rate ones. Doesn't like perpetuals which are very sensitive to interest rates. There are ETF's but the problem is, they hold a mix of all of them.

Markets. We are seeing an appetite for yield in these markets and this is manifesting itself in a whole host of ways, most obviously in the sovereign debt market where 7 to 8 countries have negative yields. This reflects a fear on the part of large institutions who are looking to park very large amounts of capital into something that is reasonably safe and liquid. High dividend paying stocks have done fantastically well and he expects that will continue to be the case. High yield debt and investment grade corporate bonds will continue to do very well.

Where are you looking for growth in this economic cycle? He can't point to one area of low hanging fruit in the equity market where growth outlook is absolutely certain, valuations are fantastic and dividend yields are high. You have to look at things on a company by company basis. Look at the organic growth rate of individual companies, which is a pretty powerful testament to the quality.

Markets: The ECB has been disappointing us for 4 years so he didn’t know what the market was expecting. He suspects they will not do anything that will impress the markets. Earnings have been OK. It is a news driven market and sometimes it makes you pull your hair out. He wants to look for fundamental value. If a stock is weak people kick it out of their portfolio. He would only buy with the right name, valuation, etc. He tiptoes around the minefields.

Markets. Very dangerous to make an assumption that just because the market is not doing well and the economy is not doing well that the markets go hand-in-hand with the economy. We are seeing record corporate profits and yet a weakish economy. When all the bad news is factored into the market, there is a chance for it to go higher.

Markets: Companies with good earnings are moving up while others move down. People are fatigues with all this macro news. Junior resource companies that have done well have done well in valuation. When market gets tough you to back to the balance sheet and the fundamentals.

Markets. Kind of dreary. World’s problems are all still there plus a few additional quite serious ones. Always cynical about money being thrown at problems. Looking forward to November when the US elections start getting into gear.