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

Markets: August is always a quiet month in his business. Europe is on holidays in a big way right now. Tricky situation in Europe. Investors are very nervous. Multiples are around 10x, which is quite cheap. From a corporate point of view things aren’t that bad. He has been buying over the last 3 months. He is trying to upgrade the portfolio during this time. He adds to those names when they sell off. Thinks slowing of Chinese growth is great. It is a soft landing and a landing that was necessary.

Markets. In the near-term, the North American markets are starting to get closer to the overbought level so near-term, there might be a bit of a pause. Have been seesawing upwards since early June. One of the things you might be looking at is a seasonality pattern. Typically August and September tend to be volatile months. In September, over the last 20 years, only half the time the market is up. Two thirds of his portfolios are defensive, lower beta, high dividend stocks. At the same time, he is opportunistic on price weakness of more secular, long-term, solid growth companies for the other 3rd.

Markets: Market is dead and weather is good and that is a good combination. She always trades. It is tough to trade the small caps but you can always trade the large caps. You pick the names you love and if the name sells off, you pick away at it. If there is strength after a report then you peel some off. On a bad day, then you buy it back. Pick a price point and if it hits it then it does and if it doesn’t then it doesn’t. You have themes you like and themes you don’t, not sectors.

Uranium Stocks: Likes Uranium. Japan just started reactivating some of their reactors. One of the largest mines has said they will post-pone expanding the mine and probably because they see slower demand. She sees a balanced market. She doesn’t see forecasted shortages. It will take Japan a wile to reactivate ALL their reactors.

Interest rates. Low rates have never been better and have been a phenomenal period. REIT sector has been able to refinance at lower and lower rates. Yields are great and the risk rate of return is phenomenal. There are a lot of signs that things are gradually improving.

Asset allocation in a REIT portfolio? First of all, you have to be diversified. Then you look for the best names and identify the best management. He is the most swinging is in the US because they are you can get prime downtown New York offices and then you can get apartments. Go for the good ones which will compound your returns.

Valuations of REITs in general using Riocan (REI.UN-T) as an example. Trading at a 43% premium to its NAV, which is pretty high. 4.8% yield has been higher in the past. Are these REITs still worth buying and is this the top of the market? This is back up to the peak it was in 2007, but they have all grown, matured and have better balance sheets than they had before. The question is, for the long-term can it generate interest? Payout ratio is not too bad. They have done a lot to bring their debt down. Very innovative in some of their projects. Wouldn't worry about the NAV.

Markets: Doesn’t even look at the index during the summer. He shorts a few large caps. In he world he sees there is no growth. You have to pick your spots. You need companies that have had problems and are fixing them. You make money if they are small and un-followed. Don’t count on any macro growth. Wait until a stock has [produced tangible improvements to it’s fundamentals before buying.

Junior oil and gas producers: They are very much beaten up, why: Investors are worried they will not raise the money they need to go into production. You have to be careful. You might want to hang on if it is trading for a big discount to its net asset value.

Rare Earths: He does not own any. Chinese have a strangle hold on it. He does not like to go there and does not trust it.

Markets. Thinks that people are getting a little more enthusiastic and deciding that we are not having a recession. Thought that there was a lot of move out of the market, really still post 2008-2009. As bond yields get lower and lower, people are finally deciding to get into the market. Commodity stocks are terribly beaten-down and they can go up a long way before they approach anything that he thinks is fair value.

Regarding the July 31 TOP PICK. My apologies. On July 31/12 a Top Pick by Barry Schwartz was shown as Assisted Living Concepts (ALC-N) and this should have been Algoma Central (ALC-T). BNN’s TV screen had the ALC-N shown instead of ALC-T. I used their info instead of double checking. This has now been corrected. (We’re having enough problems with our new site without needing any problems from BNN. Bill ;>)

Markets: Likes the positive news on jobs considering the last couple of weeks. He is not aggressively buying because of the headwinds. The most upside is with Nat Gas because it has gotten so beaten up. Once LNG plants get up and running that should be good for Nat Gas. The hot summers is helping also.

How does premium income from selling options get taxed? This is treated as capital gain. You have to be a little careful that if you were selling now and the option expires in December, that's fine because it is in the same year. If it didn't expire until March, you would still be taxed on it this year.

Covered call strategy ETF's that outperform the market? This is the nature of covered calls. People will look at the yield these things are offering and think that is what they are going to get. The yields are actually predicated upon what is happening in the stock. You have to decide if you like the particular sector. He likes the ZWB-T.