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

E-Mail for Yesterday's "Top Picks" E-Mail missed including Dennis Da Silva's Trevali Mining Corp (TV-T). Our apologies Bill

Markets. Seeing a lot of dirt cheap stocks that are getting cheaper, due to the irrational and emotional activities in the market place. There are a lot of things on the macro side that are happening such as Italy, Greece, Spain and concerns about recession, etc. Finding a lot of stocks that are cheap, but eventually the market will turn and then these stocks are going to gallop up.

Differences between Growth and Value stocks? In terms of Growth, he is a deep value manager that wants a Tooney for a Looney. These include companies that have high PE multiples, tremendous growth potential, probably trading at massive premiums to Book Value and generally followed by many people. On Value he looks for companies that are trading below Book break up, out of favour and not followed by many analysts.

Markets. Macro events. Europe is going to cause a lot of volatility in the next couple of weeks, but there are also micro events. Earnings for the 2nd quarter are not looking so good. S&P 500 earnings are expected to be down slightly on a year over year basis. 25 of the top 60 Canadian companies are expected to report lower earnings. Markets won’t do very well until we get those 2nd earnings results. Expecting a good rally from late July until the end of the year. Believes the North American markets hit their lows on June 4th.

Investing. 90% cash but getting very close to a very important point, probably within the next 3 weeks. There are a lot of macro and micro things happening in the next 3 weeks, which are going to cause markets to be really whippy but there’s an opportunity not too far away, before the end of July, for a major move on the upside.

Energy. Normally do very well from around the end of January until the end of June. Historically middle of June is when the CAPP (Canadian Assoc of Cdn Producers) conferences are held, which is usually when the energy sector has reached a peak. This year the seasonal energy trade did not work. Historically this has worked 24 of the last 28 periods.

Airline stocks. They normally do quite well in the spring when people are buying tickets to go on holidays. You probably have another month or so.

Wishes he could tell you when the bottom or the top is. All he can tell us is that things look interesting. He sees good valuation for 3-5 year investments. There are good buys if you are going to be patient. Oil sands are questionable as to whether they are viable. If oil goes to $70-$75 then a bit of small oil companies would be sidelined.

Markets. This was a kind of day which reinforces that you should have these things worked out in advance. You should have a hedging platform, you should know in advance what you are going to do and how you are going to react if markets fall like they started to today. You should use markets like this to try to build and add to positions because some of these stocks have great looking yields.

Hedging strategies? Put option on the SPDRs, the S&P, NASDQ or TSX? PUT options are so expensive and when you really need them, they are even more expensive. You Buy one and it expires worthless in about 2 months or you get eaten away by the volatility. For most investors, the way to hedge is to have good asset allocation built in so the cash keeps coming in. Or if you want to be more dynamic, go to Cash when you see the market falling, but this is a tough thing to do.

Fixed Reset Preferreds. These are preferred shares that mature every 5 years and you can either get your shares back or you can have it float to whatever the 5 year Govt of Canada bond is plus the spread. Gives a lot of inflation protection. Have been remarkably successful and he owns a lot of them.

Markets. Technology sector is certainly undervalued given that it has fabulous growth metrics. Many of the good companies in technology are trading at historically low valuation levels. He would probably avoid the Consumer Staples group.

Markets. Heading into earnings season in 3-4 weeks and at that point you’ll start to see some of the good earnings of the good companies come through and that’s were he aims for. Dividends are reasonably important. He likes to have them but he would Buy a stock even if it doesn’t pay a dividend.

ETF Portfolios. He prefers holding the broad market as a core and builds in around the edges with some explorer (?) products. He looks for trends in the market and then buys that trend around the edges of the court.

Vanguard has moved into Canada. How do you compare them with the existing ETF's? You have to love these funds. To be successful you need liquidity and low fees. These have lower MERs.