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

Shorting US 2 and 10 bonds after European crisis winds down? The risk is that yields continue to go down. For an individual to short the bond market is very difficult. To do that you might have to use an ETF, which can be really leveraged. Very risky and complicated for an individual.

Real Return Bond ETFs? Yield on real return bonds is almost 0. You should get a return of 2% over inflation. If you own them, he would sell. Returns have been fantastic. If nominal yields rise and inflation expectations stay the same, these will sell off in price substantially.

How risky are BBB rated bonds such as Calloway Real Estate (CWT.UN-T) or First Capital Realty (FCR-T)? Likes these 2 credits particularly. REIT sector has had a really good run and is still a comfortable sector to be in on the equity side. Dividends are well protected and interest payments are even better protected as they get paid out before the dividends.

Coupon, province of Ontario bond due March 8/23? This is an interest payment that has been detached from a regular bond. Very volatile instrument and has had a tremendous run in the last 2 years. He would be tempted to sell. For them to continue as well, interest rates would have to go down another full percent.

Investment for a fixed income portion of an RRSP in today's low interest environment? With be allocation and duration of investments? #1 He would build a portfolio using conventional interest paying instruments. He likes 1-10 year maturities. GIC's for 1-5 (yielding more than almost all bonds). Investment grade corporates for the 6-10 year term. #2 He would look for short-term (under 5 years) corporate strip bonds and for longer-term would look for provincial strips, 6-10 years.

10-year bond ladder with a minimum bond rating of BBB. Maximum percentage allotted to each credit and/or sector? Would put no more than 10% in any one credit or 10% in any one particular sector of the economy.

Floating Rate Bond ETF such as HFR-T or XFR-T in anticipation of rising interest rates? Not a good place to put your money. Also it does not appear as though short term interest rates will be rising anytime soon.

Italian 10 year bonds? He has a very good outlook on Italy because he doesn't buy a lot of the criticism that they are coming under. 7th largest economy globally. 4th largest gold reserves globally. It runs a primary surplus. High risk transaction because you have the value of the bond plus the value of the euro versus the Cdn $. If you have a speculative inclination, this is a good value.

$20,000 bond coming due on an 8-year ladder. Should he renew at 4% or go shorter? He thinks you should keep the ladder intact. 4% is a reasonable rate in 82% inflation world.

Markets. Has become marginally more positive on risk assets over the last couple of months. European sovereign debt spreads have come in a lot, which is a positive change underlying the markets. There is now more noise out of the US Fed about low interest rates continuing for 2 1/2 more years.

Markets. Believes we are in a bull market. NYSE advance/decline line has broken out. Dow is now at its old peak of 2011. Chart shows a pivot point occurring at the end of October. Ance we clear the pivot point, it is an indication that the bull is assured. Expects there will be a little bit of selling but it should not be very aggressive. It could meander sideways for a couple of weeks.

Semiconductor industry. Rose about its pivot point this week. It will probably sell down a bit for a few weeks and then start moving again. After that, the upward trend should start again.

Markets: Looks more on the short term to see a direction. Primarily on the down days there is recovery and then follow-on. It looks like we are in a bull market. Getting close to 200 day moving average on S&P. That will give another group of people the interest to buy some more. He is getting rid of stocks that don’t do well when there are inflation worries. You are seeing negative returns for bonds this month. Reducing income oriented investments and getting more into momentum investments.

Silver: Some correlation between this and gold. It is in a downward trend in a trough. Don’t expect too much out of it and expect it to consolidate about the $30 level.