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

90-Day Treasury Bill, US or CDN. Equities will be under downward pressure until reporting of second quarter results. Companies are giving negative guidance about their second quarter. Once you get past second quarter results it is not so bad.

30-Day Treasury Bill, US or CDN. Equities will be under downward pressure until reporting of second quarter results. Companies are giving negative guidance about their second quarter. Once you get past second quarter results, it is not so bad.

Commodity stocks. They had been under a lot of pressure lately and a lot of people believe that the commodity trade is done with China's slow down and US$ rising. The liquidity trade has been really responsible for a lot of the move in commodities but he is a real believer that the long-term is still going to be strong there. Stocks have more than discounted a lot of that. There has been a lot of selling from non-Canadian accounts on the institutional accounts as well.

Canadian Banks. They continue to be in good shape. They are not big discounts to the overall market or the overall banking sector globally. There will be some headwinds for at least the next couple of quarters. Doesn't expect there will be huge gains for them.

Gold Stocks. Companies keep having problems with these giant mines that they keep trying to open. This has been the real issue on the devaluation of the stocks were you have taken the premium out. People have been playing the ETF's directly for that reason. Why take all that risk so why wouldn't you play them directly. However looking at the valuation of the stocks compared to bullion, you can buy some of them at 8X earnings and 4 to 5 times operating cash flow. He'd rather by the company.

Natural Gas. You are still getting excess production but, although he is not saying he is bullish on it, he doesn't believe the people that say it is going down to $1-$1.50 MCF. It is more likely we have seen the bottom for now. FV is probably around $3 MCF.

Resources. The last 12 months has been an incredible difficult mid-cap, small-cap market where there has been an incredible wave of speculation and things running up and then dying. It gets really complicated and each commodity has to be separated out. He always looks for very high quality project, high quality management team, low-cost producer and reasonable amount of debt. Mining is a bad business. It destroys capital over time. You have a depleting asset base and the incredibly expensive to put new mines into production.

Gold bullion and mining stocks? Gold almost reached $2000 and is pulling back gradually in a consolidation phase but didn't collapse. Valuations have really gotten cheap at the same time that political risks have gone up and costs of building new mines has become punitive. Companies themselves have become compelling and he is just trying to find one in the sweet spot.

Silver? It will probably consolidate in the low $20 with support at $25. If you are playing silver itself, you are speculating on the pure commodity in which case the price has to move and you're not getting any additional benefit by owning a company. Silver stocks are really expensive.

Canadian fracers in the oil patch? You have basically gone from a 6 year reserve life in gas to a 100 year reserve life in gas. This is a technological change that has changed everything. The companies that have benefited are the fracers in this area is so incredibly volatile. If they have a little blip, they don't make any money. The one he likes is Calfrac Well Services (CFW-T) which seems to be a bit more consistent on the profitability side, but it is not cheap enough.

High-yield investments. It is becoming very difficult for people to find traditional places to hide in income oriented equities as they are trading at very high valuations compared to the past. Now is not the right time to sell these as interest rates are very, very historic lows. Doesn't expect interest rates to move significantly higher in the next 12-24 months.

99 Cents Only Stores 11% Bond maturing Dec 15/19. About 300 stores across the US predominately in California. He can see them expanding beyond California and moving into other states.

Markets. Expect the markets to move higher over the next year but not without some volatility. He is constructive on US stocks. There is lots of choice.

Thoughts on a basket of the sin stocks, such as alcohol, tobacco, firearms, etc.? You have to be selective and look at it from a bottom up standpoint. There are many that have done extremely well. His view is that there are lots of opportunities out there and if he is facing moral headwinds, why not go with others?

Markets. Finding some bargains. Market is like a coiled spring. The lower it goes, the quicker it can snap back. Feeling quite positive about the outlook for stocks but we are surrounded right now by headlines and fear. How long this can continue, who knows. You have to use valuations as your benchmark. S&P is trading less than 13X this year's earnings compared to its usual 16X, so there is upside once we get through this.