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

Would you purchase zero coupon bonds for a retirement portfolio and are they safe? When looking at these, you should 1) look at the term i.e. how long they run and 2) the credit rating of the company. Most of these are pretty safe.

Perpetual versus Callable Preferreds? Given the background of interest rate increases, he doesn't think there is a lot of danger in perpetuals. About 40% of his fund is geared towards perpetuals.

When do you sell for a gain, a Reset Preferred resetting in 2014? As you get closer to the reset date of 2014, the company will have an option to call it back or redeem it from you. Up to that date, it will start eroding back to $25. A lot of people have started trimming them off already in order to lock in their capital gain.

Is it a little early to get into floating rate bonds given that interest rates are not likely to rise? Yes that is correct. Use these in a rising rate environment.

Markets. This is a market where investors are continually searching for good news and overreacting whenever there is any positive or negative announcement. GDP growth is very slow and we are coming out of a financial recession. Consumers are paying off debt which takes a period of time. Unfortunately, our governments are going further into debt. Expect we will continue to see very choppy growth in employment. Value investors will be able to pick their spots as markets retreat from time to time. People should be prepared to take profits when action is on the positive side.

Gold. BRICS Countries (Bazil, Russia, India, China and South Africa)) recently stated they will be setting up their own banking system. Gold will give these nations a monetary constant, which they need to do business among themselves. We are seeing a breakup of the current monetary system that no longer works. The only way to keep the current system is to print money, which is very good for precious metals. What is happening to the BRICS nations is even better, because no one is paying attention to it.

Molybdenum? Used for rust prevention, especially on pipelines. In order to replace old pipelines, we need more molybdenum.

Markets. Last year Europe was not on most investors’ radar screen. Now everyone is hunkered down and ready for it. Also thinks the policymakers are a little bit further along. Any sort of weakness you get from Europe, at some point you are going to want to add to quality positions. There are a lot of supportive factors such as the Fed yesterday, China that has widened their currency band and earnings in the US have been great. Valuations are still relatively attractive.

Sentry Canadian Income Fund? Claim they can take some of the volatility out of investing but still returning their dividend income monthly. MER is over 2%. Thoughts? Mutual funds can be a very good way to go. If you have good active management that can really identify the companies that are more likely to grow their dividends, it is worth it to pay for that active management.

RRIF. Canadian dividend stock versus GIC? Depends on your risk tolerance. You are better off having a dividend stock in a taxable account so you can enjoy the dividend tax credit. He would prefer dividend stocks.

Economy. US Federal Reserve has reconfirmed they are not going to raise rates for quite a while. Even more important, it doesn't look like QE 3 is going to happen. There is enough liquidity in the system. Economy is growing; it just doesn't feel that great. Still has high unemployment and GDP growth of 2%-2.5%.

City of Toronto bonds? Most cities are not allowed to run deficits so the credit quality of cities generally is a great thing to have. Has never owned city bonds as the spread is not great enough for him. He prefers AA or BBB bonds.

Markets. We are currently standing on very thin ice. Key issue will be May 6th when there will be a German state election, a runoff in France and elections in Greece. Following this there will be a Dutch election. The sum total of what will be involved is probably a delay in implementing fiscal austerity measures and budgetary controls. Thinks we go back to square one. Investors should not underestimate the potential seriousness.

Natural gas. Thinks we're going to see the low point in pricing this summer, maybe into the fall. There are some rumours circulating that some major, very large institutions are starting to buy natural gas stocks. Assuming that natural gas bases at $2.50 and in 2 years ends up that $3.50, the best leveraged companies are Advantage (AAV-T) with a potential of 95% increase in cash flow, Progress Energy (PRQ-T) would have a gain of 105% less a yield of about $3.96 and Peyto Energy (PEY-T) with a 38% increase in cash flow and a yield of about $4.60, Arc Resources (ARX-T) and Bonavista (BNP-T).

Gold. If Europe falls apart or looks like it is going to get difficult, he thinks there will be some nasty inflationary implications, fears about a Euro breakup which will result in gold going much higher.