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

Videotron 7.125% bond maturing 2020, now yields 6%. Thinks it is miss-priced. Cable company of Quebecor. Grown free cash flow. Extra 3% above gov’t of Canada.

If you don't have oil and gas and larger material stocks, you've probably done quite well.

Markets: Toronto has Lagged the US. New York has about 7-11% to call. In Toronto we could see another 1-3%. Bondholders will someday demand a real rate of return. Thinks long rates could go to 4%. We are trying to get the shape of the yield curve right now. Stocks are the place to be generally and for the long term. The only time to buy bonds is when you think interest rates are at a peak.

Nat Gas: Hold on. Has heard rumors of $1.50 or less for Nat Gas but he doesn’t feel that will happen because so much gas will be shut in. Nat Gas will turn in a year or two. Get exposed to it through a company like Bona Vista, not the commodity.

Cad$: As price of oil goes up, so does Canadian dollar. If you think price is coming down to $95 like he does, that will affect the Canadian dollar. If US reduces dependence on Foreign oil and Europe flares up again, that will affect the value of the US$. He would stay with the Canadian dollar.

Markets: Finding it a lot more difficult to find stocks to buy. There is still value there but not so much with his contrarian bent. There are so many people who have been discouraged from markets and low interest rates, they may decided they want to get in now. There is still a lot of financials in the states. Would have loved to have gotten into US real estate. Could be a good chance to jump. He owns CT and is the second time he has bought it. Hemisphere GPS allows tractors o effectively drive themselves. Have record revenues and he is happy to hold it.

Markets: Goldman Sacks says this is a once in a generation opportunity to get into stocks. He agrees and thinks it is a good opportunity to be in stocks and especially dividend paying stocks. Feels bond yields will continue to go up.

You may not see the PE expansion you saw in the mid-80s. You can find great companies that pay great dividends and grow them. Moving up the risk curve is moving toward speculation and that is not investing.

Markets: VT-T, Owned since 2003 at $0.395 but they did a 20:1 reverse split. He is double ion the price now. The acquisition is sad because Canada is getting hollowed out. Good things go and new good things get started. Likes one or two of agri companies. Difficult on Potash. Agrium is a fine company and what a massive retail network, but sit back. Doesn’t think Feds will have a problem with the acquisition.

Markets: Dividends should be a bigger part of global dividends. Canadians know very well that there are two parts of return. Stock appreciation and dividend. As soon as he tries to invest outside of Canada he gets small, medium and large cap companies globally, but should take dividends into account. There is no tax credit but the returns out do the taxes. Buy growth/payout/sustainability stocks.

Indian Banks: Indian banks have avoided the sub prime crisis. Net interest margins have compressed so margins in Indian banks are not as high as they used to be.

Markets: There was nothing really fundamental when the selling started in the recent sell off. He blames young money managers or computers. You have to look at the market from a fundamental viewpoint. Something else was going on and he doesn’t know what it was. There were always skittish investors, but computers aggravated it. There is going to me more M&A. Corporate world is loaded with cash. The Greek situation got settled with a minimum of damage. That problem isn’t going to go away but a bunch of the debt got written down. We were prepared for the Greeks but not for Lehman.

Markets: Market is saying you have a pretty descent recovery going on in the US. Canada, not so. You have momentum behind this recovery in the US and much of the world. Tech, auto, industrials, base metals are good sectors.

Nat. Gas.: Could drop below 2 but will not stay there for a long time. You are going to find some good buys in this sector. Buy be a hero on this one. Thick oil production is still throwing off lots of cash flow. In the short term the trend will still be down.

Markets: A lot of the rally is triggered by liquidity. Finally Japan, who was the holdout, has come out and said they are doing QE. We have seen some better real economic news. This probably still has legs. The break out in bond yields is 10% up in yields of 10 years and 10% down in bond prices. That is really big news. This is the start of a sell off short term and may be a longer-term bear market. Economically sensitive areas have done well in which you should take some profits and there are laggards in the defensive area, where you should the proceeds to.