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

Darvas Box? This is just a matter of studying a list of the 52-week highs. He does this a lot but he wants to see those that have just hit the 52-week high because the 1st one is probably not going to be the last one.

Gold. Everyone is wondering why gold stocks are not keeping up with the price of gold. Has been in a linear rally since 2000-2001. In the early stages, smaller gold stocks outperformed the metal. In the middle stages of the advance, mid caps and big caps came on. In the later stages, the advances are muted. Mid-tier producers are going to do well.

Corporate strip bond portfolio? It is very difficult, especially in Canada, to buy corporate strip bonds. If you are building a “Strip” portfolio, on ladders they should go out to 10 years at least and even add in a few longer-term if you can find them. This can be handy if you have a child's education in 18-19 years, you can have a strip go out that long.

Bond values will drop when interest rates rise. Doesn't that defeat the whole purpose of bonds? Interest rate cycles last anywhere from 5 to 7 years. This is usually followed by an “easing phase of the cycle” and rates drop, when you usually get your very best year in bonds. You can't just focus in on 1 year.

Skyline Private REIT. Because this is a private REIT, they don't report and are not publicly traded so he doesn't know how they are doing operationally. They tend to have smaller apartment buildings, spread out in southwestern Ontario in the secondary and tertiary markets such as St. Catherines or Goderich.

Market: What we saw in the debt ceiling is just the tip of the iceberg. We haven’t gotten rid of debt. It’s a 3-ring circus. We haven’t figured out how to get jobs back and get the economy going. With economy so weak and certainty about the future so weak, corporations are sitting on the cash that they have. US bonds are just a temporary parking space for the global investor.

Market: It nuts or plain stupid. We wondered if the US could have stimulus now. The whole concept of the country in bankruptcy. The US is not going to disappear so we can buy stocks. Gold looks likes it has legs. It has become an obsession. This is closing on toward the end. Institutional investors are not more than a normal weighting in gold. End gale is 6 months to a year or more. If gold price stays reasonably high (14-17 hundred), mining can handle it quite nicely. Will continue to see an expansion on the gold stocks. Canadian investors hang in with good companies and suffer the tumbles on minor aggravations. It doesn’t mean you have to hold everything forever to stay invested. If there is a major bear market, you probably come out at the other end as if you hadn’t sold anything in banks. You have to buy them when they are still down or not sell at all.

Markets. S&P 500 and TSX both closed close to June lows. Surprised by the pullback. Market is starting to realize, with price of gold, they are losing confidence in currencies and governments to get the economy going. This leaves the private sector to get us into a recovery, which means profit growth. Recovery may be more muted and protracted. Still feels we are grinding higher. Earnings on the S&P 500 are about 13 percent higher year-over-year.

Economies. Most recent numbers for both US and Canada were quite weak and we are on thin ice. This whole debt ceiling business is creating an atmosphere of crisis at exactly the wrong time.

1 month Call options Versus 6 month? Likes 6 month Calls because it gives him downside protection. Example. Buys a bank share at $50 and he can sell a 6 month option for $2.50, plus pick up the dividends. He has basically covered himself for 5% off the Call plus he is getting 2% of the 4% on the dividend. This is 7% over 6 months.

Gold ETFs? The ones that he likes are those that are hedged against the decline in the US$. He likes Claymore Gold Bullion ETF (CGL-T).

Why are Cash Covered Naked Puts considered riskier than buying a straight forward stock in an RRSP? There is no way of segregating the funds. If you put in a naked put, you have to have the cash available if the stock is put to you.

30-year-old wants to set up an ETF portfolio. Depends on the size of your portfolio. For example, if you have $25-$50 thousand and every time you buy an ETF there is a commission involved. (Sometimes better for smaller ($10,000?) investor to just go into a bank and buy a Cdn index fund.) You only need 4 or 5 of them.

Gold. Does not believe we are at a secular high and his forecast for the next year is over $2000. Ultimately would not be surprised to see it go well north of $5000. It is not the price of gold that is going up, but the devaluation of global currencies because of large debts. He

US banks? Something for a long-term hold. Wouldn't get into it for three months or a year. At some point, when the economy starts to normalize, some of these banks will have very nice moves. Many of them are trading at historically low valuations.