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

Markets: Defensive themes stressed. Reality is that Europe has huge problems. Issue is whether Europe can come up with a large enough stability fund that it addresses all of the market’s worries. They are not all singing from the same hymnbook. Greece is spending more money than last year and economy is slowing from last year. More Carnage is possible in October. The risk is that you are not defensively prepared. There will be some sort of government intervention but this time round they are all heavily indebted. We don’t know who will be the last entity standing. Commodities will be weak until all of this is resolved.

Markets. It's basically panic right now. Investors are fearful of double-dip recession, specifically on what is happening in Europe and the contagion of their banks. Feels that panic is unwarranted. On top down analysis, the leading indicators are starting to turn up. There is definitely a growth slowdown in the US but it is not pointing to recession. He focuses on quality growth companies.

REITs. Commercial real estate sector in Canada has single digit vacancy rates in virtually every property type in every region of the country. Bodes well today, but the question is what is going to happen tomorrow. Supply/demand is probably better now than in the last 30 years.

Evaluating REITs? P/E, Price to Book, NAV, etc? If you are going to use it in multiple, use “Price to Cash Flow”, but he prefers is Net Asset Value (NAV).

REIT convertible debentures? You get a fixed income stream with the opportunity to convert into the units. You are higher in the food chain if something goes wrong. They don't make a lot of sense he has a hard time rationalizing them. The underlying security typically pays a higher amount than the debenture.

Last time she came was the first time she didn’t pick a gold stock. Gold has work to do. She thinks we are peaking and is too risky. You are going to look at a difficult economic environment so why look at copper. Why bother.

Gold: Nothing can go up parabolically. Then there is the strength of the US dollar. Gold is viewed as a currency. The markets are selling everything indiscriminately. US is the reserve currency and where people flee for safety.

Market: That was the week that was. The volatility is something that has not been seen before. Day after day. It makes life difficult for a money manager with long-term focus. Europe – you are getting some realization that you have to amputate instead of band-aids. The US Fed is saying things are not that good. They are trying to bring down long-term interest rates. They are admitting that the problems are bigger than they used to admit. His portfolios are defensive. People decide to panic and sell and a lot of really good stocks that shouldn’t be sold are sold. Margin clerks sell what they can. The good stuff gets sold with the bad stuff and that creates opportunities. He has not been buying – it is too early for that.

Markets: There has been a bit of a pour on with PMI coming out plus other news. You are seeing investors protesting until they see a viable contagion blockage. A Eurobond would be a bond that would be backed by Germany and issued by the weaker countries.

GOLD sell off: You need to realize that comedies are the most volatile asset class. Juniors are just another layer of volatility. It can be purchased on margin and we saw people going to cash quickly today because of margin. People parking money have to do it in the US treasuring market and this explains the strength of the US dollar.

Markets: Panic selling was going on. A multitude of fears. Default by Greek government and fears around recovery in the US. The expectation that markets are always going to be rational is not valid. The market is starting to price in a US recession. If growth is merely lousy, then stocks are relatively cheap. This level should hold fundamentally, but there isn’t a lot of concern for fundamentals. Market is driven by fear. We could see short-term volatility.

Operation twist by the fed was expected. It was not net new money but it was the emphasis. We have about another week or two to go to see where the market is going. If we break down from here there is a long way to go. There are no net new things going on today. He thinks we are getting an investment bottom.

Deep value means not relative value investing. Only buy things when they are very, very cheap otherwise stay in cash. If market gets hammered and you bought relatively cheap, you still get hammered. Since 2000, Canadian investors have not made money in equities. The real key is to only buy when it is really, really cheap. His outlook is gloomy. The economic news is going to be pretty bad going forward for the next 12 months. Patient investors who hold cash will do well.

Market Bottom. You never realize it would happen until 6 months after the fact. You need to start buying when they are cheap and then continue to add positions until the bottom. The great thing about companies that can still pay their dividends is that the dividends get really attractive.

Economy. It's all about too much debt. 3 years ago, banks had too much debt and they transferred it all to the governments. Now the government has too much debt. How do they get rid of it? Either the taxpayer pays for it on the banks consume it. All it does is slows things down. It is the velocity of money and there is no demand for money. You want high-quality companies that have free cash flow.