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

Markets: Canadian $ getting stronger and equities going down. Forex traders have been dumping the US$. Maybe at some point this will settle down. Maybe when it is $1.04 Canadian. When European situation comes down to the forefront you could see more bit back into the US$. There will be a lot of volatility. The markets have been waiting for a bailout in Europe. You could see a haircut in a couple of sovereign debt issues. Portugal refinanced at 7%. The key issue is going to be Spain. Favourite part of debt market is the 2-5 year corporate debt. Likes the banks. He has never seen the balance sheets so strong.

Bond Funds: depending on the type of the manger and the duration of the bonds. 2-5 years is good since the manager can mitigate the interest rate risks. Typically these funds under perform as interest rates go up. He prefers to hold the bonds directly.

We were in this secular bull market in commodities driven by the emerging developing world and now we have a shock factor on top of it. You have to pull those 2 things apart and make sure you analyze the right pieces. The secular trend in resources we have from the developing world is ongoing but the middle east is an event and should be a shorter term thing. Don’t get caught up in it too much. He has started to lighten up on oil stocks.

Natural Gas. There is actually a Bull market in natural gas. We have gone from a 6 year reserve life to a 100 year reserve life. We just have too much of it so the price has gone down.

Natural Gas. There is actually a Bull market in natural gas. We have gone from a 6 year reserve life to a 100 year reserve life. We just have too much of it so the price has gone down.

There is no sign of the gold spike coming to an end. One tends to worry. It is a strange world at the moment with all that has been going on for some time – interest rates, depression in US housing, then financial problems, and then massive wave of revolution and discontent bubbling up to the surface in certain Mediterranean countries. It’s all very unsettling. What ever happens in Libya, the oil price comes down afterwords about $10. He is telling investors to expect massive and sudden moves in the market both up AND down.

Silver – This could be the decade for silver. Gold/silver ratio is currently 50 to 1 and feels it could go to 30 to 1 or even lower.

Market: We have high food and fuel prices like the 70s. Commodity stocks were doing well but everything lese was doing fairly poorly. When you have 10% unemployment in the US you can’t pass increasing commodity prices onto the consumer. We are still in the early innings of this game. It will carry on for the next decade.

China: He was on a trip there recently. What is overwhelming is how dynamic it is. He found it unbelievable. Saw mines, steel mills. There is a 450Km/h high speed train that is where a farmer’s field was last year. A huge number of people are entering middle class here and are starting to consume.

Market – The big wild card is the price of oil. If prices stayed at this level for the rest of 2011, it would take 1.2% off the US GDP, which is not good and they are very vulnerable. Globally, in the developed world, recovery is on but it is still fragile.

Market – Some fairly serious issues in the middle east right now and oil has been spiking quite a bit lately. Oil functions very well at $50, $60 or $70 but at $110 or $120 that could put a real crimp on recovery. Between the oil and high grain and high commodity prices, there has to be some inflationary events that show through. Eventually rates will creep up as people demand to be paid for the volumes of debt that is circulating. Feels the market is due for a set back. You have to very pick about what you pay and where you place your investments.

Because of high oil prices and the fact that it cold stay high and affect the economy, she is switching economically sensitive sectors such as copper and industrial products into oil.

Markets: Is like a value investor. Looks for companies or sectors that are beaten down. Must have gone down at least 33% in last year. Looks for a sector out of favour. People are moving back into the market. There is a tendency when the market is out of favour, people run from it. It is harder for him to find opportunities in this environment. People tend to make the same mistakes again and again. There are good reasons to be skittish. They have not dealt with the problems in the market – liquidity, debt load, hedge funds.

Natural gas: is a great play, although it has gone down recently. He owns Pengrowth and is happy to collect the dividend, although he would not buy it right now. It’s a contrarian play. It has to rise eventually. It is a supply/demand thing.

Gold and Silver: Both had tremendous moves. People are looking in other areas. If you are looking for a better kick, gold stocks are better than gold itself. Gold and silver are not particularly exciting to him right now.