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

Federal reserve in the US announced another round of QE. It seems the news was already priced in to the market. Has seen more volatility on just interest rate days. And there was the election, which could be a catalyst for the market but it could move the markets 10% in either direction in the next month starting about now. Thinks QE is a waste of time. Any company that is profitable or has a prospect of being profitable is a value investment. Stocks are pretty fairly valued.

US $: This is not a bad time to exchange CAD$ into US$. As it approaches parity he would be quite comfortable purchasing US$.

People can short the index to hedge against their long investments. Concerns now will be noise a little way out. Good fundamental companies will do well in 2011 whereas the indexes may not. Options are a way to get leverage in a portfolio. Premiums associated with options plays are getting rich. In uranium there is still a supply/demand imbalance. He would play it from a stock perspective.

Are Hedge Funds a different asset class? No, they are using assets that other asset managers use but in a different way.

What to do based on US election results? Both parties will have to print money. You will see a lot of inflation down the road, even if deflation short term. He would go overweight resources.

When you write a covered call you should enhance the long-term return on the underlying stock. He rolls them over every three months.

Delta hedging. Templeton suggested he would isolate his good stock picking by shorting the index. You have to decide on the optimum ratio of long to short, for example 3 to 1.

Man Investments: Great strategy. Largest hedge fund (65 Billion) in the world. Good company, great strategy. They have computer models that follow trends in the market. They do well if market is trending down or up for a long period of time. Don’t do well in sideways markets.

Vertex Fund: One of the biggest hedge funds in Canada that no one has ever head of. They don’t use a lot of leverage. Equity fund. A Multi strategy portfolio. About a Billion dollars. Almost 20% a year since 1996 through the up and down times. They write covered calls. Right now they have options on gold. Very little money at risk, but if gold does well they make a lot of money in the next few years.

Northpole multi-strategy Fund: Very good risk controls, hedge by shorting the index. Canada’s oldest hedge fund company. Were trading beaver pelts in the 1800s. Usually equity based strategies. Not a lot of leverage.

CI Global opportunities: This is for the bears out there that think we will have serious inflation, currency devaluation, and economic collapses. Up 107% in 2007, 50% in 2008.

(Top Pick July 14/09, Up 27.79%) Picton Mahoney Long-Short Equity Fund.

(Top Pick July 14/09, Up 6.53%) Arrow JC Clark Opportunities.

(Top Pick July 14/09, Up 37.97%) Sprott Hedge II.

He doesn’t get good demand numbers out of China. At least in the near term, metal and gold prices are going to do quite well. Gold production has been declining as the price has been going up. Companies are paying top dollar for good deposits in takeovers. The higher the margin in production, the more likely they are to be taken out.