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

Natural gas. Virtually every commodity on the planet has gone up except for this one because there is a ton of it and demand has been weak. Looking for this to change in 2011 and feels it is attractive. Would invest in something like Encana (ECA-T) as a way of participating. (She owns this one.)

Natural Gas. Recent technological improvements have meant that reserves are coming out in abundance so can’t see prices going up from here.

He is more concerned with valuations. REITs came back to fair valuations in 2010 and then some. The universe if fairly valued at present. If you are in REITs for short-term gains, you should take profits. If you are in them for stable long-term returns, then stay in them. He is seeing money coming out of Income trusts and into REITs. Beginning in August he saw daily net flows into his funds double. New accounting standards will increase volatility in the Real Estate sector. However intrinsic value of a company is still based on free cash flow. Fundamentals at present are great for Real Estate.

Not a lot has changed since 2009 except overnight bank rates. The Canadian yield curve has rallied. There is not really any value at the short end and the risk is too high. At the short end, rates are as low as they are going to go. Prefers corporate bonds. Investment grade bonds are very attractive. Ireland or Greek credit problems will cause volatility.

Aeroplan Bonds: 6.95% 01/26/2017 The improving economic theme and the Aeroplan card attached to purchases. Broad customer base, deep penetration. Not all miles get redeemed (over 20%). Good cash flow, modest debt, and good franchise, higher income individuals.

Foreign Debt: If he wanted it he would stick to high quality debt such as Australia or New Zealand.

Navigation Canada Bonds. Related to airports. Monopoly on managing airport landing, gate fees, etc. Regulated business with strong cash flow. You wont get a lot of spread comported to provincial.

BMG Bullion Fund. Has 1/3 gold, 1/3 silver and 1/3 platinum giving you a spread of bullion. Has done better than the gold stocks he owns. A low charge fund.

Been staying away from US but now looking at a couple of consumer stocks including Johnson & Johnson (JNJ-N), Proctor & Gamble (PG-N). Also rail with Union Pacific (UNP-N). On the assumption that they’ll lose on the Potash (POT-T) deal, he is considering BHP Billiton (BHP-N). Would like to see these 2%-5% lower.

Canadian Banks. Has a fair size weight in Cdn banks except for Bank of Montreal (BMO-T). Will be slower going forward. Expect National (NA-T) will be the first to declare a dividend followed by TD (TD-T). Valuations are not cheap, but not overly expensive either.

Coal. An absolutely terrific time to Buy coal companies. Commodities are going to do well in this environment. Likes Alpha Natural Resources (ANR-N).

The market has been going up for a while, especially since US announced the quantitative easing, which causes commodity and stock markets to go up. The US$ has been weak. But in the last couple of days there has been a reversal. It caused the stock market to reverse today. Thinks QE2 is off base. Companies are flush with cash and don’t want to borrow it. They need consumer confidence. What is need is fiscal policy. His stock picking methodology is just staying the same.

Preferreds: Owns preferred shares for some of his taxable income accounts. He only owns some preferreds. Lower percentage than bonds. They trade like junk bonds. It’s getting harder to find good quality preferreds.

He has made money off gold stocks. It hit 1400 today. 3 things the US wants to do is inflation, lower currency and introduce austerity measures. When the gold bubble bursts there wont be many exits. It will be brutal. He’s 10% in Gold with half of that in ABX.

Gold isn’t going up so much as paper currency is going down. It is very positive when the US$ goes up at the same time as gold. Gold $1300-$1500 by year-end. He’s not looking for a pullback but it certainly could happen. Loves silver. Over 650 years, Silver has been 1/16 th the price of gold. It is 1/50 th now, so silver has quite a way to run.