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

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.

(Top Pick Oct 6/09, Up 14.30%) Gov’t of Canada 5.75% 2033 Bond

Every week has volatility. We have discounted potash. QE2 is pretty well priced in. Money velocity is dropping. This is one of the ingredients of deflation. He is neutral between bonds and stocks.

QE expectations were a big reason for the run up in the markets. Doesn’t think the Fed even wants to do QE but they are boxed in. There might be a little bit of a sell off on the announcement. Usually after the election it is a great time to be in the market, but this time might be a little different. He is expecting a strong 6 months, though. Doesn’t see a big correction at this time. The markets are too strong. He is 95% in cash in his HAC fund – since May. His finger is on the trigger.

Shorting: in his book he has included a few strategies. He shorts using ETFs.

Currencies: US$ has a weak December because countries repatriate their currencies. Then US$ has a strong January.