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

Natural gas. Expects it will continue to stay cold. There has not been the massive conversion from other fuels.

(A Top Pick Oct 30/09. Up 11%.) US treasury 3.625% maturing August 15/19. There were more deflationary pressures than most people thought with a good chance that longer-term yields would fall, which happened. Now starting to see a spreading recovery. (See Top Picks.)

Top Short US treasury 2.625% maturing August 15/20. (See Past Picks.) 1) Rates have gone too far down and shouldn't be this low. 2) There is a recovery coming, which will cause some demand in credit to pick up. QE1 and QE2 is pushing on a string. Pumping money into the system but no one is borrowing it.

Government of Canada 4% maturing June 1/41. This has given a good ride and you should take your profits.

Foreign debt? He is a “stay at home” guy with fixed income securities. He would recommend you keep your money in Cdn$ bonds as foreign bonds are too risky.

Real return bonds (RRBs) as a long-term investment? Interest and principal payments are both indexed to CPI. If you buy one today with a yield of 1.15% and you hold it to maturity you will get 1.15% after inflation. If you want to sell in 2 years and yields have risen to 3% you will love lost a lot of money.

Cdn Bank Tier 1 bonds and the Call feature? When Basil 111 comes into being, high yielding capital trust securities issued by the banks, 10% a year will not be allowed after 2013 so will be phased out by 2023. Could be called at par. He would be nervous and would look to see what the bid is. He doesn't have an answer.

TD Real Return Bond Fund? Expensive fund because it charges a higher management expense ratio than if you bought the ETF that iShares has (XRB-T). Has had a great track record because real yields have been falling and bond prices have been rising but there is no guarantee this will continue. You pay more in fees than if you buy an ETF or your own individual RRB.

Ten-year bond ladders. He is a staunch advocate of maintaining the discipline of laddering because you don't know what rates are going to be in the future. You always have a 10th of your money maturing every year and that protects you from inflation as well as credit risk diversification.

Brookfield Renewable Power Bond. 2018 @ 5.25% or 2020 @ 5.14%? Likes Brookfield as an equity investment and their bonds. He would buy the shorter term Bond, 2018.

Uranium: You will get spikes and it will come back down. Look for low cost resources, undermined resources that can be brought to the market as uranium prices move higher.

We have recovered from one of the worst economic environments of his career. He is disappointed that the economy is not stronger than it is. There are some factors that could see the US economy move ahead in the next couple of months. Next year we will have some fiscal drag as the stimulus programs end.

People are giving up on Hat Gas. He thought we may get a bit of a bounce, but not so. It is inescapable not to have some holding of Nat Gas, but he has tried to minimize that. He is bullish on the price of oil on the next 12-24 months. Expected a pullback but did not get what he anticipated. It is putting in a nice base. $90 will be the next stop and before the new year probably. Chinese raising rates had bit of an impact. He is optimistic that the markets are firming here. Sees value in the junior space, rather than the senior space.

There is a lot of noise out there. Just keep in mind what your asset allocation is. Multinational companies are looking attractive. He would not want to buy the US economy but he will buy US stalks because of their global exposure. There are some new ETFs.

Leaps: Long term options. He tends to do options 6 months out, but he doesn’t like to do them longer out.