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

Canadian banks? Have had good recoveries since 2008 but are currently fairly valued and trading has been slowing down. Decent dividends. His preference would be Toronto Dominion (TD-T) #1, Canadian Western (CWB-T) or bank of Montreal (BMO-T) #2 and if you are more adventuresome, CIBC (CM-T) as #3.

BMG Bullion Fund. Gives you platinum, silver and gold in equal parts. Relatively low cost. Thinks gold is in too much in the spotlight at times and is being manipulated at times, while platinum and silver tend to be more stable. A way to play inflation, commodities, etc.

Usually it’s low volume, often negative in the summer. A lot of reports coming in. Markets are focused on positive earnings. There are some negative and some positive reports on the economy, jobs etc. It’s any one’s guess. We tend not to see strong moves in the market place this time of the year. He is concerned about drops later on.

Natural gas falls into a strong seasonal trend. Best time to invest is August until Dec 21 st. A drop off occurs because of tax loss selling. Hurricane season – stronger chance of hurricanes this season. This is not a bad pace to be.

You should have 25% of portfolio in bonds and increase during bad times.

He is not a big high yield guy. You have to do it in small doses. Prefers government and investment grade bonds. But this is a time, if there is one, to get some high yield bonds through an ETF, for example.

Choosing between common, preferred or bond depends on where you want to stand in line. Dividends get cut, e.g. BP.

Advantages of a bond fund: Access to inventories at all the dealers, competitive pricing, expertise, and credit management (which companies to buy). Prices you get as a retail investor are not as good as those a professional can get.

If you only have $10K to invest, the built in commission is not going to be significant for the broker. Retail investor needs to go into a fund or an ETF.

What do you do with a bond that you got above par that is approaching maturity and you old it in a non-tax account: This is why a lot of retail investors use ETFs.

Term deposits vs. deposit notes. Later are backed by deposits of banks. A term deposit is a retail product issued by a bank. Term deposit is redeemable. Deposit notes have a secondary market so can be sold.

Ontario strip bond due 2021. Value will fluctuate on a secondary market but it will mature at $100. If you are going to hold to maturity, the day to day fluctuations can be ignored.

Future of interest rates and impact on fixed income investors: Interests rates will stay low for some time. There’s a 5-year cycle in bonds. First year is crummy year when yields go up sharply. Second year is best year in bonds after all easing takes place, the best in the 5. Following years go sideways – clipping your coupon time. You have to watch the disconnect between government and financials.

Even though we are in the summer doldrums there are exciting things. US Fed making some comments. Don't have a lot of weapons left to use. They are buying bonds and stock piling up. They will be maturing and what do they do with the cash. With corporate bonds we are seeing lots of issuance. Yields are all over the place. The Canadian banks are issuing bonds in the US. Preferred shares offer some advantages. Fixed rate resets as well as perpetuals. More tax efficient (dividend).

Market. Currently in a sideways range but in this kind of a situation, when there is a breakout, it is usually pretty strong. Doing very little trading and has 50% exposure to the market right now. Trigger point on the upside is 12000 for the TSX and wants to stay above 1100 on the S&P 500.