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

Tuesday's program was supposed to have Linda Shick on Canadian Large Caps but turned out to be a recording of Monday's Program with Michael Smedley so there will be nothing new for Market Call today. Bill

Market has been looking for an excuse to sell off for a couple of days. When you get a little bit of bad news the markets go way down. 2 or 3 more weeks of choppiness and then Q2 results will start coming out. Hang in there and stay with quality names. He looks for a high-return-on-equity company.

GE Capital Australia, which is Australia's General Electric funding arm. 5.75% maturing January/11. Likes the very short end of the yield curve of Australia.

(A Top Pick June 24/09. Up 8.88%.) City of Toronto 4.95% due June 27/18.

Why is Cdn 5-year continuing to be 60 basis points above the US five-year? This has a lot to do with the outlook for interest rates in Canada versus the US. Canada has started to raise rates and are expected to continue to do so.

Strip bonds. Taxed yearly or a maturity? These are taxed yearly, e.g. you buy a strip coupon at $.80 on $1 that matures at par over the next 4 years. Essentially a $5 increase over time. It is all interest income and you have to pay tax even though you did not get the money.

Long-term Bond for TFSA accounts? Best way to capture yield is through a strip coupon. You are locking in yield and it will compound over time. Good value in the strip market right now. (Strip Bond is where there are coupon payments followed by a final maturity lump sum payment.)

Real return bonds for retirees? On the longer-term view, yes. However, right now they look expensive, using about 1.5% on a Real basis. When it moves a little bit higher again, you may want to put some money in this.

Timing the Market. Market averages is the net effect of all the money in the market. When it starts acting differently, going down, you are able to get out of the market. On April 16 the market changed its behaviour giving a series of losses on higher volume and giving lower lows and lower highs.

Categorizing Stock by Condition. Stocks that are poor performers i.e. going down when they market is going higher, are not worth looking at. Big money goes after the high-growth stocks in the best sectors. When these change, you know the market overall has changed and you can make different decisions.

Where would you put cash if a double dip were in sight? If we are in the double dip, as investors we don't need to figure that out, but just what the market trend is. Market blindsided us this week making new buys very unreliable.

Trade Template. Use an S&P 500 chart and draw a line from the high in April down to the high in June. That is the range the market is trading in. Market is unable to cross over the line on a short-term basis. Most investors should not try to make any money in a correction. If you are going to trade, do it in a trading range the chart shows.

Not buying anything right now and hasn't for 6 months. Has about 10%-20% cash depending on the asset mix of the portfolio. He is looking for a signal of global de-leveraging before buying. Would like to Buy when there is capitulation but hasn't seen it yet. Will watch to see what happens when the Q2 and Q3 earnings coming out in the fall.

Christine Poole's Top Pick of SNC Lavalin (SNC-T) was shown as a Buy yesterday. My apologies. This was a Top Pick and didn't go out with last night's e-mails. Will try to do better from now on. Sorry Christine. Bill

Canadian banks. Posted fairly good earnings last few quarters. Past quarter didn't surprise on the upside like they had in the prior quarter. Loss provisions are declining in a stronger economy. Might get 5%-10% upside this year and dividend yields are 3.5%-5%. Expect very positive returns 2-3 years out. Dividend increases will probably be put off until next year when the capital requirements are sorted out.