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

Oil drillers - ETF, land driller or ocean driller? Generally doesn't buy ETF’s. Prefers specific stocks. Too early to buy deep-water drillers as there is not enough clarity on the long-term outlook. Wants to see the well gets capped and what new regulations will be and if moratorium gets extended. Would prefer a land-based driller.

The market is in a bit of a no man’s land right now. Correction in May happened mostly because of problem in Europe. Since then there was quite a bit of recovery in the last couple of weeks and now question is where do we go from here. He is taking a wait-and-see attitude. The big picture is that we have been having a good recovery but the momentum is slowing down. Thinks we will risk a double dip. There will be some challenges over the next few months.

REITs: Best risk adjusted sources of good income flow. You can go and pick specific REITs or you can go and buy a fund. Canadian REITs have way outperformed the US ones. If interest rates go the wrong way you can get caught. Look for steady income because there is very little growth anywhere else.

Triple witching today. REITs are in very good shape. The environment is right for them. The economy is in good shape. They’ve taken on debt, extending it at lower rates. Payout ratios have gone down. Income is safer. Economy is not going to take off – certainly not the global economy.

Natural gas. Feels prices will go substantially higher. Headlines would indicate that we have a natural abundance from shale as far as the eye can see. However looking at the supply of gas today, particularly US, only 13% comes from shale and over half is from the Barnett shale, which saw peak production about a year ago. Only 6% of the 13% is actually growing, nowhere near enough to offset the declines from the other 87%. Questions if the EIA is supplying accurate data on supply. Looking for $8 gas over the next 6-12 months.

Oil. World is operating in 80 million barrels a day of production. Gulf spill of 60,000 barrels a day doesn't move the needle too much as far as what the price should be. Expect it will become much more costly to drill offshore and that will position Canada very well because we have the 2nd highest reserves globally, in the tar sands.

Alberta oil sands. Medium to long-term, a very attractive area to invest in. 180 billion barrels of proven reserves, 2nd only to Saudi Arabia. Most production currently is from Suncor (SU-T) and Syncrude but there are some emerging players like Cenovus (CVE-T) that are bringing some SAGD technology and this is where real production growth is going to come from.

Markets are telling us, because they were oversold, were due for a bounce. People look at the 50-day and 200 day moving averages. It was a good rally. How far is it going to go – neither you nor I know - through the month end and into the earnings season, but if there are any mishaps (Europe situation, for example) then it ends. We are in for an era of broken promises. People in unions will have to accept cuts to benefits. 10-15% cash.

Natural Gas: Not sure it is bouncing off bottom and going higher. With new legislation, power companies in the US are going to look hard at what fuel they will use. He thinks Gas will be much higher in 3 years.

Market. We may have reached fair value at 12,000-12,500 so he doesn't expect too much upside. A “show me” market that he'll look at in the 3rd-4th quarters. Doesn't think economy will fall in a double dip recession. Not comfortable with being in the US as he expects Cdn$ to go over par.

(A Top Pick Nov 10/09. Up 3.14%.) Canada Real Return Bond Dec 2021.

Income trusts: We are not in the rising interest rate environment that we thought we would be in thanks to the Greeks. Yields that are sustainable in income trusts still look pretty good. There are a lot of trusts that don’t need to convert because of tax credits. If the trust is a good business and earning its distribution it is going to do fine after its conversion. You need to be very focused on which trusts you hold. Positive outlook for 2010; no major correction, TSX should end up in the high 12,000s. The world isn’t coming to an end and there are people who have made their careers in the last couple of years by coming on TV and saying the world is ending on bad news.

Hedge fund are relevant to a retail environment in terms of diversification. Alternative strategies and hedge funds add diversification, which is harder with the globalization in the markets. Hedge funds are very much misunderstood. 99% of guys running these funds are doing a fantastic job. You get returns that are not as relevant to the rest of the world. You need an advisor that has access to these guys. You shouldn’t do hedge funds yourself. Minimum investment is $25K and there are salary and asset requirements that must be met.

Are they an asset class on their own? Yes, Hedge funds are a separate asset. Percent depends on who you are and what you require.