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

Uranium. Very bullish on this longer term. Growth demand will be coming from China, which are currently producing about 6.8 GW of power and targeted to go to 86 GW over the next 10 years. Planning 68 nuclear plants but recently increase that to 114. Looking out 3, 4, 5 years uranium should be very much higher in price.

Oil/gas. Oil stocks are reflecting an oil price of between $60 and $70 right now so there's not a lot of upside for oil/gas stocks. Would avoid gas stocks until there is a better picture of how the inventories are doing. Likes companies with long reserves so would Buy and Hold Canadian Natural Resources (CNQ-T) or Suncor (SU-T).

Stock market rallied, credit markets rallied. He got invested earlier in the year and has been taking profits. He is stepping back and seeing where it settles. Is waiting to see more earnings before stepping back in. The banks have had a good run so lets see how they will perform at the end of the year. We have to wait for the refinancing of the loans made at the top of the market. This is the next problem to hit us – two or three years from now.

Fairfax 2018 7.35% bonds: They inherited a lot of problems in their acquisitions 2 - 3 years back but claims to them have been declining. They have had some value investments that have done well. The investment portfolio seems to be good.

Dollarama IPO: Likes the business. IPO coming up and pricing needs to be determined. Bonds were a great buy. Management delivered quarter after quarter. Would be good at $18

Market Neutral Investing. Security delivers returns. 1) Income via interest, dividend etc. 2) movement in security price related to the movement of the stock market (Beta) and 3) movement security price specific to fundamentals going on at the company (Alpha). Eliminate the Beta and isolate the Alpha. E.G. If Long and Short 2 gold stocks he wants the company that is Long to deliver positive surprise such as lower costs, increased production. Shorts the company he doesn't like. This illuminates the Beta.

Short bank stocks (ETF’s) and Long gold stocks. Good strategy? Not something he would do. He would go Long and Short bank stocks. Currently he’s long Bank of Nova Scotia (BNS-T) and Commerce (CM-T) and Short Royal (RY-T) and TD (TD-T). 6 weeks ago the picture was different. In gold he is Long Barrick (ABX-T) and Short Newmont (NMC-T). Wants to stay in the same sector to hedge out the industry Beta’s and isolate Alpha’s in the companies.

Natural gas. Was a bear on natural gas until a month and a half ago. A lot of people have been playing a spread, Long oil and Short natural gas. Probably need 4 to 6 more weeks to get through the inventory stuff. If we don't see a big selloff, then we are home free.

Oil. Discovery of a tremendously huge deposit in the Gulf of Mexico. Doesn't change anything since there won't be meaningful production until 2016-2017. In the meantime, there is a 7%-8% decline rate, which means we are under the gun to replace 4 to 5 million barrels a day.

Blue-chip Dow Jones Industrial Average. Chart shows a head and shoulders formation with a neckline at around 9000 so he is expecting a pullback to this mark and then going up to 1100-11500.

S&P 500. Expecting a decline by as much as 10%. Head and shoulders bottom formation has been forming for several months. Neckline of 900 has been broken which typically results in a pullback. This lines up with a seasonal pullback. Markets are a little overbought. Resistance is at 1300 and once head/shoulders is completed he thinks it can get there.

Market - Present market is overvalued and in an air pocket to be countered sometime between now and the middle of October followed by a failing rally maybe, which would be the in term top for the market followed by your more substantial 10%-15% correction. Key indicator of the failing rally are the small and mid-cap issues. Large-cap issues are probably going to be fine with earnings reports coming out for Q3.

US ETF Regulations. A number of proposals are being talked about which would mean greater restrictions and greater oversight's on various different types of instruments that might be potentially systemic risky. Doesn't believe it is going to be an issue with things like economic sector, common stocks, styles or even countries that could affect things like energy or commodities.

The rally in Natural Gas we have seen this month does not need to continue. The market was looking for the commodity that had not had a run yet. We are seeing some of the stocks price in what we see the futures curve looking like over the next 12 months. She thinks it is a bit aggressive. The rally could continue for another week or two. The fundamentals have not really changed in the last couple of weeks. Gas will not stay at the $2-3 level. It should hover around the $5-6 level.

Provincial government bonds. Most provinces issue debt from 1 to 30 years. The more liquid ones would be the provinces that are in the most debt such as Ontario, Quebec, BC and Alberta. On a 10 year term you are looking at about anywhere is from 75 to 100 basis points over a government bond give you lower-mid 4% yields. He is currently underway to this sector as he prefers corporate bonds but he does have exposure in the 30-year provincials.