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

Natural Gas. Outlook is much more favourable. Currently nothing but bad news with potential new supplies from shale and even LNG imports. If economy is going to pick up in 2010-2011 and unless there is an unseasonably warm winter, he is looking for $6.50 to $6.75 of natural gas futures one to two years out.

Crude Oil. Futures curve shows $71 today, $80 a year out and $82 two years out. Thinks $80-$85 is a fair price.

Government bonds. Currently rates vary from just over 1% to a high of 4% in the longest bonds. If you are looking for higher rates, you have to wait for inflation to rise considerably. This is not likely in the next 1 to 2 years.

Real Return Bonds are a different asset class than the normal corporate bonds. Value is determined by inflation and real return. More of an insurance policy. If you are concerned that inflation will rise and are willing to accept a lower return.

MLFA 2002 bond. A pool of Canadian commercial mortgages secures interest and principal. The mortgages are well diversified across Canada. Short maturity of 2 or 3 years. AAA rated. Trading with a yield of 4% or more of a Canada government bond.

Real return bonds. Great way to hedge against inflation. If you think inflation is rising, you should tilt more of their government bond weighting to these.

(A Top Pick April 13/09. Up 1.6%.) Government of Canada Real Return Bonds. Bought this when inflation expectations were low and securities were priced at a discount. She rotated into government bonds.

Wednesday night's program is on investing on art so there will be no comments by me. Bill

Natural Gas. Down about 40% year-to-date were oil is up 50%. There have been dramatic supplies through the shale plays in the US. Rig count has dropped off dramatically meaning the cost for them is going to come down and could cause a shift in the price of natural gas. Weather is always a factor. His choice is XTO Energy (XTO-N), a shale play and one of the better managed companies.

Interest Rates. Longer-term there is going to be pressure on interest rates to go up. With the amount of paper that the US is going to have to put out to finance their deficits there will be tremendous pressure to move rates up. This would also affect interest rates globally.

Hotel REITs. Hotel vacancies are way up and will become taxable in 2011. If you sell your holdings now you are selling at the bottom of the cycle. Hopefully there will be some recovery in the next couple of years and his tendency would be to Hold unless you have some were the balance sheet is vulnerable.

Gold: Not a big believer that gold will be taking off to high levels. When it hit $1000 this year, he shorted it and made very good money. If it hits $1000 he will Short it again.

Natural Gas: With the drop in prices, drilling activity has fallen from about 2000 rigs in September to under 1000 now. Monthly production has started to decline and will accelerate. Expects any surplus will have dissipated by the end of this year and there will be a doubling of prices from now. Looking for $6 by year end and averaging $7 in 2010.

Oil: Looking for oil to reach $80-$85 by the end of the year. Doesn't think that equity prices are discounting higher oil prices.

Company Consolidations: Expecting a great step up in the coming years as oil production will be declining and this is one of the few places in the world where companies can acquire new assets and grow production. Anticipates that larger global companies will buy out most of the operators in Canada in the next 5 years or so.