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

Corporate bonds versus the stock market: Caution. Yield curve is so steep that everybody is hungry for yield. Greatest yields right now are in the longest maturities, where there is the most risk. He suggests laddering portfolios to spread the risks around, especially corporates. Buy individual bonds rather than ETFs or bond funds.

Top Short Canada 1.25% maturing Jan 6/11. A 2-year bond yielding 1% is a great Short. He doesn't think there is any way for government yields to go anywhere but up in the next year or two.

Trinidad Energy Services 7.75% maturing July 31/12 yielding close to 9.5% to maturity. There are a host of convertible bonds issued by income trusts that are still outstanding.

Markets: Thinks we are in a secular bear market but there has been a cyclical bull market in the short term. You have to be careful and not get sucked in here.

US$: As the global recovery starts to take hold, there should be a weakening of the US$ against the Cdn$. Commodities should do well.

Natural Gas: A lot of shale gas came into play last year. That helped drive down prices. This year, there is talk of LNG coming from the middle east. Long-term, it has been going down and down. Good news is that seasonally natural gas prices tend to go up in July/August and on to the end of the year.

Crude Oil: Hasn’t responded as well in its sector. Has gone up and has done well but he usually sees bigger returns from the end of February to May so there may be a little bit left because of a whole economic situation. However he thinks you would be better to wait until the end of July to Buy.

Gold: He is a long-term bull on gold. It has broken down through its channel and is now moving sideways. He sees gold going down to possibly $750. July 27 would be the time to get back in, until the end of September.

Buying dividend stocks is a great idea, but if you cut your dividend, it destroys your wealth. Corporate bonds are certainly yielding exorbitant yields. GM bondholders should force the company into bankruptcy so they can claim the assets. Bondholders are ahead in the line of creditors.

GMAC Bonds: They are a separate entity. They are going to be the auto financier of North America of choice. They are now a bank and get Tarp financing. GMAC in Canada is in much better shape than their US counterpart. They have benefits that fully back their lending. Don’t re-invest maturing bonds.

Convertible debentures. There are tied to equity. They are lower on the capital structure as bonds. Competes with preferred.

Corporate Bonds 7% and above: Can’t buy through discount broker. Brokers add a lot for commission. (Host said they are trying to stop those being recommended in case where they are only available through guests funds or in $100K lots)

Long term real estate bonds: E.g. Reocan, First Capital. Doesn’t favour sector but getting a crazy 8% yield on bonds.

We have rallied 30-35% from March lows. We are above the 50-day moving averages. We are within a hair of the 100-day moving averages. He thinks it will go through the 200 day moving average. There is 35-40% left to go to last August highs.

We still have a lot of troubles ahead. This is a season where the markets don’t typically do well. It’s a time to guard. Wouldn’t be buying right now. Portfolio up about 10% this year. He looks at 100s of percent gain. Average hold is 3 years. Wait till tax loss session season, but there are always opportunities to buy.