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

Shaw Communications 6.5% due June 2/14 yielding 5.8%. This is a BBB bond and for this company this is fairly solid. Generating nice free cash flow.

Government of Canada Real Return Bonds. 4% maturing Dec 1/31. This is for people that have a concern with inflation in the future. Real Return Bonds’ yields change with inflation rates so it gives you a great hedge. Buy on weakness.

Gold. Market is sort of improving in tone and people that have used gold as a safe haven are probably unwinding some of their positions so he thinks it is in for a weaker period. Everybody should have a gold stock but sit on the sidelines for a while. He carries about 5% weighting.

Canadian Bank Preferreds. Has participated in these but a word of caution. Usually when banks are issuing preferreds, it is probably not the greatest time to buy them. With bond market yielding next to nothing and you want something in your fixed income category, these look pretty good.

(Market Call Minute.) Canadian bank preferreds. They continue to get eroded because the banks keep issuing more and more.

US Banks. You should stay away from this area. You have a far more solid banking system in Canada. If you are going to invest in this area, use the investment banks such as Goldman Sachs (GS-N) or J.P. Morgan (JPM-N) instead.

Lithium: All the new cars that are battery-powered with the coming new technology will require this. Long-term, this commodity makes a lot of sense. The small companies that are involved in this commodity find it almost impossible to get financing so he has avoided buying.

Oil: Next 3 months is the shoulder season when prices usually melt down. He thinks they could go back to the $40 range into the summer driving season. If there is improvement in the economy, it could be back in the $60-$70 range in the summer. It’ll back off again in the fall. Wild card is the 2009/2010 winter.

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Recent bank preferred issues with the 5 year reset. They don’t often trade that well. People tend to Buy and put them away. There is liquidity risk if ou have to Sell. Treat as a Buy and Hold.

US$: Going forward the Cdn$ is positioned for a fairly good recovery. Because of our commodity exposure, there will be a recovery in commodities when the local economy gets better. Could see a 10%-15% move in the Cdn$.

To learn about Options Trading, go to http://optionmatters.ca/blog/2009/03/25/upcoming-options-education-days/ for a schedule of their option education trading days. There is one in Toronto. Cost is $30, which includes breakfast and lunch. (Couldn't find the one for Toronto.)

Energy: $75 oil on average this year and will overshoot that given where we are now. Expects $80-$85 by the end of the year and settle back down to $75 next year. Natural gas is more difficult but wouldn't be surprised to see continued pressure through the rest of 2009. $5.50 is a near-term average so not sure if it will be a sharp correction or a gradual increase.

We had a year-end rally that didn’t stick and then we tested the year-end lows. The federal budget is for a year that starts next week, so the flow of money into the economy starts next week. Thinks the depth of the crisis in Canada has been overstated.

Income Trusts: Look at them on their business merits. What you have is a business that is paying a very high distribution. You have to look at when they will actually become taxable. Look at payout ratio. You want it to be lower so you know they can make it.