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

Mark to Market Explanation: For opaque off balance sheet instruments. For something not readily traded because it is not going through a regulated trading firm/agency, companies are left to their own design, accounting wise, as to how they want to price these.

Canadian banks will still face some hard times over the next year or so because they haven't slowed down their loan loss provisions. Jump in the first quarter was pretty nasty and that will continue for the next quarter or two. Valuations still look pretty high compared to the rest of the world.

Short Sales: Basically buying shares with borrowed stock. If a stock is $20 and you think it is going down to $10, you borrow stock and then sell it. If it goes down to $10 you buy back and the difference is your profit.

European Equities: The dramatic issues that are affecting Eastern Europe right now are not getting a lot of press regarding insolvencies in businesses and real estate and the huge impact that is having on Western European banking.

US$ over the next 6 months? Has taken a major hit with what the federal reserve announced this week. On the short term (months), it is likely to be under pressure but then likely to see stabilization.

Gold: Quantitative easing package of $1 trillion by the US has reduced the inflation factor and the US$ is getting punished by every currency in the world. A weak US$ means strong commodity prices, and most especially bullion prices. Can see it testing $1000 easily but is not convinced it is on its way up for good. An appropriate strategy is to have some option overlays on your gold stocks.

Call LEAPs on Canadian Banks: (Leap is a Call option with a long maturity.) He finds the sweet spot are Calls 1 to 3 months out. This will give the highest amount of premium. If they are cheap and you believe in the long-term story of banks, why not.

US$: If concerned you could get hit on exchange rates if flight to US$ abates when things turn around, the most obvious way to hedge is to open and FX trading account. You have to know what you are doing and understand the leverage.

Oil: Likes oil right now. Long oil but only until the end of the month when he might take some profits. It's a very strong seasonal trend for oil stocks to do well.

Natural Resources: Overweight on the materials index but not as much on gold. Would look at Freeport McMoran (FCX-N), First Quantum Minerals (FM-T), Equinox Minerals (EQN-T) and fertilizer stocks such as Potash (POT-T) and Agrium (AGU-T).

Nickel: Lagging the group generally. There is still some oversupply. 50% of it goes to the stainless steel market, which is also in oversupply.

GMAC & Ford Credit Bonds maturing by January 2010: Should I worry? If you are a senior you should be very worried about how your portfolio is structured if the majority of your portfolio is in these securities. Ford is rated B and GMAC is rated CCC. This is considered very highly speculative. For the aggressive investor only.

25-year provincial strip bonds with 6% yield (the high end) for RESP accounts. The 20-25 year area is a great area to look at. Very comfortable with all the provinces.

GIC’s. Great value. For the 1st time in the last 10-12 years they are yielding more than Government of Canada bonds.

Canada Housing Trust (CMHC). They issue bonds in order to buy mortgages and mortgage-backed securities. Backed by the Canadian government. As a Buy and Hold investor you get yield pick-up.