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

Because of structural reasons, Duncan is currently 100% cash and owns no stocks.

Canadian Banks: Still a sound investment. Doesn't expect to see a disaster in their share price.

Buy & Hold Strategy: Last 6 months brought about a change in valuation parameters. Thinks we will go back to an environment of a Rotation of Values. If this happens, Buy & Hold will not work anymore and will have profound implications for how people view the stock market. You will trade based on PE, Price to Book, etc. ratios. Dividends will be very important.

Gold: Bullion and gold stocks have faltered with the strength of the US$. Expect this will be ephemeral as it is artificial.

US$: there are some good technical reasons why it has been strong such as repatriation of funds. From a global perspective, other countries are terrified that the US will slip into a recession and kill them all. Until the rest of the world thinks in terms of expanding their economies, it is not going to happen. Not confident the dollar will be strong for much longer.

Economy: There is $600 trillion in derivatives, which is $10 in revenues for every $1 of global GDP. There has to be a lot of coming down because that mountain of derivatives is what really is supporting the mountain of debt. This is one of the reasons he is not very bullish on the banking sector.

Canadian Banks: Had a rolling correction with Bank of Montreal (BMO-T) and CIBC (CM-T) leading the way down and the others have been following. You could probably look at these 2, which have good yields. Much closer to the bottom than the others.

(Market Called Minute.) Bullion. Because of technical reasons, the US$ will fall back.

Short-Term Market: Absolutely stunning volatility. Driven by herd instinct. Although the market is discounting a recession, it is not discounting The recession. Thinks there will be a rally but then we will get part #2.

Mid-Term Market: Defined as the next year or perhaps 2. The problem we are facing is too much debt. De-leveraging will get the US and the world back to financial health. This process will be painful.

Oil: What is needed cannot be replaced at $55-$56 a barrel. It should be at about $80 just before winter. Once you get into winter, physical demand rises by about 2 million barrels a day more than in the fall. We do not have that oil and OPEC is cutting back. Thinks oil has bottomed and will be in the $80 range by Jan/Feb and north of $100 by the 4th quarter.

Natural Gas: Storage is OK now if we have an average winter. If it is colder than normal, natural gas should recover in Jan/Feb. Could be at $8.00.

Market: His view is that between now and the 2nd week of December most of the tax loss selling should be done. Once into the new year, the key ingredients of the new US administration are in place, stability should return.

US Rails: Move a lot of grain and coal. As the price of grain and coal skyrocket the rails were doing very well. Both of these have reversed and that is the main headwind for them rather than the general economy. Likes them long term. Have some cost issues. Will have a bumpy 2009.

Dividends: In an economy like this they are becoming more relevant. The issue is, especially around the energy trusts, where are the dividends going. Feels energy trusts have displayed a prudent amount of discipline by increasing or decreasing dividends at the appropriate times.