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

Contarian Outlook: Current market condition is good news. Always looking at sectors and cherry picking in them. Financial sector - will likely get a chance later to buy dividend-paying stocks with possibility of capital appreciation. Dividends allow increased returns even if stock does not move. Wait for things to shake out and some tax loss selling. Other sectors, particularily housing, could also be interesting.

Canadian banks are still expensive at 10X cash flow basis. He prefers buying when they are trading at 5Xs. He owns Toronto Dominion (TD-T).

Crude: As it goes up, there is a point where the economy can't stand it. Thinks the magic number is around $130. Dow Transport chart shows a high in 2007 and trying to make a new high in May 2008. Transports are economically sensitive and are a bellwether. As soon as crude broke above $130, transports immediately nose-dived. As long as it stays above 130, the more trouble we've got and it extends the bear. There are signs that crude is getting tired. A lot of the energy stocks are not behaving well and there is some divergence between the stocks and the price of crude.

Financials: Ultimately there will be an entry point for the banks. Financials hit their critical low in March. Dropped today but at a higher low. If the higher low can be held it is probably quite good. If you are a traitor or want to take on some additional risk, buy the bank that has made the lower low. It might spring act more.

Agriculture: The boom is a real phenomena based on real demand for food products. With the ethanol situation in the US taking away acreage from food production, a growing demand for protein in the developing world there will be continuing demand for agricultural products. However, that sector has had a tremendous upward move and it may be too late to get in on it.

Water Sector: A lot of dollars needs to be spent on infrastructure as well as on specifically water. Only 1/3 of the world has fresh water available to them. You won’t see prices move as aggressively as in energy or agriculture.

Global Agricultural: Agricultural soft commodities have had a big run and there might be some softness in prices over the next short while. In 5 years prices will be even higher than today. New technologies will be changing the world.

Cdn Preferred Shares: This has been a very negative market in the last 12 months. They present a great way to get exposure to a tax efficient income in today’s low interest rate environment. Gives you good exposure to good companies. You can get 5% to 6% return in banks and life insurance. Be in P1’s and P2’s, the higher quality credit side.

(A Top Pick Feb 13/08.) Canadian Banks & Life Insurance: Banks have a fantastic cash flow producing asset in retail banking, which can make up for any mistakes they make. Fantastic opportunities long term. Good entry points for long-term investors.

(A Top Pick Feb 13/08.) Natural Gas: He is bullish on natural gas. Over 70% increase in price this year. Good for the next 12 months.

(A Top Pick Feb 13/08.) Global Mining: Still very bullish on the hard commodities. You need to have exposure to the “global” mining area. (A lot of Canadian companies have been taken over.) Expecting this will be a long-term secular trend.

Preferred Stocks: Doesn’t like the outlook for interest rates and therefore long bonds and perpetual preferred shares because as rates rise their prices will decline. Risk is entirely interest rate related. One preferred he could recommend is Premium Income Corp (PIC.PR.A-T). Split share corporation consisting of bank holdings.

Oil: A lot of people don't believe present oil prices are sustainable. He believes oil will take a run at $160, pull back in 2009 to about $100-$120, go back to $150, then $120 and could ultimately take a run at $190 in the next 1.5 years.

China: Official numbers for unemployment are probably 65 to 70 million people and is a result of laying people off from farming as they industrialize and try to boost yields. CIA number is probably 160 million. Also 25% food inflation in the last year. To prevent civil unrest, government will probably try to re-stimulate and try to keep economy going for the next year and a half. Post the Olympics there will be hyperinflationary growth. Banking crisis probably follows in 2012.

Euro: Believes the US will want to devalue their currency by another 20% to 30%. Market forces might do it for them. If this happens, the Euro will have risen so much that you’ll have some of the weaker nations wanting to bail out of the European Union. Feels the Euro will cease to exist by 2010.