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

There’s not much more upside left in the bond market. The yield curve is very steep, which means there will be a very snappy recovery and you should not be in the long end of the market.

Convertible Bonds- We like a lot of the convertible bonds that were issued by the income trust. They have been left alone and have very good value.

Shaw Bonds- (Top pick. July 4, 2007.) Mature December 2017. An improving credit. For several years their cash flow and profitability had been rising. We still recommend them.

Telus Bonds (Top pick. July 4, 2007.) Mature March 2012. Telus has a good credit rating. Telus is likely to have to raise a lot of money through equity and debt in the near future. Still likes them very much

3.75 Canadian government- (Top pick. July 4, 2007.) Mature June first 2009. The short term curve of this bond is going to steepen more, and the short term rates are going to go down more, so these have more upside in price, but limited.

ISHARES- Very good investment for those retail investors who don’t have an advisor to help them pick individual bonds. ETFs are better than mutual funds because they charge a very small management expense ratio. Likes the short term XSB (on the TSX) and the XRB (real return fund). These are a good combination for investors to buy now.

Safety on Market Funds- Your far better off buying individual T-Bills with your short term money than any money mark funds.

GMAC high yield bonds- Don’t like these bonds. Company has serious problems ahead. Buy the common shares if you think GMAC is worth investing in. Take your money and run from these bonds.

GoC 30-year bonds- They’ve been in a bull market, with a lot of jerking around lately, but it looks like the long term has more room to run. Be more cautious as the yield curve gets steeper. Right now they look OK for further capital bonds.

Real return bonds- Now is a good time to buy. In this climate there is great potential for markets to turn around, so be cautious about bonds.

Inflation and bond prices- Very low risk of inflation. This danger is not close yet, but there is a real possibility.

Interest rate risk- It’s very challenging to predict when and by how much interest rates will change. Interest rates have got a long way further to fall. Pay very close attention to the U.S housing market to get an idea of when the interest rate may change. Borrow money in U.S dollars not Canadian dollars (bearish on U.S $)

Holding Strategy bonds- Like the shorter maturities right now. You can make money in short term bonds.

Bearish/Bullish Gaps- When a stock closes at a certain value, then opens the next day higher/lower. When gaps occur they typically fill in 3 days. Then the primary direction continues.

This is going to be a very selective year. Commodities are where your money should be.