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

Market Outlook - Earlier in the year financials rallied, made a peak, corrected and then failed to make a new high. They then broke their low mid summer. That was a signal of the top. Are we going to have 1) long down bear like we had in the 70s 2) short, dirty bear or a 3) flat rotational bear. He thinks the latter because the commodities continued making new highs and are now correcting. In other words, half the market is doing one thing and half is doing the other.

Gold - The recent spike is just short of an all time high so you might consider this as the overhead resistance. If gold stays in its trading range where it is now, if the Cdn$ calms down a bit maybe gold stocks play catch-up. There may be opportunities in the stocks.

Index Investing - The time to own an index is in a strong bull market. The time not to own them is when the market is going down.

Bank of Nova Scotia 5.65% bond maturing July 22/08. A good pick up over treasury bills that are artificially low right now (3%+) because of the flight to quality bid. This is a fixed floater, i.e., it has a fixed coupon up to July, but if the bank decides not to mature the bond, it will float plus 1%.

MetLife 4.35% bond maturing Feb 10/09. Very good US insurance company, AA rated.

GE Capital Canada 4.4% bond maturing June 1/14. AAA rated, This is a great global, well-diversified company.

What to Invest in if you have $10K in both Cdn and US? – He would look at large Cdn and US blue chip companies that will export to China and India, etc. Exporters are going to be very competitive with the weak US$. These countries are going to need the technology and know how of the US.

Cdn$ versus the Euro – The Euro is not a bad bet at all. It has moved a long way. It is another good positive long-term story. The Euro should continue to strengthen over the US$.

Impact of High $ on the Bond Market – Very close “Direct and Cause” link between the $ and the bond market. The Cdn$ is acting as a de facto tighten for the Bank of Canada, which is a very positive support for the bond market. Canada is a fairly low yielder now and by looking elsewhere, you would be able to get some added yield. Australia, New Zealand have 6.25% - 6.50% versus our 4.25%. Instead of taking a currency risk, you could Buy some high-grade financials (major banks, etc.) that would yield 1.5% - 1.75% over Govt of Canada Bonds, which would put you up close to 6%.

Natural Gas - There are 2 things different this year than in previous cycles. The resource plays in the US are so profitable, that even at $5/$6 gas, drillers are making 2X their money. LNG is now being landed from ships 2 miles offshore. Over the next 2 years there is likely to be a wall of gas hitting the North American markets.

Preferred Shares – Are currently down. A lot of blue chip stocks are down because of credit concerns. There is a bit of a supply glut. A lot of companies are issuing preferreds because other venues are too expensive, or even closed down to them. Once the glut clears trading will go back a bit more to the fiundamentals.

Short Sales: - Have been tough in the last few years because we have been in the middle of a bull market. Also, when stock prices drop, there has been prevalence for takeovers. Theoretically, your portfolio should benefit from having Shorts in it.

Gold - Very much depends on what happens with US interest rates. As long as they keep lowering interest rates, the US$ weakens. Once they stop lowering rates, you'll see how the market interprets it and short-term, you could have a correction in commodities. She would bet on the US$ going lower.

He is diversified in all sectors, not heavily weighted in one area.

A softening in the whole Real Estate market. US has really weakened. Credit spreads have widened. He emphasises REITs that have very little debt. They get hurt when the whole market goes down, but they are also the first to recover.