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

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.

New Visa IPO: - The MasterCard IPO has done very well. The appeal to these credit card companies is that they don't take any of the credit risks. Make most of their money on the transaction. She is a little nervous about IPOs because there is a little seasoning that goes on but it would be very dependent on what the price is and the market environment. There would be a drop in the value if there were a sharp drop in transactions.

Canadian Banks: - Yields are enormous and are above 10-year rates. Earnings power is going to slow down because of the economy and the de-leveraging of the balance sheets but they are still going to make money and they're still going to grow their earnings and bottom line. They'll also slowly increase dividends. They offer some tremendous value at this point but the technicals are lousy. Some verification that this is the bottom is needed.

Saskatchewan Oil Sands Development: - going through a delineation process of defining the field, core samples and assessing the resource. Long process and fairly expensive. They are far from infrastructure, which is important in the oil sands market. These are in situ leases, which are less profitable than the mining leases.

Canadian Banks: - You should feel comfortable owning these. No Canadian bank has cut its dividend in 25 years. You can now get yields of more than 5% in 3 of the big 6 banks with the others paying more than 4%. This gives you the dividend tax credit as well.