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

2006/2007 could be dangerous years for the market. The Dow Jones shows a mirror image pullback and these can pull back to where they started. The rally in the past 3 years has just been an extended bear market rally. We are near the end of this run. The seasonal period could be the end of it. US treasury bonds have a series of lows every 3 years or so and in the last 3 years lows came in at 2000 and then there was a mysterious low in 2002 and again in 2004 which seemed to be breaking a normal 6 year cycle of 2 years instead of 3 years. Now in the process of breaking down into the lows again and might even break it.

LIMIT ORDERS - Rather than putting in a market order to buy a stock, use a limit order of a price you want, all or nothing, good until cancelled. If the stock gets there, it will get filled at a priced you want.

Outlook for the technology sector is bleak. One of his concerns is that it is heavily oriented in the end to the consumer and if there is going to be a major weakness, particularily in the US, that's the sector. Would avoid for the time being.

Had been waiting for a correction, but didn't think it would happen in one week. The correction was very much needed by the market. Thinks it is now 50%, maybe 60% over. Expects in the next week or two, the price of oil will break $60 on the downside and will have one more waterfall down. Recommending to buy favourites on weakness which could set up the next leg on the bull market which could go into the 2nd quarter of '06. Small caps have also been hit hard which is creating very, very good buying opportunities.

A top pick is a Canada 3 month T-Bills. Yielding about 2.9%. A 3% return on a treasury bill is a higher return than the average dividend yield on the TSX. Feels it is time for people to increase the fixed income part of their portfolios. A defensive holding.

Expecting a 10/15% correction. Oil has come off from $70 to $64 and he feels it could back off to below $60, maybe $55/58 range over the next few months which would give investors a fabulous buying opportunity. Long term he's very bullish on the sector but we need these corrections to cool off the excesses that do occur.

Believes gold prices are going higher and will be in the $500 range by the end of this year.

Bullish on the US. There's a lot of value in the US. When New Orleans got hit by Katrina, the US went up. Loves the Canadian $. Has been on a hedge basis for the last 2 years. If investors are into US stocks and are not hedged to Cdn$'s, they will make no money. If you can seek out investments that are hedged back to the Cdn $ you've got the best of all worlds. Finding value on Cdn oil/gas, but there are still a lot of companies above his model price. Starting to get out of this area by taking profits. Still not a fan of golds as they are too expensive. Uranium stocks are obscenely expensive. Big fan of Canadian banks, especially National Bank (NA-T).

The Darkness of 2006 - Typically when oil/gas prices sky rocket there is a recession that follows. This has happened the last 4 times. Housing prices are in a bubble and at some point they'll start to come down. People have taken on a tremendous amount of debt and when they have to pay the piper later on it can be a problem. Car companies have been selling at virtually historical levels, so future sales are more likely to be lower resulting in layoffs. Because of oil/gas prices, expects to see a number of layoffs in a number of sectors.

Management has done a fabulous job.

Government of Canada 10 year bond. Interest rates in the bond market have not gone up. They've come down and he thinks they will continue to moderate.

Sell US consumer stocks, such as RV's, restaurents, retailers, etc. Basically he shorts companies that have negative same store sales and pairs with good companies.

2 of his top picks are not on North American exchanges. You would have to see your broker for this. China Petroleum (Hong Kong) As China grows, more and more people will have cars. Mitsubishi Tokyo Finacial Group (Tokyo) Likes the Japanese banking environment now. Becoming much more commercial in the way they manage their businesses. Profit margins have been low and can improve. Profit margins have been low and can be improved.

Has had a very rapid growth in its production. Some interesting properties. Was a little concerned with their numbers in the 1st quarter which were probably weather related. One of his more favourite junior oils.

One of the larger power names. Yield is relatively low. Management contracts was recently sold to Epcor and will be very interested to see what Epcor does with this platform. Will probably be more aggressive than what Trans Canada was. Underweight this sector so he doesn't own at present but will own again propbably.