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

Portfolio Diversification: - You want exposure right across-the-board without taking large bets. He has 30 stocks in his portfolio with only a 3% rating in each and following 3 cardinal rules. 1) Rebalance when a stock exceeds 3%. 2) Dollar cost average if need be. 3) Keep the turnover below 30% to reduce trading costs.

Interest Rates: - Feels that interest rates will stay flat. If there is a slowdown in the 1.5/2% range there will be room to cut rates. Doesn't get really worried until rates go up to 9%, as that is when corporate margins start to disappear. Sees no signs of recession.

Investment Style: - Quantitative investor. Doesn't care about quality of management. Only interested in undervalued companies. Good or bad management will show up on the balance sheet.

Investment Style: - Fundamental value investor. Uses balance sheets, but also looks beyond the numbers to management. Have to consider globalization.

Today's topic was "Bulls versus Bears" and guests included an analyst and a strategist. More and general discussion then selection of stocks so there are no notes for today's noon hour session.

US Recession: - Feels we are heading for a recession, or at least a deflationary period and possibly a depression, but it will be an inflationary depression in the US$ is going to collapse.

Gold % in a Portfolio: - Minimum of 10%. It should be an important component of anybody's portfolio.

Gold % in a Portfolio: - Outside of cash that he has raised this year, all of his investments are in gold.

Gold conspiracy? - US has not had an audit of its gold reserves since the 1950’s. IMF has supported accounting rules that have allowed central banks to double count, so they are complicit in the scheme to keep gold prices down.

Gold conspiracy? - Doesn’t believe in a Gold conspiracy and there is no way to prove that gold price is being manipulated. Even if it was, and he assumed manipulation, that still gives him no predictive capabilities.

Gold conspiracy? - Not a believer in a Gold conspiracy and there is no evidence that gold is being manipulated. This thinking does not help you to invest.

Zinc: - In the last 12 months, base metal prices ran substantially, especially zinc. Inventories are historically low and prices in all these commodities are very expensive. Believes institutional money has come into the market looking for a hedge against devaluation of the US$.

Gold Investing: - No one is going to get rich investing in gold in the next 5 years. Gold, base metals, housing, commodities, Euro and stocks have all run up. Contra-cyclical markets are now running pro-cyclical. At the late stages of a credit cycle, everything is moving with liquidity. As liquidity expands, everything rises. As it contracts, everything falls. This is what is starting to happen.

Deflation: - Deflation will bring bullion down. Inflation that has occurred in the last 7 years was not currency inflation, but credit inflation. Fed's main goal was not to print Federal reserve notes; it was fostering expansion of credit. Difference is that credit can be extinguished much faster than the Fed is able to print currency. When the $ denominated value of debt declines on a currency inflation, that is deflation.

Deflation: - Doesn't agree that deflation will bring bullion down. First of all, deflation is a low probability event.