MARKET WATCH

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This is Market Watch Wednesday, July 28, 2010

Good Day. This is Tom Waitt with Union Securities. Welcome to Market Watch for Wednesday, July 28th, 2010.

Investors have been disappointed with the performance or lack of performance of their mutual funds. Equity markets, despite volatility, have not been friendly to the buy and hold mentality. Many investors are jumping out of the frying pan and into the fire of rising interest rates.

I will be back after these messages with a discussion.

Counting down in 3, 2, 1.

Frustrations from 10 years of underperformance have seen many investors lock in a fixed rate at near record lows. A Government of Canada 30 year bond yields 3.79% today. Historically, through thousands of years it has been found the normal rate of interest is 7%. If we move to that level a 30 year Government of Canada bond will lose 40% of its principal value. In 1981, some will remember the Canadian prime rate reached 23%, it has since fallen as low as 2.25% and is currently 2.75%. Many conservative investors could find their savings tied up in bond funds in the wrong place at the wrong time as rates rise further.

It is paramount that investments are considered and evaluated for upside potential reward measured against potential downside risk. This is a trading environment and requires active management. It is paramount to think outside the box and apply risk/reward analysis to your investments. Please visit my website at www.tomwaitt.com and view the video blogs as how applying ratios can work to your advantage and view a chart of Canadian Interest Rates over the last 35 years. There are many opportunities to make money but it requires action on your part; each position selected must show risk/reward of at least 2:1. Make the call and discuss the positions that would make sense for your portfolio. Timing is everything when investing; please call to assess the risk/reward ratio attached to any given investment.

That’s today’s Market Watch, for Union Securities, I’m Tom Waitt. If you would like to discuss these matters or your own investments, please call me at 1-800-847-9985. For more information visit my website at www.tomwaitt.com. Thanks and enjoy your day.

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Union Securities Ltd. is a member of the Canadian Investor Protection Fund (CIPF) designed to protect client investment in accordance with their corporate mandate.