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Claude Desrochers
Karina Campos
Arthur Martinot

Tel: 514-282-5957
Fax: 514-282-8199

1501, avenue McGill College
32e étage
Montréal, QC
H3A 3M8


Dear clients,

We are amazed at how often journalists can repeat the same news and how most people see it as really something new . As you know, along with the rest of humanity, there are debt issues in many european countries. Without minimizing the issue which is quite preoccupying, it has been plastered on the front pages of every newspaper of the world for months, if not years now. I doubt that anyone of us could provide any new contribution that would shed extra insight on this issue. Therefore, we must conclude that markets around the world are discounting the negative news that has been fed to us and that most equity prices are currently quite low by normal standards.

Most people are naturally drawn to disaster sites and like expressing opinions on how it could have been avoided, what to do, the worst case scenario, etc... instead of looking for opportunities that are certain to be around given the context of general morosity, if not fear and panic, that we are going through. Warren Buffet , one of the most respected investors of our era using his 50+ years of experience, has been investing monies massively recently in various companies that he feels are grossly undervalued because of the context and not because of their operations. That is what investors do, they acknowledge the situation, evaluate companies and sieze the opportunities. They understand that what they buy today will most probably be worth a lot more when normalcy, in time, returns. This is primary example is quite different from your average person that can't keep their eyes off of the latest headline.

Now the big question, "If I buy today, will what I'm buying be cheaper next week or month?". The answer is your time horizon is too short. Nobody knows what will happen over such a short period. Trying to time the market short term is at best comparable to flipping a coin for advice. The obvious is that markets in general are cheap now and that in time they will be worth more. There is no greed left in the markets, it has been replaced by the fear component of the famous adage. It may be time to look for the pearls out there and watch your foresight get rewarded in time.

A good example of foresight can be found in real estate investing. In 1993, no one wanted to buy real estate because that market had been very bad for a number of years and many investors had lost large sums in their ventures. After having constantly gone up in value from 1982 to 1988, real estate values collapsed from 1989 to 1993. Mind you, in 1987-88, when they bought, investors were sure that they would be the next Donald Trump (by the way he went bankrupt back then). Those that bought between 1993 and 1998, made excellent investments because they purchased their real estate after the market had gone down and everyone wanted out from such a high risk sector. Today, everyone wants to buy real estate after a 12 year rise in values in Canada, driven by a continuous drop in interest rates over that period. Should we not look at the situation in the US and learn from their mistakes? The obvious is that, when everyone wants something, it's price has most probably gone up. What's the top? Again, we don't know, but an educated guess tells us that there is a lot more downside risk than upside potential in real estate currently and that if you are not an expert in that market, maybe you should be cautious.

To sum this up, we still don't believe in market timing but we do believe in being opportunistic. The obvious is that everybody currently knows that the world is far from being perfect and that fear is rampant. The other obvious statement is that, if you run after investments that have gone up recently instead of looking at opportunities in those that have gone down, you may wind up in the shoes of the proverbial lamb. So try to look further down the road, do not use the front page of the newspaper as your guide but your long term experience and common sense . Please stay cautious and diversified in your approach and do not hesitate to call us.

Thank you,

Claude Desrochers

Premier Vice-President

Senior Vice-President

Tél: 514-282-5957

Sans frais: 1-800-363-6732

Téléc: 514-282-8199


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