Politics and Capitalism

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Politics and Capitalism Current Credit
Crunch Where are the Markets Going? US vs. Canada
and the World Commodities David
MacNicol President and Portfolio Manager MacNicol
Associates Asset Management Inc. Willem
Hanskamp C.F.G. Heward Investment Management
Ltd. Wednesday, October 29, 2008 500 pm 630
pm Rosedale Golf Club
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THE WEEK IN NUMBERS (October 20th October 24th)
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THE WEEK IN NUMBERS (October 20th October 24th)
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THE WEEK IN NUMBERS (October 20th October 24th)
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• September 1931 was down 29.94 October 1987 was
  down 21.76 May 1940 was down 23.95 March 1938
  was down 25.04.  
• Each time the market had a bear market rally of
  20.  So, after the pop in the last two days, the
  TSX is now down 18 after peaking down 27.  The
  SP 500 is now down 18 after peaking down 28. 
  Based on these examples, it looks like we have
  some more room to rallyanother 10
  approximately.

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• October 28 is the best day of the year to buy
  equities.
• A 10,000 investment is SP Index purchased on
  October 28 and sold on May 5 each year since
  1950, had a value of 806,204 on October 28,
  2007.
• In contrast a 10,000 investment on May 5 and
  sold on October 28 had a value of 9,465.

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         EQUITIES BOTTOMED BEFORE RATES IN THE
PAST 4 RECESSIONS 73-57, 80-82, 90-01 and 01-03
recessions the SP 500 bottomed before fed fund
rates Hence although the Fed is expected to cut
rates as much as an addition 100bp to 0.50
equities could again bottom well before we reach
those levels
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Money on the Sidelines

• 5.7 Trillion money market funds
• 3.5 Trillion in the US
• Equal to 25 US stock market
• NYSE cash and margin 150 Billion net
• Global Savings Accounts
• 21 Trillion in 2003
• 35 Trillion now

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U.S. Dollar 1-Year Horizon
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U.S. Dollar 5-Year Horizon
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The Euro 1-Year Horizon
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The Euro 5-Year Horizon
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US/CAN Exchange Rate 5-Year Horizon
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US/CAN Exchange Rate 1-Year Horizon
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Agrium Inc (TSXAGU)

• Fundamentals of fertilizer industry has remained
  very positive.
• Potash prices continue to rise, fueled by rising
  demand in Asia and limited supplies around the
  world.
• Agriums earnings in each of the first three
  quarters this year yielded more than a 200
  increase over the same period last year.
• Stock price has fallen nearly 60 since the
  beginning of the year, in spite of rapid earnings
  growth.
• Very undervalued is currently trading at a P/E
  of 5.4.
• Expect demand for fertilizers to continue to grow
  as populations in Asia gravitate towards larger
  diets.

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Agrium Inc (TSXAGU) 1-Year Price History
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Agrium Inc (TSXAGU) 5-Year Price History
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Viterra Inc. (TSX VT) 1-Yr Price History
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Viterra Inc. (TSX VT) 5-Year Price History
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Berkshire Hathaway (NYSE BRK.B)

• Diversified conglomerate composed of a number of
  different businesses ranging from financial
  services to retail markets.
• Has begun to focus more on acquiring operating
  businesses than investments.
• Managed by Warren Buffett and Charlie Munger.
• One of the fastest growers for companies of its
  size.
• Berkshire is currently 20 undervalued according
  to intrinsic value calculations.

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Berkshire Hathaway B Shares (NYSE BRK.B) 1-Year
Price History
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Berkshire Hathaway B Shares (NYSE BRK.B) 5-Year
Price History
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Ritchie Bros. Auctioneers (NYSE RBA)

• Largest and only publicly traded industrial
  auctioneer of construction, transportation and
  agricultural equipment in North America.
• Benefits from weakening construction and truck
  sector fundamentals which leads to higher auction
  volume.
• Given current financial conditions, can expect to
  see auction volume to sharply increase.
• Financing for buyers havent been a problem.
• Average five-year P/E is 29x, three-year P/E is
  31x. RBA currently trading below its 5-year
  average level.

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Ritchie Bros. Auctioneers (NYSE RBA) 1-Year
Price History
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Ritchie Bros. Auctioneers (NYSE RBA) 5-Year
Price History
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Alternative Asset StrategiesReal Estate

• WALTON
• Brant County
• Simcoe Heights
• Alliston Ontario
• CENTURION
• Refinancing mortgage portfolio
• Revenue enhancements
• 2 condominiums completed tax savings
• September best in 18 months
• VILLABAR
• Port Hope Retirement Home
• Brantford Hotel Project
• Villabar Properties (2005) Limited Partnership
• Villabar Properties (2004) Limited Partnership

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• Key Items to be watching
• Credit markets
• Home prices
• Oil/commodity prices
• US
• Leading indicators of economy/employment
• New fiscal stimulus package
• Financial stocks
• Individual stock price response to disappointing
  earnings

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• Please feel free to contact us at
• 416-367-3040 for additional information.
• Alternatively, please find us on the web
• www.macnicolasset.com