Resource Stock Update - V15 #2.3 - Oil, HOU, Portfolio, Millennium Index, MID.UN - Jan. 21, 2009

PO Box 1020  Owen Sound, Ontario, Canada   N4K 6H6

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                                             Oil Market - HOU

Just a quick note, the huge anomaly in the contango has been easing the past 2 days, and in two
ways. The oil price is rising in the near term February/April contracts and falling in the farther
out markets. At the close, February oil was up $2.71 to $43.55 and January 2009 oil is at $54.32
down $0.61. January 2009 oil was also down over $2.00 yesterday while the near term contract was up.
The 1 year contango is now at 25% compared to 34% back on Jan. 15th. As long as the near term
contract keeps going higher, the HOU is moving in the right direction, but if the farther out
contracts also keep dropping then we might trade out of the HOU soon. Tomorrow, the U.S. oil
inventories will be announced and that could move the market. I believe the market is already
pricing in high inventory so any surprise on the downside could cause a bump higher in oil prices.

This is the 2nd day of the rally now and we should at least see a 4 or 5 day rally, so maybe we will
take part profits on Friday,

                                                     Model Portfolio

I cannot stress enough about diversification and many of you that complained about being hit so hard in 2008, lacked good diversification. Gold and senior gold stocks were the only thing that did not
get hit hard last year, but if you did not own any - that was of no help. Same with Prudent Bear or
other Bear Funds, they had some gains.  And the Millennium Index that held up better than most other
stocks.

I am going to update the Model Portfolio more often and add it to the top of the web site where you
can easily check and revisit what weightings I suggest in what sectors.

I am going to make adjustments to our model portfolio over the next few months and want to give you
an idea where I am heading to.

I am also going to change the names of some of the sectors to reflect these changes.

I have been consistent for quite some time with 15% in Prudent Bear or other bear funds or ETFs. I
am going to adjust this weighting to 30% over the next few months, but include in this sector ETFs
and other hedges like the HOU we just bought, the US$ Bear Power shares etc. and I am going to list
these investments on a separate area on our selection list.

To do this I am changing/selling  the few tech or other stocks, the 5% weighting to 0%. The 5% in
Speculations I will also throw into this bucket and also reduce our Resource Stock Weighting from
40% to 35%.

If we get a good rebound in the markets and commodities, I could reduce resource stocks further and
up the bear and hedge weighting.

I am going to take the cash weighting to zero and go 15% on Precious Metals, but I might use an ETF
or fund etc. for 5% of this since physical has such a high premium. However, it is important to have
physical gold and silver and nothing wrong with all 15% in physical.

I believe high paying dividend stocks will see good capital appreciation as the World adjusts to a
zero interest rate environment so I am keeping 20% in the Millennium Index.

However, we sold two of our energy trusts last year that paid good dividends and South Peru Copper
that paid a big dividend so our average dividend rate has dropped. My plan is to sell  2 or 3 stocks
that are not paying a dividend that are in the Millennium Index and buy 1 or 2 high dividend stocks.
I have listed a couple changes further down.

Model Portfolio, as of Jan. 1 2009  ($100,000 on Jan. 1 2008)

Sector                             Weighting   Amount   Going to
                                                                    Weighting
Equity                                    0%
Prudent Bear, Hedges, ETFs   15%    $15,000     30%
Resource Stocks                   40%    $35,000     35%
Tech/Other Stocks                   5%     $5,000      0%
Bonds                                    0%    $00,000      0%
Prec Metals                          10%    $10,000     15%
Speculation  was HXD&NKE      5%    $5,000       0%
Cash                                       5%    $5,000       0%
Millennium index                     20%    $20,000     20%
                                             ------    -------   ----
                                            100%   $100,000    100%

                                             Millennium  Index

There are a few stocks replicated, listed both in my selection list and on the Millennium Index that
pay little in dividends. I will look at selling these in the index but keeping them on the selection
list. You might want to just hold what you own or sell part of the position to buy the new
additions. You should also consider the overall weightings in your portfolio to make adjustments.

Western Wind - WND, I am going to sell into strength and list as sold in the Index on a move to
$0.85 or higher. It was at $0.80 a couple days ago.

Newmont - NEM, The dividend is low, just around 1.5% and we will have many gold stocks on our
resource list, so I will look to sell Newmont into strength around $42, now around $40

Tech Cominco - TCK.B I think the stock is way oversold and can see a very good rebound in a market
rally, but they have cut their dividend. I plan on selling it off the index on a rally to $8 or $9,
it did hit $8.85 in the New Year rally. I will decide at that time if I will keep it on the Resource
Stock Selection List or not.

Now the stock I am going to add and you can buy or start accumulating now is a high dividend paying
income trust stock - but it is different than any other. The big issue right now with all these
income trusts is a cut in their payout because of the collapse in the economy and yes there will be
many cuts in payouts. This is a big concern if we buy one or two of these, a cut in the payout will
hurt are dividend stream, but there is a way to manage this issue.

That is to buy the Mint Income Fund            TSX:MID.UN
Recent Price C$6.66
52 week trading range $6.03 to $12.70

The difference with the Mint Income Fund - it is like a mutual fund of income trusts so it spreads
the risk of distribution cuts for you. Certainly a number of their holdings will see distribution
cuts, but not all of them and not all at the same time.

And the other factor, the plunge in the stock price of the Mint Fund is already pricing in the
distribution cuts. The stock was back around $11 or $12 back in the summer of 2008 before the
meltdown and has now come down to the $6 range.

They have been paying and currently are paying a $0.10 per month distribution or $1.20 a year. At a
stock price of $6.66 that is a yield of 18%. Even if the distribution gets cut in half, we are still
getting a 9% yield. Nine percent would be very good in today's market. Like I said, as the world
adjusts to zero interest rates - dividend paying stocks will appreciate in value.

The last quarterly statement showed the following allocation in their various income trusts:
Oil and Gas                            37.0%
Business Trusts                      33.2%
RealEstate Investment Trusts  12.9%
Power and Pipeline                10.8%
Other                                      5.4%
Cash                                       0.9%

Certainly we can see distributions being cut in a number of the oil and gas trusts. Some business
trusts will be affected also, depending on the business. Real Estate is not strong, but the market
in Canada is much better than the U.S. because it did not see near as much speculation.

I don't know how long their $0.10 payout will last and longer term we should count on a reduction of
this, maybe as low as $0.05. But we could also see a rally in energy prices and the markets that
could move the price of Mint back to $10 or so where we could take some profits and reduce our buy
level.

As I said, I think the fund is already pricing in a distribution cut, but until that happens, we can
collect 18% on our money.

You can check out more details at their web site

Website   www.middlefield.com

http://www.stockhouse.com/comp_info.asp?symbol=MID.UN&table=LIST

(c) Copyright 2009, Struther's Resource Stock Report

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