|
Current Market Outlook and Our Strategy |
|
Wednesday, 01 September 2010 |
|
Our last few Notes have emphasized that the current North American market outlook was unusually cloudy and carried a higher degree of uncertainty than normal. When markets were under maximum downward pressure in the first half of July and investors as pessimistic as they had last been during the financial crisis, we had deemed it timely to temporarily put our cash reserves to work. However, our purchases were generally in defensive areas. We looked for investments that had strong free cash flow, good balance sheets and the potential to increase dividends over time. This strategy has generally worked very well as the best performance has come from such companies. The financial sector, however, has been the exception. Although their dividend yields are largely attractive, the banks and more so the insurance sector have significantly underperformed the market over the last couple of months. Despite some nibbling in terms of adding to two banks in recent weeks, we have been extremely underweight the sector. We also added significant holdings of 10-year Government of Canada bonds in June in the portfolios where it was appropriate. Our purchases were chiefly made when these bonds yielded about 3.25%. They now yield almost 50 basis points less and thus have provided good paper capital gains as well as income. |
|
Register to view more...
|
|
|
How We Have Positioned Our Portfolios to Take Advantage |
|
Friday, 13 August 2010 |
|
Our last Note suggested that the current market outlook was, however, cloudy and carried a higher degree of uncertainty than normal. When markets were under maximum downward pressure in the first half of July and investors as pessimistic as they had last been during the financial crisis, we had deemed it opportune to temporarily put our cash reserves to work in combination with reinvesting the proceeds from a sharp reduction in our exposure to the gold sector. However, we did it in a somewhat defensive manner. We looked largely for equity investments with good balance sheets, strong free cash flow and healthy dividends. In the fixed income sector, we added significant purchases of 10-year Government of Canada bonds where appropriate.
How has this strategy been working out? This Note will examine the anatomy of the market over the last three months since the market peaked and relate it to our positioning in the portfolios. |
|
Register to view more...
|
|
|
Current Market Prospect & How We Are Positioning Portfolios |
|
Tuesday, 03 August 2010 |
|
In our June 30, 2010 Strategy Note, published a month ago, we struck a note of caution. We noted that the ECRI Weekly Leading Indicators had just registered a reading of -5% - a level that has always preceded a recession over the last 40 years. The ECRI itself refuses for the moment - to declare a recession as the most likely outcome until they see a longer period of negative readings. The other two indicators that we featured in our last Strategy Note namely the ratio of coincident to lagging indicators and the shape of the yield curve are not yet flashing red warning signals. We suspect that the U.S. economic outcome over the next year could parallel 2002. Similar growth rates of 3% were generally expected then or the latter part of the year but growth turned out to be near zero. In the intervening month, the ECRI WLI has weakened further and the reading published on Friday July 30 was -10.7%. We had become more defensive in the portfolios in light of the heightened short term economic risk. This Strategy Note will update our thinking on the shorter term risks and what further moves we have been making in the portfolios as a consequence. |
|
Register to view more...
|
|
|
<< Start < Prev 11 12 13 14 15 16 Next > End >>
|
| Results 40 - 42 of 48 |
