Remembrance Day Update

I want to start today’s update by acknowledging Canada’s veterans and the forces currently abroad for all of the things they have done for us in the past as well as everything they are doing for us today in various parts of the world. I watched the CBC coverage of the Ottawa Remembrance Day ceremony and it was great to see the thousands of people braving the cold to show their support over on Elgin Street in front of the War Memorial.

This week really had everything though, didn’t it? We went from an optimistic Monday-Tuesday rally to the nightmare that was Wednesday, as Italian yields spiked to over 7.6% essentially overnight. We know that the 7% level was key in forcing other countries such as Greece and Ireland to seek a direct bailout, but unfortunately Italy is a bit too large to bailout at this point. Instead, we saw the ECB come in and buy their bonds to help control the spike – which also helped to buy some time for the political side of things to get moving. Silvio Berlusconi is stepping down from the Prime Minister role in favour of Mario Monti who they hope can push through some of the tough austerity measures that the EU is demanding. Once it became clear that Berlusconi was actually  going to leave, the market enjoyed a pleasant Friday rebound and things are looking up for next week.

After all of the Turmoil, The Fund ended the week down 0.20%, while the S&P TSX dropped 1.07% and the S&P 500 gained 0.80%. Due to the volatility during the week we did not pull the trigger on a couple of investments we were looking to make – so we will continue to hold just over 70% cash and equivalents for the time being. If a more stable investment environment starts to emerge this week then we will look to execute those trades. Overall, while we may get another relief rally over the coming weeks there remains significant risks of the EU failing to re-assure the markets that it can withstand whatever sort of recession it appears to be heading into.

In terms of our research, we heard industry reports from the teams including: Automobiles/Parts, Household and Personal Goods, Consumer Electronics, and Enterprise Software. After going through the reports and discussing them as a group, we have decided that we will be digging into the following companies in much greater detail: Ford (F), Autozone (AZO), Proctor and Gamble (PG), Johnson and Johnson (JNJ), Apple (AAPL), Oracle (ORCL) and Microsoft (MSFT). Next week, we will be shifting our focus to the following industries: Uranium Mining, Agriculture/Seeds, Utilities, REITs and Pipelines.

That’s all for this week – have a great weekend!