Weekly Update, Nov. 4th

I’d like to start off this week’s update by announcing that there have been updates made to both the performance page and the 2011-2012 team page. I added performance charts to reflect everything up to market-close today, as well as added short bios for this year’s team. If you have a look at the performance charts right now, you will notice that we actually had a very small gain this week while the S&P 500 lost 2.50% and the S&P TSX lost 0.50%. A weakening of the Canadian dollar as well as strong performance from McDonald’s were the main reasons for our gain this week.

The soap-opera that is currently the EU was full of dramatic scenes this week — everything from a referendum being called by Greece on the EFSF, to the eventual step-down by Papandreou, the reluctance of G20 leaders to shell out any dough to the EU, and finally the IMF being put in charge of monitoring Italy’s implementation of promised austerity measures. Italian bond yields also continued their charge higher, indicating that the markets are still not satisfied with the EU’s plans despite rallying big time last week when the ‘deal’ was reached.

Meanwhile, we continue to get mixed indicators from both China and the U.S. in terms of where their respective economies are heading. All of this uncertainty had people speculating the the Fed was getting ready to hint at plans for a QE3 on Wednesday, and although Bernanke did not specifically rule it out, he made no indication that any such plan was imminent.

All of that to say we have not changed our investment thesis and believe that holding cash is our best option until more clarity exists regarding the EU situation. Although many corporations had strong earnings this past quarter there are some doubts regarding how much longer this strength can continue given the headwinds in the global economy.

In terms of our research, we are continuing to drill through our top-down analysis and are starting to identify companies that we will be analyzing in much greater depth. Right now some of the leading candidates for further research are: CCJ, ORCL, F, KMP, AAPL, and PG. We are still looking to average down into some of our other favourites as we do think there is some value at these levels.

That’s all from us, have a great week!