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Monthly
World Markets Report - November
NatGas:
The Widow Maker
This year’s rebound in commodities such as oil and copper has
been remarkable. At the beginning of the year, as we looked into
the abyss of the “Great Recession,” few predicted that
the prices of many commodities would double from their lows in such
a short span, but that is exactly what has happened.....
(uploaded
Nov 7, 2009)
Index
Return Monitor - November
What Spooked The Market?
It seemed, at first, that investors would be spared from the infamous
frights that the autumn stock market often brings. Indeed, through
most of September and October, major stock markets rose modestly.
However, nearing the end of October, equity markets around the world
began to sell off resulting in a 4.2% loss for the S&P/TSX Composite
Index (TSX) last month, or 5.8% from its recent peak. So what caused
the downdraft in stocks?
(uploaded Nov 7, 2009)
Monthly
World Markets Report - October
The
“Other” Financials
The Toronto Stock Exchange is well known for being a resource-heavy
stock market, a claim that is substantiated by the fact that 46%
of the S&P/TSX Composite Index consists of energy and material
stocks. The largest single sector, however, remains financials,
which makes up 32% of the benchmark index....
(uploaded
Oct 7, 2009)
Index
Return Monitor - October
Checking The Market’s Pulse After Three Quarters
At the start of the year, the very viability of our financial system
was in question. Credit markets were virtually frozen; stock markets
were plunging; housing prices were trending lower; and job losses
were accelerating — all of which led consumer confidence to
plunge to a record low in January. It is therefore encouraging that
three quarters later, the debate among market aficionados has shifted
from whether or not the global economy will become entrapped in
another Great Depression to whether or not the S&P/TSX Composite
Index (TSX) will add to its 26.8% year-to date rally in the final
quarter of 2009.
(uploaded Oct 7, 2009)
Monthly
World Markets Report - August
Summer
Ebbs And Flows Offer Entry Points
While it may seem illogical, and even go against financial theory,
the markets do tend to exhibit seasonal anomalies. This year appears
to be no different, as the bullish sentiment in spring that helped
push the S&P/TSX Composite Index 42% higher from its low in
March, appeared to give way to the usual summer doldrums....
(uploaded
August 7, 2009)
Monthly
World Markets Report - July
Emerging
Market Consumers To Pick Up The Slack
Over the past few years, the all-important U.S. consumer has had
to bear the brunt of several significant blows. First, in mid-2006,
housing prices began their multi-year slide. U.S. home values have
now fallen more than 30% since their peak and while the decline
is easing, it is not yet over. The second blow to consumers’
balance sheets was their investments....
(uploaded
July 7, 2009)
Monthly
World Markets Report - June
Boring
Singles Can Win The Game
In
mid-May baseball season was in full swing and Canadians were enjoying
seeing their only major league team at the top of the standings.
Then the Blue Jays’ bats cooled and the team went into a late-month
slide. When homerun hitters enter an inevitable slump, they often
continue swinging for the fences, resulting in more strikeouts than
hits...
(uploaded
Jun 7, 2009)
Index
Return Monitor - May
Building Confidence
With many stock market strategists calling for a pullback in equities,
markets continued to climb the proverbial wall-of-worry in April,
with the S&P/TSX Composite Index and S&P 500 Index gaining
6.9% and 9.4%, respectively...
(uploaded May 7, 2009)
Monthly
World Markets Report - May
When
Cash Becomes A Risky Asset
The S&P/TSX Composite Index has rallied 24% since its March
9 low. With each 5% advance, bearish market observers argued that
stocks were getting ahead of the fundamentals and that the ascent
would prove to be nothing more than another “bear market rally.”
Such naysayers point to numerous economic data points...
(uploaded
May 7, 2009)
Monthly World Markets Report - April
When
The Market Turns
In the January issue of our Monthly World Markets Report we predicted
that the markets would remained challenged in the first half of
2009 due to the deteriorating economy. We expected some choppiness,
but were surprised to see the S&P/TSX Composite Index down nearly
16% by early March. It appears other investors were similarly surprised,
as buying activity sent the market 16% higher in less than three
weeks since the low....
(uploaded
April 7, 2009)
Index
Return Monitor - April
Confidence Found
After the drubbing of the past few months, equity markets surged
in March. The S&P/TSX Composite Index climbed 7.4%, its largest
monthly gain since November 2001, and the S&P 500 Index appreciated
8.5% as an improvement in confidence resulted in renewed appetite
for riskier assets such as stocks and commodities...
(uploaded April 7, 2009)
Monthly
World Markets Report - March
Dividend
Growth Despite A Recession
Finance theory tells us that whether a company pays a dividend or
not should have little relevance to an investor. The more cash a
company keeps internally, instead of paying out as dividends, the
more it can put toward growth projects. Thus, the theory goes, a
company’s dividend policy should have little influence on investment
returns. (Note: We use the term “dividend” in its broadest
sense to include payouts by income trusts, which pay distributions
that are comprised of dividends, return of capital and other income.)
(uploaded
March 9, 2009)
Index
Return Monitor - March
Seeking Confidence
Despite the trillions of dollars earmarked by governments worldwide
to resurrect growth, market participants continued to exit equity
positions in the second month sending the S&P/TSX Composite
and S&P 500 indices 6.6% and 11.0% lower, Economic data continues
to disappoint, as we recently saw with the 6.2% fourth quarter U.S.
gross domestic product (GDP), the biggest contraction since 1982.
North of the shrank 3.4% during the same period, the fastest pace
since 1991...
(uploaded March 6, 2009)
Monthly
World Markets Report - February
Energy
Stocks: What Are Investors Expecting?
One method investors use to value energy stocks is to calculate
the price of oil that is being implied by the stocks’ trading level.
If the implied price of oil is much higher than the current price,
one could consider energy stocks to be overvalued. Research analysts
use complicated models to determine the implied price of oil. As
an alternative, however, there is a simple (and surprisingly accurate)
tool that the average investor can use to gauge whether energy stocks
are cheap or expensive relative to current commodity prices: the
ratio of the S&P/TSX Capped Energy Index to the price of oil...
(uploaded
February 2, 2009)
Index
Return Monitor - February
Running Towards The Fire
2008 was a year in which governments worldwide tried to contain
the fallout of the subprime mortgage market collapse. The Kings
of Wall Street, renowned investment banks that earned billions of
dollars in profits from participating in the credit derivatives
market, succumbed to their own toxic creations. While the health
of the world’s banks continues to be a focus, it is clear that
resuscitating economic growth is also top of mind....
(uploaded February 6, 2009)
Monthly
World Markets Report - February
Five
Reasons Why Stocks Will Be Higher In 2009
Good riddance 2008. That is one old acquaintance we would rather
soon forget. At time of writing, the S&P/TSX Composite Index was
set to post its worst annual return ever (-40%), while the S&P 500
and the MSCI World indices were also down roughly 40%. As last year’s
market declines continued seemingly endlessly, investors who could
no longer bear to see their investments sink further moved to the
sidelines. Some even moved their money into guaranteed investment
certificates (GICs) that offered paltry yields. These investors
clearly have given up on investing in stocks, feeling that the risks
outweigh the benefits....
(uploaded
February 2, 2009)
Index
Return Monitor - January
2008: The Second Worst Year Since 1920
When the S&P/TSX Composite Index surpassed the 15,000 level in June,
it is unlikely anyone had surmised that 2008 would end up being
the second worst year for the Canadian market in the past 88 years.
It was a difficult year for investors everywhere, with more then
US$30 trillion of value destroyed in equity markets worldwide. Yet
2008 taught us at least a couple of important, albeit painful, lessons...
(uploaded January 4, 2009)
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