December 2011

In general, the year 2011 ended on a negative note for most stock markets. After peaking in April, the markets corrected due to the uncertainty surrounding the debt ceiling in the United States, concerns related to a possible default by Greece, as well as doubts about the survival of the Euro. Despite a downgrade on U.S. debt, the U.S. dollar has served as a safe haven in a time of great uncertainty and volatility. The Canadian market has weakened mainly due to the correction in the price of raw materials as demand is heavily dependent on emerging markets.

Changes in 2011

S & P/TSX (Canadian market) – 11.1%
S & P 500 (US market) 0 %
MSCI World (global index) – 8.01%
MSCI emerging markets – 12.8 %

The Canadian dollar peaked from US$1.06 to US$0.98 to finish slightly below parity at the end of the year.

2012 Outlook

It is always difficult to predict the markets. We expect to experience another year of volatility due to various crises related to the survival of the Euro, increased tensions in the Middle East and the impact of a slowdown in the growth of some emerging countries.

As we mentioned last year, we are entering a period of sluggish growth in developed economies. Given the failure of social democracy with its fiscal deficits and excessive debt, various governments will have no other choice but to put in place programs to cut and manage an overall reduction in services.Financial markets are imposing measures on politicians to follow and the example of Greece should make us think.

The record level of cash waiting to be placed in the market reflects the discomfort of investors facing these profound changes.

In this context, our strategy continues to encourage investment in high-quality companies, paying attractive dividends with a steady growth rate and best positioned to capitalize on these issues. We prefer long-term stability of a balanced portfolio, with less volatility than the market.

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