October 6th, 2014

Strategy Review

Third Quarter Review North American Capital Appreciation Strategy October 2014

The TSX and the S&P500 started off with gains during the first two months of the third quarter but lost ground in September. The loss in September was enough to pull the TSX into negative territory for the quarter as it returned -0.6% for the third quarter while the S&P500 returned 1.1% in US$. Adjusting for currency moves, the S&P500 returned 6.2% in the third quarter as the C$ lost just over 4 cents, essentially reversing the gains it saw in the second quarter. The biggest drop in Canada occurred in the resource sectors driven by the decline in commodity pricing as West Texas Intermediate (WTI) oil fell 11.5% to US$91.16 per barrel and gold dropped 9.0% to US$1,208.15 per ounce. In the U.S., market trepidation early in the quarter centered around the second quarter earnings releases which in totality actually ended up coming in better than analysts’ expectations as the blended earnings growth rate in Q2 rose to 7.7%. This drove a decent recovery in the S&P500 in August.