Ottawa Investment Advisor John Bruce

Client Letter Q1 2010

May 4, 2010 · Print This Article

I am pleased to report that financial markets provided positive results in the first three months of 2010, as the global recovery continued to build.

Canadian and American stocks posted broad-based increases, with most industry sectors advancing. In Canada, the S&P/TSX Composite Index reached an 18-month high, while the U.S. S&P 500 Index had its best first-quarter performance since 1998.

Globally, the financial news was dominated by concerns over the ability of Greece to manage its large debt load. However, major European stock indexes shrugged off these worries to make decent gains. Asian markets were mixed, as were emerging markets, with, for example, Japan’s equity index rising and Chinese stocks declining.

Index returns (in %)
as of March 31, 2010
3 months 1 Year 3 Years 5 Years 10 Years
S&P/TSX Composite Index 3.1 42.1 0.0 7.4 4.7
S&P 500 Index (C$) 2.3 20.7 -8.1 -1.6 -4.2
MSCI World Index (C$) 0.3 23.5 -8.8 -0.1 -3.1
DEX Universe Bond Index 1.3 5.1 5.3 5.2 6.5


Source: TD Newcrest, PC Bond

On the income side, bond markets were unsettled by Greece’s debt problems, but expectations that the country would avoid a default provided stability. However, yields on longer-term bonds have begun to rise in response to such concerns and the need of many governments – especially the U.S. – to issue increasing amounts of bonds to finance their deficits. Corporate bonds, meanwhile, benefited from improving profitability for many companies.

The Canadian dollar has continued to make ground against other currencies this year, and has reached parity with the U.S. dollar. This has served to reduce foreign investment returns reported in Canadian dollars. However, a strong Canadian dollar provides an opportunity for cross-border shopping, by purchasing global securities at more reasonable prices.

This progress in financial markets was supported by significant economic improvement in many regions. The Canadian economy grew 5% (at an annual rate) in the fourth quarter of 2009, and has reported steady job growth since last fall. In the United States, the economy posted growth of 5.6% annualized in the final three months of last year and began generating new jobs this March. Economic activity is also firming in Europe and Japan, while key developing economies like Brazil and China have recorded stellar growth.

All this points to a global economic recovery that is gathering steam. At the same time, we should expect that further challenges lie ahead. Concerns include the prospects of rising interest rates and the removal of government programs designed to stimulate the economy.

The key to success in this environment is to maintain the diversified portfolio that we have tailored to suit your individual goals and circumstances. Diversification can provide some stability to your portfolio while allowing you to benefit from continued market growth. Please feel free to contact me at 613-425-3732 or Toll-Free 1-866-860-4190 if you have any questions about your investments.


John S. Bruce
Ottawa Investment Advisor
Also licensed in ON, BC, AB, QC, NS
Mackie Research Capital
Direct Line- 613-425-3732
Toll Free- 866-860-4190

The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation (“MRCC”). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member-Canadian Investor Protection Fund / member-fonds canadien de protection des épargnants.

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