Portfolio Update

The Canadian Edge

The relative strength of the Canadian economy is reflected in the generally solid fourth-quarter and full-year 2009 earnings numbers being put up by our Canadian Edge Portfolio Holdings.

Near-Perfect Safety

When it comes to investing, even a money market fund or a certificate of deposit doesn’t offer perfect safety. But yields of 7 to 11 percent backed by healthy and growing companies come pretty close.


Wheat from Chaff

Underlying business strength was the key to surviving the bear market and riding the recovery that began in early March 2009. And it’s the key to hurdling the Canadian markets’ biggest challenges for 2010.

Numbers that Match Up

The 33 Canadian Edge Portfolio picks returned an average of 60 percent in the first 11 months of 2009. Every one of them has what it takes to add to those robust returns for the rest of the year and well beyond.

Making Our Moves

Last year, when unprecedented credit and economic storms blew the financial markets apart, our approach kept us earning safe dividends in strong companies. And this year, when the sun came out again, our picks are up 50 percent on average.

Easy Expectations

The better the news gets on the global economy, the fatter the gains will become. Should recovering growth begin to have inflationary implications, US investors in Canadian trusts and dividend-paying stocks are likely to score even more.

More Gains to Come

Canadian trusts and high-yielding corporations picked up in August where they left off in July. The broad-based S&P/Toronto Stock Exchange Income Trust Index surged to highs not seen in more than a year.

Earning Their Way

Conditions are improving, but this is no time to let down our guard. Rather, we need to continue to subject our holdings to the same discipline we’ve employed since this recession/bear market began more than two years ago.

Stick with Value

In the December 2008, I forecast a reversal of the “negative factors” that made 2008 so painful for Canadian markets. That’s exactly what we’ve seen since early March of this year. Despite a slight pullback over the last month, the Canadian Edge Portfolio is up more than 20 percent for the year, with many holdings doubling and more off the March 9 lows.

A Fund Switch and the Numbers

Despite the “green shoots” we’ve pointed out in the Great White North, sooner or later, the torrid rally of the last three months must run out of gas. And at that point we’re going to see some of our recent gains evaporate, despite the fact that everything remains deeply undervalued.