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The second quarter of 2010 proved to be challenging with global concerns ruling the day. Investors focused on European debt, doubts about the Chinese economy being able to continue their pace of growth and heightened worries about the U.S. jobless recovery. All these issues brought into doubt the sustainability of the global recovery and many began wondering if we might not be headed for the dreaded double dip!
For the quarter, the SPTSX fell 5.51 % and ended the quarter at -2.54 % year to date. The fund was off 11.68 % resulting in a year to date return of 0.15 %.
Defensive sectors outperformed growth and large cap gold stocks attracted capital as the fear trade won the day.
As we all know, the market rallied sharply off its lows in 2009 posting a 35.05 % return for the year. An absolute market truism is; markets do not go up in a straight line. Was a pull back reasonable? Yes, by some measure, given the large gains of the previous year. On the other hand, do I believe that the global economy will double dip into a recession opening up the possibility of retracing 50 % of 2009 gains? (Something many pudants are talking about). No, I don’t.
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