Commentary

30 Jun 2008

Capital markets worldwide continued to unwind during the second quarter of 2008 as evidence of the credit-led financial woes spreading into the rest of the economy took hold. South of the border, the S&P500 and the Dow Jones Indices dropped 3.2% and 7.4%, respectively. Year-to-date, stocks in the U.S. (Dow Jones) are down almost 15% while their European & Asian cousins are faring much worse.

31 May 2008

If you sold near the start of May and went away, you missed a milestone in the Canadian market. The S&P/TSX barreled through 15,000 and hit a new all-time high in the month (May 21), which at that level was up 26% from the 52-week low on Jan 22. To date, the market is only up about 6%. On the month, the main index increased 5.58%, while most national indexes worldwide substantially underperformed – Japan, Mexico and Brazil were some exceptions. (DOW -1.42%, S&P +1.07%, NASDAQ +0.46%)

31 May 2008

The Canadian market outperformed its international peers in May as Energy and Materials’ share prices climbed. Rising confidence that the U.S. economic woes would not spread to the bigger economy worldwide supported the resource complex.

31 May 2008

With the bottom of the Credit Crisis panic seemingly hit in mid-March (the Bear Sterns rescue being the symbolic low-point), global capital markets are now operating in a fashion that we consider to be ‘nearly normal’. While the economic and corporate news remains mixed, markets are functional, assets are being revalued and if necessary disposed of (albeit typically at sharp discounts) and investor psychology has steadily improved.

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The opinions expressed herein reflect those of the individual portfolio manager. These opinions are subject to change at any time based on market or other conditions, and Front Street Capital disclaims any responsibility to update such views. These opinions may differ from those of other portfolio managers or of Front Street Capital as a whole.

These views are for informational purposes only and are not intended to be a forecast of future events, a guarantee of future results or investment advice. All data referenced herein are from sources deemed to be reliable but cannot be guaranteed.

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If specific securities are referenced, they have been selected by the portfolio manager on an objective basis to illustrate the views expressed herein. Such references do not include all material information about such securities, including risks, and are not intended to be recommendations to take any action with respect to such securities. Referenced securities may not be representative of the portfolio manager's current or future investments and are subject to change at any time.