THE YEAR OF THE C.I.A.

2014 was the year to have invested with the C.I.A. (China, India and America). The Shanghai Composite gained 53%, despite the slowdown in China’s growth rate, while India’s Nifty Fifty ended 2014 with a gain of 31%.

USA
It was a good year for U.S bondholders and equity investors. Abundant liquidity, a return to strong U.S. growth as well as relatively lackluster performances from emerging markets, drove stock indices to record highs. The S&P 500 ended its third straight year of double digit percentage gains, rising 13.7% on a total return basis.

Stock pickers encountered difficulties this year in part because of concentration at the top of the market. Just five stocks – Apple, Berkshire Hathaway, Johnson & Johnson, Microsoft and Intel – accounted for 20% of the market’s gains. According to Lipper, 85% of all active stock mutual fund managers trailed their benchmarks this year, the worst year for active managers in three decades.

On the fixed-income side, most investors were expecting this to be the year in which Treasury rates began to rise. Instead, yields on the 20 year Treasury bond fell from 3% to 2.2%.

COMMODITIES
Commodities had a good start in 2014, but as the U.S dollar continued to build strength in the latter half of the year, commodities began to suffer, especially oil, which fell 44.5%.

CANADA
After a lot of ups and downs, including a new record high in September, the Canadian market (TSX) ended the year up 10.5%. That was a rather remarkable result, considering the energy sector fell almost 20%, metals and mining lost 14%, and gold was down 7%. The standout sectors, as in the U.S, were consumer staples and information technology.

HOLDUN
How did we fare?

Surprisingly well in both countries, as well as globally.

USA
We have always had a preference for consumer staple, health care and technology stocks in the US, which stood us in good stead last year. Our core Holdun US portfolio increased 21.8% versus the S&P 500 (13.7%).

CANADA
In Canada, we had help from Tiny Tim, as we tiptoed through the tulips. As we eschew most commodities most of the time, this was a distinct benefit to us in 2014.

  • Our core Holdun Canadian portfolio was up 16.5% versus the TSX (10.5%)
  • Our Canadian Growth portfolio rose 14.9%
  • It pays to be in dividend stocks in more ways than one, as our Canadian Dividend portfolio rose an outstanding 26.9%, fully 16% better than the index

GLOBAL
Our global tactical portfolio, in which we could have any mix of asset classes (stocks, bonds, cash) and any mix of countries, increased 13.7%.

HAPPY NEW YEAR

HOLDUN