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month of October produced interesting gains for North America's stock markets.
The S&P 500 index returned slightly more than the TSE 300. At
October 29, 1999, the S&P 500 index returned 6.2%, compared to 4.7%
for the TSE 300 index. The strong performance of the american index
comes from the publication of the quarterly profits of technology stocks
such as Microsoft, Hewlett-Packard, Dell and Intel which beat expectations.
The calming of possible interest
rate hikes in the United States did have an effect on canadian markets
as well. The financial services sector, consumer goods and industrial
products sector each advanced 8.8%, 17.8% and 9.0% respectively.
These three sectors combined make up only 54.6% of the TSE 300 index.
The news on gold was not as good
as the yellow metal's price fell below the $300 U.S. mark for the first
time since the European Central Bank decided to limit its sales of reserves.The
gold and precious metal sub-index of the TSE 300 feel 16.4% during the
month of October.
Did you know ...
On November 1st, the Dow Jones Industrial
Average experienced a re-shuffle. The purpose of this change was
for the DJIA to represent what is happening to the U.S economy. That
is, to give the technology sector a better representation within the DJIA.
Sears Roebuck & Co., Goodyear Tire & Rubber, Chevron Corp and Union
Carbide Corp. were all deleted from the DJIA. They were replaced by Microsoft
Corp., Intel Corp., Home Depot Inc. and SBC Communication. Note that there
are still only 30 companies in the DJIA.
The Dow Jones index is one of the
most followed indices in the world and is still considered as one of the
most inportant barometers of the american economy. However, many analysts
criticize the index as not being a true representative of the U.S. market
because it only holds 30 out of a possible 13 000 stocks that are listed
on the New York Stock Exchange.
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This change
will have many consequences on the future of the Dow Jones. First
of all, the eight companies involved in the change are not of the same
quality. For example, the four old companies were more dividend yielding
companies where as the four new companies are more growth oriented.
The new firms should help push the DJIA to new highs in the near future.
A Dow at 15 000 or 17 000 is not an impossible target with these technology
firms being added. However, one must also realize that the index
itself will be a litlle more volatile as well.
Finally, it is important to realize
that if one is searching for an index that portrays a more complete picture
of the U.S. economy, it would be preferable to look at the S&P 500.
This index looks at the top 500 U.S. companies in the United States.
News
With the RRSP season approaching
many mutual fund companies are offering new funds. This year, foreign
funds that are 100% eligible as canadian content will be even more popular
than last year. These funds were created to take advantage of global
oppurtunities in foreign markets and at the same time offer the possibility
of reducing risk because of the global divirsification.
C.I. Mutual Funds has launched a
new fund based on an existing fund. The fund is called the BPI Global
Oppurtunities III. The original BPI Global Oppurtunities fund will
be closing to new investors on November 1st, 1999. This action was
taken by C.I. in order to keep the assets of the fund from becoming unmanageable.
Assets are now at 420 million canadian dollars. Existing unit
holders may continue to purchase the original fund.
As we approach year-end, mutual fund
companies will be announcing their distribution dates shortly. Spectrum
United has announced that they will be distributing units on the 24th of
December. These distribution dates are very important for investors
holding their funds outside a registeted plan since these distributions
are taxable in the 1999 taxation year. Over the next few weeks, more
companies will be announcing their distribution dates.
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