John O’Connell.Tibor Kolley/The Globe and Mail
John O'Connell is chairman and CEO of Davis Rea. His focus is North American large caps.
Top Picks:
McDonald's Corp. (MCD-NYSE)
Stryker Corp. (SYK-NYSE)
Cisco Systems Inc. (CSCO-Nasdaq)
Past Picks: January 21, 2014
Stanley Black & Decker (SWK-NYSE)
Then: $81.00; Now: $90.51 +11.74%; Total return: +14.33%
RMP Energy (RMP-TSX)
Then: $5.88; Now: $4.01 -31.80%; Total return: -31.80%
Kelt Explorations (KEL-TSX)
Then: $10.77; Now: $5.88 -45.40%; Total return: -45.40%
Total return average: -20.96%
Market outlook:
The global economy (excluding the United States) continues to suffer from weak demand in spite of low interest rates. Every country is trying to stimulate domestic consumption and one of the primary tools used is weakening one's currency. Presently, the American dollar is very strong and this is expected to continue. Our equity fund benefits from this trend through its exposure to the U.S. economy via the large U.S. cash position we have and the U.S.-based companies we own. But as with everything, excess can cause problems. A strong currency is hurting American exporters. This is a major (but not the only) contributor to our unease about increasing exposure to American equities. For the time being, we are content in the safety of short-term investments denominated in U.S. funds.