We have seen a step down in U.S. indexes today for no good reason of which we are aware. There are about 10 explanations for the move, but the fact of the matter is there has been a strong rally in the markets for the year-to-date and they currently lack a catalyst. We raised cash about a week ago in case of a pullback, and we are ready to put money to work if there is further weakness.
One interesting fact about the last few days is we have seen high volatility in the U.S. but not as much in Canada. In addition, the trading seems to be centered on a few sectors (technology and transportation today). Both of these attributes suggest that ETF/indexing flows are driving the swings rather than any fundamental stock purchasing.
We are watching these movements and have our list of names and the prices at which we want to own them. We continue to focus on two themes: North American energy and improvements in housing in the U.S. (and the deterioration in housing in Canada).