intoxicated markets 2011

Agenda:• Market Update• Investor Behaviour

ATB Securities Inc.

Intoxicated MARKETSOctober 23, 2011

Brock Melnyk B.Mgt, CFP

Financial Advisor

This report has been prepared by ATB Investment Management Inc. ("ATBIM”) which manages the Compass Portfolio Series. ATBIM and ATB Securities Inc. ("ATBSI") are wholly owned subsidiaries of ATB Financial and operate under the trade name ATB Investor Services. ATBIM and ATBSI are licensed users of the registered trademarks for ATB Investor Services and the Compass Portfolio Series. The performance data provided assumes re-investment of distributions only and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that may reduce returns. Mutual Funds are not insured by the Canada Deposit Insurance Corporation, nor guaranteed by ATB Securities Inc., ATB Investment Management Inc., ATB Financial, the province of Alberta, any other government or any government agency. Commissions, trailing commissions, management fees, and expenses may all be associated with mutual fund investments. Read the prospectus provided before investing. Unit values of mutual funds will fluctuate and past performance may not be repeated.

Opinions, estimates, and projections contained herein are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. ATB Financial, ATBIM and ATBSI do not accept any liability whatsoever for any losses arising from the use of this report or its contents.

This report is not, and should not to be construed as, an offer to sell or a solicitation of an offer to buy any investment. This report may not be reproduced in whole or in part; referred to in any manner whatsoever; nor may the information, opinions, and conclusions contained herein be referred to without the prior written consent of ATBIM.

Market RECAP

Data current to September 30 2011

FIXED INCOME MARKET RECAPSeptember 30 2011 Fixed Income

IndexCurrent

1 Mth

YTD1 Year

3 Year

5 Year

DEX 91 Day T-Bill Index 386 0.10% 0.78% 1.02% 0.89% 2.14%

DEX Universe Bond Index 845 1.81% 7.43% 6.66% 8.10% 6.08%

DEX All Corp (or BBB Index) 977 0.73% 6.35% 5.70% 10.99% 6.86%

Fixed Income Yields

91 DayT-Bill

10 Yr Bond

30 Yr Bond

Canada Government 0.82% 2.16% 2.77%

U.S. Treasuries 0.02% 1.92% 2.91%

Short term and longer term rates continue to moderate, relative to the previous year.

All returns are total returns in CAD

Source: Bloomberg

3M 6M 1Y 2Y 3Y 4Y 5Y 7Y 8Y 9Y 10Y 15Y 20Y 25Y 30Y0

1

2

3

4

Canada Government Yield Curve – 2010 vs. 2011

Sep 2010 - Canada Sov Strips Sep 2011 - Canada Sov Strips

Rate

(%)

EQUITY MARKET RECAPSeptember 30 2011 Stock Market

IndexCountr

y

Current

“Price Level”

1 Mth

YTD1 Yr

3 Yr

5 Yr

S&P/TSX Composite CDN 11,624 -8.66%-

11.88% -3.55% 2.66% 2.61%

BMO NB Weighted Sm Cap CDN 649 -11.45%-

18.44% -2.33%12.60% 3.27%

S&P/TSX Capped REIT CDN 146 0.54% 15.20%25.66%13.31% 8.02%

S&P 500 (CAD) US 1,175 -0.50% -3.76% 3.03% 0.72% -2.44%

S&P 600 (CAD) US 369 -3.99% -9.14% 2.08% 0.26% -1.01%

MSCI EAFE (CAD) INT’L 3,573 -3.17%-

10.39% -7.66% -1.63% -4.69%

MSCI Global Small Cap (CAD)

INT’L211 -4.99%

-11.44% -2.17% 4.13% -1.62%


• There has been continued worry about Euro zone sovereign debt repayment.

• Weak global growth outlook led the markets down in September.

• TSX Composite is in negative territory year to date.

Source: Bloomberg

Sep 06 Sep 07 Sep 08 Sep 09 Sep 10 Sep 11

600

800

1000

1200

1400

1600

TSX S&P 500 EAFE

Canadian Market Cap Performance – Past 5 Years

Major commodity prices declined. The heavy weighting of both energy and material sectors dragged large and small cap stocks lower in September.

September 30 2011

CANADIAN MARKET–MARKET CAP OVERVIEW

Market Cap Index

Current“Price Level”

1 Mth YTD 1 Yr 3 Yr 5 Yr

S&P/TSX Large Cap 667 -8.09% -11.57% -4.27% 0.89% 2.41%

S&P/TSX Small Cap 585 -14.93% -21.05% -6.66% 8.23% 0.72%

The smaller landscape of the Canadian market largely excludes the existence of a mid-cap market index. All returns are total Returns are in CAD


400

600

800

1000

1200

1400

1600

TSX TSX Sm Cap

Uncertainties surrounding US economic growth, consumer confidence and the Euro Zone sovereign debt repayment drove the decline in the equity markets.

Over the 1 year period, the US Large Cap market continues to be the strongest performer.

September 30 2011

U.S. MARKET–MARKET CAP OVERVIEW

Market Cap Index

Current“Price Level”

1 Mth YTD 1 Yr 3 Yr 5 Yr

S&P 500 (Large Cap) 1,175 -7.03% -8.68% 1.14% 1.23% -1.18%

S&P 400 (Mid Cap) 812 -10.59% -13.02% -1.28% 4.05% 2.20%

S&P 600 (Small Cap) 369 -10.29% -13.79% 0.21% 0.77% 0.27%

US Market Cap Performance – Past 5 Years

All returns are total Returns are in USD


400

600

800

1000

1200

1400

1600

S&P 500 S&P 400 S&P 600

September 30 2011

INTERNATIONAL MARKET–OVERVIEW

Market Cap Index

Current 1 Mth YTD 1 Yr 3 Yr 5 Yr

EAFE Net (Large Cap) 690 -11.28% -15.56% -11.51% -1.60% -2.97%

EAFE Net (Mid Cap) 617 -13.59% -18.92% -13.47% -0.71% -3.99%

EAFE Net (Small Cap) 240 -14.40% -21.36% -11.98% 4.15% -1.65%

EAFE Large Cap index is the strongest performer over the previous 1 year period.

Given the uncertainties surrounding the Euro Zone sovereign debt repayment and the weaker economic data coming out of Germany and China, international equity markets softened in September.

All returns are total returns in USD


600

800

1,000

1,200

1,400

1,600

EAFE Net Large Cap EAFE Net Mid Cap EAFE Net Sm Cap

Source: MSCI

S&P/TSX Composite Sector Returns/WeightingSeptember 30 2011 S&P/TSX Sector

Returns1 Mth

YTD1 Year

3 Year

5 Year

Consumer Discretionary -2.53% -15.84% -10.04% 2.17% -2.32%

Consumer Staples 1.75% 3.79% 8.89% 8.53% 3.39%

Energy -11.93% -19.14% -8.16% -2.37% -0.31%

Financials -3.57% -4.02% 0.90% 2.67% 1.15%

Health Care -5.67% 30.85% 46.10% 35.10% 11.00%

Industrials -8.58% -9.47% -5.06% 4.41% 4.05%

Information Technology -19.62% -43.76% -36.40% -19.49% -10.31%

Materials -14.63% -17.67% -5.95% 9.79% 11.77%

Telecommunication Services -1.40% 13.65% 14.19% 9.00% 5.73%

Utilities 0.56% 5.55% 10.63% 11.56% 7.68%

The rise in precious metals prices pushed the materials sectors into positive territory during the month of August.


The S&P/TSX Composite is dominated by 3 main sectors, the Financials, Materials and Energy sector.

Energy, 25.18% Materials, 22.67%

Industrials, 5.23%

Consumer Discretionary,

4.20%

Consumer Staples, 2.87%

Health Care, 1.22%Financials,

29.98%

Information Technology,

1.59%

Telecom Services, 4.98%

Utilities, 2.09%

S&P/TSX Sector Weights

Source: TD Newscrest

S&P 500 Sector Returns/WeightingSeptember 30 2011

Most sectors in the US have shown continued weakness as uncertainty over economic growth persists. Financials have shown to be the weakest performing sector year to date.

S&P 500 Sector Returns

1 Mth

YTD1 Year

3 Year

5 Year

Consumer Discretionary -6.84% -5.73% 6.17% 9.47% 1.60%

Consumer Staples -3.33% 3.38% 9.70% 5.72% 6.26%

Energy -12.54% -11.40% 7.63% -1.20% 3.40%

Financials -11.43% -25.16% -16.50% -14.71% -17.47%

Health Care -4.42% 2.52% 6.25% 3.54% 1.16%

Industrials -9.21% -14.68% -4.60% -0.18% -1.39%

Information Technology -3.38% -5.81% 3.84% 7.62% 3.33%

Materials -16.36% -21.79% -6.90% -0.57% 1.05%

Telecommunication Services -1.12% -1.52% 5.71% 7.97% 1.54%

Utilities 0.19% 10.74% 11.95% 5.20% 3.88%All returns are total returns in USD

Energy, 11.63%

Materials, 3.36%

Industrials, 10.27%


10.65%

Consumer Staples11.68%

Health Care, 12.14%

Financials, 13.59%


19.44%


Utilities, 3.97%

S&P 500 Sector Weights


Source: RBC Global Asset Management

WHY NOT MORE CANADIAN EXPOSURE

Canada does not look like the world, as half of the Canadian stock market is concentrated in Energy/Commodities. Where only 1/5 of the world stock

market is allocated to Commodities.

Energy, 26.22%Materials,

24.06%

Industrials, 5.29%


3.88%Consumer

Staples, 2.58%Health Care,

1.17%Financials,

28.44%


1.81%


Utilities, 1.85%

S&P/TSX Sector Weights


Energy, 10.99%

Materials, 9.22%

Industrials, 11.45%


10.78%Consumer Staples, 9.42%

Health Care, 8.76%

Financials , 19.55%

Information Technology ,

11.79%


Utilities, 3.87%

S&P Global Sector Weights

Source: S&P

WHY NOT MORE CANADIAN EXPOSURE

Canada is not the world as 95% of all equity opportunities lie outside the

Canadian border

United States 43%

Japan, 8%United Kingdom,

8%

Canada, 5%

France, 3%

Australia, 3%

Switzerland , 3%

Germany, 3%

China, 2%

Korea, 2%

Brazil, 2%

Taiwan, 2%

Hong Kong, 1%

Global Equity Capitalization August 31, 2011

Source: S&P

Investor BEHAVIOUR

THE FUTURE STARTS HERE

9497

1022

710

958

1168

812

419

1314

913

880

1461

015

341

1607

116

802

1753

218

263

1899

319

724

2045

421

185

2191

522

646

2337

624

107

2483

725

568

2629

827

029

2775

928

490

2922

029

951

3068

031

412

3214

232

871

3360

334

334

3506

235

795

3652

537

256

3798

638

717

3944

740

178

0%

2%

4%

6%

8%

10%

12%

14%

16%

Initial Yield & Subsequent ReturnUS Long-Term Govt. Bonds

Initial YldComp. Ann. Return, Next 10 Yrs

Source: Ibbotson, BofA

The future starts here

EARNINGS GROWTH, SHARE BUYBACKS AND DIVIDEND GROWTH

3652

536

646

3676

936

891

3701

137

134

3725

637

376

3749

937

621

3774

137

864

3798

638

107

3823

038

352

3847

238

595

3871

738

837

3896

039

082

3920

239

325

3944

739

568

3969

139

813

3993

340

056

4017

840

298

4042

140

543

4066

3

$0

$20

$40

$60

$80

$100

S&P 500 FundamentalsTrailing 4-Qtr ($ nominal, per share)

Operating EarningsShare BuybacksDividends

Source: S&P

Next decade shaping up a lot different than last!

The cost to buy $1 of Company Earnings or Bond

Interest, then and now

Then (Dec/99)

Stocks Bonds

$40

$15

$

$

Now (Sep/11)

Stocks Bonds

$16

$50$

$

MARKET TIMING

Market timing is difficult at best. Those who try to time the market often make changes at

the worst times.

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

-$250

-$125

$0

$125

$250

$375

Dec

-95

Dec

-97

Dec

-99

Dec

-01

Dec

-03

Dec

-05

Dec

-07

Dec

-09

Stock Market Prices & Annual US Mutual Fund Purchases

Equity Fund Purchases (net), bil USD (LHS)

S&P 500 Price (RHS)

Source: S&P, ICI

Fear

Greed

$3,000

$6,000

$9,000

$12,000

$15,000

-$10

$0

$10

$20

$30

$40

Dec

-95

Dec

-97

Dec

-99

Dec

-01

Dec

-03

Dec

-05

Dec

-07

Dec

-09

Stock Market Prices and Annual Cdn Mutual Fund Purchases

Net Equity Fund Purchases, bil $Cdn (LHS)

TSX Price (RHS)

Source: S&P, IFIC

Greed

Fear

THANK YOU!

intoxicated markets 2011

Documents

total returns

bloombergtsx sp

consumer staples

information technology

information materials

telecom health care

telecom industrials

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