16 Apr 2011 Dodge & Cox - Q1 2011 Commentary ( Portfolio )
The U.S. equity market rallied during the quarter. News during the period was dominated by persistent political turmoil in North Africa and the Middle East. Oil prices rose more than 15%, with most of the gains occurring during March as investors absorbed the implications of the Middle East unrest. The earthquake and tsunami in Japan caused both short-term and longer-term stresses on the Japanese economy and global growth. In addition, European sovereign debt concerns persisted.

Within the United States, market gains were driven by both consumer confidence and the economic recovery, with strong job growth in March and a gradually declining unemployment rate. The Federal Reserve continued to keep rates low during the quarter to stimulate the economy. At quarter end, the S&P 500 traded at 14.2 times estimated forward earnings, which reflects rather modest investor expectations. Over our long-term investment horizon, we believe that the Fund is well positioned to benefit from global growth, and we encourage our fellow shareholders to take a similar long-term view when investing.