Over the past year I have spent time reviewing the history of the markets. While it does not predict the future, there are some interesting observations that you may be unaware of which could make a significant impact on how you view the markets and how you invest going forward.

Over the longer term (75 to 100 years) markets go up. However, most investors do not invest over that time-frame. Generally, an investor’s long-term time horizon is in the neighbourhood of 20 or so years and would be defined as an intermediate timeframe. The trends for “secular” markets generally last longer than market or business cycles. During these intermediate timeframes, markets are either in “secular bulls” (going up) or “secular bears” (going sideways or down). Below I have labelled the “secular bear” markets for the Dow Jones Industrial Average since 1898.

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This is the question on everyone’s mind. Unfortunately no one knows for sure!

Leading economic indicators change before the economy changes

You may have noticed that the equity markets have risen of late even though the economic news continues to be bad. Company earnings are down but in many cases are beating expectations and their stock price rises. Stock market returns are a leading indicator, as the stock market usually begins to decline before the economy declines and improve before the economy begins to pull out of a recession. Leading economic indicators are important because they help predict what the economy will be like in the future. Continue reading »

Do You Know Your Number?

While extreme market volatility continues and the length of the recession remains uncertain, investors are understandably scared about their investments and their ability to retire comfortably. Whether you invest on your own or use an advisor, my recommendation is that you should review your retirement plan to determine where you stand personally.

One of the best methods to model your retirement plan is using the Otar Retirement Calculator (ORC). It is straightforward to use and answers the following questions.

• Do I have enough money to retire?

• How long will my money last?

• When can I retire?

• How much do I need to save for my retirement?

• Do I need a life annuity?

• What is my optimum asset mix? Continue reading »