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.
Market Returns
While returns were negative for most equity markets, it’s interesting to note that in March the equity markets listed below were all positive for the first time since April 2008.
* adjusted for Canadian/US dollar exchange.
**Source: Morningstar Paltrak March 31, 2009 data.
Where do we go from here?
I’ve shown this slide many times in the past. As you look at the chart below, how do you feel? Most likely it’s somewhere between “despondency” and “depression” or maybe an even stronger term that I can’t put in print. I understand your feelings.
Only when we look back some time from now, will we be able to confirm that this was indeed the “point of maximum financial opportunity”.
Don Maycock, P. Eng, CFP, CIM is an independent financial advisor …advising you to and through retirement! Don is licensed for mutual funds which are provided through Armstrong & Quaile Associates Inc and insurance which is provided through Armstrong & Quaile Insurance Agency Inc. If you have a question or comment, email Don at dmaycock@a-q.com, call (613) 966 8289, or go to www.donmaycock.com for more information. Subscribe to “The MAYCOCK e-Newsletter” to receive valuable financial planning tips each month.
Disclaimer:” “Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.”