Jordan Wealth Management Group - ScotiaMcLeod Truro

The collapse of the financial institution Lehman Brothers and also housing prices in the States last year created a panic that our capitalist system was irrevocably broken, and that another Great Depression was going to result from this.

The market has realized that this scenario is NOT going to play out. True, the economy is still in a recession scenario, but stimulus packages will start to come through the system in the last few months of 2009 and early in 2010. Please note that less than 50 Billion has actually been spent of the 750 Billion stimulus packages in the States. Markets are a little frothy at the moment – somewhat overbought. People are stepping in and buying the markets when the markets drop down to about six percent less than current levels (10,500 on TSX and 975 on S&P). Money Market assets are still at very high levels. Many institutional and individual investors missed the rally since March and WILL come back into the markets if they get the chance. Strong buyers stepping in will meet any decent sell-off equally.  On a more negative note, we still need U.S. consumers to come back. For the markets to rally in a big way beyond our previous highs, we would need BIG leverage to come back into the markets and banks aren’t ready to go back to that quite yet. We need to get through this flu season with our populations and businesses intact.  

My perfect world would have the stock markets go sideways for a while, or back off just enough so that prices seem more reasonable and we get the chance to move money in that we should have when things were, with hindsight, REALLY cheap. I’d like to see a gradual, and very slow increase in interest rates – rates that are going up because our economies are expanding again, and not because the attack on the US dollar never stops. I don’t want to see a rapid rise in rates, because that will just sideswipe the safe money sitting in bonds, and  that may be all that some have left after they took a licking in the stock markets. I want to see Canada gain by the world paying up for our resources that they need. (Good for stock prices – just don’t get me started on “Avro Arrow” or environmental stories).  

Bottom line: The glass is ALWAYS half- full. Be patient. Be realistic. Be wary. Be safe.