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Ted's March 2011 Commentary

March 2011 Commentary

Since the last time…

I’m going to start by reminding you that I am an optimist at heart – and I think that if we were able to get through some of the horrific disasters and scares we have so far in our lifetimes – then why should this point in time be any different? That’s not to say you look at the world with rose coloured glasses on, but let’s not focus on only the negative (of which there are lots out there as we all know at present).

Visit our site here to see a great chart showing the amount of and lengths of time the S&P500 has gone up and down since the 1920’s. Our Canadian market chart is very similar. The message in the chart is that there have been instances where our markets have gone up higher and longer than they have this cycle …

but there have been times that the markets have gone up higher and longer than they have this cycle … but there have been times that the markets have corrected along the way long before this! It sure looked like the events in Japan and Egypt and then Libya were finally enough bad news to cause some investors to get nervous and decide to sell. Who can blame them when we had already before that been worrying about the ability of Europe to roll over their debts at decent rates and wondering if the US housing market will ever hit bottom, and worrying about how long the world will be willing to finance the US’s record deficits. We all know that the US has to change – they cannot afford the entitlements they currently have in place – in particular health care. In addition, we have to watch how long the symbiotic relationship between China and the US can continue – the US sends money to China to buy their lower cost manufactured goods, then China invests the money back in US treasuries, propping up the US financial system. The unfortunate circumstances that Japan now face will likely put pressure on US interest rates to rise, while their eventual reconstruction efforts will likely provide some new additional demand for commodities (or at least a replacement for expected diminished demand by China as they try to slow down the growth and inflation in their economy).

I am currently in the camp that once the day-trading swings diminish from the Japan and Libya events; that we can easily see a continuation in the mini-correction in our markets – I call it a mini-correction, as I am hopeful that the 200 day moving averages of our Toronto and US stock markets will provide significant support levels, and I plan to use any weakness as another buying opportunity!

In the meantime, please feel free to call or email me at any time if you have any specific concerns about your financial plan or portfolio.

Ted