Market Forecasts

[Belguy]

After one entire year, the TSX is basically back where it started from. On September 1, 2010, the TSX was sitting just above the 12,000 mark. Then, from that point until the end of February 2011, it rose more or less continuously to just above 14,000. Then, from March 1, 2011 until now, it dropped more or less continuously, albeit with more volatility, until Friday's close of 12,327.51. YTD, the net result is that the TSX is down 8.30% while the S&P 500 Index has lost 6.43%.

In the past few years, losses in equities have been partially offset, in a balanced portfolio, by gains in bonds but this is not as true today and likely going forward for some time if and when interest rates start to rise.

Also, nobody is predicting a booming economy anytime soon. At best, there might be anemic growth and, at worst, another recession. This will likely result in low returns for equities.

And so, this leads me to ask this question: GIC's anyone?

Also, the Wealthy Barber Returns:

http://www.canadianbusiness.com/article/42235

[dubmac]

In my investment account I am 40% 4yr laddered GIC and 10% cash. Rates are very low, but after 4 years, I'm hoping to gain at least 1-1.5 % above inflation on this part of the portfolio. Inflation is the wild card in choosing GIC's.

[larry81]

This will likely result in low returns for equities.

Remember 'Death of equities' ? Decades apart, economic predictions strikingly similar...

http://www.marketwatch.com/story/dea...t-2-2010-08-28

If you are losing sleep while riding the roller coaster, GIC might be an alernative but remember that... in the end, optimists will triumph ! IMHO, this is not about predicting the future but about personal risk tolerance.

[ChrisR]

After one entire year, the TSX is basically back where it started from. On September 1, 2010, the TSX was sitting just above the 12,000 mark. Then, from that point until the end of February 2011, it rose more or less continuously to just above 14,000. Then, from March 1, 2011 until now, it dropped more or less continuously, albeit with more volatility, until Friday's close of 12,327.51. YTD, the net result is that the TSX is down 8.30% while the S&P 500 Index has lost 6.43%.

What is the relevance of looking at YTD returns?

If you look at 1 year returns (Aug 27, 2010 - Aug 27, 2011) then XIC has returned 6.26% (3.7% gain + 2.56% div).

[dubmac]

Remember 'Death of equities' ? Decades apart, economic predictions strikingly similar...

http://www.marketwatch.com/story/dea...t-2-2010-08-28

If you are losing sleep while riding the roller coaster, GIC might be an alernative but remember that... in the end, optimists will triumph ! IMHO, this is not about predicting the future but about personal risk tolerance.

Yes...I agree larry81 - it is about risk tolerance - I enjoyed that article from marketwatch. My approach, (tho I loathe to use the word timing) is to buy low from a cash reserve each year. The last real opportunity was in 2009, and summer 2010. I expect that optimism will prevail, but did you buy much in Feb-March 2011 when optimism was "peaking"? - I would rather keep more in cash (or GIC's) and try to buy when prices are low - if that means keeping a sizeable amount out of the market and gradually buy when prices are better (and my sense is that prices are getting better) then so be it - I'll forgo some of potnetial gains/losses.

It is about sleeping well at night.

[ddkay]

The US Congressional Budget Office's own estimate is that the U.S. won't fully recover until 2017 and that's using optimistic data. Death of equities is an exaggeration. Being permanently bearish is like betting on the end of mankind. The only time to do that is when there's mass physical disaster (nuclear war, sun burns out, asteroid hits us etc). IMO this is just the beginning of multi-year decline. My gut feeling is that something big (bad) is going to happen this week, I just can't put my finger on it yet.

[larry81]

My gut feeling is that something big (bad) is going to happen this week, I just can't put my finger on it yet.

You should short the market !

Remember last week

prediction spinned by the media = big drop (~5%) last friday if the fed dont announce QE3...

reality = +2% last friday, week ending 26-Aug-11 The S&P 500 rallied 4.7%

[Belguy]

I think that the something bad that is about to happen is that New York City gets wiped out by a hurricane. We will all wake up on Monday morning to the news that the NYSE is under water--quite literally this time!!

CNN and the rest of the media have been ringing the alarm bells that life as we have known it is about to be wiped out by Irene!!

By the way, for whatever it is worth, I have sold nothing in the past 12 months except for rebalancing purposes and remain fully invested as always. Market timing is much too difficult a job for me to pursue. My annualized return over the past several years has been 7 per cent but I do not expect this to be sustained in the slow growth years ahead but, heh, you never know.

[ddkay]

I'll let you know when I do... it won't be until we see conviction selling again

[ddkay]

Looks like the hurricane besides some inland flooding and a few downed trees was mostly a non-event