August 12, 2011 Market Update
A few quick
points should be made here;
First, this
is a recent piece I found in the Globe and Mail.
The
gentleman referred to is very highly regarded by any money manager I have met.
Second,
Empire sent me a quick update on Wednesday. They are suggesting that the
turbulence and volatility are not over yet. “I would say not.”
Third, I do
not believe we are anywhere near a bottom yet. This will take some time
to unwind. In 2008 the process took more than six months and this time
should be no different. We watched a nice bounce up on Thursday and we
saw that continue around the world in a more cautious way today, but even
though stock indexes are all green, we are seeing bond indexes moving that same
direction. Generally, we would not see a continuation the upward
moving bond markets if the stock markets were really on their way back up.
I found
this little list of debt totals at the Wikipedia site.
http://en.wikipedia.org/wiki/List_of_countries_by_external_debt
That looks
a little disconcerting, to make an understatement. That amount of
debt is increasing daily. Very few countries are doing much about the
debt issue yet. And that is what will continue to drive the fear into the
marketplace. Jobs and production are what will bring profits back
to the economy and ultimately that is what will bring the stock market back
from its fall. In the meantime, it will continue to fall in my
estimation.
The fact
that a few European countries have banned short sales in their respective
countries is plenty of proof for me that we are nowhere near the end yet.
These types of interventions do not work but in my estimation are
signals of desperation.
The reason I am writing is to let you know that I am watching the markets for a point to get back in but I do not believe we are anywhere near that point yet. We will likely need to move out of the bond and income funds prior to a move back into equities but I will watch that as well. The attachment is what the TSX looks like over the past 5 years. It is very likely, in my estimation, that we will fall well below the bottom of 2008.