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May 21 2009

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Have We Bottomed?

Have We Bottomed?

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 Bottom in 2009


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.

The Cycle of Market Emotions

The Cycle of Market Emotions

 

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 certified financial planner.  If you have a question or comment please use the contact form on the right side of this website.

 

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