16 May 2008

The End is Near...what the hell?



You know, when I hear people talking about the end being near, I get suspicious. Damn suspicious. Do they mean the end is near for them? Or are they trying to convince me that my number's up? The naysayers want to spoil everything for everyone else... and dammit, I'm not going to take it anymore!

For almost a year, anyone who's tuned into any of the financial news networks has been bombarded with enough doom and gloom to make the Grim Reaper blush. Yes, the evil credit crunch is on the verge of turning Canada and our southern neighbour into Third World countries with nice ski resorts and better late night TV. In the financial services business that I'm in, I've listened to client after client complaining about the massive losses their investments have taken and I've watched wide-eyed new anchors say the word recession in such dramatic fashion, you'd think they just marched down Mount Sinai with the Ten Commandments.

Well, crunch this.

The Toronto Stock Exchange closed today at a new record high of 14984.20 and if oil and mining stocks continue in the direction they're going, we're going to see new record highs next week too. The polar ice cap might be crumbling, but the economy isn't. Even the Dow Jones is bouncing back after a rough fall and winter...but people, this isn't the news story of the millenium. Check out an Andex chart and you'll see that on average, we get hit by a recession at least once a decade...and over the past 50 years, we've seen dozens of major world events that will give your investment portfolio a good body shot, but like any good boxer, it will weather the storm, keep punching, and eventually do just fine...and it won't even look like Rocky Balboa after fifteen rounds!

It's true that what's happening in the American economy is not good, but the powers that be have a good habit of learning from their mistakes and not repeating those particular ones. They'll just find new, fun and wacky ones to create yet another crisis. The best possible thing to come out of this one is that if you've been wondering how your greasy, unemployed neighbour just bought the $300,000 house next door to you...rest assured that in another year or two, his ilk will be lucky to find a flea infested apartment to rent. And buy bank shares. They started this mess, their shares values dropped as a result, but happy cigar-smoking times are just on the horizon...once this recession comes and goes.

As a financial advisor, I hate seeing people make rash decisions that put them in a worse position or cause them to lose their hard earned dollars. So, my recommendation remains the same - stay invested, invest regularly, and if you're young...start early. That yacht that's waiting for you in the Caymans will thank you for it. Just don't forget your sunscreen.

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