Many people are certainly upset and maybe rightly so that many of the people who were charged with the responsibility to predict things and consequently help to protect us did a poor job in 2008. Of course I am speaking of the economists or (econo – I – missed – it).
Good article today about this and although they did bring out some predictions from a handful of the real ‘Rockstar’ economists in this country there are some interesting highlights.
“Right now we don’t have buys on any sectors,” she said in January 2008. “You can’t seek refuge in any sector. It’s all going down.” – Danielle Park.
I agree wholeheartedly. People ask me a lot sould I get back in? I repeat the same thing, dont fight negative momentum. It is not “wait for the bottom” as I believe no one knows when the bottom actually is, but you will get a feeling when we are out of negative momentum.
Jeff Rubin is optimistic about the stock market this year, predicting the TSX will end 2009 at 11,000. It closed on Monday, Jan. 12, at 8793.
“The bad news is that we are in a recession, and a fairly deep one at that. The good news is that the stock market has already discounted a depression,” said Rubin.
Again I agree. To be fair Rubin has had a good track record in predicting the upside but sadly he like all his colleagues missed warning us about the impending downside. However I believe the stock market is a leading indicator so the lower it goes or the more bad news there is the better. That leads us closer to the bounce back.
“Rubin’s sidekick at the CIBC, senior economist Avery Shenfeld, is cautious. He said it could take up to three years for the TSX to reach the high it set last year.”
No problem, that’s OK. If we lost four years of value in this collapse and it takes three years to come back then that’s OK. We certainly would not want to see the four years of value come back as fast as it went down (six to 12 months) would we? That would bring some serious problems.
“Even in a mild recession the unemployment rate usually rises about two per cent,” Shenfeld said. “We’re looking at an eight per cent unemployment rate [in 2009] and it could get there in a hurry.” (He said that about 36 hours before Canada’s latest unemployment numbers spiked to 6.6 per cent.)
Expect more bad news about job numbers, and that is to be expected. Remember in the depression unemployment went to 25%, if it is 8% then we can survive.
“This year, the smart money seems to be on the Canadian dollar heading back to par with the U.S. dollar. But then the smart money was almost always wrong last year.”
Yup, and this will delay the recovery in Canada.
“2009 is the one year where it’s almost impossible to find consensus,” Richards said. “There are those who say we’ll bottom in the second quarter [and] those who say it will take until the end of 2010 to work through the economic woes.”
Enough said…no one really knows, but I do know this…this to shall pass…everyone take a deep breath and act rationally.
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