May 2003 - Nr. 5
So where are we now?
by Herwig Wandschneider
Aside from enjoying the K-W nightlife – movies, theater, festive activities (such as the 40th anniversary of the Continental Club in Cambridge, the May 1st opening of the Concordia Patio and the upcoming 50th anniversary celebrations of the Alpine Club in Kitchener – is there a life?
These are in fact tough days beyond the news of Afghanistan, Iraq, North Korea, SARS, and the Middle East, as anyone with a few dollars to invest in Retirement - or already is in Retirement - knows. Let’s face it, the most used reference points, the S&P/TSX, the Dow, the S&P 500 and Nasdaq have not earned you much money, if you were fully invested "for the long term" in the indexes for the last 5 years. And if you invested at the peak, you are down some 30-70% depending which Index you held. Never mind any particular stock you placed your bet on.
OK, but where are we now, more than 3 years beyond the peak of the market relative to where it is going? Have we seen the bottom? That is the Million Dollar question no one has the answer to, yet. Will the market rise back to where it peaked? Silly question, sure, eventually, but how long do we need to wait? 5 years, 10, 25, or more? No one can tell. One thing is for sure, the era of 1950 to 2000 is passé. Meaning that - for the time being - there will not be another period like that too soon. Plenty of reasons for that, but perhaps not globally explained. All we see is monumental shifts in how the world is teaming up in Europe and in the Americas and what is happening in the Middle East, and the Far East.
For those of us, who lived through this exciting period of growth, there is a need to adjust ,count our luck that we were part of this era and scale back our expectations. Not much choice in the matter. Just look at Japan. Down for well over a decade and still hitting new lows, even at interest rates close to zero. We are not Japan to be sure, but it serves to illustrate that life carries on, even in a long-term economic crunch.
No point suffering anxiety attacks over the facts of life. Interest rates may still be high at this end of the world. Even Greenspan says he might lower them some more. Not much room left, but worth a try. Choices become somewhat limited, if the consumer is exhausted, costs have been cut to the bone and no one is spending. Only the Government may get back to doing that and pile up the debt again. Sure to soften the blow, but not likely to fix the problem.
At the end of the day, take what money you have left and invest it wisely. You can still get what could be said to be a half decent return. Quarter-decent, if you go by standards just prior to the turn of the century. But, if you are willing and able to take some risks, there should be some upside steam, at least for the next few years – somewhere. Check into www.htassociates.ca/news.html (That’s the website of yours truly) and review the weekly graphs. They will tell you something. You can even find some comments on Canada’s Pension Plan investments in the Market there.
