Canadian Personal Finance Blog

Archive for October 22nd, 2007

Black Monday, Blue Monday?

Yes, it was actually last week, but this is the Monday that it would have happened on 20 years ago. I had just started working when this “market adjustment” happened, and at the time, I didn’t have any investments to lose money on (I’m sure my parents did). The people I worked with at the time were very affected (effected) and I just couldn’t figure out what all the hype was about.

The following clip from the CBC (with Knowlton Nash), shows what the news of the day said about this monumental $500B asset drop. An end to the Bull Market of the 80’s (remember, Greed is Good) and made a lot of people get out of stocks for a very long time (and then they came back just in time for the High Tech Bubble and Burst).

What does this mean? We are usually not that far from a market crash, but not as close as the experts think either. Some can show reason how they predict these market adjustments, but then again, some people also have good strategies for choosing winning lottery tickets as well. If you are in the stock market, be aware, this kind of adjustment IS going to happen SOME TIME, and you had better have a plan on how to deal with it.

Dodge Speaks About Canada

David Dodge the Bank of Canada Governor spoke on the release of the Canadian Monetary report and made the following interesting statement:

But there are a number of upside and downside risks to the Bank’s inflation projection. The main upside risk is that excess demand in the Canadian economy could persist longer than projected. The main downside risk is that output and inflation could be lower if the Canadian dollar were to be persistently higher than the assumed average level of 98 cents U.S. for reasons not associated with demand for Canadian products.

So exports will drop, but spending may stay up, and inflation may stay around, which means they have not said, “No Interest Hikes”, yet. With Oil at $90 a barrel, Canadian economy is bound to overheat due to oil export income, and the inflation that $1.50 a litre for Gas is going to cause.

Get rid of that debt folks, I suspect our interest rates are not going to drop in the near future