Canadian Personal Finance Blog

Archive for the ‘Leadning Indicators’ Category

As the Magic 8-Ball tells us (OK Stats Canada tells us, but it sounds like the Magic 8-Ball), indications are good that the economy may be turning around. Yesterday stats Canada announced that the Leading Indicators jumped 1.3% , which suggests things may be turning around slowly in our economy.

The index seems a bit of a mish-mash of a lot of information, but as usual if you read closer you’ll see that there are some very interesting tid-bits of information in there.

• The housing index is up 2.5% from last month, which means it is costing more to buy a house, so someone must be able to buy them if the prices are going up.
• The TSX S&P is up 2.0% from last month and if you look back to June 2009, it is up 18% over that period, which is a big number (but it did have a long way to go as well, after the great drop of ‘08)

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Stocks and Houses

So two areas of “investment” are up a fair amount which is good, and the questions now are, will this last? We shall see is the only answer, but with stocks returning to pre-crash valuations in some areas (some will never come back folks, remember that), is it safe again? Can’t tell, and we’ll only really know looking back in a few years whether this was the start of the recovery or a “suckers rally”.

Given I bought my house a long time ago, fluctuations in it’s value mean little to me, as I don’t plan on refinancing it.

Christmas Laziness and Cheer

I am planning on doing a Top 10 postings for the Christmas/New Year stretch (given I may or may not be around), so if you have any suggestions for this kind of a list (top 10 for this year), please leave a comment with a title or story you may have particularly liked (written by me, that is).

The Magic 8-Ball of Stats Canada’s Leading Indicators Index seems to suggest that we have entered a recovery from the great Financial Apocalypse of 2009 (trademark pending).

To quote the actual post:

The composite leading index rose by 1.1% in August, after a 0.6% gain in July. The increase was the largest since April 2002. Growth in the leading index usually only exceeds 1% early in the recovery from a downturn. In August, 8 of the 10 components contributed to the advance, up from 5 the month before, as the manufacturing sector joined the advance.

So we are actually early in the recovery, well that’s good, it would be really bad if this reflected the end of the recovery, so I guess we can all be relatively happy about these numbers.

Housing and Stocks seem to be leading the way which is a good thing for folks with the forethought of buying stocks last November when prices were the lowest and not so good news for folks who haven’t got back into the market yet (might want to wait for a while, unless you like following the herd, then follow the other lemmings back into the market).

Interesting how most “pundits” are now saying the recovery has started and you should be getting your money in now, notice they also said last November that to help get us out of the coming recession we should spend, and of course during the recovery we’ll need to keep spending to sustain the recovery. Only question I could come up with was, “When do we STOP spending?”, maybe it’s just me.

The BIG Table

This table is actually enormous and I would suggest if you really want to read it click here and go check it out at the Stats Canada web site.

“Indications are Good“, isn’t that what the Magic 8 Ball used to answer?

It seems Stats Canada also thinks that is the case with their Leading Indicators index showing positive for the first time in a year. The Leading Indicators index is made up of many portions of the economy, including manufacturing, housing starts and the stock market.

The Stock Market (up 5.7%) and Housing Market (up 4.5%) seem to be the major driving forces that caused this positive jump, so does this mean the Financial Apocalypse is over? Seems to be what every “expert” is saying, but I remain skeptical for now. To quote the Magic 8 Ball, “Concentrate and ask again“.

Leading Indicators for the past while

Random Thoughts

The Financial Bloggers had their say this week as well about the current world of finances:

• Michael James pulls out his magic 8-ball and comes up with a New Retirement Plan which consists of him blowing all his cash reserves, interesting idea, hope he buys lots of beer too.
• The Canadian Capitalist outlines Why the Middle Class is Feeling squeezed, me I am just glad to be included in that group again.
• Larry MacDonald wrote about a point I have already mentioned as well, The Health Risks of Reusable Grocery Bags, better be washing those folks, or you might be doing yourself harm.
• Preet at WhereDoesAllMyMoneyGo has a Reader who was taken for over $200,000 (yikes!).
• No Debt Plan has an interesting post about How To Order Tires on Line, watch out there are rumors of Ontario bringing in similar legislation for mandatory winter tires.
• Canadian Tax Resource outlines Planning Your Home Renovation, unfortunately his was due to a leaky basement.

Have a great weekend all!

Our friends at Stats Canada published their Leading Indicators for August 2008 yesterday and things in the Canadian economy seem to be doing ok, not great, but not as bad as some might think. 

The most interesting statement made was:

Household demand has remained the most consistent source of growth in recent months. Sales of furniture and appliances grew steadily, helped by a steady housing market. Housing starts rebounded in August. Meanwhile, personal services have become the main prop to growth in services employment. Sales of other durable goods were an exception to the strength in household spending, reflecting slower auto sales over the summer in response to record gasoline prices.

The housing index dropped, which may mean more reasonable housing prices or a slowing of the price increases we have seen, which is good as well.

Speaking of House Prices

The Citizen talks about how new price valuations for homes across Ontario are about to be sent out by The Municipal Property Assessment Corporation. Remember these valuations have been frozen for the past two years, so these new numbers could be pretty darn crazy (given a 20% price increase since 2005 on average in Ontario). 

“Residential property values have increased by an average of approximately 20 per cent across Ontario since 2005, when the last assessment update was done. Because of the four-year phase-in, property taxpayers will see an average assessment increase of five per cent next year,” Carl Isenburg, president and chief administrative officer of the Municipal Property Assessment Corporation (MPAC)…

 
I look forward to seeing this envelope in the mail.

Quick Run Around the Blogs

Some excellent articles this week from other bloggers worth having a look at:

• Nancy Zimmerman writes about 10 tips to change a small money habit, where she discusses how to stop buying lunch out (micro economics at it’s best). 
• Michael James writes about the Current Financial Mess and gives a very philosophical view that we are still living good lives, we just need to figure that one out. 
• All About Nortel has an excellent article questioning the former Telecom Diva’s decision to Sell Off Their Metro Ethernet product. Good research.
• The Canadian Capitalist writes about the implications of the Fall of AIG, a little depressing, but good research as well. 
• No Debt Plan writes an interesting view on Credit Card Victims Don’t Pay for 100% of My Credit Card rewards. 

Lies, Damn Lies and Stock Price Trends

To paraphrase Benjamin Disraeli. One of my favorite times of the year is here, with the opening of the N.F.L. season and with baseball coming down to the end of the season, the orgy of numbers coming from both games is astounding and quite satisfying for a number nut like me.

As a kid I reveled in the numbers from Baseball and loved collecting them and comparing them, but even as a kid I learned that all the numbers in the world are only telling you what happened in the past (which can be very important), but these numbers do not necessarily point to what will happen in the future. It is important to know what has happened in the past (because we do not wish to re-do our previous mistakes) but to know the future is what we all crave.

Football is awash in numbers to the point where there is an entire industry that has been created to use the statistics created by football games (Fantasy Football leagues), which astounds me, that you create a game from a game (is that recursion?).

Financial analysts do the same things to investors. They have mega-tonnes of data on every single stock and what it has done since it’s inception, and there are entire companies making fortunes analyzing these numbers, predicting what stocks “might” do by doing this analysis.

My understanding of the stock market, is that it has no conscience and no memory. Each day is a new day, and it’s like a Simpson’s episode (i.e. most of what happened yesterday isn’t relevant and it is forgotten) on the Equities market.  The simple fact a stock went down the previous day does not mean it will drop the next day (that fact alone, there may be other much better reasons, but the previous drop means nothing).

I have to laugh when I hear about “downward trends” and “upward trends” being reasons alone to buy or sell stocks, you may as well base your purchases on your lucky rabbit’s foot if you are going to think that way.

Keep crunching those numbers, but remember the numbers alone are meaningless without the context of why the numbers happened.