Market Outlook

Market Outlook:

The market bears are looking at thinning values and are expecting another 2008-like outcome. The VIX Index is bumping along its very long term average lows, which did lead to the market rout of 2008-09, however, we still do not see the sort of excesses that started that whole bear market off. There are expensive pockets here and there (the recent collapse of the social media stocks), but not the kind of overall excess that necessarily leads to a wholesale rout of stock prices and a major economic setback. While there is no doubt that the excessive monetary expansion does constitute an “excess” from which any serious pulling back will be very, very painful, as far as we can see, the Chair of the Fed, Janet Yellen, has no intention of allowing such an event to occur on her watch and in an election year.

We pay a good deal of attention to what Stephen Poloz says about the outlook, and does in practice. His actions remain bullish for the asset markets and we continue to look for opportunities to take advantage of the central bank actions.

www.bnn.ca

Don't sell your stocks if you’re worried about a market decline

"investors are acting as if the market is perched on a knife’s edge. A recent report from the Center for Applied Research at asset management giant State Street Corp. found that investors in 16 countries around the world have increased their cash holdings over the past two years to 40 per cent, on average, from 31 per cent. Canadians were a little more adventurous than most, with a recent average cash position of 34 per cent. Considering how low returns on cash are, that’s still an exceptionally high level.

Sheryl Purdy, vice-president at Leede Financial Markets in Calgary, says she began hearing a year or so ago about brokers, who, in dealing with nervous clients, were keeping substantial parts of their portfolios in cash. This prompted her to do her own analysis of the market’s vulnerability to a pullback. Her conclusion is that anxiety about soaring stocks is driven more by jittery investors than by market fundamentals.

“I don’t think we’re in for another serious crash,” Ms. Purdy said. “I think what we’re dealing with is shell shock for a lot of clients.”

The last time the stock markets were this strong, a crash for the ages lay dead ahead.

Parallels such as this are hard to ignore, but they’re of little use in managing an investment portfolio. So stay in stocks, or at least make only modest changes to your portfolio. The market will fall at some point, but it’s pointless for most investors to try and predict when.

http://www.theglobeandmail.com/globe-investor/investment-ideas/should-you-sell-your-stocks-if-youre-worried-about-a-market-decline/article19165282/