Acrophobia



By: YOSEF TASTASSA  
Published: December 9th 2010
in Economics » Local

Exchange Tower in Toronto

The Index performances in 2010

 

If you invested your money in the TSX Venture Composite Index in the beginning of 2010 and took your money out of the market 6 months after, you probably lost up to 5 per cent on your investment. During the first half of 2010 the Index reached a peak of nearly 1,700 points and then withdrew back to the territory of 1,400 points.

 

However, the person you sold your portfolio to in the beginning of July 2010 is very happy these days. It's because the TSX venture Composite Index surged from around 1,400 points to nearly 2,100 points – 50 per cent in only 6 months. The closure of the Index yesterday in Bay-Street was 2,098.84 points after it lost 18 points.

 

We are at the end of a fiscal year and it's time to ask ourselves some questions that may indicate how 2011 is going to look like.

 

Are we pro the stock markets or are we against it? Let's look at some facts and ideas about the markets.

 

Pro TSX Venture Composite Index

 

Many investors think that despite the fantastic performance in the second half of 2010, the Index is still far from its highest peaks from two years ago. As some of us remember, the TSX Venture dived sharply from around 2,500 points to less than 1,000 points during the 2008 crisis.

 

Investors say that Canadian markets went down too much. The country was very responsible and had no real economic problems excluding the negative sentiment that came from America.

 

Therefore, investors say, the recovery is slow but there is still a long way to go and we expect to see 2011 as a successful year and expect the Indexes to keep surging.

 

Against TSX Venture Composite Index

 

Europe is facing a new monetary crisis. The situation in Ireland, Greece, Portugal and Spain is worse than most of us think. Once the real figures come out from the European economy we will face a "Red" season in the markets and we may fall back to 2009 prices. 

 

America is not recovering in a good pace. The unemployment rates are very high and despite some positive data from the markets the general macro figures indicate that without QE2 the US would be in the "Double Bottom" scenario and a second recession is a fact.

 

The TSX recovery was better than most world markets and Bay Street was an island of stability. It cannot be stable forever and not be affected by the global markets. The Dow-Jones and the NASDAQ are around 11,400 and 2,600 points respectively. The Indexes are too high and when they start falling it will affect Bay-Street.

 

What to do?

 

It's always recommended not to invest in the capital market with money that you really need. If you're thinking of investing in the markets, try to spread your investments to various financial products so that your portfolio will be balanced and will be less sensitive to fluctuations. Cash, Bonds, Foreign currency, Stocks, Commodities and simple saving plans are normally the "ingredients" in a balanced portfolio. You should consult your professional financial advisor about possible risks to your money before taking any decisions.

 

This article does not recommend investing in the capital market



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