In the current and prospective economic and stock market environment are you planning to spend more time understanding the economy, the markets and your investment options than you have done in the past? Are you going to do more stock research, online research, and analysis yourself?

If you read Canadian newpapers, you may have read the recent articles referring to losses suffered by ‘ordinary investors’ on investments made in non-bank ‘asset backed commercial paper’ (‘ABCP’), described in at least one instance as ‘an obscure investment product many … had never heard of’. Another headline stated: ‘Investors blame the brokers, brokers blame the companies, the companies blame the debt raters’. Investors who purchased ABCP’s were quoted as having said things like (paraphrased):

• ‘ABCP has been a huge nightmare … this is all of our life savings’;

• ‘Our investment advisor told us that if ABCP failed, so would the entire Canadian banking industry. That convinced me we were getting into something completely safe’;

• ‘This is my life savings. I now have to get a job’; and

• ‘If you knew what you were buying, you’d know you could lose money. But in this case we weren’t informed’.

Simply put, if you rely entirely on others to look after your capital and things go wrong, rest assured it is unlikely anyone will admit to having given you bad advice. Bad results inevitably will be blamed on ‘unforeseen events’, the ‘unpredictable behavior of market forces’, or something along similar lines.

We suggest that investors use these ‘ABCP’ type of events as ‘wake-up calls’. While we fervently hope we are wrong, based on our research and analysis we think at in the context of the capital and stock markets the ‘worst is yet to come’. We think this based on our continuing beliefs that include:

• the U.S. Consumer must continue to spend at recent annual levels if growth patterns in developing countries is to continue at anything like recent levels;

• if those developing country growth patterns do not continue, we think base metal and some other commodity prices may be negatively impacted in the near-term;

• the ongoing losses in U.S. manufacturing jobs does not auger well for the U.S. economy in the mid to long-term;

• continuing increases in the U.S. cumulative net trade deficit escalates U.S. dependence on other economies that are ideologically different from those of the developed countries; and,

• we have not seen the end of the drop in U.S. house prices, increases in U.S. house foreclosures, and resultant stress on U.S. lenders.

Until mid-2007 a large percentage of stock market investors had enjoyed continuous value growth in their portfolios. Some might say that in the period from 2002 to 2006 that to make money in the stock markets all one had to do was show up. That is clearly not the case today. Everything we hear and think resoundingly tells us the ‘free ride’ of the early 2000’s is over.

We think the clear message that events such as the ABCP write-downs communicate is that people who invest in the stock markets owe it to themselves to spend more time understanding the markets and the stocks that are recommended to them and that investors take increasing amounts of responsibility for their own actions going forward. We believe StockResearchPortal.com is well positioned to assist investors in this regard in the context of Canadian Mining and Oil & Gas stocks.

You can quickly access the up-to-date statistics mentioned in this Post, and other related statistics, by logging into StockResearchPortal.com, clicking on Economic Research in the Main Navigation Line, and then clicking on the various statistical charts and data listed in the Left Navigation Bar. We suggest you access these charts and data frequently, and that you cross-reference what you find there to what you otherwise read and discuss.

The views expressed in this Post are those of the author. They are offered to readers for information and general guidance only. They are neither intended to, nor should be taken to, constitute economic or investment advice. See Legal Disclaimer.

Possibly Related Posts:

• Three Types of Investors – and What About Traders?
• Dow Weekly Gains/Losses!
• What Value Do You Give To Your Time?
• Coming Derivatives Crisis?
• The Equity Markets and Value?

Trackback URI | Comments RSS