The second quarter of 2009 has been pretty good in terms of equity performance around the world. Here in Canada, the main barometer of overall stock market performance is the S&P/TSX Composite Index, or more commonly referred to as simply “the TSX”. For the year-to-date (January 1st 2009 to June 30th 2009), the TSX is up approximately 15.43%. But if you go back one full year (just click on the “1y”) on the embedded chart below, the performance for the last full year is still negative at -27.58%.
NOTE: The chart should update on a delayed basis so you might see slightly different numbers. The cumulative performance numbers will appear below the chart on the left.
Flash Player 9 or higher is required to view the chart Click here to download Flash Player nowLots of people are talking about a new culture of increased savings and decreased spending, which might lead to lower stock market returns going forward versus historical rates. What do you think? Will people permanently change their ways? Or only temporarily (if at all)?
Yes, increased savings will hurt companies, if the average person hides their cash away in a Scrooge McDuck-style vault. Otherwise, if they are keeping it in the bank, bonds, stocks, or real estate, they money doesn’t stop moving. In bank accounts, it gets lent to others, and they spend it.
In stocks, bonds, and real estate, you’re buying the investment from someone else who wanted to sell it, presumably so they could have money for something else. They may turn around and invest it in stocks or bonds or real estate, or they may buy something. Either way, the money’s not just sitting idle.
What may be hurt is consumer spending. That’s not the same thing as the Economy (with a capital E). There are lots of things besides big screen TVs to buy with your money.
Excellent informative blog post….Nice work