Interesting thread...
The stock market has killed my holdings, to the point where i don't even open my statements. Yes, i own/ed Nortel, JDS, Rim, Celestica et al, but also sun life, Bombardier, TD.
Blah blah blah.
Many things previously said on this thread are true, consumers are spending, yes on borrowed money, but since when is that new?
Yes companies are NOT spending, but sooner or later they will have to and there is a lot of pent up demand.
Someone mentioned that unemployment is low. By my lifetime memories, yes, it is.
Perhaps a lot has to do with Demographics. With boomers now entering retirement, the employment picture for the Gen Xers such as myself (32 to 39 yr olds) is more secure than it would have been say 10 or more years ago under similar circumstances.
The so called Gen Yers have had it easy. They have never experienced recession.
I went through the early 90's recession and it was far more brutal than this. I didn't see any real turn around till 94, and by 96, it was starting to boom again.
If the economy follows a 10 year cycle (it used to be 7, but increases in producitivity and a change in the economy itself has stretched that to 10 years) and i believe that it does, we still have another 2 years of these doldrums.
Sorry to pee in your cherios.
All summer long i have been thinking, wow, there are some bargoons out there in the market, but thankfully, i have avoided temptation as every "rally" has turned into a sucker rally.
In fact, since march of 2000, every rally has been a sucker rally.
I am not so sure that real estate is a good investment at the current time. The prices are very very high in toronto, driven by low interest rates and the desire to get into the market. (The heard mentality)
I basically would be scared off at the price of my own house now.
To me, the current condo boom signals an END to the current real estate market.
Last time, in the late 80's, early 90 or so, you saw the exact same thing happening.
Condos were being built like weeds around the GTA. You had people spec-ing on condos. Putting 10 grand down on `10 units before they even broke ground and flipping them before theyh even had occupancy permits in hand.
Then the bottom fell out. First out of the condo market, then moving up the food chain.
Guys were trapped, owing more in mortgage than they could even hope to sell the place for. There were a lot of walk aways when interest and unemployment rates climbed together. The condo market and the neveau rich high end took it hardest.
Prices in real estate started to slide from 91 and didn't start to go up till 96. Single detached houses in toronto fell by as much as 40 percent from their 90 peak to 95/96. Condos even moreso.
Developers who had condo projects on the books in 91 / 92 either forgot about it, went broke (Bramalea comes to mind as one that went tits up), or switched at the design stage from condo to gov't housing (Daniels in Etobicoke at the former Good year plant site which once was going to be high end condos, switched to gov't housing when there was no more housing market.)
I am not so sure EXACTLY what caused it, but in 91, the unemployment picture got pretty ugly, and many many people were "under- employed", working for little money, etc.
All i know is that you can't convince me that a house in riverdale is worth a half million bucks right now.
It's going to turn, it's just lagging the stock market.
Moral of the story, if you are a couple, make sure you can survive on one person's salary, and don't over mortgage yourself.
I have heard that the banks are actually getting nervous these days with all the credit that is out there.
cheers
