February 16, 2010

2009 Market Recap

Filed under: Financial Planning,Investments — MikeT @ 7:37 pm

So how do you think stock markets performed in 2009? If you’re like 74% of investors in a recent survey, you thought the S&P/TSX was flat, down or you didn’t know (1). Only 14% in the survey actually knew the S&P/TSX posted a return over 20% (1). In fact, our major Canadian stock index posted 30.7%, its best return since 1979 (2 & 3). Although I don’t have a survey or any stats to prove my theory, I believe that investors were far more cognizant of poor market performance in 2008 when the S&P/TSX’s return was -33% (2). I’m sure the media is to blame for much of investor’s knowledge of market conditions, with their tendency to focus and trumpet the negative as oppose to the positive.

For the record, the S&P500 (a major U.S. index) and the MSCI World index produced returns of 23.5% and 27% respectively (2).

At the end of the day it really doesn’t matter if you’re up-to-date with market returns as long as they don’t swing your emotions enough to make trading decisions. Investors that get caught up in emotions are more likely to make investment decisions that lead to timing the market, resulting in buying high and selling low.

Reviewing your portfolio annually in conjunction with your financial plan is the best way to support long-term financial health. Evaluating performance and matching it to your financial goals will ensure you remain on the financial path mapped and will help eliminate the emotions involved in investing.

(1) Angus Reid Survey Results (Jan 5, 2010)
(2) globeadvisor.com
(3) Bloomberg



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