Some of you will remember last fall, during the worst stock market crash in recent memory, the Prime Minister of Canada declared a "buying opportunity." Many Canadians, and not just politicians, vilified him for his unsolicited financial advice.
I thought it'd be a fun little exercise to track what has occurred since then and maybe offer some reasons why we are where we find ourselves today--in a place that no one in these parts has accurately predicted.
On October 7, 2008, the TSX was at 9,829 points.
It "bottomed" on March 9, 2009 at 7,566 points.
Today, the TSX is at 10,936 and climbing.
If you rushed out and bought an index fund on October 8, 2008, you'd be "up" about 9% today. If you were patient and picked a better buying moment, you could be "up" almost 31%.
Considering all that has gone on in the global financial market, I find these numbers remarkable. At the same time, I struggle to explain the index numbers as a whole on the basis of any sound fundamental analysis (although when you look at individual stocks, you can see stars, dogs and reasonable valuations, especially in some financial stocks).
What happened in the local housing market?
Median Greater Victoria price in October 2008: $495K
Median in June 2009: $530K
July numbers are out, along with hyper-spin, and the median price dropped to $520K. My earlier guess was off, I had expected price hikes, avg and median prices both declined MOM. What this indicates is that it is properties priced below $500K that continue to fly off the shelf as fast as they are listed while properties priced $600K or more move slowly if at all. Official sales stats are: 516 single family homes, 252 condominiums and 103 townhouses or 933 in total--the highest July sales volume in 19 years.
The "buying opportunity" in housing occurred exactly 3 months after the fall declaration: interest rates dropped to equal the lowest on record and buyers bought. But real estate analysts should be concerned that previous high water marks weren't surpassed--considering the frenzy during the fall of 2007 and spring of 2008 was happening with interest rates more than 2% higher than today's.
These are weird and wacky times. I suspect we will be offered new buying opportunities in the near future.