2007 was a challenging year for investors as the Canadian stock market leaders were concentrated in a narrow list of companies. The top five TSX gainers contributed 89% of the total 2007 gains; RIM, Potash and Alcan alone accounted for about 72% of the return.
We began 2007 on a positive market tone and ended the year on a negative note, plus we experienced heightened volatility in the markets. Some analysts believe the opposite will happen this year – we’ll begin 2008 with negative market sentiment plus volatility and end on a more positive note. Certainly the continued volatility in the stock markets will test our patience!
The 4th year of a U.S. Presidential election and the positive effect of expected interest rate cuts by the Feds are what is behind the more optimistic outlook. As we have absolutely no control over the markets, we’ll just have to wait and see. Single digit stock market returns are expected however.
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