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We've just seen a remarkable market recovery from the second largest percentage market dip in 150 years. We saw a huge emotional panic to get out of the market following Lehman's demise, and we are now seeing the same crowd looking get back in, just when the S&P500 has doubled from its March 2009 lows of 666.
But looking at corporate profits and balance sheets around North America, one can make a straightforward conclusion that most companies are in very good shape. Valuations are a little streched in some sectors (commodities mainly) and it would only seem reasonable to expect a modest pullback of 5-15% sooner than later - once the current inflows of cash trickle down some, the market will slow down - it's been quite a run from July 2010. The easy money has already been made.
That doesn't mean that someone who's still willing to do a little homework, or ask for a little advice cannot collect a 3.5% to 4.5% average dividend yield from a simple and fairly well diversified portfolio of 15 or 20 quality Canadian brand name companies. To those of you who don't "beleive" in the stock market, it is only because you have never taking even a few minutes to consider what is the foundation to our economy, or even the world's economy - forget about government for a minute, who employs people? In fact, reading some of the comments on this blog can be a bit disturbing sometimes.
All Canadians have some stake in the market, whether they know it or not trough CPP or even your own RRSPs. Companies employ people and look to make a profit - current profits are strong and the global economy is slowly but surely recovering - aside from the current geopolitical issues around the Suez canal, we've made a lot of progress - and no, the markets aren't going to zero just yet!