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2008 - A Year in Review

Jen — Tue, 06 Jan 2009 21:31:45 -0500

There is no doubt that 2008 will be remembered as one of the most remarkable years in the history of the global stock market (and not in a good way). Events have occurred that almost nobody could have predicted, although many seem obvious in hindsight. However, we must move forward. We can't dwell in the past-we have to learn from it. So what can we find out from the previous downturns?

1987 Black Monday - It was the largest one-day market decline in history. The general reaction by investors was a huge dumping of stocks, good and bad. The panic crystallized losses, and many investors went to cash to avoid further trouncing-not a wise move for long-term investors. The markets recovered, but many investors were not able to participate in the upturn because they had sold out and were waiting for "just the right moment" to get back into the market.

1990-91 Recessions - Companies were laying off staff by the thousands (just as at present). They restructured, cut costs, merged with competitors, and did all the things they should have done in the good times, but didn't because times were good. Investors, scared by the glum news, continued to wait on the sidelines. Unfortunately, all this cost cutting and restructuring led to companies making unprecedented profits and therefore optimum stock market performance for the next 10 years (with a few bumps along the way).

2000 - Everything was great, especially in the fancy new technology companies. Most people felt that the old way of doing business was out and that if it was on the Internet, it would lead to profits. Unfortunately, what really went out the door was the ability for people to use common sense and calculators. We all know the result of overbuying in a particular sector…a big drop! This plunge frightened perfectly reasonable investors out of the market once more and out of good companies. Again they waited on the sidelines until the markets were high and again moved back to risky investments.

Current Times 2008 - What I’ve seen is a reminder of just how much capitalism is dependent on confidence. What we are experiencing in the stock markets is a lack of confidence, but what we are certainly not seeing is a lack of good investment opportunities. This is not a crisis of business fundamentals (most, but not all, businesses are still very strong), but a crisis of confidence in investing in the future.

Without confidence, the price of any asset (stocks, bonds, commodities, real estate, and your car) becomes separated from its true value. If investors lose faith and trust in the process, asset prices become disconnected from expectations of future earnings and profits and are left to nightmarish emotional scenarios. When this happens, a fundamentally good investment can appear to be worthless overnight simply because nobody will buy it, as they are convinced that the prices will fall further. Rather than making careful assessments of future earnings and risk versus reward, potential buyers prefer to wait until sanity returns. Of course all this waiting and lack of purchasers pushes prices down further, increasing the downward spiral.

As we head into 2009, I believe times will stay tough over the year. And, as a result, they will do as in every recession - cut costs, re-structure, announce lay-offs, buy up competitors at reasonable prices, and all the things they neglected when times were good. This inevitably leads to higher profits and stock growth (we just don't know when).

Control what you can…your own spending! Know what you can truly afford and what should be put on hold until times get better.

Here are some positives as I look out into 2009:
• Companies' valuations are low, which means they are cheap compared to their revenues.
• Oil prices are lower, which is good for everyone but oil companies and the Canadian dollar.
• Banks are becoming more prudent and stricter in their lending practices
• Bad investment lending companies have been removed, for example, Lehman Bros., Bear Stearns.
• There is a global political effort to solve this mess that has never been seen before.
• Lower interest rates for variable rate mortgages or lines of credit
• Strong companies will show increases in dividends.
• Obama and other global governments want to expand jobs and infrastructure spending.
• Most importantly, we realize that downturns don't last forever - we just don't know when they will end. What we do know is that we would rather be in the market when it turns than sitting on the sidelines waiting for the magic moment to get back in.

2008 has been a trying period, but there is no other place I’d rather be than an advisor through these times. Take time to set your goals and financial plan and get 2009 off to a good start!

The Importance of Celebration

Rob Stringer — Wed, 31 Dec 2008 08:32:45 -0500

Each month countless opportunities for celebration occur in each of our children's lives, yet as parents sometimes we do not recognize them for what they are ... with December being no exception. This month your child received his/her first term report card which may have contained average or even below average results. Does this represent an opportunity for celebration? You may be surprised ...

Why should you celebrate?

Although often taken for granted, the act of celebration affords our children many important opportunities.

Celebration provides time for reflection. It allows you and your child a chance to stop and look back at his/her accomplishments--the goals achieved, as well as the steps taken (or in progress) to get there.
Celebration provides the opportunity for others to participate. How wonderful it is to have family and friends share in the celebrations and acknowledge your child for his/her hard work or efforts--regardless of the final marks achieved.
Celebration provides the opportunity to acknowledge others. Just as rewarding as being recognized, is the opportunity for your child to give thanks back - acknowledging family and friends for their support and encouragement along the way.
Celebration allows everyone to relax and unwind in the midst of a busy life. It provides a chance for everyone to step outside their normal routines to do something pleasurable and unwind. It can also provide a positive sense of anticipation.

What do you celebrate?

It can be tempting to celebrate only the larger achievements or high marks. However, there are many other events which may also warrant celebrations be they large or small. Here are just a few for your consideration:

When your child works at something new or difficult
When he/she takes risks
Making hard choices
Letting go of habits that no longer serve him/her
Completing a smaller step in the attainment of a larger goal, like working to close the gap between them and the provincial standards.

If you or a family member tries and fails, is there still reason to celebrate? Absolutely! Failure can be one of life's greatest teachers, if you only help your child to be open and recognize the lessons it can provide. For example:

Failure gives everyone a chance to look at what they are doing and change their actions--to try a new direction.
Failure can teach people about perseverance, and give an opportunity to keep going.
Failure can teach you there is no shame in failing--only in being so afraid of it that you do not get back up and try again.

For you see, it isn't a matter of whether you will fail at things throughout your life, it's more a question of how you will fail ... and the attitude or perspective you will bring to the situation.

So let me ask again, should you celebrate a below average report cards? While ultimately the choice is up to you, hopefully you see the importance celebration can play in both your child's and family's lives. It not only represents a chance to acknowledge the efforts/gains made, and to identify ongoing strategies for success, but can also replace threats and punishments as potential motivators with your children in the months and years to come.

About the author

An award-winning educator and Parenting & Youth Coach, Rob Stringer BA, BEd, CPC has spent almost two decades helping kids, teens, and adults meet with success, and live lives they LOVE! Although based outside of Toronto, Rob's coaching practice is global with teen and adult clients around the world.

Ready to give your child a head start on success? Check out Rob's coaching programs and workshops for parents and youth. Visit www.YouthCoachCanada.com or call 905.515.9822.

Cars, dolls and games...Oh My!

Julie Vickerman — Tue, 30 Dec 2008 08:37:00 -0500

Ah...the holiday season. Crisp snow, warm fires, fragrant trees and soft candle light and... TOYS!!! Christmas and Chanukah have come and gone and now we have a million more toys to store. Well, maybe not a million but definitely more than we had two weeks ago. Luckily, as children get older we are finding that the toys get smaller but nevertheless they still need homes.

As we have said before, weeding through your children's toys before the influx of new holiday gifts will make finding homes for the new additions much easier. Make it part of your holiday routine - go through your current toys with your children and have them decide what they would like to give away. Having your children donate their used toys to children who don't have any is teaching them an important life lesson in philanthropy. That being said, you may want to take some time alone, without your children present and purge further.

Now to find the new toys a home. Get the toys up off the floor. A great way to do this is to use canvas shoe bags. These can be hung over doors or hung on the wall. They are great for storing little things like Barbie and her accessories or if you have a budding musician in the family you can use the shoe bag to store the microphone, drumsticks, maracas, harmonica, etc.

As we have said before, baskets with lids are perfect because the clutter is hidden and they can be stacked. Baskets also look nice on shelves. Plus they are easy to pick up and take to another spot to be played with. Try to put only one type of toy in each basket - this makes it much easier for your kids to find what they are looking for. Label the baskets with luggage tags, shipping tags or if you are feeling really creative take pictures of the contents and put them on labels.

Games and puzzles can be stored in an armoire or even on an open shelf. If you display them artfully with a combination of books and baskets they can appear to be part of your décor. We are not fans of toy boxes - they are too deep so things sink to the bottom and the kids can't find them so the toys will be constantly dumped out or worse it becomes a dumping zone for everything else. Eventually it will be used to store all the things they don't play with anymore.

Hooks or pegs are great for dress-up clothes. Mount the hooks at the right height for your kids to be able to get them down or put the clothes away.

Now let's toast to a tidy and organized playroom for 2009! Happy New Year everyone!