As Halloween approaches one starts to think of that inevitable summons to the front door by the cry of trick or treat. Investors might do well to ponder the same sentiment when it comes to today’s markets. Are we facing a market full of devilish tricks or are we in for a treat? I think that treats may be the order of the day.
This is why?
We just found out that the Bank of Canada does not plan to raise interest rates until next April, so bond investments appear to be relatively safe for a while although with low returns. This news is welcome also for stock prices since rising interest rates can adversely affect them as well. The threat of downward adjustments in stock prices even though the market is at or near historical highs is lessened considerably. Some economists believe we are in the early stages of the business cycle which bodes well for continuing growth. Inflation on the other hand is at historic highs and expected to continue in the short term. Exacerbated by supply issues inflation is expected to lessen as the supply situation improves.
Retirees however will suffer from higher grocery, heating and gasoline costs. On a fixed income higher prices can really hurt. There is hope however that high inflation will diminish over time. We can only hope. With a lower fixed income and higher costs some of you, who can do so, might find some joy in stocks. Be careful and seek advice from a certified financial planner if you are uncertain on where to invest.