Are Markets Priced For Perfection

Are Markets Priced for Perfection?

Pacifica Partners’ Financial Post Weekly Column – Sept 30th 2009


As we make the transition from the lazy days of summer to the fall, most investors are enjoying the first extended period of optimism in quite some time. We have seen the markets come back from the freefall they were in and economists and market strategists are now talking about the recovery at hand.

One issue we have taken with all of the talk about “economic recovery” is that there seems to be a sense that economic recovery is a foregone conclusion. That is the idea that economic recovery follows recession as sure as night follows day. However, some economists are of the opinion that “this time is different”. This school of thought says that trying to stimulate the economy with lower interest rates and trying to induce more “borrow and spend” economics is what caused all of the problems in the first place. They state that it will take longer for the economy to rebuild itself this time. They state that what we are seeing is a deleveraing of debt in all aspects of the economy. In turn, governments have taken on the burden of trying to jump start the economy with borrowing and spending of their own.

Can Expected Earnings be Delivered?

As off base as the arguments were only a few short months ago that implied that the world was headed into another Great Depression, perhaps the markets’ current enthusiasm is almost as equally misplaced. Add to this equation the possibility that the stock market is not as compelling a value as many would argue and we have a reason for investors to become more cautious – not bearish but cautious. Why is this so?

To read the rest of this article please visit the Financial Post online: FP Magazine Daily

Pacifica Partners are weekly columnists for the Financial Post

Legal Disclaimer

This report is for information purposes only and is neither a solicitation for the purchase of securities nor an offer of securities. The information contained in this report has been compiled from sources we believe to be reliable, however, we make no guarantee, representation or warranty, expressed or implied, as to such information’s accuracy or completeness. All opinions and estimates contained in this report, whether or not our own, are based on assumptions we believe to be reasonable as of the date of the report and are subject to change without notice. Past performance is not indicative of future performance. Please note that, as at the date of this report, our firm may hold positions in some of the companies mentioned.

Copyright (C) 2009 Pacifica Partners Inc. All rights reserved.

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