Saturday, October 11, 2008

Here’s a better constructed hypothetical question

Q Mr. Harper, on October 7th, you said:

“I think there are probably some great buying opportunities emerging on the stock market.”
If I had taken your advice and invested $10,000 in a TSX index fund that day, how much money would I have today?

A Your investment would be worth $9015, a loss of $985 in a mere four days.

Q If you were Prime Minister now, which you are, and knew four days ago what you today as Prime Minister know now presently, what would you , as Prime Minister today, have said four days ago, to people today wondering about what you said four days ago?

A Vote Conservative February 14th?

Of course, this was all entirely hypothetical. With people worrying about their jobs, their pensions, and having lost thousands on the markets, not many people have $10,000 lying around to follow Stephen “I’m an economist” Harper’s sound financial advice. And if you do, you're probably already voting Conservative.

Thing is, there actually are lots of buying opportunities. IF YOU HAVE MONEY.

It’s times like this that I’ve got my portfolio entirely in comic books and hockey cards.

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8 comments:

Noir Novelist said...

Someone's put a clip of Harper from the 2006 French Debates, repeatedly saying he doesn't understand questions he's being asked.

http://www.youtube.com/user/FrancaisdeHarper

Michael Fox said...

First off, he didn't say to buy an index fund, he said there are probably some great buying opportunities, which there are. Several stocks have gone up since he made those comments.

Second, that index fund will be worth more a year from now. Yes, there will be day to day fluctuations, but right now is a great time to buy.

tdwebste said...

Harper was running Canada as blind ideot.

Flaherty is the source of Canada’s 40yr zero down mortages.

http://www.taxpayer.com/main/news.php?news_id=2430

Harper followed Bush’s example and first deregulated credit. June 2006, than again in November 2006 CMHC relaxed its standards. Prior to Harper, government insured mortgage were a prudent maximum of 25 years and with a minimum down payment of 5%. The introduction of dangerous zero down 40yr mortgages fueled already out of control housing prices. Canada is not suffering to the extend the US people are suffering because the Liberals know there is piper to pay and did not follow Bush deregulating credit. Only after Canada felt the growing credit crises did Harper reverse the dangerous zero down 40yr mortgages effective Oct 15 2008 which he earlier introduced in 2006.

http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2006/2006-06-28-1400.cfm

Quote:

Earlier this year, CMHC was the first Canadian mortgage insurer to introduce, on a pilot basis, insurance on loans with extended amortization periods of up to 30 years. Building on the success of this pilot, CMHC is now moving to further facilitate homeownership by making this feature on-going, and is also introducing extended amortization periods of up to 35 years.

sharonapple88 said...

First off, he didn't say to buy an index fund, he said there are probably some great buying opportunities, which there are. Several stocks have gone up since he made those comments.

That's the problem -- Harper wasn't specific enough.

(There should be a law that politicians shouldn't give financial advice. It would be too easy to create a bubble or a panic.)

Second, that index fund will be worth more a year from now.

There is no guarantee of that. The NASDAQ bubble took several years to bottom out. It took a decade for Japan's bubble to hit its bottom. The Dow Jones didn't surpass the numbers it hit in 1929 until 1954. Here's an on-line article with a chart on the US stock market. Bears can last years.

It's possible with computers and the net that the recovery could be faster. Who really knows.

Anyway, for those who might be interested, someone has graphed the Dow Jones over several decades and adjusted it to inflation. It's quite interesting to see.

McLea said...

"A Your investment would be worth $9015, a loss of $985 in a mere four days."

So is 4 days your new investment horizon Jeff?

Funny, when I watch BNN I don't see too many 4 day charts, but what do I know, maybe you're new hyper-short term "investment" strategy will catch on.

Jeff said...

Buying into the drop is never a good idea mclea, and its not over yet. But I don't have an investment strategy. Like most Canadians, I don't have the extra cash kicking around to follow Steve Harper's investment advice. And that's the point. With Canadians concerned about their pensions and their savings and the worsening economy, Harper is telling them to throw cash they don't have into the markets and saying everything is peachy keen. He may as well have said let them eat cake. For a guy that supposedly is all about the Tim Horton's crowd, he couldn't have shown himself to be more aloof and out of town with ordinary Canadians.

McLea said...

Well then be honest with your criticism Jeff.

What he said isn't stupid because 4 days later you would have lost 9% of your portfolio if you took his advise literally and bought the index, it was stupid because it served absolutely no constructive purpose.

Jeff said...

It was stupid of him on many levels mclea. It was dumb politically. It was dumb financially. Even if you had money and wanted to buy into the bottom, we haven't reached bottom yet. But I don't want stock tips from my PM, I want sound economic management. And Harper, on that count, has failed.