History books will mark 2008 as a year that showed how quickly stock markets can go down. It is hard to believe but as recently as June of this year, the TSX Composite was higher than 15,000 and is trading around 8,830 now. Canadian stocks also have plenty of company — it is hard to find a single asset class apart from Government of Canada bonds that had a positive year.
European, Japanese and Emerging market stocks had a very bad year but US stock returns would turn out to be relatively better (if you can call a 20% or so fall “better”) due to the significant depreciation in the Canadian dollar.
If the rapidity of the stock market decline was stunning, the volatility was remarkable as well. The stock market fell or rose more than 5% all too frequently — especially during the months of September and October.
The bad news doesn’t end with the stock market, of course. With the major economies in recession, businesses started laying off workers and our pay checks were in danger as well. Add it all up and 2008 will end up as a horrible year from a financial perspective.
Amidst all this doom and gloom, there were some scraps of good news. Pretty much every asset class (again, except Government bonds) is now a lot cheaper now than at the start of the year. Softening home prices should be welcome news for first-time home buyers. And finally, the introduction of the Tax-Free Savings Account will turn out to have a significant impact on our personal finances.
Here’s hoping that 2009 turns out to be a better year. Happy New Year to you all!