Pat on YouTube—When Does the Market Crisis End?

This is the latest in a series of video interviews in which Pat McKeough gives his advice on a variety of topics. Some will deal with his overall investment philosophy, others on specific investment strategies and still others offer investment advice related to events that are affecting the markets and the economy. In last week’s video, Pat advised against selling during the market downturn. This week, the market turned up and Pat thinks people should look closer to home than Europe for one of the reasons why. He also looks at what may be ahead for the stock market.
Q: Pat, last week you said people shouldn’t be dumping their stocks. This week the market turned up. Was that because of something that happened in Europe, and do you think the crisis is over? Pat McKeough: Really, there are two questions there. I don’t think it was something to do with Europe, I think it was something that happened in the U.S. Midwest. There’s the Wisconsin governor, Scott Walker, who was getting recalled because he brought in legislation to curb union power and stop unions being able to have automatic collection of dues. And they put other restrictions on unions’ negotiations for pensions. I think the big issue for many people today is, “can the government curb its Federal budget deficit, or are we continually going to be seeing rising taxes, with falling productivity due to rising taxes?” I think regardless of whether you’re a union member or whether you support the unions or not, you have to recognize that union members working for the government generally get paid better than people working for private enterprise. And it shouldn’t be that way; union members in government have more job security, so they should get paid less than private sector people, not more. I think that’s an indication of something that a lot of people can get behind, even though it’s sort of politically incorrect. So what happened in Wisconsin was that a lot of people saw it as a much bigger battle than the average Canadian did. And they thought, when Walker was allowed to keep his job and didn’t get voted out, that maybe there is hope that a lot of the spending we can’t maintain anymore is going to get voted out, that it’s going to be tackled by government and keep the budget from really going overboard and creating all the problems that creates. So, I think that Scott Walker thing really had an impact. Secondly, markets don’t turn around for just any one reason, and I kind of doubt that the Scott Walker news would be enough to turn the market around. I think that it will be a bit stormy for the next few weeks, maybe the next few months. But I am pretty optimistic that now is a time to be buying rather than selling. [ofie_ad] COMMENTS PLEASE Are you satisfied that the people you vote for are serious about curbing spending and cutting taxes? If you had one question you could ask your MP or MPP face to face, what would it be? Let us know what you think in the comments section below. Click here.