For investors, 2008 was a very tough year.    The Toronto Stock Index fell 35%, the S&P 500 Index fell 38.5%, and the international markets were worse!   (ie.  MSCI World Index fell 42.1%).

2009 is now upon us……….what now?    From a “media” perspective, it’s difficult to be optimistic, with the US economy in its worst recession since the 1930’s (and all the ingredients that go along with it:  declining corporate earnings, job layoffs and companies shutting down businesses).   Staying objective about one’s investments is not an easy task.

Let’s face facts.    The US recession was caused by the use of excessive debt (at all levels:  Government, Corporate and Individual) fueling an economic boom for the last decade.   This will take time to repair.   Fortunately for Canada, we are in a completely different situation, with most Governments, Corporations and Individuals, being much more fiscally responsible.   Canadians cannot deduct their mortgage interest on their personal residences, so there is no incentive to have a large mortgage.   Thus, Canada will feel the effects of a US recession, however, we are also in a much greater position for future economic growth.    Canadian businesses will continue to prosper, albeit at a slower growth rate.
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