Looking back at 2009
One of the things I’m fond of saying is that it doesn’t matter a whit where a stock price has been. What matters is where it’s going. Just because a $3.00 stock used to trade at $10.00 doesn’t mean it’s going back there, as much as some investors (and I’m using the term lightly) feel it has an innate need to get back to that level, simply because it’s been there before.
That’s not quite so true about overall markets, however, at least the part about it mattering where they’ve been. In fact, getting a sense of where a market might be headed comes from understanding where it has been recently, and why.
After all, changes in a stock index level from one quarter or one year to another represent the collective thinking of many thousands of investors, all with money on the line, about tens or hundreds of stocks, whereas a single stock may have moved up or down on the whims of just a handful of investors, and by definition represents just one security.
And it’s obviously going to be hard to be a successful investor if you didn’t at least know that the S&P/TSX Composite Index fell from the beginning of 2009 to about the first week of March, rose sharply thereafter through the end of August, and then posted only moderate gains for the rest of the year.
So for all of you who are doing your own investing, without an adviser, let me save you some time gathering the numbers. You might want to keep this article handy as a reference.
First, the S&P/TSX Composite Index gained 27.69% in 2009 (I have seen some other numbers out there, but on December 31, 2008 the index closed at 8987.70; it closed at 11476.10 on December 31, 2009, and in my books that’s a gain of 27.69%). The main Income Trust Index gained 29.50% on the year.
Of the thirteen sectors that make up the TSX, the top three gainers were metals and minerals, up 317.77% on the year; information technology stocks, up 53.51%; and financials, up 38.52%. The bottom three were telecom services, up 0.86%; gold stocks, up 6.91%; and consumer staple stocks, up 7.33%.
If you invest outside of Canada, chances are you own some U.S. equities. The Dow Jones Industrial Average gained 15.42% in 2009. The S&P 500 rose 19.67% and the Nasdaq Composite went up 39.02%. Of course, as a Canadian you can subtract 15.96 from each of those returns, because the Loonie rose by 15.96% against the greenback last year.
Around the rest of the world, of the 20-plus major markets that I watch regularly, the best performer overall was Brazil’s Bovespa, which increased by 62.98% in 2009. Next-best was Singapore’s STI Index with its gain of 58.36%. Taking third place was Hong Kong’s Hang Seng, which was up 45.40% on the year.
Incidentally, the Dow Jones Industrial Average with its gain of 15.42% was the worst performer of that global group. Finland’s HEX Index gained 15.43% and the Dow Jones Germany Index gained 15.96% for third-worst place. Thus all major world equity markets increased last year by quite handsome amounts.
On that scale, Canada’s TSX ranked in ninth place with its 27.69% gain, flanked by Belgium and Denmark.
And finally, in the months from January to December 2009, the TSX Composite posted returns of -3.26%, -6.58%, +7.35%, +6.93%, +11.21%, +0.05%, +3.97%, +0.75%, +4.85%, -4.25%, +4.92%, and +2.61%.
That’s where the markets have been. Now all we have to figure out is where they’re going next.
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