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.
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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.
Comments
Peter
When are Ministers being made responsible for there Porfolios or Budgets! If a Minister goes over Budget by 2%, he should loose his job. If a Minister goes 2% under the Budget, he can keep his job. At what point is he responsible with consequenses?
I am surprised that any oposition, whether FEDERAL or PROVINCIAL, has not jet used this to get into POWER.
That is all Ministers want,POWER with no responsibility to the TAXPAYER.
Your commentary that government servants are paid more than the private sector is not generally correct. While it is mostly true for the clerical and trade/techincal workers, it is not so for prfessional and scientific staff. I have a PhD and work as a research scientist for federal dept. I do not get close to the private sector in pay but the greater security sort of conpensates for it. When I go to scientific conferences, I often meet colleagues with the private sector. They stay in expensive hotels while I have to watch my expenses and budget; They often treat me to dinner because of their fat expense account because they know my budget limitation. Professionals in government services do not go on strike that’s why we have no bargaining power, unlike the clerical and trade workers.
What you failed to mention in your recent commentary about Scott Walker and Wisconsin is that teh Republicans and Tea Party outspent the Democratic candidate by as much as 10 to 1. Yes, unfortunately, especially in the US where people tend to not read newspapers or look for alternative news sources, are easily swayed by TV and radio ads, even if they are untruthful. “Americans” like being dictated to by whomever have the most commonly heard message. Canadians are almost getting as bad, but we still have some campaign finance legislation which regulates spending, unlike in the US where they have these “PAC”s, allowing for private industry and multi-billionaires to protect their interests, whcih are to keep taxes and wages as low as possible, since they have enough money to chock a horse and really do not need, nor do they want to pay for any public or social programs. IMHO, it is a sociopathic approach to society, and I am not surprised that Wisconsin voters were “convinced” Scott Walker and his approach were “good for them”.
I do not belong to any union, and I am not particularly sure they accomplish what they should, but I am offended by the concept of a race to the bottom in wages, benefits and taxes, such that only the wealthy can afford such things.
Shouldn’t there be some kind of formula that would rate a job in terms of requirements of: academic education from gradeschool up to doctorate or fellowship, skill literacy (e.g. accounting, nutrition, engineering, politician, technician, all trades, medicine, general duties etc.) years of on the job training and experience, degree of responsibility, physical attributes, hardship of working conditions, danger, leadership qualities? – and I could go on and on. An evaluation could then be done to assign a financial value to any job in the public or private sector. This would be an invaluable tool to generally compare different jobs in any field, private or public!!
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When are Ministers being made responsible for there Porfolios or Budgets! If a Minister goes over Budget by 2%, he should loose his job. If a Minister goes 2% under the Budget, he can keep his job. At what point is he responsible with consequenses?
I am surprised that any oposition, whether FEDERAL or PROVINCIAL, has not jet used this to get into POWER.
That is all Ministers want,POWER with no responsibility to the TAXPAYER.
Your commentary that government servants are paid more than the private sector is not generally correct. While it is mostly true for the clerical and trade/techincal workers, it is not so for prfessional and scientific staff. I have a PhD and work as a research scientist for federal dept. I do not get close to the private sector in pay but the greater security sort of conpensates for it. When I go to scientific conferences, I often meet colleagues with the private sector. They stay in expensive hotels while I have to watch my expenses and budget; They often treat me to dinner because of their fat expense account because they know my budget limitation. Professionals in government services do not go on strike that’s why we have no bargaining power, unlike the clerical and trade workers.
What you failed to mention in your recent commentary about Scott Walker and Wisconsin is that teh Republicans and Tea Party outspent the Democratic candidate by as much as 10 to 1. Yes, unfortunately, especially in the US where people tend to not read newspapers or look for alternative news sources, are easily swayed by TV and radio ads, even if they are untruthful. “Americans” like being dictated to by whomever have the most commonly heard message. Canadians are almost getting as bad, but we still have some campaign finance legislation which regulates spending, unlike in the US where they have these “PAC”s, allowing for private industry and multi-billionaires to protect their interests, whcih are to keep taxes and wages as low as possible, since they have enough money to chock a horse and really do not need, nor do they want to pay for any public or social programs. IMHO, it is a sociopathic approach to society, and I am not surprised that Wisconsin voters were “convinced” Scott Walker and his approach were “good for them”.
I do not belong to any union, and I am not particularly sure they accomplish what they should, but I am offended by the concept of a race to the bottom in wages, benefits and taxes, such that only the wealthy can afford such things.
I apologize for the typos, I was rushing, and didn’t proofread my comment. My bad.
Shouldn’t there be some kind of formula that would rate a job in terms of requirements of: academic education from gradeschool up to doctorate or fellowship, skill literacy (e.g. accounting, nutrition, engineering, politician, technician, all trades, medicine, general duties etc.) years of on the job training and experience, degree of responsibility, physical attributes, hardship of working conditions, danger, leadership qualities? – and I could go on and on. An evaluation could then be done to assign a financial value to any job in the public or private sector. This would be an invaluable tool to generally compare different jobs in any field, private or public!!