As he talked to a crowd of concerned investors Wednesday morning, Craig Fehr likened the economic landslide of 2008 to a movie. A very bad movie.
Fehr, a St. Louis-based financial services equity analyst with Edward Jones, was the guest speaker at a seminar at the Vernon Golf & Country Club, lending his investing insight to the group of 70 in attendance.
“2008 is all too fresh in investors’ memories. We’ve seen the movie and the ending was pretty lousy in ‘08. People don’t want to sit through the movie again this time to see how it ends,” said Fehr.
“You typically see that in investors; they have short memories, but very vivid memories of what most recently happened to them.”
With U.S. and European debt troubles making major headlines, combined with a general slowdown in the global economy, Fehr says it is understandable that investors are being cautious with their money. However, he also sees differences in what is happening now and what went down in 2008.
For starters, Fehr noted the Canadian unemployment rate has steadily declined to 7.2 per cent from a two-year high 8.7 per cent in September 2009.
Fehr also said non-financial North American corporations are holding $1.9 trillion on their books, meaning about 13 per cent of their net worth is in cash. That allows them more flexibility to operate more freely in a period of slow growth, which in turn helps stimulate the economy, he said.
“Some of the fundamentals that were deteriorating in ‘08 are improving now… slowly, but they are improving,” said Fehr, who will tour Salmon Arm, Kamloops, Penticton, Osoyoos and Kelowna during his Okanagan visit.
“It’s important to keep the right perspective on things and managing things you can control, which are your emotions. We can’t control what’s going on around the world.”
And while slower than many had hoped, economic growth is expected to be positive, albeit bumpy, in 2011.
Fehr, who has been with Edward Jones since 2002, said the economy moves more like a dump truck, and less like the Lamborghini investors want it to be.
“It’s slow, it’s sluggish and once it gets moving in one direction it’s difficult to change it. It doesn’t handle corners very well, but it’s pretty reliable and it usually gets you where you want to go.”
With stock prices dropping and investors hesitant about getting back into the market, Fehr says there are solid long-term opportunities for those daring enough to get back in the game. And despite the bleak picture painted by the current state of affairs, he doesn’t believe the financial landscape is as bad as it is made out to be.
“What we’re seeing is a disconnect. We’re seeing the market react to something it feels is really severe, when in reality the economic picture we’re looking at… is just kind of slow and frustrating, but not severely negative.
“When you get that disconnect between investment prices and the economic reality, it tends to be an opportunity to buy quality investments,” he said.
“It’s about making smart decisions on a longer-term time frame. If you take a longer view of things and say ‘What’s going to happen over the next three, five or 10 years?’ the picture is much brighter and it creates an opportunity for investors.”