Business Blog

By Leah Walker — It seems safe to say this summer it’s not just the pipsqueaks in the back seat asking again and again, “Are we there yet?”.  Investors, too, have been full of nervous energy, squirming in their seats waiting for the economy to work its way out of recession.

Instead of the traditional lazy, hazy trading we might expect to see this time of year, the summer has been marked by heightened investor sensitivity.  According to Kate Warne, Canadian markets strategist with Edward Jones in St. Louis, “Investors are trying to read a lot into every indicator that comes out, and a lot more is being interpreted into every announcement than what we typically see during the summer, or any other time, because people are so nervous about what happens next. ”

She tells me that while many of us have the sense that the market doesn’t do much during the summer, “This summer what we’ve seen is a lot of news coming out that has been positive for stocks, as well as investors wondering, ‘is this what we are going to continue to see, or are the markets going to pull back?’. We’ve had a lot more attention paid to economic news, which usually doesn’t get a lot of attention, and also a lot more movement in the markets than we typically see.”

Statistics from the Toronto Stock Exchange show there’s been plenty of movement lately, with trading volume in July higher than it was in July of last year.  Volume year to date on the TSX is up 22%, although the value of transactions is down 27%.

Adrian Mastracci, portfolio manager with Vancouver’s KCM Wealth Management, says the market action has been all over the map, and what is clear is that we are no longer enjoying quiet summers. “Two years ago in August we had the big fall of some 500, 600 points [in intraday trading] in one day on the TSX. Last year, of course, we had the prelude before the fall session which decimated a lot of portfolios, and this year we’re sort of trying to inch our way back. I think we have digested a lot of information over the summer.” But he warns there’s plenty to brace for. Says Mastracci, “I do think there are a couple of lines in the sand that are coming up, the back to school season, and putting in the orders for Christmas. Both of those will be very telling, very soon.”

As the summer draws to a close, the best advice for both pipsqueaks and investors may be to buckle up and be patient.