Today the Toronto Stock Exchange Index (TSX) hit 15,000 points, its highest number ever.

Even though 15,000 is purely a nominal number, skewed heavily by a small number of companies granted heavy weightings by the indexing formula, now is as good a time as any to reflect on the past 10 years.  

Why 10 years? Well, firstly that is as far back as my graph will go. More importantly, it is a period that encompasses two market cycles (the second is yet to be completed).

Looking at the far left In the above image, we can observe the effect of the tech bubble on the TSX index. A very quick boom was following by an equally quick bust. During the boom, the hot stock in the index was Nortel Networks. At one point, Nortel represented over 32%of the entire index. It was the market darling. It didn’t last. Today, Nortel trades at about 8 dollars, but it is really worth 80 cents after you account for the marketing wonders of stock splits (Nortel had a 1-for-10 reverse split).

Moving on over to the right, we can see that the current bull run does not appear to be too similar to previous bubble. Here we have a much slower and paced increase. There are however, some similarities.

Three companies: RIM, Encana & Potash Corp. account for over 20% of gains in the index over the past 5 years. The good news is that currently we have three firms leading the way, not one. There are also two sectors involved: Tech & Energy.  The last positive note is that the banking sector appears to be regaining steam. The big five Canadian banks haven’t been contributing much to the index the past few months as they struggled with write-offs from the credit collapse. If they continue to perform, it will provide a good hedge against a slowdown in Energy, assuming commodity prices begin to come back down to earth.

It is important to remember that the past will not reflect the future. Do not think that there is anything in the above chart that will hold the magic key to unlocking where the market will go next. Charts are only useful for giving us the ability to take a minute and reflect on how we got to where we are, so that our minds are a bit more focused as we decipher where it will go next.

Canadian consumers are suckers, willing to buy at any price.

How else can one explain the record quarter for new auto sales during the first quarter of 2008. Sales that had their biggest increase since 1998. That’s a freaking decade, people!

Sales of new passenger cars were up 17.8%, the largest increase since 1976.  That’s more than three freaking decades!

I don’t get it.

Canadian cars are expensive. No, that’s too nice, they’re a rip-off. Auto manufacturers are scamming the Canadians and they seem more than happy to go along with it.

How else can one explain these sales numbers?

The Canadian dollar has been near or above par with the US for over a year. Yet Canadian car prices are still more than 10, 20, even 30 percent more expensive than identical models south of the border. The only leverage Canadian consumers have to reduce this discrepancy is to buy used cars, or simply not buy at all.

However, going out like lemmings and buying new cars just because the dealer’s marketing campaign uses slogans like “Canadian Pricing” while giving you a 3% discount on price is just stupid.

Boo on you Canada, Boo on you.

-BCE Reported “steady” earrings for the first quarter. Net profit came in at 258M compared to 499M a year earlier. Adjusted EPS (earnings per share) at $0.57 actually topped Thomson’s analyst poll of $0.54. Translation: We took no risks and didn’t mess up.

1. -Investment Bank Genuity Capital is predicting the BCE takeover is will close. No surprises there as this has been the market’s view since the courts gave the bond holders the big heave ho. [via Seeking Alpha, CBC]

All is not lost. This data reflects the state of the economy a couple of months ago, and the Bank of Canada has made a couple of big cuts since then. We’ll be keeping a close eye on Canada’s GDP to see if the trend continues, or if February was just a blip.

The reason Rogers is so late to the iPhone game is that they run a monopoly on GSM (the cell technology the iPhone uses) and were able to play the waiting game until Apple would come to terms on an agreement. Apple has been very aggressive in its demands with other service providers and used the popularity of the device as leverage to get a cut o subscription revenues. I expect a similar deal was reached with Rogers, and the timing of this deal is rather curious.

There are rumors that a new version of the iPhone is going to be released in June. Don’t be surprised that as US consumers line up to get iPhone 2, Canadians are offered the old one as a substitute. Just be happy you have an iPhone, Rogers will say. 

Then there’s the monthly fees.

AT&T offers plans with unlimited data usage starting at $59.99. Rogers is nowhere near as competitive and it wouldn’t be unexpected if they don’t package the iPhone with a reasonable plan. They have no competition and no incentive to offer one.

So even though many Apple fans in Canada are jumping up and down with joy, don’t be surprised to be given a big ol’ smack to the head, courtesy of Rogers, when the details are announced.

I recently purchased purchased some property. At the bank I gave my income and financial info to the banker and their computer system spat out my maximum purchase price, which could be increased if necessary. They can increase the number by increasing the term of the mortgage. 25 years, which a generation ago was considered the max mortgage is now the standard. 30, 35 and 40 year mortgages are becoming more popular. One bank is even running billboards advertising a 0 down mortgage. With 0 down and 40 years of payments, almost anyone can afford a little place with today’s interest rates. But what about tomorrow? What happens if Joe with 0 down and 40 years to pay loses his job in 2 years? He’ll quickly discover that he has not built any equity because almost 100% of his payments for those 2 years were interest.

Joe will default.

The same goes for interest rates. If rates spike up, Joe might not be able to afford his payments.

The end result? Not a meltdown like the US, but a serious dent in the real estate market.

” OTTAWA, April 22 (Reuters) – The Bank of Canada cut its benchmark interest rate  on Tuesday by a half-percentage point to 3 percent, as expected, and signaled that  further easing was required but suggested it might pause before cutting again.
    In a statement which projected a steeper U.S. economic downturn that would  dampen Canadian growth, the bank said “further monetary stimulus will likely be  required,” but dropped a previous reference to the need for more cuts in the “near  term.”

    “Given the cumulative reduction in the target for the overnight rate of 150  basis points since December, the timing of any further monetary stimulus will depend  on the evolution of the global economy and domestic demand, and their impact on  inflation in Canada,” the central bank said.
     The bank pushed back the time frame for inflation to move back up to its 2  percent target to 2010 from end-2009 and for the economy to move back into balance  to mid-2010 from early 2010. It said the economy was operating above capacity now  but would move into excess supply in the second quarter of 2008.
     Tighter credit conditions and weakening confidence will likely weaken business  investment and consumer spending, the bank said. However, it sees domestic demand  staying strong due to high commodity prices, a vibrant labor market and the effect  of cumulative interest rate cuts.