Business TheReview Wednesday, January 8, 1992 — A12 +2 " Prediction of better times ahead As its Christmas-New Year’s gift to us, the Investment Reporter has come up with something we all badly need: positive predic- tions about the economy and i inv- estment climate. In its annual forecast issue, the weekly Investment Reporter (pub- lished in Toronto by Canadian Business Service/MPL Communi- cations Inc.) sees better times ahead, for a variety of reasons. Commenting on concerns about a repeat of a 30s-type depression, the newsletter says: “Tf history repeats itself, we'd bet against a replay of the depre- ssionary 1930s.” “Our best guess is that instead, we'll have a post-Cold War boom — a repeat of the post-Second World War boom between 1945 and 1970.” ‘Our besf guess is that instead, we'll have a post-Cold War boom — a repeat of fhe post- Second World War boom between 1945 and 1970’ “And if we're wrong, maybe we err by under-estimation. Maybe our model should be the golden age of ancient Greece, in the fifth century B.C., when trade flour- ished and wealth ballooned after the Greek democracies defeated Persia.” The newsletter agrees we have high levels of personal and govern- ment debt which reduce the poten- tial for economic growth, but notes: “Tt’s not the high debt but its rapid unraveling that causes the trouble. Besides, debt is just one part of the economic-social- political picture.” The Investment Reporter said falling trade barriers and the downfall of central planning are more important factors. “You don’t create any wealth when you stand in line to buy soap, as millions still do in Russia. You do create wealth if you spend that time making soap and are allowed to sell your output in, say, an open air market.” “That’s only a little wealth, to be sure. But that’s how companies like Proctor and Gamble got Started.” Reviewing concems about debt, the Investment Reporter said a two-income baby-boom couple aged 40, with two children and a big mortgage, can thrive despite a high debt ratio, while the same ratio could be precarious for a single-income family with a 60- year-old breadwinner. “Today, though, it’s the two- income 40-year-old couples and the government that owe all the money. The 60-year-olds, raised during the Depression, are the lenders.” “Corporations, too, can cope with more debt when they face an inviting political climate and expanding international prospects, in a more stable world than we’ ve had since at least the start of the century.” Election years in both Canada and the U.S. should produce at least some tax cuts and govern- ment spending, despite budget deficits. Falling interest rates mean peo- ple who renew their mortgages will find their payments drop sub- stantially if they keep their same amortization (repayment) periods. Those individuals will probably spend that extra money, helping to Company sues proiesiers Fletcher Challenge said last week it plans to go to court to make environmental activists pay for illegal logging protests in the Walbran Valley on Vancouver Island this fall. Gordon Clark, vice-president, secretary and general counsel for Fletcher Challenge, said the forest company will likely file a lawsuit seeking “hundreds of thousands of dollars” for losses caused by van- dalism and blockades of logging roads. The week before, MacMillan Bloedel announced a similar law- suit for a blockade near Tofino. Some environmentalists have complained that the action of the companies is having a chilling effect on civil disobedience in the forests, and that suits Clark just fine. “One hopes it will be chilling. It really comes down to individuals being responsible for their actions. If their actions have been found to be unlawful, there’s no reason why MacMillan or Fletcher Challenge should not have a remedy to seek compensation for extraordinary costs related to misconduct.” Lighthouse layoffs spark proiest Thirteen government MLAs last week fired off a letter to federal Transport Minister Jean Corbell protesting the planned layoffs of all permanent staff from 14 ligh- thouses along British Columbia’s coastal waters. “As British Columbians have seen, the lighthouse staff you're proposing to remove often play a vital role in emergency and rescue situations. More importantly, they help avoid those emergency situa- tions by providing early storm warnings to local boaters,” the letter said. Phone: 656-5547 Moore, Roberts & Co. CHARTERED ACCOUNTANTS Accounting & Auditing Services Income Tax Preparation & Planning Business & Computer Consulting #200-2377 Bevan Ave. Sidney V8L 4M9 Fax: 656-2382 boost the economy. Low interest rates also mean people are more likely to invest their money — especially in their higher RRSP contributions (up to $11,500 for 1991 and $12,500 for 1992) - in the stock market. The Investment Reporter lists 25 stocks it expects to perform well in 1992 and 25 that could lag behind the market, with a risk rating and brief reason for each. For income, it recommends stocks with steady or rising divi- dends like the “very conservative” BCE, BC Tel, Bank of Montreal and Scotiabank, and the ‘‘conser- vative’’ BC Gas, Bruncor, Fortis, Maritime T&T, NewTel, Quebec Tel and Telus. The Investment Reporter feels the threat of Quebec separatism falls each time the unemployment Tate rises. “Some compare Quebec and English Canada to partners in an unhappy marriage. Far better, we think, to compare the two to neigh- bors with a history of spats who use a jointly owned right-of-way to get into their own garages. In the heat of the argument, either might threaten to put up a fence along the property line. But that wouldn’t serve anybody’s purpose.” “Our guess is that negotiations on Canadian unity are a little like GATT and other trade talks: when the exchanges grow peeved, they are close to a deal.” Mike Grenby is a Vancouver- based columnist and independent financial adviser who works with individuals; he will answer your questions as space allows — write to him clo The Review, 9726 First St, Sidney, B.C. V8L 3C7. 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