From market open on Monday to market close on Friday, the TSX lost 6.66 points. It’s basically even, but if you think it’s an omen, let me know in the comments.

There’s no change in the stock market, but bond yields have risen a little. That means bond values have fallen. Now, stocks have performed far better over the past six months (+2%) compared to bonds (-0.3%). ┬áThe one year performance for stocks (-9%) is causing real drag on the momentum, especially compared to bonds over the same period (+4%). That’s why I don’t yet feel comfortable recommending that investors shift their portfolios from debt to equities.

The situation in Greece seems to be orderly, which should address much of the lingering worry. The outlook isn’t rosy, especially in Europe, but many of the biggest threats appear to be contained. For that reason, investors should increasingly return to risky assets. As money moves from the sidelines back to equities (sometime in the future), we can expect market values to rise, and getting in front of that potential wave would be profitable.

For the moment, stocks appear to be holding even while bonds are losing value. For that reason, a balanced portfolio should (if it hasn’t already) return to neutral weighting. This situation may last some time. It appears that stocks may be building a base from which to launch future growth, but summer months are generally slow in the market, and September and October have tended to be negative in the past, so we may have to wait until November to see really strong growth. Even though the last week was a little disappointing for owners of real estate (XRE), that’s where the momentum remains and that’s what I continue to own this coming week.

Market Outlook March 19, 2012

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