Key Takeaways from Latest Insolvency Numbers

Following the latest Ipsos survey results from companies like MNP Ltd. can be daunting, and one has to wonder just how much credence to give such reports, from the perspective of a long-term investor.

After all, for those who spend less than they make, and invest their savings accordingly (most of the readers on Baystreet.com), why should this matter?

It turns out, paying close attention to the affairs of the Canadian populace is an important factor for investors who are considering buying anything that relies on purchases by the mass market.

Sectors like consumer goods, the auto sector, banking sector, and others rely on a strong consumer base in Canada, something which seems to be deteriorating of late.

Nearly half (48% to be exact) of Canadians have reported that they are less than $200 away from insolvency, a number which has been widely reported but which may not get the credence it deserves.

Thinking about these numbers more deeply, one has to consider the means by which almost half of the country pays for goods - juggling various credit vehicles and living paycheque to paycheque certainly does not correlate well with the alarming unemployment numbers which continue to be published by Statistics Canada.

Rates are low, and the ability of the average Canadian to make payments continues to be a non-issue for most businesses, but as with any cycle, when half of any country is stretching to buy necessities, investors need to take notice.

Picking sectors to invest in domestically is an important task for all investors, and I would encourage any investor with significant holdings in any sector which could be adversely affected by a credit crunch to take notice.

Invest wisely, my friends.