Stock market bears emerge with TSX mired in losses

OTTAWA -- It may be the dead of winter, but the stock market bears are coming out of hibernation.

North American stock markets are off to their worst start in recent memory, rattling the confidence of investors.

See Full Article

But investment managers say that doesn't mean it is time to sell everything and stuff it all under a mattress.

Marc Cevey, chief executive of HSBC Global Asset Management (Canada) Ltd., says the recent downturn in the market is not a repeat of the 2008-09 financial crisis.

"We see the conditions as being very different this time around and because of that and because we don't view it as a financial crisis of a systemic nature, we actually think it represents a better opportunity" he said.

Cevey says investors should examine their portfolios to see if they still have the asset mix they want. If the equity portion of their portfolio has fallen, it may be time to rebalance and move money from bonds into stocks.

He conceded that it may be a scary time for investors, but if you have a long-term focus and you don't believe the world is falling apart, "at some point this creates some value."

"You've just got to look at dividend yields," he said. "Dividend yields virtually in every market around the world are in excess of three per cent, which is far in excess of what you're going to get from fixed income or cash."

A bear market is generally seen as a broad market index that has lost more than 20 per cent of its value.

U.S. markets haven't hit those levels yet, but the S&P/TSX composite index has and with the sustained weakness in the commodity sector, it is continuing to head lower.

The damage has spilled over from the energy sector into other areas of the market, including the country's bank stocks, a core holding for many portfolios.

Royal Bank and Scotiabank have both lost roughly one-fifth of their value compared with their 52-week highs set last year.

But the pain has not been universal and there are some areas of refuge.

ScotiaMcLeod portfolio manager Stan Wong suggested you could increase your cash or fixed income investments or look to so-called defensive stocks.

"Historically, the more defensive sectors -- whether it be consumer staples, utilities, telecom or health care stocks -- tend to hold a little bit better in tough times," he said.

However, he said many of these stocks can be expensive.

Wong also suggested using stop-loss orders to limit losses as well considering inverse exchange traded funds like the Horizons Betapro S&P/TSX 60 Inverse ETF, which is designed to move in the opposite direction of the S&P/TSX 60 Index.

"If you feel bearish about the market and you don't want to sell some of your really strong long-term names for tax reasons or fundamental reasons, why not hedge the portfolio?" he said.

But if the stock market drop has resulted in sleepless nights, you may need to reassess your financial plan and how much risk you are comfortable taking.

It is easy to say you are willing to take risk in search of higher returns during a bull market. But once the trend turns and you are confronted with the reality of what taking risk in the stock market means and are faced with losses, you may have a different answer.



Advertisements

Latest Economic News

  • British Airways aims to recover from IT failure

    Economic CTV News
    LONDON -- British Airways said Sunday it was still working to restore its computer systems but hoped to resume flights from London airports, a day after a global IT failure crippled its services. The airline said that it hopes to operate a "near normal schedule" at Gatwick and the "majority of services" from Heathrow on Sunday. Source
  • Canadian teenagers smarter than most about money, OECD finds

    Economic CBC News
    Canadian teenagers are more financially literate than most people their age in other rich countries, but more than one out of eight still fails to meet what the OECD considers a baseline level of proficiency in the topic. Source
  • People with serious food allergies want impostors to stop faking it in restaurants

    Economic CBC News
    Sarah Elliott has had it with people faking food allergies in restaurants. She has life-threatening allergies to eggs, dairy and nuts and fears the impostors are hurting her chances of safely dining out. Source
  • GM's emissions scandal and dangerous avocados: CBC's Marketplace consumer cheat sheet

    Economic CBC News
    If you've been too busy to follow the consumer news this week, here's our cheat sheet. And you can get the Marketplace newsletter in your inbox every week. GM accused of emissions cheating A class-action suit in the U.S. Source
  • CN Rail employees issue strike notice

    Economic CTV News
    MONTREAL -- A union representing employees at CN Rail is threatening job action to back contract demands. The Teamsters union has given the company 72 hour strike notice and could legally walk off the job Tuesday morning. Source
  • British Airways cancels flights amid global computer outage

    Economic CTV News
    LONDON -- British Airways cancelled all flights from London's Heathrow and Gatwick airports Saturday as a global IT failure caused severe disruption for travellers on a busy holiday weekend. The airline said it was suffering a "major IT systems failure" around the world. Source
  • Computer outage grounds hundreds of British Airways flights in London

    Economic CTV News
    LONDON -- British Airways cancelled all flights from London's Heathrow and Gatwick airports on Saturday as a global IT failure upended the travel plans of tens of thousands of people on a busy U.K. holiday weekend. Source
  • British Airways outage spurs London travel chaos; power issue blamed

    Economic CTV News
    LONDON -- British Airways cancelled all flights from London's Heathrow and Gatwick airports on Saturday as a global IT failure upended the travel plans of tens of thousands of people on a busy U.K. holiday weekend. Source
  • Broker, agent who worked with subsidiary of Home Capital disciplined

    Economic CBC News
    An Ontario regulator says it has imposed disciplinary actions against a mortgage broker and agent who worked with Home Trust Co., a subsidiary of Home Capital Group, over their handling of mortgages. The Financial Services Commission of Ontario (FSCO) says it conducted a review of 45 mortgage brokers and agents that Home Capital cut ties with after they were accused of falsifying income information several years ago. Source
  • Calgary man on lam in Mexico sentenced to 3 years in $27M mortgage fraud

    Economic CTV News
    CALGARY -- A Calgary man who was arrested after being on the lam for two years in Mexico for his part in a $27 million mortgage fraud has been sentenced to three years in prison. Source