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

  • Sears Canada executive chairman steps away to make bid for retailer

    Economic Toronto Sun
    TORONTO — Sears Canada executive chairman Brandon Stranzl is stepping away from his role to launch a bid for the beleaguered retailer, which is restructuring under court protection from creditors. A memo to staff Wednesday about his departure from the top job said the company’s goal is to create a path to emerge from creditor protection. Source
  • CIBC takes over PC Financial bank accounts, launches Simplii banking brand

    Economic Toronto Sun
    The Canadian Imperial Bank of Commerce is taking over President’s Choice Financial bank accounts with a new online brand as it responds to the continuing trend towards digital banking. The Toronto-based bank said Wednesday it will cut its nearly 20-year relationship with PC Financial-owner Loblaw Companies Ltd. Source
  • Asian shares rise higher after gains on Wall Street

    Economic CTV News
    TOKYO - Asian shares were mostly higher Thursday in narrow trading, tracking gains overnight on Wall Street. Japan's Nikkei 225 index slipped as the yen strengthened against the U.S. dollar. KEEPING SCORE: Japan's Nikkei 225 index edged 0.1 per cent lower to 19,718.09. Source
  • Belgium joins legal action against tainted egg 'cheats'

    Economic CTV News
    BRUSSELS -- Belgium's Agriculture Minister Denis Ducarme says the government will join in legal action against those responsible for the egg contamination scandal, which has hit at least 17 countries. Ducarme told The Associated Press Wednesday that "the Belgian government wants to take part in civil proceedings. Source
  • Sears Canada chairman steps down so he can bid to buy retailer

    Economic CBC News
    The executive chairman of Sears Canada has stepped down in order to head up a bid to buy the company. According to an employee memo obtained by CBC News, Brandon Stranzl will step away from his day-to-day operations at the company to instead focus on putting together a bid to buy the company and keep it going once it emerges from its current restructuring. Source
  • Sears Canada executive chairman steps down to make bid for retailer

    Economic CTV News
    TORONTO - Sears Canada executive chairman Brandon Stranzl is stepping away from his role to launch a bid for the retailer, which is restructuring under court protection from creditors. A memo to staff says the goal is to create a path for the company to emerge from creditor protection. Source
  • GM shares to be delisted from TSX in November

    Economic CTV News
    TORONTO - General Motors Co. (TSX: GMM.U) is delisting its shares from the Toronto Stock Exchange in Canada effective at the end of November. The company's shares will still be traded in New York. Source
  • Resale homes should carry energy use label by 2019, environmental groups say

    Economic CTV News
    OTTAWA - A coalition of environmental groups wants to see homes listed for resale in Canada to carry information about how much energy they use. Ten organizations, including the Pembina Institute, the Canadian Energy Efficiency Alliance and The Atmospheric Fund, want the federal government to implement nearly two dozen policies to cut energy use in commercial and residential buildings. Source
  • Judge OKs Takata request to halt some lawsuits over air bags

    Economic CTV News
    DOVER, Del. -- A Delaware bankruptcy judge is temporarily halting the prosecution of lawsuits filed by Hawaii, New Mexico and the U.S. Virgin Islands against Japanese auto-parts supplier Takata over its lethally defective air bag inflators. Source
  • What's coming for President's Choice Financial customers when CIBC sets up Simplii

    Economic CTV News
    TORONTO -- How President's Choice Financial customers will be affected by the creation of Simplii Financial, a new brand from CIBC, which will absorb the accounts of some two million current PC Financial account holders. Source