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

  • Wireless wars heat up as big telcos top up phone plans with bonus data

    Economic CBC News
    Wireless wars are heating up again with numerous telcos offering smartphone plans topped up with what many Canadians crave — extra data. The standout deals are in Manitoba where Rogers began the battle this week by doubling the data — at no extra cost — for its 10 GB and 15 GB family phone plans. Source
  • Unions representing CP Rail workers issue notice of strike action

    Economic CTV News
    LAVAL, Que. -- The unions representing train operators and signalling workers at Canadian Pacific Railway Ltd. have served the company with notice of a strike action. The Teamsters Canada Rail Conference and the International Brotherhood of Electrical Workers have told CP Rail they will be in a position to strike as of 10 p.m. Source
  • CP Rail union formally serves strike notice

    Economic CBC News
    The strike notice comes a day after the Teamsters Canada Rail Conference rejected the company's latest contract offer. "After workers at CP voted to reject the last contract offers, the company is still refusing to negotiate seriously," the statement said. Source
  • Loonie sinks to two-week low: Is this the start of another big drop?

    Economic CBC News
    The Canadian dollar fell to a two-week low against the U.S. dollar on Friday as lower oil prices and global trade tensions continue to weigh on the currency. The loonie is already down more than three per cent this year and was at 77.11 cents US on Friday. Source
  • What Trump's proposed auto tariff could mean for Canada

    Economic CBC News
    As with many of the trade actions announced by the Trump administration, the possible effects of his proposed Section 232 investigation of vehicle imports are both menacing and unclear. To understand how it might affect Canada, one first has to know how the Trump administration intends to define an "imported car. Source
  • WestJet agrees to 'settlement process' with pilots union

    Economic CBC News
    Anxious air travellers can now rest easy with the threat of a WestJet strike seemingly at an end. On Friday evening, WestJet and the Air Line Pilots Association agreed to a settlement process through the Federal Mediation and Conciliation Service. Source
  • WestJet, pilot's union agree to settlement process with mediator

    Economic CTV News
    CALGARY -- The threat of a strike by WestJet pilots appears to be over. The Calgary-based airline and the union that represents the pilots said Friday they have agreed to a settlement process that will involve a federal mediator. Source
  • Canada's pot industry gets a new supporter: Snoop Dogg

    Economic CTV News
    MONTREAL -- Canada is more advanced than the United States regarding its approach to cannabis, world-famous rapper and weed entrepreneur Snoop Dogg said Friday to a crowd of hundreds at Montreal's C2 technology conference. The entertainer lamented that in the U.S. Source
  • Energy sector weighs on Canadian markets as oil drops below US$70 a barrel

    Economic CBC News
    Canada's main stock index continued to fall Friday as the price for oil moved below US$70 a barrel and further dragged down the important energy sector. "Today, oil is by far the major story," said Macan Nia, a senior investment strategist at Manulife Investments. Source
  • Mercer International to give up TSX listing following loss at NAFTA tribunal

    Economic CBC News
    Mercer International says it intends to voluntarily de-list from the Toronto Stock Exchange on June 11, about three months after it lost a six-year-old NAFTA battle with the Canadian government. The U.S.-based forest products company had mounted a $250-million claim against the Canadian government in early 2012. Source