Monday, January 21, 2008

Anyone jumping out of windows yet?

Things not looking too good today - Toronto Stock Market falls more than 600 points.

What do you think? Bail or hang in for the ride?

* * * *

: Jonathan Chevreau - Global Stock Market Rout – babies tossed with bath water:

...Exactly the same "baby/bathwater" cliche was used by Gordon Pape in his current Internet Wealth Builder: "Don’t throw out the baby with the bathwater. In every market downturn, some investors reach a point where fear overwhelms common sense and they sell everything at any price. That happened most recently in November 2006 in the days immediately following the announcement that the government would tax income trusts. Those who blew all their trust units out the door in reaction have long since come to regret it. Don’t make the same mistake now."

Afternoon Update - Global anxiety takes its toll on the TSX - Globe

Sun- Economic fears complicate decision on election timing:
Mounting fears of an impending economic meltdown are making it harder for Liberals to decide whether to force an early federal election.

Even the most hawkish Liberal MPs were suddenly pulling back from the election brink Monday as stock markets worldwide went into yet another nosedive.

“I think the economy is the No. 1 thing right now, rather than an election, I really do,” said Toronto-area MP Garth Turner...
Does this mean the Liberals will be sitting down on the job again this spring?

CBC - TSX plunges 500 points:

"This isn't a 'panic', but in a thin market, with the U.S. closed for a holiday, the scale of the decline today may have been exacerbated by illiquidity — simply not enough bargain hunters around," said CIBC World Markets senior economist Avery Shenfeld...

* * * *
Tuesday Update: Terence Corcoran - Throw another forecast on the fire.


Ruth said...

Only lose if you bail, so let's not panic and just hang on for the ride. Think of something else for the day.

Joanne (True Blue) said...

Good advice, Ruth.

rabbit said...

Ruth has got a right. Only investment professionals bail in times like these. Us "amateurs" just wait it out and maybe buy some more shares. After all, what better time to buy when there's a sale on.

This investment advice is worth everything you paid for it.

Anonymous said...

I would expect the TSX to come close to the Dow in raw numbers. As for those folks whining about a stimulus package in in Canada vis a vis the Us version. Just remember that the Gov't began cutting taxes 2 years ago to the tune of over $60 billion, accelerating our positioning to be more competitive in a global sense. Nice to have a government that is proactive in this sense. Lower small business, corporate and personal taxes will position us well going forward and should help us weather the current global challenges that have been precipitated out of the US.


Möbius said...

Buy low, sell high.

Not the other way around.

Amazingly, these routs are lead by people doing exactly that. Some smart folks are buying what they're selling at a cut-rate, waiting for the next up-turn.

Anonymous said...

US economy prognosis.

Slow first quarter of 2008 but then the US Fed kicks into high gear on the interest rate cuts and money printing.
Second and third quarter 2008 are good and the markets recover.
By the fourth quarter 2008 inflation is increasing and becoming a problem.
2009 will have similar inflation problems. This will be good for real assets and bad for financial assets. Think of it as a 1970's redo of stagflation.

Things will be simmilar in Canada and all of this will be beyond the Canadian governments control.

maryT said...

Just wondering how many of those that bailed on Income Trusts, took their money and bought stocks. Guess some people are just not meant to get rich.

Anonymous said...

The accomplished investor is one that can make money in any market, up or down. Keep in mind that everything is cyclical. If the company your own shares in is sound and the pullback is a result of the market sinking as a whole then you're better off leaving it and riding it out. Things'll turn around again. You should be investing for the long term anyway.

Personally I'm going to be watching a few companies I wanted to put some money into and wait till things look like they're going to turn around again and then buy a whole bunch at the discounted price.

Annie said...

Bail? OMG, I'm investing!!

Picking up bank stocks at bargin basement prices is completely making my day. : )

The market is cyclical. What goes up, must come down. But.. it will go up again. Throughout history the market has always has recovered and then exceeded it's previous fall. I was one that didn't bail after the income trust announcement and I had all but gained back any losses, until last week! But... I am confident that give it another 24 months and I'll come out a winner.

liberal supporter said...

I hope all the "Anone" (referred to in your topic title) jump out the windows. Well, the anon at 01:02 excepted.

The crash of '87 was 500 points from a Dow level of 3000. 600 points now is about 5%, significant but still in "correction" territory.

First of all, US markets are closed for MLK day. That tends to see our markets more volatile. I suspect a lot of the market maker types are off today, even here. With the snow and pileups on the 400, plus many parent companies off today, it would be a good day to be off.

Plus, with the US stimulus package coming, and rate reductions coming, the markets often tend to go overboard to give lots of room for bigger rate cuts (and bigger stimulus in this case as well).

It has always seemed strange to me that markets could be seen to collectively send this kind of message, since it is supposed to be an aggregate of individuals acting in their own best interests. Yet it often seems to be so. Invisible hand and all that.

fh said...

Kudos to CRB whose comment on Jack's Newswatch has made my day
Forget the Market what goes down also goes up Hang tight

Comment #3 " No doubt DeYawn and Taliban Jack......"

Article by Sandy: Manley

I have been trying to get a handle for DeYawn since I have noticed the term Sharper a few days ago

Rt. Hon. Stephen Harper best Prime Minister

Anonymous said...

I'm mostly in RRSP mutual funds of great diversity, but with a sizeable amount in non-RRSP equities as well. Been through three down cycles in my investing career, and I try to repeat the mantra of 'dollar-cost averaging' when these things happen. I took a bath to the tune of $18K on the leading edge of the subprime blowout in '05 and hardly noticed it at the time (I was buying a second property at the time and admit I was distracted). Got out of income trusts before the Flaherty manouvre for unrelated reasons, not sure how I've done on that account. Maxing out my RRSP space this year, so that's progress. Buffet says, Rule1 is 'don't lose money,' Rule 2 is 'remember rule 1' Can't say I haven't lost money, but I've made some, too, and still have a few earning years ahead of me. I guess I'm still in for the ride.

liberal supporter said...

Rt. Hon. Stephen Harper best Prime Minister
He's certainly been the best Prime Minister Canada has had in 2007 and 2008 so far.

tori said...

two people beat me to the punch :)

what goes up must come down
what goes down must go up

make sure your portfolio is well diversified and buy low and sell high.

everything else is a crap shoot

Clown Party of Canada said...

Harper said things would be difficult this year, while DeYawn [LIEberals] and Talaban Jack [NDPeers] criticized him for that statement [eg. few tax cuts this year.]

At least Harper has set Canada into a position where we can change some things to help our economy. And if tax cuts are needed, the Cons are in a position to do something about it.

Joanne (True Blue) said...

This is great. Keep the advice coming.

I guess my thoughts on it are that if you cash in when your investments have tanked, then you've solidified it. Otherwise it's just a loss on paper.

liberal supporter said...

I guess my thoughts on it are that if you cash in when your investments have tanked, then you've solidified it. Otherwise it's just a loss on paper.
Generally true. Only if a company's fundamentals are really worsening would you want to bail and save what you had left.

If your investments are following the market down, then they should follow it back up eventually. Of course it could take a long time if things got really bad. For example, "the market did not return to pre-1929 levels until late 1954".

I don't know if I would be buying, but I would certainly not be selling.

Joanne (True Blue) said...

I don't know if I would be buying, but I would certainly not be selling.

We finally agree on something! ;)

I think that is pretty much what Jonathan Chevreau was saying too in the link I added on an update.

cherenkov said...

I'll echo what most people here are saying: definitely don't panic and sell. I plan on buying a little (RRSPs) and possibly transferring some conservative investments into Equities to take advantage of the low prices. It may still go lower for a while, but eventually the markets will recover.

Ruth said...

boy, the markets sure aren't doing what all the reporters wanted them to do this morning. No big story here for them yet, maybe this afternoon.

Joanne (True Blue) said...

Ruth, not sure exactly what you mean, but the TSX is up, which is a good thing I suppose. Hard to say how things will end up this afternoon.

Ruth said...

All reports had the New York market off 600 to 1000 points this morning and that hasn't happened. Yes, it's certainly good that it didn't and I'm glad that the Toronto one is moving up. Hope people don't panic.