Managing through the latest challenge.
October 17, 1987 saw the single greatest market fall of all time. The Dow Jones Industrial Average fell a stunning 45% in just three days. Despite many studies, no expert ever concluded why that crash occurred. Some 51 weeks later I started my career in this industry and met many new clients who were emotionally scarred and in fear of a repeat of those three days.
Those fears became reality 21 months later just as the markets had recovered in August 1990 to their pre-crash1987 levels when Saddam Hussein started the first Gulf war just as we were entering a recession spurring a real estate crisis in Canada and the US.
Markets fell and 770 US finance companies collapsed. I wondered then what I had gotten myself into entering such a challenging industry.
This was followed in 1992 by the collapse of Confederation Life in Canada, the Meech Lake Accord debacle in 1994, and the near miss of the Quebec referendum in 1995 all resulting in extreme market turmoil in every instance.
Confidence in stocks was particularly put to the test by the Bre-X fraud in 1996 then again the markets recovered and it looked like clear sailing as markets moved higher into 1998. That summer, though, proved to be the beginnings of another market fall when a G-7 country – Russia - suddenly went bankrupt during the Asian currency crisis in August 1998. The Canadian market fell 36% in three months and I remember, in September, panic in the voice from an analyst at Head Office telling me that trading in the Canadian dollar had been suspended, due to the collapse of currencies around the world.
About then I was thinking that a quiet job in accounting sounded very attractive.
Again, the markets recovered, rising an astounding 109% in 22 months to August 2000 based on the growth of the New Economy and the Internet. Then all that collapsed.
Just as we thought we were pulling out of the downtrend one of my assistants interrupted a meeting on the morning of September 11, 2001. She was crying as she said "You have to come see this" and that is when I saw the Towers fall and the market’s plunge again. Nothing in my career to that point had prepared me for that sight.
The markets continued to fall until March 2003, an agonizing 30 odd months in total with stocks grinding lower each month with occasional signs of optimism but generally a terrible period of pessimism with little hope in sight. It was like slowly peeling off a well stuck bandage on an open wound. The total fall from peak to trough was close to 45% and pundits on TV were saying to just not open your statements.
But the recovery did take hold even though there were headlines filled with the Nortel, Exon, and WorldCom bankruptcies and of the Afghan and Iraqi wars and Al Qaeda.
This brought us to 2008. By then Kimberley and Curtis had joined my team just in time to see that plunge. If 2000 to 2003 was like pulling off a bandage slowly, this was like ripping it off in one fell swoop. The shock to investors was palpable. From June 2008 to January 2009 the Canadian market was off by 50% and pundits were again saying that investors should not open their statements. I had seen this before and observed that it was one of the signals for the best time to invest.
So on January 2009 we started giving presentations about re-investing into the Canadian market and, in particular, Canadian banks. We had persuaded a large number of clients to do that just as the market turned down again, amidst even worse headlines, falling another 5%.
Until March 8, 2009, when the market finally turned back up.
Since then we have had the Greek/ European Crises, the Chinese devaluation threat, mining stocks collapse, Al Qaeda being superseded by the even more extreme ISIS, the further collapse in oil prices, and then Brexit this summer past.
And now Donald Trump.
I’d like to quote myself now, from page 34 of In Short: Successful Investing During Turbulent Times “You will see, and let me emphasize this as strongly as I can, that the stock market is best viewed as a series of crisis interrupted by periods of relative calm.” Each crisis is said to be different but it isn't. It just has a different label. We will get through this. Dogs will bark and babies will cry and we will meet the challenge.
Stocks and currencies that will rise under Trump comprise a different list than those under Clinton. We are adjusting accordingly.
We will update you on the active measures we are taking to adjust to this new at our next review. In the interim we are available at your convenience.
This article was prepared solely by Larry Short who is a registered representative of HollisWealth®, a division of Industrial Alliance Securities Inc. (iA Securities), a member of the Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC).The views and opinions, including any recommendations, expressed in this article are those of Larry Short alone and not those of HollisWealth®
BComm, CPA, CGA, CIM®, CFP®, FCSI
Portfolio Manager, Executive Director, Private Client Group
HollisWealth, a division of Industrial Alliance Securities Inc.
Hollis Insurance Inc.
In Short: Secrets to Make Your Dollars Grow
HollisWealth® is a division of Industrial Alliance Securities Inc. (iA Securities), a member of the Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC). iA Securities is a trade name and business name under which Industrial Alliance Securities Inc. operates. This information has been prepared by Larry Short, Portfolio Manager for HollisWealth®, a division of iA Securities, and does not necessarily reflect the opinion of iA Securities. The information contained in this document comes from sources we believe to be reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any the securities mentioned. The information contained herein may not apply to all types of investors. The Portfolio Manager can open accounts only in the provinces where he is registered. For more information about HollisWealth®, please consult the official website at www.holliswealth.com . ShortFinancial is a personal trade name of Larry Short.
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