Investor fear understandable amid tumbling markets, but far from panic

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By Romina Maurino
THE CANADIAN PRESS

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TORONTO - Nervous investors have reason to be pessimistic after a week of steep losses on the Toronto stock market, experts say, but they warn people must keep the swings in perspective and remember that downturns provide buying opportunities for the brave and patient.

"Given the kind of the correction that we have had, I understand why people are fearful," says Fred Ketchen, manager of equity trading at Scotia Capital.

"The kind of activity that we have had in our stock market in the last little while is going to be frightening for some but to other who are patient, others who are brave, over time, this presents some very tempting opportunities."

Stock markets in Toronto and around the world struggled yesterday amid weak economic reports, particularly in the U.S., where the unemployment rate jumped to 6.1 per cent from 5.7 per cent.

Toronto's S&P/TSX composite index eked out the slimmest of gains, rising 2.28 points to 12,816.42 after plunging over 200 points earlier yesterday. A commodity stock-led retreat on the Toronto market has carved almost 1,000 points or 6.6 per cent from the main index this week alone.

But Ross Healy, president and CEO of Strategic Analysis Corp., says the recent declines shouldn't be misinterpreted as panic -- no matter how widespread the losses.

"If anybody thinks that what's gone on in the last couple of days is panic they haven't got a clue," he says.

"So far, it's just a normal-course selloff. Panic? Absolutely not. We're going to get it, but not now."

Healy says he believes the bear market is just underway, noting that it's normally the consumer that begins the recovery process in the markets.

So far, consumers aren't coming back.

"If the consumer doesn't come back, we haven't got to the bottom of the recession," Healy says.

"My suspicion is that the economics of the situation will get a lot worse."

The TSX has been falling on a move away from commodities, dropping oil prices and anxiety over the financial sector and the health of the global economy.

The Toronto energy sector plunged well over two per cent yesterday before moving slightly into positive ground as oil prices continued to lose ground ahead of next week's meeting of the Organization of Petroleum Exporting Countries.

Light sweet crude was down $1.58 to US$106.31 a barrel on the New York Mercantile Exchange, after going as low as $105.76 overnight.

TSX financials sector was down one per cent, a day after Bill Gross, manager of Pacific Investment Management Co., the world's biggest bond fund, warned of a "financial tsunami."

Amid all that uncertainty, Ketchen's advice to everyday investors is to hold off making any rash decisions.

"Our advice is stick with your overall plan, because if you have invested wisely and you do have a good plan, it's best to stick with it," he says.

"We'll get over this somewhere along the way and... maybe we'll go through the same experience again in early winter, next spring -- who knows.

"That's just the way the markets work."