The current market reminds us a bit of early 2009. As noted above, the stock market had its worst-ever start that year. Markets went down so much that investors became immune. I remember thinking, “Oh, the market was only down one per cent today, that’s a pretty good day.” It did seem like markets were going to zero in February 2009. But then, suddenly — BAM! — we went on a 10-year stock market party, just like that.
Corporate deals have saved the markets before. If short-term investors don’t care and drive prices down 65 per cent, long-term thinking corporations start seeing value. The takeover price of Intertape was not above its stock’s all-time price, but it’s higher than any price it has traded at in the past 23 years.: Yes, this is another stretch, but, again, it’s a mathematical fact. But it depends on the day. This year, the Canadian dollar, versus the U.S. dollar, is slightly up.
The U.S. dollar is seen as a safe haven in times of turmoil, so it has had a lot of relative strength in currency markets. Your U.S. stocks might be down eight per cent in the past two weeks, but perhaps only seven per cent in Canadian-dollar terms. Peter Hodson, CFA, is founder and head of Research at 5i Research Inc., an independent investment research network helping do-it-yourself investors reach their investment goals. He is also associate portfolio manager for the i2i Long/Short U.S. Equity Fund.