[Only The Lonely..]

Toronto Stock Market plunges
Updated at 12:29 PM

By David Friend

TORONTO -- Jittery investors sold off tens of billions of dollars worth of stock Monday morning as fear of a severe economic downturn in the United States drove a search for financial safe havens, hammering the Toronto market.

The 520-point drop, which is about or 4.1 per cent of the market, trimmed more than $70 billion in value from the TSX on top of a 6.6 per cent dive last week that had already wiped out all of the market's gains for 2007.

The losses eroded the value of stocks held by millions of Canadians either directly or in their mutual funds or pension plans. If consumers suddenly start feeling poorer because of the market drop, it could also lead to lower retail spending and further erosion in growth in the overall economy.

"Financial markets around the globe, and equity markets in particular, seem to be increasingly pricing in the recession scenario in the U.S," said Craig Wright, chief economist at RBC Financial Group.

"Sentiment is so negative right now that anything that could be interpreted as positive news gets ignored and anything that's negative gets exaggerated."

In the past, Canadian markets had been cushioned somewhat from the troubles in the United States because of the Toronto Stock Exchange's dependence on blue-chip companies such as banks and oil and gas producers and metals miners. Their share prices had risen sharply because of soaring demand for commodities from Asia's rapidly growing economies.

On Monday, oil prices fell to below US$90 a barrel and have now retreated more than US$10 from a record above US$100 a barrel a few weeks ago on worries a flagging U.S. economy would dampen fuel demand.

Monday's selloff on the TSX came despite the unveiling of a massive economic stimulus plan Friday by president George Bush and the fact that American markets were closed for the Martin Luther King holiday.

At midday, the main index at the TSX was down 523.78 points to 12,213.34, a level it had not seen since around November of 2006. The TSX Venture Exchange, which trades smaller capital companies, was down 8.1 per cent -- a loss of 211.89 points to 2,406.32.

The major worry is that a widespread slowing of the U.S. economy, with the possibility that it could turn into a recession, could spill over into Canada and put the brakes on an economy that has so far weathered global economic storms pretty well.

"Overlay that with the weakness we're seeing in financial markets in particular... and that argues for a slower growth environment, which opens the door for all sorts of risks including deterioration in the labour market," said Wright.

Economists have suggested that a U.S. housing slump sparked by a credit crisis linked to the collapse of the subprime mortgage industry will force consumers to slash spending. That could lead to a slowdown in new hires and could eventually lead to layoffs as companies adjust to tightening purse strings.

Asian and European stock markets were also down sharply in Monday trading, more signs that investors around the world are not optimistic that the Bush stimulus plan is enough to stop a recession.

Investors have strong doubts about the plan to shore up the U.S. economy, which has been battered by severe problems in its housing and credit markets.

The plan, which requires approval by Congress, calls for about US$145 billion worth of tax relief to encourage consumer spending.

While there was no daily trading in New York, futures contracts still logged major losses, pointing to a drastic selloff on Tuesday when the market reopens.

On Friday, the Dow Jones industrials moved down 59.91 points to 12,099.3, bringing the total loss for the last week to 507 points or four per cent.

The Nasdaq composite index declined 6.88 points to 2,340.02 while the S&P 500 index declined 8.06 points to 1,325.19.

Losses bled into commodities prices as the gold bullion contract slid $13 to US$868.70 in electronic trading on the Nymex. The crude oil contract was $1.46 lower to $89.11.

When markets are lower, "safe haven" investments like gold usually rise in price, though that seems to be the opposite of what's happening this time, said Bob Tebbutt, vice-president of risk management at Peregrine Financial.

"When people are terribly nervous they generally go to the gold market and boost it," he said.

"When you see concerns over inflation or war or just plain concerns over the economic picture, the gold market tends to show good strength."

Tebbutt said the recent market reaction is composed of "irrational" behaviour motivated by fear and uncertainty.

Last week, the TSX ended with the deepest losses of all the major North American markets and among its biggest weekly declines in seven years.

At the end of December, the value of all the shares traded on the TSX senior market was more than $1.9 trillion.

--The Canadian Press

[Aylmer]

Noooooooo!

:(

[LordMandeep]

relax, the TSX jumps around a lot.

It will now go down to around 10000 or so still much higher then in 2002. Then who knows it could start jumping around like crazy in 2 years again.

[Calgarian]

This is no disaster, but could be a sign of things to come.

[LordMandeep]

Yes I would think everyones stocks will fall by at least 10% or so if this continues or even more.

[zerokarma]

It took quite a fall last week and this week doesn't look too promising as well.

Lots of panic selling going on...

[caltrane74]

I hope this doesn't impact our skyscraper construction.

btw: all my money stays in cash/bonds/ until this is over, then I buy buy buy.....

yippeee...

[Spocket]

I'm rather surprised that the North American economy in general hasn't gone into a full-scale recession already. Seems like we've had all the indications for a while now. Lot's of bubbles a' burstin' including arguably the most important one ; real-estate in the US. Not that I'm complaining about this but since these things are cyclic we seem due. Of course, this is the TSE but with our dollar valued as high as it is and the US economy showing no signs of resurgence as of yet, I would expect this to have happened sooner or later.

[sync]

it's down over 600 right now.

[Coldrsx]

expected at least...

[401_King]

its been an extremely stressful day for everyone on bayst today, i havent seen a single smile.

[Aylmer]

Here's one!

:)

I'll be be nice and make it two:

:)

[401_King]

US will get hit hard tomorrow. DJ futures are calling for a 500 point decrease at the open. brace yourself kiddies!

[Aylmer]

I still can't belive that our economy is based on mass-consumerism nad our world is controled by the media...

I neeeeed to get out more.

:)

[Boreal]

If it wasn't Dr. Martin Luther King Jr. Day today, it could have been a lot worse. Alas, it just makes for a one day layover as the chaos will roll in again like a tidal wave tomorrow, in my opinion. This isn't a hiccup. The USA is falling into a recession. Perhaps the foreign markets will feature strong enough demand to prop up Canada's resource based economy. Regardless, if its a deep seeded recession in the US, the likelihood that EVERYONE gets hit is strong.

Hold on to something sturdy, turn off the motor and whip out the oars and keep your eyes out for dry land.

My opinion only of course.

[Only The Lonely..]

Originally posted on the Winnipeg Free Press website

Market, dollar plunge
TSX down 605, loonie below .97 US
Updated at 4:45 PM


TORONTO -- The Toronto stock market has taken its biggest one-day plunge in seven years, losing 4.75 per cent while the Canadian dollar fell under under 97 cents US, its lowest point in months, as fears of a U.S. economic downturn sparked a violent share selloff.

The Toronto Stock Exchange dropped 604.98 points to finish the day at 12,132.14, trimming almost $90 billion off the market's total value.

That's on top of a fall last week that wiped out all the market's gains for 2007.

The last time the market fell so far was a 6.5 per cent drop in February 2001, when the tech bubble burst and Nortel Networks (TSX:NT) shares rapidly lost value.

The stocks plunge could spill over into other sectors of the economy if consumers start tightening their belts and stop spending on everything from cars and houses to clothing and other retail goods.


American markets were closed Monday, but Canadian investors appear unmoved by an economic stimulus plan unveiled by president George Bush on Friday.

The plan, which requires approval by Congress, calls for about US$145 billion worth of tax relief to encourage consumer spending.

The loonie fell by more than half a cent at one point, hitting 96.76 cents US -- the lowest since mid-September -- before regaining some of its lost value.

The dollar is now down more than 13 cents since setting an all-time high of about 110.3 cents US in mid-November.

At that time, there was optimism that Canada's wealth of oil, gas and mineral resources and the relatively strong job market would help the country through a slowdown south of the border.

However, there are growing concerns that the U.S. economy is headed for a recession that would reduce demand global for Canadian resources.

The Canadian forestry and manufacturing sectors have already been hurt by lower American demand and a high Canadian dollar.

The Canadian Press

[graupner]

I work in the financial sector and today was really hard. Some people today lost over 50,000 $ ( retirement money!!!).

On the other hand, with some well calculated short sells and a few arbitrages here and there, we were actually able to get a small profit today :cool:

The probability of a recession hitting the USA went from 50% yesterday to about 60-65% now ( according to major economists).

Off-market trading of major american stocks shows that the market could go down by at least 7% tommorow morning. (Off market trading is usually a good way to predict the opening of the day).

Expect the financial and technological sectors to drop the most.
Good investments right now could be companies who implemented succesful risk management strategies, like GE, Procter&Gamble, etc.
Also , because of very high volatility, avoid energy and natural ressources. But they could also show a high rebound later this week.

[240glt]

Should be fun to see what happens tomorrow when the NYSE opens up

Black tuesday or business as usual ?

[Aylmer]

Why are we panicking?

This just means our economic foresights will be more realistic!
Bring them investors back to earth.

:)

[mersar]

It won't be business as usual, but I don't think it will be the end of the world either. I suspect a lot of traders are going to try to take advantage of the fact that its a given that the market will plummet off the start, which should lessen the overall blow.

[graupner]

I believe NY will go down somewhere between 4-6 %. Toronto will probably drop another 1-2%. That's the 'optimistic' scenario.

Pessimist.. NY drops 12%, Europe down 15%, Asia 20-30%, Toronto another 15% . Everything down, Oil down several dollars, Canadian dollar down 4-5 cents, etc. Major slow down everywhere.
Everything could happen in one day.

[Rathgrith]

Sucks to be investors!

Wait... I invested. Crap!

I look forward to seeing what will happen with the condo boom in Toronto during all of this.

[401_King]

Asia is down 4-5% right now. Its going to be a long night.

[LordMandeep]

called our Financial advisor (who lives 1 km away from Jane/Finch :haha: ) and says to relax as we have mutual funds, not high risk stocks.

[yeeg]

I hope this doesn't impact our skyscraper construction.

btw: all my money stays in cash/bonds/ until this is over, then I buy buy buy.....

yippeee...If you can tell me when that is, I will cut you in on the profits....Best thing is to stay partially invested....

[LordMandeep]

my dad did not check his funds, either he is to scared or to tired or does not know what is going on...

[yeeg]

Sucks to be investors!

Wait... I invested. Crap!

I look forward to seeing what will happen with the condo boom in Toronto during all of this.Actually, its good to be investors....It sucks to be speculators...And someone else is right, mutual funds can be much less volatile than stocks unless you compare sector funds vs large cap dividends...

[LordMandeep]

mutual funds won't fall by a few thousand dollars even in the worst case.

I also assume one who has mutual funds has a lot of money invested or else your not making much.



Checked...

Not bad there has been around 1-4% loss on the funds over the whole week.

[401_King]

its 12pm EST and India was down 12% in 1 hr of trading


• Japan's Nikkei 225: - 5%
• Hong Kong H-shares: -11.2%
• DJIA futures: Down 497 points
• Hong Kong's Hang Seng: -8.4%
• Taiwan: -6.6%

[Canadian Mind]

Not looking happy.

[Rico Rommheim]

Can anyone say what a 20 something year old student should invest in when the markest blows up? I have like $1000 tops to invest.

[401_King]

my best advice would be to stay away right now and keep your money in your bank account and wait.... do you really want to put your 1000$ through this BS on a daily basis?

[The Jabroni]

Since I don't know exactly how trading stocks work, I'm going with 401 king on this one.

Besides, I believe we were due of something like this. We'll just have to weather the storm until it goes away.

[Canadian Mind]

I'm hoping housing prices will drop a bit. Would be nice to be able to buy a place for dirt cheap while in the military, then make some nice gains on it down the road.

[Rico Rommheim]

. never mind

[LordMandeep]

The US govt is panicking

Fed cuts interest rate 3/4 of a point

http://news.yahoo.com/s/ap/20080122/ap_on_bi_ge/fed_interest_rates

[Rathgrith]

Did the Bank of Canada cut the prime rate?

[MolsonExport]

http://ecx.images-amazon.com/images/I/51VArAEHUrL._AA240_.jpg

[caltrane74]

Let's pray this doesn't do damage to the construction industry in Canada.

We have so much shit on the go.....this could cause troubles for proposed projects...like Front Street West....Aura (college park 3) as they have not yet gone into sales.....

[mersar]

Did the Bank of Canada cut the prime rate?

Bank of Canada cut by 1/4 point so far, and indicated that they may cut another 1/2 point in the coming months. It so far seems to be helping soften the blow a bit, TSX is up nearly 400 and the Dow is only down about 120.

[WhipperSnapper]

I look forward to seeing what will happen with the condo boom in Toronto during all of this.



In the past, stocks taking a dive usually meant longer lines in front of sales centres.

[graupner]

In the past, stocks taking a dive usually meant longer lines in front of sales centres.

historically false. Major stock crash, in 1929,1973,1987 all slowed down heavily the real estate market.
Maybe it meant longer lines of people wondering about eventual price drop, but it sure didn't mean better sales.

[graupner]

Can anyone say what a 20 something year old student should invest in when the markest blows up? I have like $1000 tops to invest.

I'd suggest you buy solid financial canadian stocks as they are trading right now at a bargain. They are not severely cash depleted like the US banks and have a bright future. Avoid CIBC and Banque Nationale.
TD, RBC, BMO, Banque Laurentienne are very good options.
Well established Energy stocks (Encana, Suncor, Nexxen,etc.) are also a good choice!!

Avoid highly speculative stocks like RIM. Also avoid ressources since they could become very slow for a long time, depending if there's a recession or not.

On a short term, chances of a loss are good, but on 5-year horizon, you can expect some very good gains!!!! 30-40% !And as you are 20 years old, you can afford to wait 5 years.

[WhipperSnapper]

historically false. Major stock crash, in 1929,1973,1987 all slowed down heavily the real estate market.

I'm not refering to anything remotely that extreme.

[caltrane74]

historically false. Major stock crash, in 1929,1973,1987 all slowed down heavily the real estate market.
Maybe it meant longer lines of people wondering about eventual price drop, but it sure didn't mean better sales.

Do you remember what happened after the market correction of 2000'.

Where have people been parking their cash over the past 7 years?

Don't guess, it's a trick question.

[Seely32]

http://ecx.images-amazon.com/images/I/51VArAEHUrL._AA240_.jpg

I have actually read that A Friend at work Bought it.

[yeeg]

I'd suggest you buy solid financial canadian stocks as they are trading right now at a bargain. They are not severely cash depleted like the US banks and have a bright future. Avoid CIBC and Banque Nationale.
TD, RBC, BMO, Banque Laurentienne are very good options.
Well established Energy stocks (Encana, Suncor, Nexxen,etc.) are also a good choice!!

Avoid highly speculative stocks like RIM. Also avoid ressources since they could become very slow for a long time, depending if there's a recession or not.

On a short term, chances of a loss are good, but on 5-year horizon, you can expect some very good gains!!!! 30-40% !And as you are 20 years old, you can afford to wait 5 years.
With $1000?? Lets see, $1000 of TD would get you 14 shares priced at $65 per share and its $29 in and $29 out...That would make your break even price being $69...Not the greatest investment if you ask me...If you want the banks, buy a dividend mutual fund....Otherwise, I would go for something where you can get a large number of shares to maximize your potential...

[LordMandeep]

Well 1000 dolllars, you are stuck to penny stocks or owning 1 or 2 shares of a big company.

You can be like that crazy old lady on futurerama at the investor meetings..

[graupner]

With 1000$, you are better not to invest at all and wait until you have at least 5000$. I didn't read that part.

[graupner]

I'm not refering to anything remotely that extreme.

Well you are then referring to the exception.
Here is what you wrote:

'In the past, stocks taking a dive usually meant longer lines in front of sales centres.'

It meant it once, but usually it doesn't mean it at all. In 2000 was a particular situation and it usually doesn't happen like that. The market had been cool for a long time and it had to expand whatever would happen on the stock market.

Usually, a really hot speculative real estate market combined with a major stock slowdown means a big real estate slow down.

[graupner]

Do you remember what happened after the market correction of 2000'.

Where have people been parking their cash over the past 7 years?

Don't guess, it's a trick question.

Exactly, you answered yourself. They have been over-investing in the real estate market for the past 7 years .
You don't seem to have a big understanding of the real estate market and speculative investment.
Before 2000, the real estate market had been really slow and the past 7 years have been a great time for speculators.
But since July, the CBRE Global Real Estate fund is down almost 31% , never seen in the past 20 years.
Major mortgage funds are also down 10-30%, signs that no new major mortgages have been signed in the past months.

the market correction of 2000 surely didn't 'help' the real estate market, and unless you havent been reading the news lately, the real estate bussiness is the MAIN PROBLEM this time.

Right now, major fund managers worlwide are avoiding the mortgage,real estate and construction sectors at all costs.

Don't expect canadian markets like toronto or calgary to crash, but don't expect the same level of development that you saw in the past 5 years.

[401_King]

i think caltrane is talking about toronto only, graupner.

[Waterlooson]

Avoid highly speculative stocks like RIM.

That advice cost us more than a 10 % gain today:

http://www.tsx.com/HttpController?GetPage=QuotesLookupPage&DetailedView=DetailedPrices&Market=T&ref=quickquotehome&Language=en&QuoteSymbol_1=rim

[LordMandeep]

looks like it will be a down day.

It is down 225, however it was down to almost 300 then it went to 200.

So no massive drop but a big drop..

[WhipperSnapper]

It meant it once, but usually it doesn't mean it at all.

I don't buy that this is the first sign of a looming recession here in Canada. Of course not to this extent but, these dives in the market tend to happen almost on an annual basis and each time it sends the day trader types scurrying to find other means to lose their shirts over and that usually means real estate (Rama is just too far)

[graupner]

That advice cost us more than a 10 % gain today:

http://www.tsx.com/HttpController?GetPage=QuotesLookupPage&DetailedView=DetailedPrices&Market=T&ref=quickquotehome&Language=en&QuoteSymbol_1=rim

Thanks for your advice!!!
another almost 10% loss today!!.and maybe a 40% loss in the next 3 months?? Speculate as much as you want but this can't be a long term investment!!!
Including transaction costs, someone who had bought it yesterday or the day before lost some good money there. Stop uselessly protecting this stock, it's a good one but right now it is a really risky bet.

[yeeg]

Thanks for your advice!!!
another almost 10% loss today!!.and maybe a 40% loss in the next 3 months?? Speculate as much as you want but this can't be a long term investment!!!
Including transaction costs, someone who had bought it yesterday or the day before lost some good money there. Stop uselessly protecting this stock, it's a good one but right now it is a really risky bet.

If almost 10% means 3% on the canadian side and little over 2% on the Nasdaq...If you think this stock is set to fall up to 40% in the next 3 months, why dont you short it??

[graupner]

If almost 10% means 3% on the canadian side and little over 2% on the Nasdaq...If you think this stock is set to fall up to 40% in the next 3 months, why dont you short it??

When I wrote it this afternoon, it was down by more than 10%. It shows even more how volatile it is right now.
I have several 120$ puts bought at the november high. Don't worry for me ;)

[yeeg]

When I wrote it this afternoon, it was down by more than 10%. It shows even more how volatile it is right now.
I have several 120$ puts bought at the november high. Don't worry for me ;)

C'mon, be a man, forget the puts, just short the darn thing!! :D

[Waterlooson]

Thanks for your advice!!!
another almost 10% loss today!!.and maybe a 40% loss in the next 3 months?? Speculate as much as you want but this can't be a long term investment!!!
Including transaction costs, someone who had bought it yesterday or the day before lost some good money there. Stop uselessly protecting this stock, it's a good one but right now it is a really risky bet.

Wrong, you spoke too soon... RIM only went down a few percentage points, and is trading up in after-hours. Transaction costs are negligible with a discount broker.... now you really hate me. :notacrook:

[401_King]

Transaction costs are negligible with a discount broker.... now you really hate me. :notacrook:

dont forget CGT bud. unless your with the banks/funds, its absolutley pointless playing this stock day by day.

[yeeg]

Wrong, you spoke too soon... RIM only went down a few percentage points, and is trading up in after-hours. Transaction costs are negligible with a discount broker.... now you really hate me. :notacrook:
Good point, my fees are 9.99 each way...unlimited shares....

[Waterlooson]

dont forget CGT bud. unless your with the banks/funds, its absolutley pointless playing this stock day by day.

Also wrong.... at least in my case.... Mexico (my residence) doesn't tax income made outside the country.... and the US doesn't charge CGT on non-residents. :notacrook:

[graupner]

Wrong, you spoke too soon... RIM only went down a few percentage points, and is trading up in after-hours. Transaction costs are negligible with a discount broker.... now you really hate me. :notacrook:

I don't hate you, ehehe. We seem to have similar interests .
Speaking of transaction costs, I get as some kind of work benefits free transactions for anything above 500$ . I have access to discount options as well :D

[graupner]

Also, this article could be of some interest:

RIM: Canary in the enterprise spending coal mine?
Posted by Larry Dignan @ 6:40 am Categories: General, Personal Technology, Mobile, RIM Tags: Research In Motion Ltd., Andy Neff, Larry Dignan
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There’s a bit of a tug of war over Research In Motion’s prospects.

First, Bear Stearns cuts RIM from “outperform” to “peer perform” in a move that’s largely based on the theory that RIM shares are too expensive.

But the one notable item is that Bear Stearns analyst Andy Neff reckons that RIM will suffer first from any economic slowdown.

Check out the dance here. Neff writes:

“From a fundamental standpoint, we like RIM’s outlook given strong demand for smartphones, RIM’s business model (hw+sw+svcs) and its competitive position. In addition, channel checks indicate continued robust demand, with product launches (Curve/Wi-Fi, Pearl II) progressing on schedule.”

From there, Neff even raises RIM’s fiscal year earnings estimates. But Neff highlights some risks:

“While we have not seen any weakness in demand for RIMM, we’re concerned about potential exposure to macro-related demand given high financial (30-40% of sales) and enterprise (75-80%) sales but small-ticket items are often affected first.”

In other words, BlackBerry sales will be the proverbial canary in the enterprise spending coal mine. If RIM stumbles other enterprise technology companies could follow.

Neff may have a point since many technology companies sell heavily to financial services firms. And given that Wall Street layoffs are likely it’s not clear that CrackBerries will be as addictive if your employer isn’t paying for the devices.

Keep in mind that Neff’s call is clearly in the minority here. Merrill Lynch analyst Vivek Arya said in a research note that RIM demand is strong and new Wi-Fi features on devices such as the 8820 are potentially a killer app for BlackBerry adoption.

For more BlackBerry information see Russell Shaw’s blog and all ZDNet resources.


It could be the first to fall ! I'm not saying it will happen but there are still good chances it does.
Anyone knows when is the next RIM quarterly results release?

[graupner]

I think it will be sometime in mid-february.

[Waterlooson]

I think it will be sometime in mid-february.

We have you talking to yourself. ;)