How to survive a bear attack – FINANCIAL
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How to survive a bear attack

Joe Chidley: Bear markets hurt. But remember that they have never lasted forever, and this one won't either.

One of the very most talked-about moments in The Revenant, the bloody and critically acclaimed new adventure flick, is a jarringly violent scene in which Leonardo diCaprio’s character gets up close and personal having a grizzly bear. By most accounts, it’s a high point of movie-making artifice in the Oscar-nominated film, so if you haven’t seen it yet, it’s something to look forward to.

China, and also the damage done: Market intervention gives China’s credibility a significant beating

Chinatopix via AP

An earthquake rolled through global markets last week, and its epicentre was in China. Let’s recap, and maybe draw a couple of lessons from it.

Continue reading.

On the other hand, Canadian investors might feel it hits a tad too near to home.

Last week in the markets left investors mauled and bloodied, battered and bruised. The S&P/TSX composite ended the week down nearly 400 points, or three per cent. On the year to date, the index is down more than seven per cent, and it is off a lot more than 20 percent from the 52-week high it hit last April.

That’s officially bear market territory.

In these times, it’s natural for investors to consider primarily about survival, much like DiCaprio’s Hugh Glass, who does, obviously, cope with the attack. But how might investors withstand the bear?

Just as with actual life, the investors’ options in the face of an ursine onslaught may look pretty limited. But let’s assess the way the two situations may be similar and which actions might be appropriate.

One of the first things real-life bear experts say you should try to determine is what kind of beast you’re facing. Grizzlies, apparently, behave differently than black bears or polar bears. What works (or might work) against one species might not work against another.

For investors, this may be good advice, too. How you can react to current market conditions usually depends on a precise reading of these conditions. So what type of bear market are we really coping with here? How dangerous could it be?

Let’s consider the causes. The proximate cause appears to be the continuing decline of West Texas intermediate and Brent crude prices, which dipped below US$30 last week. There’s continuing oversupply within the global market, and lots of uncertainty about the impact of Iran and also the lifting of sanctions. So, oil is down about 18 per cent around the year, and the resource-heavy TSX is down, too.

So we’re dealing with an oil bear here, clearly. Other difficulties pale by comparison. Reading China and it is roller-coaster markets is difficult to read meaningfully anyway. The threat of the recession in Canada may appear a sharper worry, but those concerns are largely driven by oil anxiety, so it’s really the same issue phrased differently.


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