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I agree that volume will be down and markets will maintain its bumpy ride over the summer as typically things are quieter. However, like sell in May (for the same reason) some of these theories are starting to become outdated. In our current interconnected world, data is available immediately and people can trade from almost anywhere; unlike the days of yesteryear when brokers would summer at the cottage for several months and perhaps pick up a paper once a week. A few things that will not be quiet over the summer are employment and inflation data. Obviously, everyone will be watching interest rates with great anticipation. As such we may remain in a low volume bear rally over the summer and then come fall volume and direction will pick up. another thing to consider that doesn't get much attention in Canada is the US midterms impact on markets. Typically there is a selloff heading into the election and then a bounce up in the following quarters. This is often attributed to uncertainty leading up to the election. Not sure if that will happen this time.
 
I can just imagine the pain and suffering of active traders who are trying to trade things like energy and bonds on a short-term basis.

One moment energy is crashing, then there are days like this with 6% rallies across the board... really crazy. I'm still guessing the trend is up but who knows.

I still think summer will be directionless, and the action starts in Q4.
I would take the opposite stance. Volatility is a trader's friend. Definitely requires nerves of steel but traders can make (or lose) a fortune in our current market volatility. I agree that pricing will be erratic over the summer. I will keep adding as cash becomes available even though prices will bounce all over the map. some think tech is at or near the bottom. I am hoping for another leg down for big tech names. Not sure it will happen.
 

This article by Tom Bradley provides an optimistic view of the current bear market. I think it does a good job in summarizing the current state and provides a vague but apt prognosis of where things are headed going forward. The statement that companies that have strong balance sheets will be rewarded is welcome news for those that believe in sound financial operations. Growth did have a good run and many expect value to have a bit of a run over the next while. I still expect a bumpy couple of quarters based on response to inflation data and interest rate response.
 
I also fear political interference. However, I am not sure that Trump or Biden will be around after the next Presidential election. I know the US is constantly in campaign mode but there can be a lot of surprises in the next 2 years.
 
@james4beach I know you had planned work would slow down for you this year. Are you taking on as much as you reasonably can? I understand some work is not worth taking on (certain clients, certain contracts, price points). I have heard from others in IT/engineering that things have slowed down from crazy to manageable to now possibly slow enough to cause budget cuts/layoffs. I am only speaking for the sectors that I know. In construction there is still more projects than labour and materials can keep up with but talk about the project pipeline slowing is now taking up more of the discussion in meetings.

Added: If we see a sideways or upward equity market over the next 30 days I will likely lock in some cash to GICs for mortgage renewal. Current GIC rates provide a decent spread over my current mortgage rate.
 
Many predicted the market movement in the summer was a bear market rally and would not be sustained. The question remains is will we see weeks on end with daily downward movement or will volatility reign? Most people will stick it out longer if there are movements up and down even if we see lower highs and lower lows than many days in a row of red on the screen. The challenge for me will be holding on to dry powder long before we see the market recover. Like many others here I am in the red for the year but keep adding and watching dividend increase announcements. When the announcement of cuts become a regular occurrence, prices will drop further and scare off more investors. I haven't seen a cut since summer 2020.
 
The average bear market lasts something like 15-18 months and the S&P500 drops in the order of ~35%. We are not done yet.
Average is the key word to this statement. Many are banking on this being your average bear. There is a strong possibility it will be longer. There was a long period of low rates and great equity returns. I am not wanting a prolonged bear but from a dollar cost averaging perspective it is to my advantage. This contradicts the mantra of its total return that matters.
 
It will be interesting to see how this bear plays out. People often use historic durations as a point of reference but each one is unique. Without knowing when it will end there is no harm in using the historic information as your guide as long as you are prepared to have it run longer and deeper than your forecast. So many events which could result in bearish or bullish sentiment. US election, Inflation, Interest rates, War in Europe, Currency spreads etc. And those are just some the ones we are aware of.

Some great discussion above re: demographics, strong economic indicators not resulting in a sustained reversal. Fear is starting to set in. I remember the fear in 2008 but I don't remember at what levels people really panicked.
 
Interesting news article in TDDI this morning:

11:16 AM EDT, 10/05/2022 (MT Newswires) -- National Bank said Tuesday that the Canadian exchange-traded funds collected $1.9 billion in net flows in September, driven almost entirely by the demand for cash-like ETFs.

"The outflowfrom Canada was mostly concentrated in institutional redemptions from XIU, with smaller withdrawals coming from other broad Canadian ETFs," the analysts said.

Equity ETFs lost $436 million, concentrated in marketcap weighed ETFs for the Canadian region. iShares S&P/TSX 60 Index ETF (XIU.TO) displayed its usual institutional activity, which in September resulted in redemptions of $737 million.

Low-cost, cap-weighted passive ETFs for various regions like Canada (XIC, HXT), international developed (ZEA), and the US (HXS) also suffered outflows, the analysts said.

Fixed Income ETF flows showed clear signs of flight-to-safety while multi-asset ETFs saw a rare month of outflows of $36 million. Crypto-asset ETFs saw redemptions of $81 million, National Bank added.

National Bank said 28 ETFs launched in September, taking the total number to 1,271 in Canada.

Is this a sign of capitulation if the institutional investors are cashing out? I think so. Maybe the bottom is in sight! What I don't get is why they're selling out more of Canada region than other markets. Hhmmf.
This is not a sign of capitulation. Institutional investors are moving money to safer options like fixed income which has been long ignored due to the poor return. They are also trying to preserve their performance record for 2022. Canada has not taken as large a hit as other funds (Europe, emerging markets). It looks better for the institution to have a return of -10% when the stock market returned - 20%. When providing brochures, they have to use an equivalent benchmark but they certainly can say it to customers who are worried about their declining portfolios.

The Nasdaq at new lows is a better sign that the bottom isn't in yet and likely won't until the interest rates stop climbing.
 
Most investors and non-investors are not panicking yet about the market despite it being the 5th worst drawdown in as many decades. I think the new inflationary environment is capturing a lot of people's attention with concerns of how to maintain lifestyle. Concerns around portfolio take a back seat to a decrease in disposable income and worries about rising mortgage rates/payments and declining property values. For those that have lived through it or studied it extensively, they realize that current performance happens from time to time and the best bet is to stay the course. In all fairness, interest rates are not that far off of the historical average.
 
Using US data, the Nasdaq entered bear territory in April and the S&P in mid June. It is my understanding that the furthest the TSX has slid is 14% from its peak. Perhaps that is why most people I know aren't panicked yet. Looking at the chart below some bears are very short lived 1-3 months. A couple less than a year but the several are about 15-21 months. Most guess (and it is just a guess) that this will continue through the bulk of 2023. I have been buying as money comes available. I am now at the lower threshold of my cash allocation so am hoping (hope is not a strategy) that we are nearing the bottom even if the bear continues. I think it is more likely that the US bear has a ways to go (both in direction and duration). As hewers of wood and drawers of water we are in a better position than most economies. That doesn't mean we will go through this unscathed. Will Canada's bear lag the US? Will we be spared the equity bear and be hit harder in RE pricing? Or is the worst yet to come? Hard to say. I am preparing for the worst as that way I will not be disappointed and may even be surprised if there is a quick recovery.

Rectangle Slope Font Plot Parallel

S&P 500 Bear Markets and Recoveries (dwcdn.net)
 
While it doesn’t seem that long ago, I separate the COVID driven crisis from what is occurring now. Through that lens we have a hot economy being squeezed by tigthening rates. People behaving quite rationally in the real economy in response to higher wages (they are spending) and higher inflation (demanding wage increases). In asset markets, risk assets have been repriced down because of higher discount rate. Classic. Things are breaking that are especially risky or especially leveraged. Classic.
I hope you are correct and that it is more like the dot.com situation in the 2000s. The overall market was discounted and the companies without out real earnings became extinct. I have no qualms with crypto replicating the dotcom crash. Be reminded that some amazing companies survived the dot com era. The same could happen with blockchain. If you are correct the economy will bounce back after a short recession and GDP will improve. Any quality positions will have been bought at a bargain price. We will need a proper immigration and spending strategy to fix our hurting healthcare and education systems.

I know of a few retirees that are looking at using a portion of their cash wedge for not just living expenses but instead to invest in 2023. They are reducing their vacation time and delaying purchasing new vehicles for the next 2 years. Like many they put a substantial portion of their discretionary money back into their home during the pandemic. They are allocating that money to equities, short term bonds and even looking to buy some property should a major correction take place.
 
The people I was speaking about are in the 5-10 years of retirement and closer to 10. They have been able to maintain the same standard of living throughout and took the same approach in 2020. As mentioned in post #336 the recovery will not be V shaped nor happen as quickly. However, they do think that vacations and vehicles are over priced and investments are fair value. They aren't buying yet but are prepared to do so should the current trend continue.
 
Different take on Germany. No wonder this stuff is so hard to predict!
I like to predict where things are going but rarely am I right. However, the graphs of most indices move up and to the right over time. I am waiting for the tax loss selling and santa rally. It may happen it may not but I will be buying. Also we are entering the 3rd year of the US presidential cycle which historically yields an above average positive return more often than not. It doesn't mean that the bear won't continue but I will buy in 2023 no matter what the market does.
 
I hope we see a bit of a rally here as I let my cash accumulate. I will be fine if this bear is shortlived and fine if it continues. My guess, and it's as good as anyody's, we got a ways to go. The actions of the Fed will likely be the biggest factor on how long this goes on. Those actions will be based on inflation results. The 2022 hikes have just started to impact people/company balance sheets. Even the recent quarterlies for the most part have been ok. Some are feeling the squeeze but the rates are normailzed, the overall market performance (in Canada) has barely declined. Is today the calm before the storm or did we avoid the hurricane?
 
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