Two years after COVID-19 sent global stock markets crashing, those who stayed the course or bought in low have made out quite well.--CP PHOTO
cgallant@medicinehatnews.com@CollinGallant
Two years ago this week, offices and factories closed as the beginning of the COVID-19 pandemic brought in ominous dark clouds to the global economy and world stock markets crashed.
Almost one-third of the value of equity markets evaporated in March 2020 as investors pulled out money to tide them over, or potentially survive, prolonged job losses and a whole world of uncertainty.
Local investment brokers told the News this week, the 24-month anniversary of the worst of the 2020 rout on markets, that those who stayed calm, could afford to wait out the worst or bought into the market made out better.
“The people who stayed invested did well,” said Steve Meldrum, head of Swell Wealth Management in Medicine Hat, stressing a personal investment strategy should be focused on a long-term horizon.
But, he added, when the horizon, such as retirement, is close at hand, the emotion is more acute.
“If you’re just starting to invest, it doesn’t matter as much,” if you assume losses will be evened out over time, he said.
“Diversification of product (of investment types) is the solution there.”
Gerald Freedman is a retired investment broker in Medicine Hat, who during his career witnessed Black Monday (and Blue Tuesday) in 1987, market volatility after the 9/11 attacks, and the 2008 credit crisis.
He said Wednesday he only handles his own investments, but would have advised clients to hold tight or buy in during the 2020 collapse, buy blue-chip stocks with dividends, and then hold.
“It’s been very difficult for seniors or those looking for investment income,” since interest rates on secure investments like GICs fell in the early 2010s, he told the News.
“You never know where the bottom or the top of the (stock) market is, but you should be in for the long-term,” said Freedman.
One example of a quickly changing sector is energy.
In the region, International Petroleum Corp. was formed at a $5 stock in Canada before its purchase of the Suffield drilling base from Cenovus in 2018. In March 2020 the stock bottomed out at $1.70 per share before a long climb out in 2020. That spring, Alberta oil traded in negative values for a time and with an almost total shutdown in commuting, gasoline in the province sold for under 70 cents per litre. That’s hardly a ringing “buy” endorsement, but IPC stock touched $5 again in June 2021, and has since lifted as war disrupts world supply.
The reversal of fortune is even more pronounced in the natural gas sector.
Major regional producers were shuddering in a third year of bad pricing in early 2020.
Pine Cliff Energy’s shares sunk to 6 cents on March 10, 2020. After a long climb up, gas-weighted companies saw stocks rise steeply last fall, and this week Pine Cliff’s stock price tickled $1.
But, the oil and gas sector has been coupled with a lot of risk over the past two years.
And trying to predict whipsawing markets, highlighted by the conflict in Europe on energy prices, gold and other sectors is difficult.
“These guys who are day trading? Good luck to them,” said Freedman, who felt a general lift to markets in late 2020 and 2021 was easier to predict.
“You buy low and sell high, and there was just a dip of 20 per cent, and there was a lot of money on the sidelines at that time.”
But buying into whipsawing markets isn’t for the faint of heart.
“It comes down to available cash, and understanding what your security is,” said Meldrum. “Think about a ski hill, you have to pick a blue, green or black run and know what to expect (in your strategy).”
City of Medicine Hat stated that spring the value of its conservatively managed $175-million investment fund only briefly dropped below its original value, but ended the year 6 per cent higher than where it started.
As markets roared back to record highs, benchmark for the fund was nearer to 12 per cent.
Even blue chip stocks were hammered in mid-March 2020 as investors sought liquid assets at the start of the pandemic to brace for possible job losses.
Overall market indices in Toronto and New York lost up to 30 per cent in value over the course of several days.
Shares in Canadian Pacific Railway lost up to half their value and sat at $37 on March 10, 2020, but stabilized higher and was double that low point in the spring of 2021 and has since gained another 10 per cent.
CF Industries stock plunged to $22 that week but had doubled in one year and then sat in the $76 range before spiking near $100 this month as concerns grows out fertilizer production in eastern Europe and Russia.
Shares in Methanex were listed at $15 at the crash but were worth four times that amount by Christmas 2020.
Goodyear Tires, which shut down global manufacturing sites for months in 2020, including the Medicine Hat plant, saw shares ramp up from a low of $6.19 to high of $19 last summer. That coincided with its acquisition of competitor Cooper Tire, but in the recent market turmoil the stock has again dropped by one-third.
Not everyone was a winner however, Aurora Cannabis was essentially untouched by the selloff, but has lost two thirds of its value over two years as the entire cannabis sector languishes well below initial expectations.
