Do you recall Dr. Doolittle's pushmi-pullu (pronounced push me-pull you)? The stock market is a bit of a pushmi-pullu creation but a mix of a bull and a bear rather than than a couple of llamas.
The bull end of our creation has been leading the way for the past few years. But the bull has finally run out of steam and the bear now has control.
Bear markets are not a surprise. Bear markets are simply part of our investing universe. Some call bear markets rare. I'd rather say they are not as common as bull markets but they do appear with a certain regularity.
Historically, bear markets do not last as long as bull markets but psychologically they seem to carry more clout. For this reason, many people are tempted to get out of the market during a serious downturn. This is usually a mistake locking in losses.
No one knows when market sentiment will flip from bear to bull. When it does flip, it is usually quick. If you are out of the market, you may miss some of the biggest gains as the recovery kicks in.
I get through bear markets by focusing on the benefits of being invested during both bull and bear markets: dividends. Today Enbridge is yielding 6.7% and the yield promises to go even higher over the coming days and weeks (assuming the bear market continues to gain strength.)
The TD bank is yielding 4.1%, while the CIBC yielding 5.2%. If one likes REITs, the ETF RIF is yielding 4.9% today. Telus is yielding almost as much at 4.8%. Emera, a much loved utility, is at 4.6%. I may be getting greedy but I think this bear has some still untapped strength. Stay the course and one my well be rewarded with some truly generous dividends and then some solid capital gains as stocks slowly regain their former values.
The Morningstar star system reflects how a stock's price today compares to its fair market value as calculated by Morningstar. The more stars the more attractive the price. With the market collapsing, more and more stocks followed by Morningstar are getting into four and even five star territory.
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