Market downturn

(Update: This post is already obsolete – this post was written before the 9% spike down in the major indexes!)

This week is the first week in a long, long time where my portfolio has taken a dive. I suspect it has been the same for others. If right now was the end of the week, it would be around -3%. This is not a reason to panic by any means, I think my financial strategy is appropriate for myself and I have enough cash (or cash-like instruments that can be liquidated) to take advantage of a “real” downturn, especially if this Greek crisis turns out to be something significant (which I do not believe).

However, what is interesting is to see what else has dropped:

– Canadian Dollar vs. USD: down about 5%
– Crude and Natural Gas (in USD): down about 8%
– Gold: Interestingly, not much change, if not a little higher.
– S&P 500, TSX 60: down about 5%
– 5-year government bond yields: down from about 3% to 2.8%
– Implied future 3-month interest rate changes: Lower; December 2010 to 1.70%; June 2011 to 2.37%

What’s odd is why Gold (which is a commodity that got hammered during the 2008 financial crisis) has not tanked with the rest of the market. Maybe there is a fundamental psychological shift in action.

The other comment is that the consumption of fossil fuel energy is not likely to abate with the Greek crisis, and most Canadian oil-related stocks have been hit. I’ve always thought that if you are a consumer of fossil fuels (which almost everybody in society is), it is wise to hedge this with ownership in some energy-producing assets, purchased at the right price.