The Dow Jones Industrial Average dipped below its November lows during the past two sessions. The general consensus is that if it trades below this low for several consecutive days the Dow will likely experience another leg down. Is this a cause for concern? Maybe a little. I would argue, however, that there is something much more important to worry about - when to start taking positions in some of the world’s best run companies.

The problem with the current state of the market is that the last thing on an investor’s mind is thinking about how he or she can take advantage of this unprecedented situation. As a portfolio manager, it is frustrating to see people shy away from giving some thought to allocating at least a small percentage of their portfolio towards stocks. They don’t necessarily have to commit their money, but it would be very reassuring to see some investors to at least start to think about the long-term benefits of buying stocks at current prices. Currently, the number of investors who are taking a good hard look at the market are few and far between.

If history is any indication this bear market will end like most others where it’s the institutions that start nibbling away at stocks, thereby causing the global markets to move higher. Individuals will likely only start buying stocks after there has been a solid bounce. This could range from anywhere from 20% to 40% from current levels. Hopefully things will be different this time around. I am not holding my breath, however.

Mounir R. El-Ayari, CIM, FCSI, C.h. P. Strategic Wealth
Investment Advisor
Associate Portfolio Manager
e-mail: mounir.el-ayari@nbf.ca