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Vancouver, B.C. (February
16, 2001): Here we go around the mulberry
bush one more time. Nortel has disappointed us
again. If the pundits are right, the TSE 300 will
take a substantial hit on the opening bell. That
is one way to get Nortel's TSE index weight more
in line.
I have more news for you. We are
not finished yet. There is more to come. I just
don't know who the next victims are going to be.
The economies, in both Canada and the US, are
not as healthy as we would like to believe. Alan
Greenspan dropped US interest rates by a full
1% in one month because his economy is ailing.
Paul Martin's rosy reassurances are not working.
The Bank of Canada is issuing revised forecasts
about growth rates.
Take note of the number of companies
laying off staff. Look at the unsold inventory
of auto companies. Consumers are holding back
renovating their homes. Technology companies are
burning through their cash reserves. Initial public
offerings are being withdrawn. Computers are a
hard sell.
What this says is that we are in
the midst of an environment much different from
what we have been used to during the last 5 to
10 years. Businesses will have to execute a well-defined
business plan, firing on all cylinders, otherwise
they risk losing their competitive edge.
The margin for error is shrinking
for many companies. Even the hint of a slight
miss on expectations sends stock prices reeling
and investors running for cover. Those companies
who are poised, ready and able to adjust their
operations, often on very short notice, will be
the ones who will weather the storm the best.
Think of it as a plane ride from
Vancouver to Paris - somewhere along the way you
are likely to experience a bumpy ride that you
cannot do anything about.
The good news is that this bumpiness
will change one day. There is a silver lining
in every market storm. The investment climate
will be a very interesting one to watch in the
coming months.
It is going to be choppy! Grip the
steering wheel firmly, keep your eyes on the horizon
and be ready to take advantage of opportunities
that fit your unique long-term game plan! For
a refresher on the strategies during uncertain
times please revisit my December 15, 2000 newsletter
on this Web site entitled
"2000:
In Like a Lion, Out Like a Lamb".
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