A B.C. business economy professor is warning people to be patient as the stock market shoots up and down as the COVID-19 crisis continues.
James Brander, a professor at UBCB次元官网网址檚 Sauder School of Business, said itB次元官网网址檚 a guessing game as to how long this crisis will last.
B次元官网网址淥bviously thereB次元官网网址檚 a lot of volatility right now,B次元官网网址� Brander told Black Press Media by phone.
B次元官网网址淎ny piece of good news will send the markets up and any piece of bad news will send the markets down.B次元官网网址�
That may be an understatement. On Monday and Tuesday, plunges in major stock markets in both Canada and the U.S. led to 15-minute pauses in trading, something Brander said is called a B次元官网网址渃ircuit breaker.B次元官网网址�
Part of the reason behind the breaker is that these days, a lot of selling and trading is done by programs that donB次元官网网址檛 pause to think.
But the other part of the market uncertainty is caused by the COVID-19 pandemic, with more than 600 confirmed cases in Canada, as well as eight deaths, mostly in B.C., as of March 18.
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Brander said the mix has caused a market situation even worse than the ones created after 9/11 and the 2008 financial crisis.
Brander, who spoke prior to the border closing between Canada and the U.S., said he hoped defined policies, rather than uncertainty, from the American and Canadian governments would stabilize things.
However, major U.S. stock indexes closed sharply lower on Wall Street Wednesday as fears of a prolonged coronavirus-induced recession took hold. The S&P/TSX index in Toronto fell 7.6 per cent, and the loonie dipped under 70 cents U.S. for the first time in five years.
Brander said the only real way to deal with the market situation is to wait it out.
B次元官网网址淚n the long run, I think the markets will come back. But donB次元官网网址檛 ask me how long I think the long run is,B次元官网网址� he said.
If he had to guess? B次元官网网址淥ne to three years.B次元官网网址�
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No one, he said, will really know the answer to that until the novel coronavirus pandemic reaches a peak and infections and deaths begin to slow. As of Wednesday, March 18, the global case count is over 191,000, while the death toll is over 7,800.
Financially speaking, Brander said, the biggest losses will come to pension funds, with people who have personal savings invested in the market a close second.
B次元官网网址淎nd a lot of people of course have pension plans and in addition they have some of their own savings,B次元官网网址� he said. B次元官网网址淭hose people have been really hit.B次元官网网址�
BranderB次元官网网址檚 advice to those people? B次元官网网址淗ang in there while you can.B次元官网网址�
The benefits rolled out by Ottawa Wednesday should make that easier.
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An unprecedented $82 billion financial-aid package announced earlier in the day will beef up Canada Child Benefit payments for families and GST tax credits for low- and middle-income earners, provide a wage subsidy for small businesses to help them keep staff on the payroll during the slowdown, pause Canada Student Loan payments for six months and establish emergency benefits for people who donB次元官网网址檛 qualify for employment insurance. Mortgage payments have also been deferred for six months, while those who owe taxes can wait till August to pay them.
If pulling out of the market right now is the wrong call, going all in at the bottom could be, too B次元官网网址� especially if youB次元官网网址檝e got bills to pay, and not too much financial cushion.
B次元官网网址淚 donB次元官网网址檛 think those kind of people should take risks, any more than they should walk into a casino and start putting big bets on the roulette table.B次元官网网址�
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