The 2016 market slump continued on Wednesday. The S&P 500 was down 2.5% and Toronto was down 1.6%.
Almost all the stocks on our list were down today.
So far this month, the S&P 500 is down 7.5% and Toronto is down 6.5%.
Rate reset preferred shares have been especially hard hit and some of these are down about 15%.
The short term direction of the markets is always uncertain. My approach has been to add slowly to what appear to be under-valued stocks when markets decline.
As an equity investor, I am optimistic that the economy will grow over the long term and that stock market index declines will eventually be reversed. Some companies will go broke but most companies will not.
Q4 earnings reports are starting to come in and some of these will be positive. J.P. Morgan reports Thursday morning. Wells Fargo and Citigroup and several smaller banks are set to report on Friday morning.
Bombardier was down 4.1% today after a rather cryptic announcement that it would no longer use a long-time distributor to sell its business jets in the middle east and north Africa and instead would sell direct with its own sales force. Bombardier would take a $278 million pre-tax charge which includes about $133 million in cash payments to cancel the distributor deal. The deal would also see firm orders for 24 business jets canceled and also cancellation of options on 30 additional planes. There was no explanation of why the orders were canceled. Bombardier claims it can sell these planes at a higher margin. It would make some sense if they were paying to remove a “middle man” but why would the orders be canceled? Does Bombardier think it can simply get these customers to place new orders? There was simply no explanation in the announcement.