Great Ponzi.com

2012-05-16

TSX down to 2006 level


Tough times for Canada's TSX index

The TSX Composite is below 11,400 – that's where the index was back on January 3, 2006. Amazingly, this means no gain in the TSX for six and a half years... even if you bought it before the meltdown and held it through the entire post-crisis rally!

Here is the long term chart courtesy of stockcharts.com along with the 200 day average. My interpretation is that we got a lower high in early 2011, and this formed a double top. I think the post-2008 rebound is over.



This is yet another illustration of how simply holding the index for a long period does not guarantee a gain. The S&P 500 has not shown a gain in 13 years.

So the next time a mutual fund salesperson tells you to “buy and hold” the stock market long term, ask them WHY. Mention that North American stocks haven't shown gains over 6.5 years (Canada) or 13 years (USA).

What I am doing

I have been short the TSX for nearly a year (see my June 2011 post, "Market is weak; scale into shorts”). I recently covered half of my TSX short on this weakness, to lock in profits.

I am still holding short the TSX, and US financials.

- Perpetual Bull, perpetualbull@gmail.com