Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

We didn’t have a market crash in October – no repeat of 1929.

That’s the good news.

The bad news is it was a lousy month for stocks. Typical for October.

Story continues below advertisement

In Toronto, the S&P/TSX Composite Index dropped 541 points (3.4 per cent) over the month.

On Wall Street, the Dow Jones Industrial Average ended the month down 1,280 points, or 4.6 per cent. Nasdaq lost 2.2 per cent, while the S&P 500 was off 2.8 per cent.

The S&P 500 result was better than the 4.7-per-cent average loss for down Octobers over the period from 1928 through 2019, according to data published by Yardeni Research.

Still, it’s a concern when we consider that about 60 per cent of the companies in the S&P 500 have now reported third-quarter results, with about 85 per cent of them beating expectations, according to FactSet. Clearly, investors don’t believe those results are sustainable, despite the strong rebound in the American economy in the third quarter.

Until recently, it appears investors were looking beyond the pandemic and hoping for signs of a rapid recovery. A few may have actually believed U.S. President Donald Trump’s repeated assertion that the novel coronavirus would simply “go away” or his more recent mantra that we’re “rounding the corner.” More likely, they were pinning their hopes on the early approval and dissemination of a vaccine.

It appears that few people actually believed that the second wave of the virus would be worse than the first, even though many infectious-disease specialists warned of the possibility. Suddenly it is upon us. Many countries are shutting down, hospitals in Europe are being pushed beyond capacity, and many investors have turned from optimists to pessimists.

Maybe October was a blip. The run-up to a U.S. presidential election historically tends to see a market drop as investors struggle with uncertainty. But we may be in for a least a few weeks of high volatility. Continued escalation in COVID-19 cases will heighten fears of a reversion to the dark economic days of last spring. That could be compounded by political concerns in the aftermath of the U.S. election.

Story continues below advertisement

For income investors, the key is to keep your cool, whatever happens. Always remember your main objective: steady, dependable cash flow. The price of the securities you own is not your primary concern. They will change from day to day. What matters is a company’s ability to maintain its dividend distribution through good times and bad.

For example, the S&P/TSX Capped Financials Index was off almost 18 per cent year to date as of Oct. 30. But only one Canadian bank, Laurentian, has cut its dividend. None of the others are expected to do so. So, while the market value of your bank stocks is temporarily down, your income has not been affected.

In times like these, it’s essential for income investors to maintain their composure. Don’t panic and sell quality securities. The only reason to dispose of a stock now is if you believe the company is in a weakened financial state and a dividend cut is coming.

Otherwise, ride it out. We should have a vaccine ready by the middle of next year, and at that point a more meaningful market rally – one fuelled by reality, not hope – can begin.

Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Coronavirus information
Coronavirus information
The Zero Canada Project provides resources to help you manage your health, your finances and your family life as Canada reopens.
Visit the hub
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies