Remember how everyone was freaking out about the tanking markets in January? Given the effect it was having on oil prices Canadian investors were particularly nervous. Within the first few weeks of the year the Canadian benchmark had shed more than 8% of its value. Don’t look now, but someone hit the reset button.
Not only has the S&P/TSX Composite returned to positive territory, it’s also one of the best performing markets in the world for 2016 so far, behind only Brazil and Mexico. The outperformance of S&P/TSX is even more dramatic when you look at foreign markets though the lens of the Canadian dollar. After hitting a low of 68 cents versus the U.S. dollar, the loonie has climbed almost seven cents—a jump of roughly 10%.
The rise in the Canadian dollar has nullified most of the gains investors would have expected as other markets recovered as well. Investors who sold when things looked bleak are likely (and justifiably) kicking themselves now: not only did they sell at the wrong time; they missed out on a great opportunity.
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