Surely, an undertaker’s work is merrier than this one.

Since the column made its debut 11 months ago, tracking the stock market has been a morbid pastime, like surveying a fatal train wreck.

The cold, hard facts are as follows: since last October, the TSE 300 is down 30 per cent, the Canadian Venture Exchange is down 13 per cent, the Nasdaq Composite, bellwether for the tech wrecks, is down 50 per cent and the Traders’ Edge portfolio is down 29 per cent.

Yikes!



But let us not despair. The market blood-letting has at least succeeded in a reincarnation of the investor as we have come to know him.

This poor chap, the new breed of investor, is not much to look at – fat lip, black eye, broken glasses (rose-coloured), grey hair and pockets turned inside out.

But the schoolyard bully of a market has produced a character with some street smarts, moxie and a wariness of the market shenanigans and the pain of catching falling knives.

The reborn trader always sits at the table by the wall in the Powderhorn saloon with his back to the wall.

He trusts no one – not the biased analysts who are paid multi-million-dollar salaries to pitch their firms’ key clients, not the typical money managers who tout the same stocks as the analysts because it’s easier to explain to the bosses when those stocks tank, not the dubious CEOs with forced smiles sugarcoating the balance sheet, not the talking heads on the business channels masquerading as market gurus, not the scam artists who try to build companies on fantasy.

This stock player is so jaded he won’t take a tip from his own mother. He has turned off the hype machines. He even turned off the TV recently when Abby Joseph Cohen, the one-time celebrated cleanup hitter in the Murderers’ Row batting order of Wall Street analysts, appeared on CNBC, desperately pounding the table on tech stocks.

A couple of years ago, Cohen could kick-start a lazy market by pounding the table. This time, the Goldman Sachs slugger was dead wrong with the Nasdaq down another 10 per cent since her pronouncement that “the worst is over.” The suckers of the great game have wisened up all right. Not so long ago, they took the touts of the so-called gurus as gospel.

Now, they just take them to court – as some investors have done with Wall Street superstar Internet analysts such as Mary Meeker of Morgan Stanley and Henry Blodget of Merrill Lynch (Merrill paid $400,000 US to settle a $10.8-million arbitration case at the New York Stock Exchange), alleging that conflicts of interest biased their stock recommendations.

So a question begs for an answer. What happens when the next bull market roars into action? Does the embattled investor harness his worst enemy, his emotions, and play it smart, drawing on the lessons from the school of hard knocks? Or does he become intoxicated yet again by the euphoria and, desperate for a ten-bagger, allow greed to dominate his psyche?

Bet on the latter. It’s the nature of the damned beast.

Pro’s Three Stars

Ross Healy, president of Strategic Analysis Corporation, continues to assume a defensive stance akin to hockey’s neutral-zone trap. Call the seasoned money manager boring and he’ll take it as a compliment.

To that end, he is sticking with his gold star – Barrick Gold.

One of the major players in the gold industry, Barrick (ABX-TSE) has gained 9.5 per cent since the Toronto-based money manager made it one of his top picks in February. The stock recently ran to $25.96, climbing steadily with the price of gold. Its year range is $18.70-$29.65.

“I think that a person who doesn’t have some kind of a market hedge in their portfolio is looking for trouble and gold is the best market hedge I can think of,” says Healy.

Healy’s other picks are Husky Oil (HSE-TSE) and Trilon Financial (TFC.A-TSE). Husky boasts an attractive price-earnings ratio of 7.0. Its recent price is $15.67 (year range, $11.50-$17.30).

“Husky is one of the cheapest of the oil stocks and it’s been holding up quite well in the onslaught of the oils,” says Healy. “And, as I’ve always said, the cheapest place to drill for oil is Bay Street.”

Trilon, with a recent price of $13.85 and a year range of $9.20-$14.20, trades at a P/E ratio of 9.69.

“Trilon has a lot of upside based on its earnings forecast and I expect that under conditions where things get rough it’ll hold relatively well and, if things bounce back, Trilon is positioned for a nice move. I think it has good defensive qualities and some aggressive qualities.”

Healy’s Record: -2.3 per cent (Barrick +9.5 per cent, Canadian Natural Resources -0.5 per cent, Alberta Energy -15.8 per cent).

HOT ALBERTA STOCK: Foremost Industries

FMO-TSE $4.20

Up 73 cents (+21.0%) on 6,000 shares (for week ending Aug. 17) An exhaustive search for a big winner turned up an equipment manufacturer that has been quietly pushing towards new year highs. While the market continued to punish oilpatch-related companies, Calgary-based Foremost bucked the trend, spiking on light volume. Stock in the manufacturer of drilling rigs, tooling equipment and heavy off-road vehicles has doubled since March. Few companies can claim that kind of action.

COLD ALBERTA STOCK: Global Thermoelectric

GLE-TSE $7.61

Down 2.82 (-27.0%) on 1,049,593 shares (for week ending Aug. 17) Seems like only yesterday that fuel-cell and alternative-fuel technologies were the cool thing to invest in. Suddenly, this sector has fallen out of favour, led by Ballard Power Systems. Fuelling the selloff in Global stock was news that a U.S. grant was awarded to its former partner, Delphi Automotive systems, to build solid-oxide fuel cell technologies. In its heyday last year, Global stock peaked at $50. Ballard had even a worse week, tanking 30 per cent.