The last few trading days have seen a significant short-term drop in the index. We have seen a total drop of about 700 point so far. This makes for a lot of nervous investors.
A David Berman March 6th article in the Financial Post reported… “The S&P/TSX composite index will be re-balanced in March — probably on or before the 14th”. It sounds like re-balancing is done every three months. Some stocks may be added and some may be removed. We can count on any “loser stocks” being thrown out to protect the index.
We can’t predict how low the index will go at this point but we can be very certain of one thing. No matter how low it goes, the S&P/TSX composite index will eventually rise back above the February 27th peak of 13433.
The high degree of certainty that the index will recover makes an index mutual fund attractive.