Bust to boom? Not so fast!

Bust to boom? Not so fast!
Monday, October 20, 2008

Gordon Pape


TORONTO (GlobeinvestorGOLD) --There was certainly nothing in the news to send stock prices higher last week. But investors, who just a few days earlier had been selling at the slightest excuse, suddenly decided to ignore the drumbeat of dismal reports and went on a buying spree.

As a result, the TSX/S&P composite index recorded its first weekly gain since the middle of September and it was a pretty impressive one – almost 500 points (5.5 per cent). Anything on the upside is a welcome change these days but this was better than we might have expected thanks to Friday's surge.

There was no obvious reason for Friday's 292-point jump, other than a modest recovery in the price of oil.

If anything, we might have expected another sharp sell-off after the latest consumer confidence numbers showed that both Americans and Canadians are scared to death about what's going on and what it all means for the economy and to their lives.

The Conference Board of Canada said on Friday that its confidence index has dropped to the lowest level in 26 years. That would take us back to 1982, a time when the economy was in recession while interest rates were near record highs.
Things are even worse in the United States, where the University of Michigan reported its consumer sentiment index recorded its biggest monthly drop in history, falling to 57.5 per cent from 70.3 per cent in September.
If that wasn't enough to discourage investors, we learned that the U.S. housing slump isn't going to end any time soon with a report from the Commerce Department that showed a 6.3-per-cent decline in new home construction in September.

Home building is now at its lowest level since the recession of 1991.
Okay, that's all bad but your pension is safe, right? Not so fast! Another report on Friday revealed that the value of major Canadian pension plans fell 8.6 per cent in the third quarter.

That brought the total decline for the year to more than 10 per cent. And pension fund managers are supposed to be the most cautious and conservative money experts around. If they're getting hammered, it's no wonder people are worried about their registered retirement savings plans.

About the only motivator for investors was Warren Buffett's article in The New York Times in which he wrote that the time has come to buy stocks. In a column titled "Buy America. I Am." the Oracle of Omaha said that selling shares in sound, well-run companies makes no sense.

"These businesses will indeed suffer earnings hiccups, as they always have," he wrote. "But most major companies will be setting new profit records five, 10 and 20 years from now." For his part, he has been selling bonds and buying stocks.

Ironically, U.S. investors seemed to ignore Mr. Buffett as the Dow dropped 127 points on the day, although it produced an overall gain for the week. But Canadians went to their phones and starting placing buy orders. Suddenly, we went from bust to boom. Or did we?

Actually, we've seen this story before – just a few days ago, in fact. On Tuesday, the TSX leaped more than 900 points as Canadians caught up with the global rally they had missed while they were enjoying their Thanksgiving holiday. Then on Wednesday, buyer's regret set in to the tune of a 631- point drop. So before we get too excited, let's see what Monday brings.

While it's nice to go into the weekend on a high note, I'm not convinced we've seen the market bottom yet. There are early signs that the international banking bailout is having an impact and that the credit freeze is easing. That's good news but we are still faced with the reality that we're about to move into a recession, if in fact we aren't already there.

The next several months will bring a litany of gloomy economic numbers and weak earnings reports. Investors will react accordingly and there will be more days of triple-digit declines.
So we're not out of the woods yet, not by a long shot. As I've said in the past, market rallies offer an opportunity to review your portfolio and, if appropriate, to reduce risk by selling some equity positions. If you need to sell, do it at a time when prices are moving higher, not in a market plunge.
If you decide you want to buy at these levels, pay attention to Mr. Buffett's sage words. Focus on industry leaders that generate strong cash flow and have good balance sheets. Those are the stocks that will pay off big-time in a year or two.
Gordon Pape is one of Canada's best respected financial authors and the nation's leading expert on mutual funds.

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Canadian Arrow Mines Ltd. - Exploration Update

Canadian Arrow Mines Ltd. - Exploration Update
08:30 EDT Monday, October 20, 2008

SUDBURY, ON, Oct. 20 /CNW/ - Canadian Arrow Mines, Ltd. (CRO: TSX-V) (the "Company") is pleased to provide an update on exploration activities conducted on the Company's Turtlepond Lake properties Atikokan properties and Denmark Lake properties. Claim staking, line cutting, geological mapping, prospecting, ground geophysics, mechanical trenching, and diamond drilling have been ongoing throughout the summer exploration season. Exploration programs are focused on identifying and evaluating nickel-copper sulphide and platinum group element (PGE), exploration targets.
Turtlepond Lake - Mechanical trenching and ground geophysical surveys on the Glatz showing have delineated two parallel zones of mineralization which extend for 900m and 700m in length. Widespread disseminated and blebby nickel-copper-iron sulphide mineralization has been exposed and channel sampled along both trends. Both anomalies are coincident with airborne geophysical anomalies and have not yet been drill tested. The geology and geophysical surveys at Emmons Lake showing indicates a well defined northern plunge to the surface mineralization, which is defined along a 250m trend.
Three newly discovered targets; North Glatz, Night Danger, and Double E, have coincident ground and airborne geophysical anomalies situated within favorable host rock assemblages.
Atikokan Properties - Sixteen holes (2,354 metres) have been completed on the Eva/Kawene project to evaluate a number of surface PGE showings, untested airborne anomalies and newly exposed areas of sulphide mineralization. The drill program has been completed and samples are currently in the lab for analysis.
Denmark Lake Area - The Company staked 73 claims covering 14,368 hectares to cover the majority of the Denmark Lake Intrusion. Staking was initiated following the Caribou Lodge discovery intersection of 4.58% Ni, 0.44% Cu, and 0.15% Co over a core length of 0.75 metres during the winter 2008 drill program. Mineralization consists of massive, blebby and disseminated nickel-copper-iron sulphides positioned near the base of a large ultramafic intrusion, an environment typical of magmatic nickel deposits.
The exploration program is being carried out under the direction of The Company's Vice President of Exploration, Todd Keast P. Geo., a qualified person as defined by National Instrument 43-101. The information in this release was prepared under the direction of Kim Tyler, P. Geo., President of the Company, a qualified person as defined by National Instrument 43-101.
About Canadian Arrow Mines, Ltd:
Canadian Arrow Mines, Ltd. is an established Canadian exploration and development Company committed to developing and advancing base metal deposits close to existing infrastructure through exploration, development and acquisition. Shares of Canadian Arrow Mines trade on the TSX Venture Exchange under the symbol "CRO".
Investors are invited to visit Canadian Arrow's IR hub at http://www.agoracom/IR/CanadianArrow where they can post questions and receive answers within the same day, or simply review questions and answers posted by other investors. Alternately, investors are able to e-mail all questions and correspondence to CRO@agoracom.com where they can also request addition to the investor e-mail list to receive future press releases and updates in real time.
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For further information: visit the website at www.canadianarrowmines.ca, call toll free at 1-877-262-6354, or contact: Canadian Arrow Mines, Ltd., R. Kim Tyler, P. Geo, President, Tel: (705) 673-8259, E-mail: kim@canadianarrowmines.ca; CHF Investor Relations, Barry Leung, Director Business Development, Tel: (416) 868-1079 ext. 222, E-mail: barry@chfir.com or Alison Tullis, Senior Account Manager, Tel: (416) 868-1079 ext. 233, E-mail: alison@chfir.com;