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© Copyright 2000 Rogers Media. The following article first appeared in the December 2000 edition of
BENEFITS CANADA magazine.
E-Poll
How long before Nortel reaches its former high of $124.50 on the TSE?
Wednesday, Oct. 25 was a turbulent day for the Toronto Stock Exchange (TSE) and its star stock Nortel
Networks. After releasing quarterly results that were weaker than expected, Nortel stock dropped to $71.55
before trading was halted. At press time in mid-November, the stock was trading at around $59.
This month's E-poll asked readers how long they think it will be before Nortel reaches its former high of
$124.50 on the TSE. Thirty-three per cent of respondents say the stock will rebound before the end of the
year, while 34% believe it will reach new highs by the end of the first quarter 2001. The other third (33%)
say it will take even longer for Nortel to reach its former high.
But the telecommunications giant doesn't need to reach $124.50 again to win the favour of investors, say
some in the industry.
"I'm much more concerned with what return is available looking out 12 months," says Ray Steele,
vice-president, equities, with YMG in Toronto. "At these [current] prices, it's quite attractive but I
don't expect it to get to its former high. Nor does it need to, to be a successful investment."
The dip in the price of Nortel could provide lessons for sponsors of defined contribution (DC) plans as
well. While one DC plan provider was reluctant to comment specifically on Nortel, it did say that, in
general, education efforts of plan sponsors are paying off.
"We're seeing behaviours on the group side that are different than behaviours on the retail side," says
Cathy Honor, vice-president, group retirement services with Sun Life Financial in Toronto. "When markets go
down, we're not seeing people selling. We see that on the retail side but [on the group side], people are
buying. The behaviour is good. We're [not] anywhere near to where we have to be from an education
standpoint, but we're making progress as an industry."
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