Surviving a Market Downturn


Things are bad here.

Like, really bad.

I feel like the Canadian media is grossly under-reporting the real state of the economic downturn in Alberta because, peeps, it is BLEAK. My city whose streets were once paved in gold is quietly becoming a wasteland.

No jobs, no money, tons of debt

From the outside looking in, the numbers only tell half the story: over 11,000 group layoffs in the province so far, applications for Employment Insurance up over 30%,  etc. These numbers don’t reflect the thousands and thousands of contractors that work in the province who have simply seen their contracts “not renewed” or canceled, or those that don’t qualify for EI for one reason or another.

But a few months or a year of joblessness wouldn’t hurt someone that has prepared for it. Too bad Albertans, particularly Calgarians, lead Canada when it comes to debt. The average Calgarian owes $27,712 in consumer debt — 33% more than the national average — and while they seem to be in a hurry to reduce it, it will be a challenge on no income. In my opinion, most Albertans on the verge of, or already in, financial distress.

Many of my MBA classmates still have yet to find jobs, even though we graduated more than three months ago. Many of those close to me have been laid off from the jobs they did have. These are not small losses.

Even just 3 months of unemployment represents a loss of $10,000 to $15,000 (or more) in net income for one person.

That is a lot of cash to miss from your bottom line. It’s a lot of rent, a lot of groceries, a lot of bills to be paid out of your savings.

The Canadian stocks and ETFs in our investment portfolios have been hammered over the past ten months, eroding months or years of saving week after week. My fiancé, who works in oil & gas, has watched no less than 1/4 of his salary evaporate as the value of his company stocks plunged over the past year. Since most of our US holdings are in our RRSPs, our retirement accounts remain unscathed, but our TFSAs with Canadian holdings have delivered returns that are mediocre at best, sustained primarily by dividends and few one-off winners. Overall, our household income is less than it was last year, and our net worth isn’t increasing at the pace we expected or wanted.

Market cycles are normal and to be expected, but it’s frustrating to face job insecurity and wealth depletion simultaneously.

Because I don’t work directly in the industry, my job is fairly secure. This is coupled with my already established investment portfolio (energy stocks be damned!) and the bustling side hustle Money After Graduation is becoming, I recognize that I’m in a position of privilege. But that doesn’t mean I’m not nervous, or upset.

Compared to my friends, my frustrations are minor. For now, all I really feel is guilt for my steady paycheque and side business. At the same time, the threat of further layoffs hangs over my head too, and I’m running myself ragged to build this website into something that can protect me from a pink slip, should that day arrive. Having dumped virtually all of my savings into my MBA, I feel excruciatingly vulnerable to any dramatic change to my income or employment, and more frustrated than ever that I’m still years away from safety. My previous job was an iron-clad union position, and my prior bank balance was one that could sustain me for at least 2 years. That is no longer the case. This is coupled with the stress of planning and paying for a wedding, which seems more frivolous than ever in light of the economic climate.

Of course, I am not in the worst position. I am merely worried. But there is an upside:

People without jobs don’t buy houses.

Calgary’s housing market, which has placed third right behind Toronto and Vancouver when it comes to rapid growth and outrageous prices has slowed considerably.

Calgary Real Estate Housing Statistics

Calgary Real Estate Housing Statistics (source)

House prices are in decline, for the first time since the Financial Crisis of 2008, and new listings are spending more time on the market, unsold, than ever before. While a few are cheering on these minor changes, my fiancé and I are still taking a “wait and see” approach. We expect it to get worse (which is better for us).

We’ve talked at length about whether or not home ownership is right for us, and what kind of home we want, as well as when and where we want to buy. The problem we face is simply that whenever we do the math, renting always comes out ahead. Until that equation changes, I doubt we’ll be in any hurry to own. Most people don’t understand or support our position, but most people don’t know how to invest in the stock market either so I can’t explain it. No matter how you cut it, investing consistently in income-generating assets like dividend stocks and ETFs provides infinitely more financial security (and precious liquidity) than owning a home. The last thing we want to do is take out a 25-year mortgage for a house, only to watch prices fall and/or face job loss.

It seems the best course of action in a market downturn is inaction.

And stock-piling cash like a mad person. While the pull-back in the stock market hurt our portfolios initially, it also represents a positive opportunity to continue to invest at a lower price. When economic recovery arrives (as it inevitably does, no matter how impossible it may seem), the investments we’re making now will return handsomely. For the time being we are merely continuing to do what we have been doing for the past 10 months: waiting it out and hoping for the best.

Apologies for the doom & gloom post today, I just wanted to get my thoughts out of my head so I can concentrate on other things!


  1. I also do not work in the industry so I am not directly effected however my fiance’s employer has done many layoffs this year, it’s scary. He would be rewarded with a generous severance package if he were to be laid off however the majority do not have that luxury.

    The problem is people think this is just a ‘phase’ or they live in a bubble that won’t be affected. And honestly I don’t think the majority have been affected…yet. Calgarians are still buying houses, they are still driving around with huge trucks towing massive trailers, they still go shopping and spend more than they can afford. I don’t think it has affected their frivolous lifestyle purchases at all.
    Hopefully they will reconsider their spending habits and prepare for the worst before its too late!

    On a side note: If housing prices fall do you think rental rates will go up? We rent too and I remember after the flood rent was ridiculously high!

    • Bridget Casey (Author)

      Agreed — my fiancé would receive a severance package, but not a big one (he’s been at his company <2 years). While I think those are some comfort, it's always nice to have a job instead.

      I agree that there's a lot of denial here. I think it will be awhile before people actually start selling their trucks etc.

      I'm not worried about rental rates increasing, especially now that vacancy is also increasing. I doubt their will be any dramatic changes to market rental prices, even if the housing market tanks!

      • I’m not worried about rents going up, either. In the US rents had a barely noticeable (single digit percent) spike higher in 2008 as there was a small surge in demand, then rents settled back down over the following few years.

  2. Jover2

    I see more positives in your post than negatives, but I’m also not currently living through it. Housing prices here in Southwest Florida rose exponentially for a while, and then I decided to buy (just beyond the peak), and lost my job a few years later. I’ve been on the bad side of both of those things, including being underwater on my mortgage for 8+ years at this point. But things do get better. Markets rebound (stocks, jobs, housing), and the work (and money!) that you put in during gloomy times will pay off during sunny times.

    • Bridget Casey (Author)

      It’s true, I am in a privileged position all things considered, and I think compared to most, we’re more prepared to weather a bad economic storm.

      But the whole environment is a downer. All everyone talks about is how bad the economic climate is and then every so often when oil dips a little or something else happens, there will be this panic ripple through a company that more layoffs are coming. Everyone basically feels on the edge at all times; it’s stressful.

      Looking forward to those sunny times coming back!

  3. I think you’re right that the best thing to do is nothing. Keep saving as much as you can and don’t touch investments. Since you’re young, you have time for them to go down and then recover before you need them for retirement. Also sounds like a smart decision on the housing front. Being tied down by a mortgage can be a huge problem if you lose your job.

    • Bridget Casey (Author)

      Agreed. We can’t imagine having a mortgage (especially one that would definitely be bigger than our rent!) and facing job lost. Our rental lease is good for another year and we definitely have that money set aside if the worst were to happen!

  4. We finally got serious about investing with Vanguard (as opposed to earning fractions of a penny in a bank CD) last year. Since then, the market has been really wonky. I don’t think things are quite as bleak stateside, but I agree. The initial impulse might be to stuff to money back under mattresses, but riding it out is part of investing. Sounds like you guys have the perfect game plan.

    • Bridget Casey (Author)

      I think most places aren’t as bleak as here… with 4/5’s of the population directly or indirectly employed by the energy sector, no one else has the same vulnerability (and now the same suffering!) to the downturn in oil. It’s miserable. I’m glad we’re ok but we’re still worried it’s going to get worse =(

      • Robbay

        There are less people in Calgary involved in Oil & Gas than the general consensus dictates – only 30% of Calgary’s GDP is related to “primary and utility” industries including O&G, compared to 55% in the 80s.

        Times are tough for some, for sure, but O&G professionals need to realize there is a flip-side to the great generosity and big salaries in the good times. Which most don’t, I am sure.

        • Bridget Casey (Author)

          You’ll get hurt even on the fringe. If people are laid off from oil & gas, they spend less at stores and restaurants, affecting the wages and tips of those workers, who in turn spend less and so on. It’s true that there may be less people directly employed by the industry, but it ripples out and affects everyone.

  5. Ellie

    Really interesting read about the insights of what is going on where you live.

    I had just posted something for sale on Amazon and worked on additional side hustles before venturing over here to read today’s post. I reminded about why I actively doing side despite the economy in my area doing well.

    • Bridget Casey (Author)

      The more you do, the safer you are honestly. My fiance was feeling stressed about paying for our honeymoon after our wedding and I just said, “no problem I’ll pick up some freelance projects over the next few months and pay for it” and BOOM! done. It’s so nice to have other sources of income.

      Not to mention side hustles, even if they can’t pay for are your bills, will definitely reduce what you need to withdraw from your emergency fund should the worst hit. You can always survive a lot longer earning $1,000/mo than $0!

  6. If I were you, assuming you have a sizable enough EF in place, I’d start dumping money into energy stocks like nobody’s business. Obviously, your short-term financial security comes first, but there’s a lot of opportunity to be had in a downturn.

    • Bridget Casey (Author)

      Why would we dump more money into energy stocks when we already own plenty and my fiancé’s job (as in, 100% of his income) is dependent on that industry?

      We don’t need to double up by putting our paycheques in what already produces them in the first place. That’s reckless, and I would discourage anyone from doing so. If you live in Calgary, particularly if they own residential real estate here, and work in oil & gas, you should invest in absolutely anything other than energy. You can’t have your entire net worth dependent on one industry.

      • +1

        I don’t buy tech stocks or hold onto any stock any employer ever gives me because my job is already dependent on the economy of the tech industry. I’d rather have my job (aka future money) than pour money into an industry that could be floundering for who knows how long.

        The only way to prepare for a market downturn is what you should be doing anyway – keeping a reasonable EF at all times.

      • Fair point! I was certainly looking at it from the perspective of someone working in tech seeing an opportunity in O&G rather than someone already with big exposure to the industry.

        • Bridget Casey (Author)

          In that case, you’re all good. I’d go for it in the next few weeks. It looks ugly and it keeps getting worse but even I can’t see, say, $25 oil. Maybe that’s my own bias haha

  7. People are definitely hurting. Even if a lot of them are still driving their trucks around, there’s lots of people trying to offload theirs. I just checked Kijiji in Edmonton and there’s a full page of lifted/modified trucks that are less than two years old that have been posted in the last day and a half alone. I also know of a girl who does luxury goods consignment in town. I asked her where she gets her stuff from, and she said it was hers and her friends. I don’t know their situations, but I wouldn’t be surprised if some of it was to keep them afloat or to prepare for tough times.

    I’m not sure how much insight you have on weathering downturns from an MBA perspective, but I’d be curious to read more about it if you do have insight.

    • Bridget Casey (Author)

      Totally. I’ve been lurking on Reddit and I see people that are like, “I’m laid off, here’s my budget: Rent $800/mo, phone $100/mo, truck payment $785/mo”

      arghhh so crazy, but SO COMMON. When they’re just driving around the city you have no idea if it’s the last day before its repossessed =p

      From an academic perspective, this is a bump in the road. I guess if I had to make predictions, I think it’s going to be a slow recovery but hopefully oil will be back over $65/bbl within 2 years. Will it return to $100/bbl? Hard to say. From a personal perspective it feels like this is the worst ever and nothing will ever be ok again =p hahaha

  8. Katelynne

    I drove down from Kensington to Inglewood down 9th Ave Tuesday and the ghost-town Core and empty parking lots have me scared. I have friends who have lost their jobs and am seeing a slow down myself but am still thankful for my job and I will be working extra diligently on our expense to get them down and to stock away as much as possible. It feels like something isn’t be said for sure!

    • I actually think this is a great opportunity. I mean no one ever wants to catch the market when its going down because it is a falling knife, but as long as your job is pretty secure this means stocks and mutual funds are on sale. In two years things will be going up again. And you will make tons of money. In terms of renting vs. buying I can see why you would. Those prices are pretty steep and will probably drop 10% or more, which is probably a good thing. Every time I watch Property Brothers I wonder how Canadians can afford to buy a house.

    • Bridget Casey (Author)

      Right? It’s so depressing! I can’t believe how much busy it feels in the centre of the city, it’s so much different than last year even.

  9. Jaye

    Losing my job wouldn’t hurt me as far as being prepared (I have 1 x my annual salary in savings – but it’s ALL I have to my name)
    It would definitely hurt my ego though. I remember when I was unemployed, even though I was doing all I could to secure employment, I felt like a loser.vits so sad so many people are being laid off.
    Like others have said, a great post about the goings on in your area.

  10. Sarah

    I would hope after seeing this happen in 2008 that people are more prepared for this this time around,!

  11. kate

    Thanks for this post (as I see a 12% hit to my non-registered holdings today). A post on how to manage investments in a down period would be really good. For now, I’m holding in cash and some other investments hoping to bounce back in the future. Needless to say, renting is a good place to be sitting right now.

  12. I took am stockpiling cash. Mostly to buy a home in cash next year. Don’t care how much I can make if I leverage instead. I’d rather not have debt hang over me.

  13. My sister works as a real estate agent. If she doesn’t sell houses, she doesn’t eat. Talk about motivation! While she may earn more than me some years, I’d take a regular paycheque over that any day!

  14. Yikes! This is a scary situation for sure. I live in the midwest of USA and when we’ve had economic downturns in the past it hasn’t been too bad here, but now that ag commodity prices are down people here are really worried. Ag is our main industry and without it my community won’t survive.

  15. I’m in the US, so we aren’t currently experiencing the downturn you’re experiencing in Canada, but from what I can see, prices are too high and it looks like our markets are ready for a correction..

    It’s kind of crazy. A house on my street just went up for sale for about $3.3M, which is around how it is valued on Zillow, but no one is buying. It looks like this trend is spreading all over…

    I have a feeling that we are right behind you in this downturn.

  16. Lindsay

    My dad was in the oil & gas industry, and left in October to flip houses full-time (which was always a hobby of his). I completely agree with you on the aspect that it’s nerve-wracking! I’m a student at the UofA, just finishing up my degree. I found your blog when I googled information on how to pay off student loans effectively. This website is excellent as well as your blog posts! Cheers.