(March 31) – “The Great Stock Market Winnowing Process has begun,” writes Eric Reguly in today’s Globe and Mail. However, Reguly argues, that does not necessarily mean that the markets are collapsing.

“The question is whether the bubble is bursting or just slowly losing air. So far, it looks like the latter. But if it happens day after day, week after week, the net effect will be the same.

“Nasdaq’s selloff hardly constitutes a collapse. The tech-laden market lost 186.78 points or 4 per cent yesterday, marking its third consecutive triple-digit decline in a row. True, it is now down more than 13 per cent from its high, but it is still up 9.6 per cent for the year and is almost double its low of 1999.

“The same goes for the Toronto Stock Exchange 300. While the index gave up 308.14 points yesterday, it has gained almost 12 per cent since January, allowing it to maintain its status as the world’s top-performing bourse of any size.

“Markets ‘correct,’ that is, suffer mini-downturns, all the time. And every correction since the Crash of 1987 has been treated as a buying opportunity; each dip has been followed by a buying spree that took the market to a higher level. This correction could follow the same pattern. Then again, it could not. It could easily keep trending down, perhaps even fall off a cliff.”

Reguly notes that “the mood is turning dark,” and attributes that partly to “a rapid-fire sequence of less-than-bullish remarks from market gurus,” such as Abby Joseph Cohen of Goldman Sachs and Mark Mobius of Templeton.

Cohen, who has been one of the bull market’s most enthusiastic cheerleaders, recently recommended that investors reduce their stock positions by 5 per cent. More importantly, she no longer advised a disproportionately high position in the technology sector.

A day later, Mobius said the recent bout of tech and Internet stock volatility means the end is nigh: “I think we’re nearing the time, that’s my guess. And it will be big . . .” Big as in big, big correction.

“Market psychology is notoriously hard to predict,” Reguly conludes, “but at the risk of being dead wrong, here goes. Today, the markets will open down again, then recover somewhat as fund managers wade back into the market to prop up some of their fallen stars. And next week? Let’s just say that one more dire comment, one more dose of bad news, could trigger another selloff.”