I could have gone the other way with the headline with … The Stock Market Crash Bottomed Ten Years Ago Today! But we’ll stay on the positive side of the stock market charts. After all a stock market bull run is obviously great for investors. That’s why we invest to take advantage of the years and decades when the markets deliver wonderful and outsized returns. And markets mostly go up.
Yup, it was March 9, 2009 when the stock markets hit rock bottom. From the Globe and Mail Birth of a Bull Market.
On March 9, the S&P 500 closed at 676.53, its lowest level since 1996, and many observers could see nothing but more pain ahead and adjusted their targets lower.
David Rosenberg, then the North American economist at Merrill Lynch (he is now chief economist and strategist at Gluskin Sheff + Associates in Toronto) argued that the S&P 500 would fall to 600, an estimate based on an ongoing recession that would sap profits even more.
But then, without any trigger or shift in sentiment, the index began to rise from its lows.
Yup, Rosey got it wrong. The markets began their ascent. And the NY Times is asking Why Aren’t More People Celebrating? Too many were scared off, they left. It’s just you and me, kid. Here’s the tell-all chart on Bull Markets from that NY Times article.
And here’s what we were able to grab by way of returns. The chart is courtesy of portfoliovisualizer.com
Portfolio 1 is the Canadian Market represented by iShares XIU – TSX 60.
Portfolio 2 is the US Market represented by iShares IVV – S&P 500 ($US)
We’ve had a good run with some minor corrections here and there, but nothing that should have caused any heart palpitations. Many investors have been handed a gift. Even if you held a sensible, low fee balanced portfolio you would have seen some very nice gains. A balanced to balanced growth model in the range of 60% to 80% stocks would have delivered in the area of 8% to 9% annual returns.
Retirees have been handed a gift. They would have been able to spend like drunken sailors. Retirees certainly have to be cautious and protect their assets from the risks, but they can also make hay when the sun is shining. And oh, has the sun been shining.
But stock markets don’t usually go up in a straight line. And after a 10 year bull market run it’s easy to forget the risks. Please have a read of The Biggest Stock Market Collapse in our Lifetime is now a Distant Memory.
We never know when markets will go up or down. We simply count on them to go up over longer periods. As my friends at Mawer Investments like to say …
You don’t fix a ship in a hurricane.
We always invest within our risk tolerance level. How’s your investment ship?
Reads For The Week
Yes, I’ve been on a bit of a retirement kick these days by request from readers. Here’s my review of Pensionize Your Nest Egg. Author Alexandra Macqueen has been kind enough to answer questions on this blog. Have a read, fire away.
I have also been writing on retirement ETF model portfolios and ideas here and here.
Retirehappy.ca offered a great article on CPP with How to apply for early CPP, and should you? It’s a great post with an additional 800 comments and suggestions offered by readers and Retirehappy experts.
And on the great debate; what percentage of Canadians stocks should you hold in your portfolio given that Canada represents such a small component of the world economy and world markets? Robb Engen of Boomer and Echo addresses his take on that with Solving The Home Bias In My Portfolio.
On the other side of the Canadian coin you’ll find many dividend investors who like to load up on big Canadian dividend payers. Here’s Million Dollar Journey with The Top 22 Canadian Dividend Growth Stocks in 2019.
On MoneySense you’ll find Norm Rothery’s Canada’s Best Dividend Stocks 2019. From that page …
The Dividend All-Stars have outperformed the market since we started way back in 2007. If you purchased an equal-dollar amount of each A-graded Dividend All-Star and rolled the proceeds into the new ones each year, you’d have gained a total of 207%, including dividends, since 2007. Similarly, a portfolio of A-and-B stocks would have climbed 133%. By way of comparison, the S&P/TSX Composite Index ETF (XIC), which tracks the broad Canadian stock market, lagged with a total return of 62% over the same period. The A-graded stocks beat the market index by an average of 6 percentage points per year since we started.
Mark Seed from My Own Advisor offers up on the dividend front, ETFs, retirement and more in his Weekend Reading Post.
And an update from The Dividend Guy.
And I really like this Robo advisor real experience update on Findependence Hub, Aman Raina’s 4-year Robo Advisor Review. It’s not all good news. That said, after too much tinkering in the early stages Mr. Raina suggests that the Robo has recently settled into a core portfolio that tracks the broad market indices (less fees of course). Of course each of the Robo’s are unique and offer various levels of active asset allocation and advice. You can read my Robo Advisor reviews to get a better sense of the offerings.
And on ETF action, Advisor’s Edge shows Canadian February ETF inflows of $1.3 Billion. One Ticket Asset Allocation portfolios continue to attract investors bringing in a solid $181 million for the month. Here’s my recent review of the BMO offering.
Rate holds and job growth.
This week saw the Bank of Canada hold rates steady, and then offer a dovish statment. That can be good for bonds of course as fears of higher rates dissipate for the time being. Bonds responded nicely. Interest rate sensitive stocks such as pipelines and telco’s also like the potential of steady or lower borrowing costs moving forward.
Canada added 55,900 jobs in February, most of them full time. That’s great news for the economy, but mostly for those who found employment, of course. Maybe the economic prospects suggest that the bull run will continue? That’s anybody’s guess.
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