As we know, the Canadian stock market has been quite the laggard over the last 5 and 10 years, but it’s starting to show signs of life. The Canadian markets reached an all-time high on Thursday and then added on slightly on Friday. The market has been on an impressive upswing for the last 3 months.
From the Globe and Mail …
Canada’s main stock index hit a new record as gains in the financial sector sent the Toronto market higher but major U.S. stock indexes ended the day mixed.
The S&P/TSX composite index closed up 39.14 points at 16,682.42 after trading as high as 16,756.11 earlier in the morning. The index had hit an intraday record of 16,696.40 on Thursday.
Here’s the look of the 6 month period for the Canadian Composite Index, by way of iShares ETF XIC.
And south of the border …
On the economic front, U.S. retail sales increased in August at twice the rate analysts expected, according to the Commerce Department, suggesting that strong consumer spending will continue to support the longest-ever U.S. economic expansion.
Yup, we continue to be in that Goldilocks situation where the economy is not to hot and not too cold. And there’s just enough uncertainty. As they say, the markets like to climb a wall of worry. And markets usually unwind when they get too hot and central banks step in to ruin the party and help bring in that beast known as a recession.
But ignore all of the above
The markets are doing great and well, that’s great. That’s why we invest to take advantage of markets that rise over time. Here’s a chart for iShares XIU TSX 60 that can give us a longer look at the market and the last 2 market cycles. This is the longest running ETF thought it’s been through a couple of different ETF providers.
We invest with this 15 and 20 year and 30 year perspective, not that 6 months chart. And we don’t add more monies or less monies just because the Canadian markets are at an all-time high. We want to diversify our equity holdings and pay attention to any Canadian home bias. Once again, Canadian markets have offered luke-warm returns in recent years and over the last decade. We need those US stocks to fill in the gaps. Many will add International funds and holdings as well.
We might embrace a simple investment plan that allows us to keep our fees low and simply let that portfolio run on auto pilot. You’ll simply add monies on a regular schedule and get the heck out of your own way. I use a mix of ETFs and individual stocks and the most important component might be that I don’t look or judge or speculate. As I like to write (cheekily) on Seeking Alpha, I bought these stocks without looking, and I added to them without looking as well.
Don’t worry, be happy
The markets will do what they will do. We have no idea where stock and bond markets will go in the short and mid term. And certainly be happy that the markets are going up and that you can get a taste of that wealth building experience when things are going well. But always be prepared for those corrections. As our friends at Mawer remind us …
You don’t fix a ship in a hurricane.
Rob Carrick offers an article that looks at a suite of Canadian equity ETFs and with some commentary on those TD e-series changes. And I found this CPP calculator courtesy of Rob and friends. That’s a fun, and more than useful tool.
Here’s a great tag team post courtesy of Justin Bender of Canadian Portfolio Manager answering a question from Robb Engen of Boomer and Echo fame. Here’s When Should I Dump VEQT (or should I?). Does Robb want to do the extra work and add US ETFs to potentially save over $600 per year? And there can be a few ‘nuances’ that can eat into Robb’s potential savings. Great post !
On that same US Equity ETF theme, here’s an offering on FindependenceHub courtesy of Michael James with Canadian ETFs vs US ETFs. I appreciate the clarity in this paragraph.
For an investor with a $50,000 portfolio, owning just VEQT is actually cheaper by $20 per year. At $100,000, the annual savings of owning the mix of 4 ETFs is $160, hardly enough to be worth the added trouble. However, an investor with a million dollar portfolio would save $3400 per year with the 4-ETF approach.
We don’t have to be perfect we just have to be great
I am a big fan of the attempt to ‘optimize performance’ but it’s more important to get that sensible low-fee portfolio and stay the course.
A few Canucks attended FinCon 2019 in Washington DC.
Here’s playing RESP catch up on milliondollarjourney.
And Ken Kivenko email updates put this in my inbox. Troubling stuff on investor recourse. Investor advocates renew call for OBSI teeth. Ken had added …
We fully expect other consumer groups to drive harder for the CSA to follow its investor protection mandate. Low ball settlements have no place in Canadian society. The stress on victims who must also sign a gag order is a strong form of financial assault.
And now we see one of the reasons for why CI Financial took a majority stake in Canadian Robo Advisor WealthBar. Here’s Assante Wealth Management partners with WealthBar to launch platform pairing online investing with financial advice.
CI has also launched an actively managed asset allocation ETF.
Thanks for reading. Enjoy the nice weather and those nice portfolio gains : ) I am off to England on Wednesday for a wonderful trip with my wonderful daughter. Can’t wait.