Merry Christmas and happy holidays. I hope most of you were able to enjoy some wonderful family time. Many of us had to cancel plans at the last minute due to COVID cases or close contact with those who have tested positive. That Omicron variant is everywhere and is more than prolific. More on OMI later in the post. All said, the surging COVID caseloads did not hold back stock markets last week. Markets recovered smartly after the initial one-two punch of the threat of a rising rate environment and the arrival of Omicron. And what’s up for next week? Will we see a Santa Claus rally in 2021?
As I have reported in my MoneySense column, November and December are historically good months for stocks. And the Santa Claus rally (when he does make the trip) usually occurs towards the end of December. We had a positive holiday-shortened week. Stocks were up in Canada, the U.S. and on the International front. That trend is likely to continue into next week says market history, but anything can happen.
The seasonally bullish trend typically sees equities rise over the last five trading sessions of December and the first two trading days of January. Since 1928, the S&P 500 has been positive in that stretch 78.5% of the time, according to data from Bank of America. (source Seeking Alpha).
At the close for 2021
On MoneySense, for the week ending December 12th we looked at market returns after three successive years of double digit returns for U.S. stocks.
And in that MoneySense post I offered an early look (and assessment) of Omicron. It was wide open on the possibilities front …
On the other hand, the Omicron variant may pose no threat, or it might be the status quo on the pandemic front. Or, this prolific variant (it has more mutations than other previous variants) might pose a real threat. If it can evade vaccines, we might be somewhat starting over. At the other end of the spike protein spectrum, Omicron may be the best thing that has happened during this pandemic.
Some of the questions have been answered. Omicron quickly became the dominant strain in many countries. This variant will steer the direction of pandemic. It appears that it will accelerate the journey from pandemic to endemic. And there are early signs that Omicron is less virulent (causing less sickness and death). That is good news, but experts still warn that the variant is so transmissible, there will be so many cases, and those numbers will drive hospitalizations and deaths.
Let’s hope for the best on the pandemic front. It is just incredible that it was almost 2 years ago that I wrote … How to prepare your portfolio for the coronavirus outbreak.
I did follow up with a look at the performance of the ‘pandemic portfolio’.
With the positive move for the markets last week, I’d guess that market makers are also taking a look at the possibility that we are moving much closer to the other side of the pandemic.
If that sentiment catches on, next week could be more than interesting. And it is encouraging to even imagine the end of the pandemic. How will stock markets react when we are on the other side? I hope that is THE story of 2022 that I cover on MoneySense and on this blog.
The next 2-3 weeks will set the table.
The Sunday Reads
On My Own Advisor, Mark offers his best posts of 2021. It’s the 12 posts of Christmas.
And on The Retirement Manifesto Fritz gives us the ten most popular posts from 2021. That’s a wonderful mix on the retirement front.
Millennial millionaires own a surprising amount of crypto assets. 83% of these young millionaires own crypto assets. And those assets have likely contributed to that wealth creation. Here’s what has happened (historically) at a 5% bitcoin weighting.
Here’s my MoneySense post on what is bitcoin? I am at that 5% allocation level for my RRSP account. And this Tweet created a lot of interest on the RRSP front.
On Tawcan, Bob offers a look at his November dividend update. Plus, you’ll see some Tweets and images surrounding the very destructive floods in B.C. Let’s hope for a much better year for our friends on the west coast in 2022. From fires to floods it was a troubling year.
How’s your TFSA?
Million Dollar Journey covers the TFSA basics, including how to calculate your TFSA contribution allowance. If you have been age of majority from 2009, and if you have not contributed, you would have TFSA space of $81,500 at the beginning of 2022.
Canadians might look to the TFSA as an account type for growth (portfolio) assets. For retirement funding, generous TFSA accounts will provide a wonderful complement to your RRSP (RRIF), pensions and taxable monies. But of course, you should always ensure that you have also (and first) covered off your short-term emergency savings fund.
Rob at Passive Canadian Income has 3 stocks that you could put under the tree.
The savings challenge
Here is a very interesting idea on Young and Thrifty, the 52-week savings challenge. The saving idea and schedule is …
- Week 1: $1 | Week 2: $2 | Week 10: $10 | Week 20: $20 | Week 52: $52
When you cross the finish line, your total savings would be $1,378 by the end of the 52-week money saving challenge.
That’s great, double that amount and you’re saving a good chunk for your TFSA. If you do a personal budget, I think you’d find that it is not difficult to find $52 dollars a week in savings. The most useful practice in the entire wealth building process is spending much less that you make. Make that a habit, a way of life. You’ll then have free cashflow to invest.
When you invest, do so in a low-fee manner. Build your own ETF portfolio, use one of the all-in-one ETFs such as iShares asset allocation ETFs, the TD One Click Portfolios or Horizons asset allocation ETFs.
Have a look at the Canadian Robo Advisor page for managed portfolio ideas that also includes various levels of advice.
Wealth building should be simple, mostly stress-free and one of the most rewarding things we do in life. Last week I offered that it was portfolio check up time.
As always, check out the Findependence Hub for a fresh post every day from Monday to Friday.
Happy holidays. You can follow this blog, look for the subscribe button at the top right of the page. Any shares of this post would be a wonderful gift to this blog and mission. Share the joy of low-fee investing.
Here’s to a healthy and prosperous 2022 and beyond.
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You will also earn a break on fees by way of many of those partnership links.
Canada’s top-ranked discount brokerage
Cut the Crap Investing readers can earn a break on fees at Questrade by way of that partnership link.
Here’s Canada’s top-performing Robo Advisor.
I have partnerships with several of the leading Canadian Robo Advisors such as Justwealth, BMO Smartfolio ,Wealthsimple, Nest Wealth and Questwealth from Questrade.
Consider Justwealth for RESP accounts. That is THE option in Canada with target date funds that adjust the risk level as the student approaches the College or University start date.
Our savings accounts
Make your cash work a lot harder at EQ Bank. RRSP and TFSA account savings rates are at 1.25%. You’ll find some higher rates on certain GICs. They now also offer U.S. dollar accounts. They have been awesome.
Our cashback credit card
We make between $60 to $70 every month! And that’s on everyday spending. There are no fees with …
The Tangerine Cash Back Credit Card
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I too hope that’s the story for 2022. Endemic and markets liking it! Generous Santa.
Congratulations again on your RRSP milestone.
Best wishes for a great 2022 to you and family and all readers of your blog.
Deane