Happy Sunday Reads. Today we have a full slate. My MoneySense post looks at the January effect for stocks. As goes January, often goes the total return prospects for the full calendar year. We will also look at the returns for the new balanced portfolio for 2021. That all-weather portfolio model certainly outperformed the classic couch potato ETF portfolio in 2021. The model would have greatly outperformed over a 5-year period as well.
Will start with my latest for MoneySense that looks at the January effect for stock markets. It is an interesting event.
Historically, for the month of January, markets have been up an average of 1.1%.
The markets have been negative 39% of the time (down 3.7% on average), but still end the year higher 63% of the time (up 2.2% on average).
Historically, U.S. stocks have been positive 61% of the time in January (up 4.1% on average), and higher in 84% of these years (up 15.5% on average).
15.5% vs 2.2%
The difference is remarkable with an average annual return of +15.5% in up years, versus +2.2% in the down years.
In my MoneySense weekly I also look at the returns round up for assets in 2021, the risks in 2022 as outlined by Charles Schwab, and the valuation levels and growth projections for sectors in the U.S.
Here’s my MoneySense, making sense of 2021 post.
Here, I’ve updated the returns for the new balanced ETF portfolio in 2021. The additional diversification added to the total returns. Plus, the risk of inflation is managed.
On this site I also posted the returns for the Core ETF Portfolios for 2021.
On The Hub
I will link to two very good posts on The Findepedence Hub from this week. John DeGoey offers his thoughts on a Preet Banerjee podcast with Dan Bortolloti.
Here’s the podcast link.
Were advisors successful in keeping their clients on track during the COVID correction in 202o? John reminds us what a REAL correction looks like and feels like. From John, on the dot-com crash of the early 2000’s and then financial crisis and correction that began in 2008 …
There was a dip and return, closely followed by a second dip and return, and the net effect was the entire market went sideways for more than 13 years.
Yes, John is referring to the lost decade for U.S. stocks.
John adds …
One of the most pervasive advisor biases is optimism bias. Most of the time when markets go up, sideways or down a bit for a while, that bias serves everyone well. Despite what advisors tell you, no one knows how they might act in a depression-like environment because they haven’t experienced it. Thus, advisors’ role in coaching people to modify their behaviour has not been fully tested.
Dark clouds in 2022?
John, predicts a big correction in 2022, but of course, no one knows what will happen. As always, be prepared for markets to soar another 30%. Be prepared for that big correction.
I would suggest that most investors and advisors are not ready for a serious bout of inflation or stagflation, or an extended period of economic decline. Well, of course, Cut The Crap Investing readers are prepared 🙂
With positive market momentum over the last 20 months, I think it would take a recession to deliver a major correction. That is also what market history suggests. Anything is possible, but a recession does not appear to be on the horizon. As always, those nasty variants are the wild card.
You asked – what about Canadian Depository Receipts?
And many Cut The Crap Investing readers have been asking for more information on the Canadian Depository Receipts available from the Neo Exchange. That is a repost from the Tawcan site. Bob from Tawcan offers this CDR outline …
Canadian Depositary Receipts are created to allow Canadian investors to buy US stocks in Canadian dollars. For now, CDRs represent shares of US companies but are traded on the NEO Exchange. Since CDRs are traded on a stock exchange, you can view them like traditional stocks. Owning CDRs means you would receive dividends (if the company pays dividends) and have voting rights to the underlying company you’re holding.
What makes CDRs very attractive is the fact that you can buy them in Canadian dollars. You no longer need to convert CAD to USD and pay the extra currency conversion costs.
In that post you’ll also find the list of U.S. stocks currently available as a CDR.
The big dividends, should you chase them?
A fresh post on Tawcan this week asks – should I invest in high-yield dividend stocks?
Of course 2021 was an incredible year for the big Canadian dividend approach. I recently reported on the 42.7% return in 2021 for the Beat The TSX Portfolio.
In the Weekend Reads on My Own Advisor, Mark looks at the important numbers for 2022. On the state of the pandemic, Mark offers …
As I watch this ultra-contagious Omicron mutant pushing cases to all-time highs and causing yet another wave of uncertainly, while scary, I see a shining light. We are armed with at least one solid layer of protection against this virus for most who understand the way out: vaccines.
This is brilliant framing …
RBC has slashed growth estimates for the first quarter of 2022, thanks to Omicron. But they do see a quick rebound in the second quarter. This armchair economist is in agreement.
Don’t rely on natural immunity, says Yahoo! But if that is the case, how did South Africa do this? As Omicron cases quickly rolled over, the hospitalizations and deaths remained well under control. Yes, I am checking in with real experts on this.
Moody’s offers that the demand for oil will increase in 2022 and return to pre-pandemic levels. And on oil and gas stocks …
With prices at the high end of its forecast range, Moody’s said that major oil companies “will be able to deliver even higher operating cash flow” than when oil prices were over US$100/barrel in 2014.
Some folks went all-in on the energy front.
Going to the dogs
Dogs of the Dow links, here and here.
And welcome back, The Atlantic Investor.
So, I am restarting a blog, about investing. I had one about 10 years ago, but could not keep it up, because of other commitments. Now I am semi-retired, time to spare, am going to start again.
Have a read and perhaps follow that blog and journey.
Market predictions from Banker on Wheels.
Included in that post is this very good 2022 outlook document from Vanguard. The post includes ideas on the balanced portfolio construction, and the trade-offs given the inflation (and other economic) risks.
On the Maple Money Podcast Rob Carrick of the Globe & Mail offers his thoughts on the year ahead.
A Wealth of Common Sense updated the asset returns chart for the last 10 years.
That chart offers another good lesson on the benefits of diversification.
And don’t miss the week in review on Dividend Hawk.
Thanks for reading. Don’t be shy, we’ll see you in the comment section. And don’t forget to follow this blog. Look for that subscribe button on the right hand side of this page.
How to leave your high-fee funds behind in 2022
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Thank you for this summary. It really helps me to make sure I didn’t miss anything important during the week.
Thanks Alain, my pleasure. Follow me on Twitter for any daily ‘stuff’. I follow and post from the best and search many sources and resources every day.
Dale