These are more than interesting weeks and months. We appear to be moving to the other side of the pandemic. But certainly the stock markets are not in the best of moods these days. I had suggested in early 2021 that the market makers might not like what they see when get a peak at the other side. Fears of rising rates that might cause a recession or market correction, geopolitical risks and more all swirl and collide. Of course, a solid and consistent investment and financial plan will help you navigate these troubled waters. We’re preparing for the next bear market, retirement and more on the Sunday Reads.
And on My Own Advisor, Mark offers RRSP facts and guidance for 2022. And of course, that will include tips for 2021 as you have until March 1, 2022 to make a RRSP contribution that can be applied to your 2021 tax year.
Recently I offered how to invest this RRSP season. Who doesn’t want to earn twice as much for retirement? 🙂
What goes where?
And here’s a good overview on assets and what’s goes where, on MoneySense courtesy of Lisa Hannam and Preet Banerjee. But always keep in mind that taxes should not drive the asset allocation bus. That said, some portfolio shading based on tax efficiency can help the cause.
On FiPhysician, doc suggests – Don’t confuse strategy and outcomes. From that post:
Resulting can lead to poor investing hygiene as you assume facts not in evidence. This is often the result of hindsight bias. Assuming that what has come true was inevitable and that you should have known it at the time. As is often said, the only inevitability is death and taxes, so make sure you plan for both.
Battling inflation with 5 sectors
On Findependence Hub, Harvest looks to battle inflation with a monthly income fund. Harvest Portfolios Group will combine 5 equally weighted sectors: Healthcare, Technology, Global Brands, Utilities, and US Banks. The initial yield targeted is 8.5%. Covered call strategies are in the mix to provide that income boost. Leverage (borrowing) is also applied.
Harvest Portfolios Group Inc. announced on Wednesday the completion of the initial offering of Class A Units of the Harvest Diversified Monthly Income ETF, which is now trading under the ticker symbol HDIF [TSX.]
That said, the fund is not concentrating on inflation-friendly sectors.
A study of U.S. equity sector performance amid rising inflationary environments revealed that from 1973 through 2020, five of the S&P 500’s 11 sectors offered solid to strong performance.
Over that time span, the healthcare, consumer staples, utilities, equity real estate investment trust (REIT) and energy sectors generated 12-month inflation adjusted returns of anywhere between about 2% and 10%, according to Sean Markowicz, a research and analytics strategist at Hartford Funds. And if we include the other half of inflationary times (pre 1970’s stagflation) only one sector delivered positive returns – energy.
It gets no respect
Inflation is the Rodney Dangerfield of the investment landscape – it gets no respect. There is little understanding. I am working on a post that will explore using stock sectors to build the retirement portfolio. That is, we will use less bonds and cash and will instead employ types of stocks to fill those gaps. We will also attempt to provide enough inflation protection. Stay tuned for the post.
Also on The Hub, what to do, and not to do, in the next bear market. We have no idea when the next angry bear might arrive. But it is important to be emotionally prepared. In turn, your portfolio should be prepared.
That’s a good post.
My MoneySense Weekly
Here’s Making Sense of the Markets for the weekend ending February 20. This week I looked at (just for fun) some very interesting stats on U.S. market returns. Mediocre positive return years of 0% to 5% are very rare. I look at the odds of that in 2022. It might all rest on February.
I also look at more earnings reports in Canada and the U.S., Goldman Sachs market return scenarios for 2022 and dividend growth stocks in the U.S.. Take your pick – 5 years, 10 years or more, or 25 years or more of dividend growth history.
The not so dumb money?
On Banker on Wheels, Wall Street Thinks You’re Dumb. The Rise of Wise Money.
Wall Street likes to make a clear distinction between Institutional Investors and Retail Investors. It’s Smart Money versus Dumb Money.
Sorry folks, they think we retailers are the dumb money. Of course it’s not hard to turn the table on those smart folks. From that BOW post …
Retail investors that are active and smart. With the proliferation of new technologies, large sets of data and insightful research, substacks, closed discourse forums or Twitter, retail is gaining, in some cases, edge. Especially in fast-paced markets.
Retail investors with long investment horizon that are evidence-based. This group includes communities like the Bogleheads or diligent savers that aim retire by the time they reach 40. And they successfully execute on it.
On the Maple Money podcast, we’re reducing financial stress with Emily Guy Birken.
Dividend Hawk provides another wonderful weekly wrap of the earnings season and more. There are many links for your reading pleasure.
Here’s a very good market and sector wrap courtesy of Credo.
On Tawcan, Bob offers his January portfolio update. Now that’s a nice January peak.
And more from Preet, how to de-risk a crypto-heavy portfolio.
https://www.youtube.com/watch?v=DY5jUIf4FOo
Thanks for reading. We’ll see you in the comment section.
How to leave your high-fee funds behind in 2022
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Dale, I would like to invest in Canadian farmland. Can you suggest how? Thank you.