In the first Sunday Reads of the Summer we’re looking at real estate, market corrections, uranium stocks, the Bogle effect and more. Also, I came out of the bullpen, back as a relief writer for MoneySense. Summer is heating up, and I hope that you’ll be able to keep your cool and put your portfolio on autopilot. The markets are volatile – don’t sweat it. I think that’s enough of the Summer puns. Let’s get at it.
This week I was back, Making Sense of the Markets for MoneySense. I left the column in April to pursue more cottage time and other dividend-funded interests.
That MoneySense weekly wrap looks at the market and economic backdrop, energy investments, the rise and fall of bitcoin and big moves in the telco space.
I added the additional thoughts on Cut The Crap Investing with – Making Sense of the Markets and thoughts from the week.
With more on the economic front, the Freedom 35 blog gives us 6 recession signs we can’t ignore.
Think outside the portfolio
Here’s a very good post from Nick Maggiulli, think outside the portfolio. You’ll find some interesting charts on stock and bond near-term performance after years of high inflation.
On Tawcan, Bob is re-evaluating the Smith Maneuver. With that strategy Canadians can borrow money against their home equity, use the money to invest in the stock market, and deduct the borrowing interest costs. Bob touches on the ramifications for the Smith Maneuver in a period of falling markets and a rising rate (increased borrowing costs) environment.
Bob also offered that the stock market is crashing – here’s what he’s doing, and thinking.
There’s a fresh post each day on Findependence Hub. It was a good week with a wide swath of topics, from travel to dividend ETFs.
First-time home buyers
This week Mark offers the home buyer’s guide for weekend reading. Mark adds his own thoughts (and support posts) to this very comprehensive first-time home buyers guide from MoneySense. You’ll find some great content and a host of calculators for mortgage affordability, land transfer tax, mortgage insurance and more. Topics include types of mortgages, renting vs owning, how much home can you afford, the mortgage stress test and on and on. Send that link to friends and family who are looking to get into the housing market.
A balanced portfolio would be down about 15% in 2022. So even if your portfolio held steady and the housing market corrects by 15% you’re still treading water. Of course you could move the needle in your favour slightly with any additional savings that are placed in safe investments – cash and GICs.
Moving forward, if the real estate markets do correct, your portfolio (a mix of stocks and REITs and bonds) might fall in sympathy. The real estate market and the portfolio are reacting to the same events. We have higher rates and the potential of a recession or slowing economic growth. Also, you’d have to factor in that your borrowing costs are likely increasing as well thanks to rising mortgage rates.
First-time home buyers have been in a tough spot trying to build that meaningful down payment. They have been chasing a real estate bubble. We should keep in mind that if we stick to the script, we should not be investing (with risk) monies that we need within the next tw0 to three years. You can follow the target date examples in this post covering the RESP portfolios at Justwealth.
Your weapons are a high savings rate and safe investments – cash. You want housing prices to go down significantly, while your house savings portfolio moves up. If you have a longer term time horizon, you can certainly take on risk and invest.
I will be back with a dedicated post on saving and investing for first time home buyers.
More hits from the week
Here is the weekly market wrap from Dividend Hawk.
And you’ll find a wonderful roundup of the greatest hits of the week on Banker on Fire. BOF also offered this very good post – Is passive investing a blatant lie? That’s a good read with some very good charts and perspectives.
Banker on Fire also linked to A Wealth of Common Sense – How long does it take for stocks to bottom in a bear market?
On Banker on Wheels we have a book review – what is the Bogle effect?
FiPhysician presents a look at the best bond alternatives.
On the stock front
Dan at stocktrades offers the top uraniam stocks to buy in June. I really like the space, and it appears obvious that nuclear will have to play a major role in the green energy transition. I am building a position in Horizons’ HURA ETF.
At Questrade, you can buy ETFs for free.
Have a great Sunday. You can follow this blog (it’s free). Enter your email address in the Subscribe area. We’ll see you in the comment section, don’t be shy.
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