As I had offered in the wealth accumulation video, stocks and real estate are the undisputed heavyweight champs. And sure that is my personal bias or experience showing. In this Sunday Reads, the Findependence Hub offers up some interesting stats on stocks for offense and bonds for defense. This week, we also had some signs that inflation may be on the decline, or at least has peaked. Stocks had a great week, up over 2.5% in Canada and the U.S. That said these are early days on the ‘end of inflation’ watch. Bad new is good news, and good news is bad news. And we’ll check in with bulls and bears. Stocks are the undisputed champion on the Sunday Reads.
I always have time for Ian McGugan at the Globe & Mail. He offered up thoughts such as … The economy has a habit of delivering good-news-bad-news jokes to investors.
The good news? Inflation is finally edging down in the United States. The bad news? So, too, is the outlook for corporate profits. How these conflicting forces play out is hard to predict. But with stock prices still high by historical standards, hopes of a new bull market on Wall Street seem rather far-fetched.
Investors may want to keep their enthusiasm in check. And, yes, that is despite all the “good news” on the inflation front. But keep in mind that core inflation (that strips out energy) actually increased.
On A Wealth of Common Sense – When is a bear market over?
Here’s a great table from that post.
There are so many interesting charts in that post. We have certainly experienced a lot of volatility over the last several months. And I have long suggested that we prepare for the rough ride. From that bear market post …
Bad stuff happens in bad markets.
This seems like such an obvious statement that it goes without saying. But it’s an important reminder that the biggest down days and the biggest up days tend to take place during market downtrends.
We have to hold on and stick to our investment plan. That table demonstrates the incredible wealth creation opportunities that were available during the bull markets. We have to ride the bulls and the bears.
From David Rosenbear
And David Rosenbear, sorry I mean Rosenberg had another post of predictions in the Globe & Mail. Here, I pulled together all of the juicy bits.
As always, no one knows what will happen, and I do enjoy and respect Mr. Rosenberg’s commentary. If history repeats, the bottom will come after rate cuts.
More Sunday Reads
There’s a real nice mix of reads this week on Findependence Hub. I really enjoyed –
There’s no doubt that stocks and real estate wear the championship belts when it comes to investing wealth creation. Certainly, let’s consider building a business and employment income as well as ways to ‘get rich’.
And while stocks help us create wealth over time, it is bonds that can help us protect that wealth. From that post. …
Here is another gem that dividend friends will like …
History suggests that stable, dividend-paying stocks offer an efficient alternative to bonds. Over long-periods of time, income-producing stocks have generated higher returns than their non-dividend-paying counterparts while suffering shallower losses in challenging periods. Over the past 20 years ending June 2022, the S&P 500 Dividend Aristocrats Index has produced a total return of 624.7% as compared to 468.6% for the S&P 500 Index. Over the same time period, the TSX Dividend Aristocrats Index returned 555.7% vs. 355.0% for the TSX Composite Index.
That’s why I suggest dividend ETFs in the retirement ETF portfolio.
And thanks to Jon for reposting my … Building the retirement stock portfolio. I have been working all week on the stock ‘selection’ for the retirement stock portfolio. I hope to post the U.S. version next week, with the Canadian retirement stock portfolio to follow.
At My Own Advisor here is the weekend reads – Misunderstanding indexing and its supporters.
There are so many good posts on RIA Advice, but I really enjoyed – Pulling Forward Growth is no longer an option.
And Martin Pelletier offers that the end of cheap labour is a good thing, despite inflationary fears. Hear hear!
Martin concludes with …
Finally, perhaps we as a society would be better off positioning portfolios and investing capital around a narrowing of wealth inequality rather than continuing to profit from it.
Hedging your bets
At Tawcan, Bob looks at – Should I hedge? Hedged vs unhedged ETFs in Canada.
My take is that we should accept the currency ‘risk’ as exposure to other currencies actually decreases our total risk. We are less reliant on the Canadian dollar and hence the Canadian currency. And research shows it all comes out in the wash. A weak U.S. dollar can be good for U.S. multinational profits. That will be reflected in share prices. When there is a strong U.S. dollar, Canadians can directly benefit from that conversion – add that on to your returns.
The portfolio watch
Rob at Passive Canadian Income has delivered his July portfolio report. Rob had 36 stocks that DRIPed in July. That is, the dividends are on reinvestment auto pilot to buy additional shares or fractional shares equal to the amount of the dividend. Instead of receiving the dividend, Rob adds additional shares. And there’s the basic scorecard …
Total July 2022 Passive Income – $2,722.84
July 2021 Passive Income – $1,757.92
Keep ‘er going Rob. All said, Rob’s total returns (portfolio value) will come into play and will enhance the ability to fund retirement. There’s a lot of value ‘hidden’ within the share prices. In retirement, most of us will also sell shares (homemade dividends) to create income.
Here’s another robust roundup of the week’s reads and events from Dividend Hawk.
On Banker on Wheels, was June the bottom for stocks? There are 17 very good links in that post, that includes blog posts and videos. In that mix …
And we always check in with Scott Barlow and his market insights, gleaned from research reports …
Looking back at inflation worries and guesses
I often look back at older posts that I wrote for MoneySense. From almost a year ago, here’s the inflation debate at the time.
Let’s start with inflation data here at home. On Wednesday, Statistics Canada released its consumer price index for August 2021. The annual pace of inflation rose to 3.7% in July, marking the biggest increase since May 2011. August said “hold my beer,” and came up with an annual inflation increase of 4.1%, the highest since 2003.
In August of 2022 inflation still dominates the financial headlines. It is the tail that wags everything.
On the economic front, I truly enjoyed John Mauldin’s curving toward stagflation. From John …
Tossing all that around, I think extended stagflation is our most likely destination. I don’t believe the Fed can produce a soft landing and I see no reason to think inflation will ease back to 2019 levels in 2023. Further out? Absolutely. I still believe in my low inflation/deflation scenario over the longer term. That means slow growth, given our debt situation.
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