I was back Making Sense of the Markets for MoneySense as Kyle is away on a wonderful family vacation. I offered a wrap on the inflation fight and the market reaction. Stock markets had a very strong week, but it was much ado about nothing. Central bankers confirmed plans that were already announced, but it was what the market expected and wanted to hear. The pace of rake hikes is set to decline. And there are signs that inflation has peaked or is declining. Markets cheered – they like ‘certainty’. We’ll have a look at what the heck has been going on, on the Sunday Reads.
For the past several weeks, rising stock markets have been predicting an economic soft landing, or the market makers are not convinced that the Fed will follow through with the inflation fight. From that MoneySense post …
I also looked at earnings from Canada’s retail darling – Alimentation Couche-Tard, plus the potential Twitter collapse and my take on why the FTX crypto scandal might be good for bitcoin. For me, bitcoin is digital or modern gold. I treat it as just another asset class. The bitcoin investment thesis has not changed, though the risks are great. Extreme volatilty is likely to remain.
The core ETF portfolios
On this blog I offered a new post looking at the performance of the core ETF portfolios. Simple low-fee investing did the trick over the last several years. Here’s a taste of the returns shown in the post, from January of 2016 to the end of October. Not bad, at all.
On the Model ETF Portfolio page I added this post from Bob at Tawcan – Dividend tax traps and what goes where. That’s a very good post on how you might slant the portfolio toward greater tax efficiency. I’m on the record that tax efficiency should not drive the bus – asset allocation and risk management trump most everything. That said, you might shade the allocations to take advantage of the dividend tax credit for Canadian stocks, and hold U.S. stocks and ETFs in RRSP and non-registered accounts. Those are two examples, Bob’s post will explain ‘the rest’.
To discover how to arrange your stocks and ETFs for greater efficiency in the accumulation stage and in retirement, self-directed investors can check in with Cashflows & Portfolios.
For example, Canadian dividends are not always the most tax efficient. It depends. Don’t guess. Make sure you do the research or seek help.
There’s more on U.S. ETFs courtesy of Justin at Canadian Portfolio Manager.
Algonquin – buy or sell?
Bob also penned on the troubles with Algonquin – a favourite utility with many Canadian investors. Is the dividend safe? I see investors on both sides of buy and sell for this stock.
In last week’s Sunday Reads you’ll find a video (covering Algonquin) from Dan at stocktrades.ca.
There’s another great wrap of the week on Dividend Hawk. Included in the wrap is a post by Author Ferdis on Seeking Alpha. Fredis is a good follow on that site. Here is 10 dividend growth stocks to consider. This chart demonstrates the Ferdis stock ranking method.
Three of my stocks make the Ferdis bonus round – BlackRock (BLK), Microsoft (MSFT) and Johnson & Johnson. From the top ten we hold Pepsi (PEP) and Lowe’s (LOW). My wife and I hold dividend growth stocks in our U.S. accounts. Here’s the link to our Canadian and U.S. stock portfolios. The stock portfolios beat the market on both sides of the border.
On the retirement front, Fritz is reimagining retirement – a book review. As is often mentioned on this blog, a retirement life plan is as important as a sound financial foundation.
From that post …
And the latest in Jonathan Chevreau’s Retired Money Series – What asset class charts can teach about risk and volatility. Readers of this blog know that I pay attention to asset classes as it relates to risk and economic conditions. It’s all part of building the all-weather portfolio for retirement. Readers were not caught off-guard, nor were they empty-handed in the recent battle against high inflation.
I recently reported on the outrageous dividend growth in the energy sector.
We might also get some inflation protection from agricultural stocks. Dan at stocktrades offers his top 3 picks.
Surviving a recession
On My Own Advisor we have the weekend reads with the surviving a recession edition. While we don’t know with certainty (that a recession will arrive) Mark offers some solid advice for consideration. Including – the safety and level of your cashflow, have that emergency fund ready, mind that debt and greater diversification always rules.
I’d consider myself ready with defensive stocks, cash and bonds and healthy dividend cashflow that has been very resilient. We’ve experienced no dividend cuts from the time of our current portfolio creation in 2014 and early 2015. It’s dividend growth all around.
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