South of the border, the Fed raised rates by 0.50%. The hike was as expected. It was a step down from three consecutive 75 bps hikes. Canada has followed a similar rate trajectory in its battle to kill inflation. The markets initially cheered a favourable inflation reading (Tuesday) in the U.S. And then Fed chair Powell talked tough, sending the markets tumbling late in the week. Central bankers continue with the attempt to convince market makers that they will take a recession over persistent or stubborn inflation. We have the race to kill inflation on the Sunday Reads.
Here’s the 2022 U.S. rate hike history:
- 0.5%: up 25 bps on March 17
- 1%: up 50 bps on May 5
- 1.75%: up 75 bps on June 16
- 2.5%: up 75 bps on July 28
- 3.25%: up 75 bps on September 21
- 4%: up 75 bps on November 3
- 4.50%: up 50 bps on December 15
I was back on MoneySense again this week, making sense of somewhat confused and unsettled markets. But all said, stock markets are pricing in a soft landing over a recession. Most economists are united in predicting a recession of some sort.
And we are higher for longer offers John at Mauldin Economics. It’s now about where we land and how long we stay there.
U.S. stocks are down 20% in 2022. Canadian stocks are down, just 8%. The Canadian high dividend approach is essentially flat for 2022, and up in the 3% to 4% range over the last year.
Lance Roberts (no relation) is a regular read for me. Here’s the 2023 investing outlook as the Fed pivots.
Tax loss harvesting
And it’s last call on tax loss harvesting for 2022. You have until, and including December 28.
A reader asked if we need to worry about a stock that is sold to create a capital gain. That’s not a bad strategy of course to also sell a winner to book some gains that will be offset by a capital loss. As you may know, we have to wait 31 days to buy back the losing stock or ETF so that we don’t create a superficial loss. But we can turn around and buy the winner again – as soon as you like.
There’s no superficial gain. You could sell and buy it back the same day and trigger the gain. The loss will first be used against any gains in the current year, and if there’s still net losses leftover, they can carry those back 3 years or forward indefinitelyFinancial Planner, Mark McGrath
On the Weekend Reads at My Own Advisor, Mark is building his own index. As I discovered many moons ago, it does not take many stocks to replicate an index. Or at least get ‘close’ in replicating the returns and risk characteristics. In 2015 I skimmed 15 of the largest cap dividend achievers and combined the skims with 3 stocks that were already owned – Apple (AAPL), BlackRock (BLK) and Berkshire Hathaway (BRK.B). The results have been more than favourable.
Here is our U.S. and Canadian stock portfolio outperforms when it counts. The mix was designed for challenging times. It is rising to the occasion.
The return of the balanced portfolio?
On Findependence Hub, Vanguard suggests that the traditional balanced portfolio might be the best bet moving forward. You can check out the recent returns history of balanced models on the asset allocation ETF page.
And of course, you can also build your own ETF portfolio.
Readers will know that I like the idea of bolting on some inflation protection to the classic balanced portfolio models. You can look to energy stocks and the Purpose real asset ETF – PRA.
Dividend and portfolio updates
Bob at Tawcan has penned his November portfolio performance post.
Matthew has also run the numbers at All About The Dividends.
And you can check out the dividend tally at Passive Canadian Income.
Checking in on the stock stories and blog posts of the week – head on over to Dividend Hawk.
In the mix at Dividend Hawk was Canadian utility stocks to buy for 2022 and beyond, from Dan at stocktrades.
On the Retirement Manifesto – Were you nervous before you retired?
Also on the subject, we have the honeymoon phase in retirement on FiPhysician.
Thanks for reading. As always, while there’s lots of noise and uncertainty out there, we need to stick to our investment plan. In the accumulation stage, add monies on a regular schedule. If we do get lower prices, great. You’ll be able to accumulate more shares attached to bigger dividends.
Retirees should understand the risks and already be prepared. I hope that’s the case with retirees and near retirees who have been reading Cut The Crap Investing.
Happy Sunday. Enjoy the World Cup.
When you cut the crap …
You will earn a break on fees by way of many of these partnership links.
CANADA’S TOP-RANKED DISCOUNT BROKERAGE
Cut the Crap Investing readers can earn a break on fees at Questrade by way of that partnership link. At Questrade, you can buy ETFs for free.
Here’s Canada’s top-performing Robo Advisor, Justwealth.
Consider Justwealth for RESP accounts. That is THE option in Canada with target date funds that adjust the risk level as the student approaches the College or University start date.
RETIREMENT FUNDING PLANNING
The self-directed investor might consider the service provided by Mark Seed from My Own Advisor. He runs Cashflows & Portfolios where they will provide options for that optimal retirement funding strategy. That service is provided for a very reasonable fee.
If you do head to Cashflow & Portfolios, be sure to tell them Cut The Crap Investing sent ya.
OUR SAVINGS ACCOUNTS
Make your cash work a lot harder at EQ Bank. RRSP and TFSA account savings rates are at 2.0%. You’ll find some higher rates on GICs, recently updated and increased to 3-4%. They also offer U.S. dollar accounts. We use EQ Bank, they have been awesome.
OUR CASHBACK CREDIT CARD
We make between $50 to $70 every month! And that’s on everyday spending. There are no fees with …
Last month we received $75 in cashback cash. We are spending too much, ha.
While I do not accept monies for feature blog posts please click here on the mission and ‘how I might get paid’ disclosures. Affiliate partnerships help me (try to) pay the bills for this site. That will allow me to keep this site free of ads and easy to read.