The stock markets were able to leave the banking crisis behind. We moved on to more smooth sailing with markets up about 3-4% for the week. The first quarter was very strong. And growth sectors led the way. Historically, a strong first quarter sets the table for a strong year. That said, the storm clouds are still circulating and forming. We are likely to still have a choppy 2023.
Here’s a chart that shows the performance for March and the first quarter. Not a bad quarter offers twitter pal Markus.
And what usually follows a robust quarter …
Of course, past performance does not guarantee future returns.
It’s as foggy as every out there
Mike Dolan from Reuters offered …
But views on that have gone around in circles since December – first an assumption of a global recession in 2023, followed by a rethink on the euro zone and China over weather and lockdowns; then signs of re-acceleration in America and talk of ‘no landing’; and now back to recession jitters over bank credit.
Markets are pricing the best of both worlds: a recession that brings inflation down rapidly and keeps rates low, yet one where corporate earnings do not fall sharply. The consensus view is that earnings growth will disappear in 2023, but return to growth in 2024. Yes, we’re back to that Goldilocks scenario for stocks.
In January of this year, Goldilocks said hold that recession. I began that Sunday Reads post with …
The pending recession might turn out to be the most advertised and expected recession in history. It might be so expected that it doesn’t happen. Or perhaps the economic shifts are now happening in slow motion. We appear to be in a Goldilocks scenario with falling inflation and a consumer that refuses to cooperate with the recession narrative. Is a soft landing possible, or are we just delaying the inevitable?
Canada has rebounded sligthly on the economic growth front.
Real gross domestic product rose 0.5% in January from the previous month, Statistics Canada reported on Friday. In a preliminary estimate, the agency said the economy grew by a further 0.3% in February. Annualized, growth is above 2.5% in the first quarter, better than the 0.5% pace that the Bank of Canada had predicted.
All said, the consensus estimate appears to be that Canada will slip into a soft recession late in 2023.
It’s also quite likely that the Bank of Canada will continue with the rate hike hiatus, holding rates steady at the next meeting and decision, later this month.
Many of the indicators in the U.S. still point to a recession of some sort. Lance Roberts offers that recession indicators suggest that the Fed broke something.
And more more on the U.S. banking crisis and on the economic front, some disturbing thoughts from John Mauldin.
Of course we don’t know what will happen. For a retiree or those in the retirement risk zone, an all-weather portfolio makes more sense than ever.
Accumulators should keep on accumulating. Lower prices are more than good.
Canadian banks, not so special?
Ian McGugan of the Globe & Mail offered what many Canadians will find a provocative post. It challenges the notion that Canadian banks are always world beaters and stock market beaters. Over the last 5 years the sector has underperformed.
I hold RBC, TD and Scotiabank. In my wife’s accounts she holds Vanguard’s Canadian High Dividend ETF (VDY). That fund is over 55% financials, that will include insurance companies. The fund is then 25% energy and a sprinkling of “other”.
The ten year picture is still favourable for the big Canadian banks. From March, 2003, until today, the five largest Canadian banks rewarded their shareholders with total returns, including dividends, of between 9 and 11.7% a year. Throw in National Bank as well that has been a perpetual outperformer within the space.
In that post Ian also offers “twenty years of triumph” …
The banks could see tighter postcrisis regulation, threats from high-tech disruptors, volatile interest rates and the potential of a real estate recession. Also add in that Canada is one of the most deeply indebted nations on earth.
No April Fool’s – the First Home Savings Account is here
On April 1 the tax-free First Home Savings Account went live in Canada. That is a wonderful new savings program that should give homeowner wannabes another tool in their saving and investing chest. Canadians can contribute $8000 annually to a lifetime limit of $40,000. Like the RRSP program, you’ll get a tax deduction for the amounts contributed. You can also combine the FHSA with the Home Buyer’s Plan that is part of the RRSP program. Add in the Tax Free Savings Account and a Canadian can save and invest a considerable sum in a tax-free manner. Though consider the HBP amounts need to be “refilled” on schedule or you will be taxed. And eventually, when you do take money out of your RRSP to fund retirement, it is taxed as income.
Check out my post link for the everything you need to know about the First Home Savings Account. If you’re are looking to use the FHSA you should open an account in 2023 to generate the contribution space, even if you don’t plant to contribute in 2023.
There are reports that the big banks and many institutions are not yet able to offer the account, they are slow out of the gate.
That said, Questrade had the FHSA available on April 1.
At Questrade you can buy ETFs for free.
I did check in with friends at EQ Bank, and they had nothing to report yet on FHSA availability. I would guess and hope that EQ will eventually offer that account type.
It may be many months before the big banks and others offer this new account type. If you want to get started, head to Questrade. And readers, please kindly offer your findings in the comment section. Who else has the FHSA up and running?
Please ensure that you are a qualified first time home buyer.
Got $50k for that RESP?
Here’s a very good thread courtesy of Aaron Hector. What is the best strategy if you have $50,000 available for the RESP? Put it all in at once for longer tax free growth? Contribute the funds in stages? Have a read …
For those who want advice and a managed RESP portfolio …
The smart way to invest in the RESP at Justwealth.
More Sunday Reads
At My Own Advisor, Mark offers stocks with moats. Thanks Mark. In that weekend reads you’ll find the Canadian Wide Moat portfolio post. I’d suggest you consider the wider moat version that includes the grocers and railways.
On Dividend Growth Investor, a historical look at the U.S. dividend achievers. For the most part, we use dividend achievers in our U.S. retirement portfolio.
On Tawcan, Bob shows that his annual spending is $40,563.19 and net worth increased 9.14% in 2022. Here’s the recent history. Bob has posts on each …
And as always, we have the week in review on Dividend Hawk. You’ll find the reports and blog posts that caught the Hawk’s eye.
Jonathan Chevreau offered the good news and bad news for the Canadian federal budget. Canadian banks and rich folks are a target for new taxes. But you might get some grocery dollars.
On Banker on Wheels we’re visualizing 90 years of stock and bond performance. That post includes a host of reads and podcasts.
Kyle Prevost was making sense of the markets at MoneySense.
No love for banks in the 2023 federal budget, Dollarama and Lulu stretch profits, banks stabilize (for now), and the money/happiness link is pretty nuanced.
Political leaders as 80’s rock stars
Thanks for reading. Have a great Sunday and a wonderful week. Don’t forget to follow me on Twitter, and follow this blog – it’s free.
Please, Cut The Crap Investing …
And then, 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.
I have partnerships with several of the leading Canadian Robo Advisors such as Justwealth, BMO Smartfolio ,Wealthsimple, Nest Wealth and Questwealth from Questrade.
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.
Cashflows & Portfolios
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 (as do many Cut The Crap Investing readers), 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 2.5% and 3.5%. You’ll find some higher rates on GICs, recently updated and increased to 3-5%. 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 …
The Tangerine Cash Back Credit Card
Last month we received $45 in cash. Spending is down, yes! Less on gas, less on restaurants, less on groceries – our 2% cashback categories.
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.
Leave a Reply