I was back at MoneySense for another week – making sense of the markets. So I had to pay attention to what the heck was going on. Big tech came up big in the U.S., moving the markets higher. And the more times you mentioned AI (artificial intelligence) in your earnings conference call, the greater the market enthusiasm. Those earnings battled against another bank failure in the U.S. It’s big U.S. tech earnings to the rescue, plus a slew of Sunday Reads.
Here is making sense of the markets for the week ending April 30. This sums it up …
There’s been a bit of a tug-of-war in markets over the last 36 hours between the dominance of U.S. tech pulling aggressively on one side against the still shaky foundations of U.S. regional banks on the other. … Meta’s positives after-the-bell earnings have helped again overnight but the battle is set to continue.
In the end it was a positive week for stocks.
I also look at the equal-weight S&P 500 index laying a beating on the S&P 500 cap weight index. Of course most portfolios and ETFs use a cap weighting indexing strategy.
On this blog, I updated the post for the big dividend battle, Vanguard’s VDY vs iShares XEI. As I had suggested a couple of years ago, XEI was likely to begin a period outperformance thanks to greater energy exposure. That played out.
More Sunday Reads
At My Own Advisor Mark asks – is stagflation on the way? The potential of a stagflationary environment is getting a lot of “support” these days. We have a softening economy and inflation that is too sticky. We don’t know what economic environment we will get, but keep in mind that stocks don’t work for inflation or stagflation. That said, while stock markets don’t work, certain types of stocks can work as inflation fighters – mostly oil and gas stocks and commodities stocks and REITs.
From 2021 …
- iShares Energy XEG.TO – up 168%
- Purpose Real Asset ETF PRA.TO – up 50%
I’m happy to have some significant inflation fighters. I can’t imagine not being protected. Of course, most Canadian investors do not hold dedicated inflation fighters, especially those with an advisor. You’ll find inflation friendly assets in the all-weather portfolio posts on this blog. You can use the search tool.
How much does it take to retire early? Have a read of Bob’s latest at Tawcan. Here’s one example …
The punchline: with a $1.15M portfolio, a couple can absolutely retire at age 40 but they still have to work and hustle a bit for a few years to avoid running out of money 55 years later.
More week-in-review posts
Given than earnings season is in full swing, we have to check in with the week in review at Dividend Hawk.
And Banker on Wheels delivers with so many great reads and podcasts.
On the Findependence Hub, we’re looking at Cash Alternatives: Bond ETFs and other vehicles.
At MoneySense, Jonathan Chevreau asks if you should cash out your workplace pension? That is a massive consideration. On this blog I previously looked at pensions with the help of pension and retirement expert Alexandra Macqueen.
Defined benefit pension planning. Bad advice could cost you your retirement.
For more on the retirement front, FiPhysician offers – money is fungible and asset allocation.
In retirement, not having a debt payment is the same as having more money to spend. Debt and cash are fungible. If you didn’t have that mortgage, you’d have more money at the end of the month. In addition, debt is leverage and inversely affects your asset allocation. Fun stuff!
And on The Retirement Manifesto, Fritz looks at a surprising truth – why is it so hard to spend money? It is not easy to flip the switch from saver and investor to spender.
It’s relevant for all of us, especially those that have been lifelong savers and now realize how hard it is to spend money in retirement. (If you’re not yet retired and find that hard to believe, just wait). I’m writing these words in the hope that the insight into my thought process will help when it’s your turn to make a spending decision in the days to come.
We have to learn how to spend, or at least take money out of accounts such as RRSPs and RRIFs in the name of tax efficiency.
investors can check in with our friends at Cashflows & Portfolios for that optimal order of asset harvesting to create retirement income.
And let’s catch up with a portfolio update on Money Maaster.
Making a better Canadian Wide Moat Portfolio
I use a concentrated version of the Canadian Wide Moat Portfolio. Given that, I have seen the weakness in a couple of stocks put pressue on the portfolio value.
So, I have looked at reducing the concentration risk, creating better risk adjusted returns with the use of BMO’s Equal Weight Banks and Equal Weight Utilities ETFs. I came to some very interesting conclusions. Here’s the teaser tweet/chart …
That is a crazy beat. I’m still convinced that it is the best portfolio model for risk-adjusted returns. And then check out the Wider Moat Portfolio that adds the lower yielding grocers and rails. You’ll find that chart in the Tweet thread. It gives that market-beating portfolio another level of beat.
And for the record I am mostly sticking with my concentrate stock mix. I will layer in some utilities in modest fashion.
From that post …
|Fig 1: BTSX vs. VDY & CDZ (AVG. ANNUAL RETURN)
|BTSX vs. VDY (10 Yrs.)
|BTSX vs. CDZ (5 Yrs.)
All said, the BTSX offers greater risk and lower returns compared to the Canadian Wide Moat Portfolios.
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Cutting fees and the crap investing …
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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
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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 $40 to $70 every month! And that’s on everyday spending. There are no fees with …
Last month we received $45 in cash. Spending is down, yes! Less on gas, less on restaurants, less on groceries – our 2% cashback categories.
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