In last week’s Sunday Reads, the headline read that the recession can wait. The economic forces that are at work trying to tame the economy are moving in slow motion. I had suggested that we might take the Summer off, on the recession watch. And now we have a new bull market in the U.S. Historically that bodes well for the rest of the year. But of course anything can happen. We have a new bull market on the Sunday Reads.
Here’s a summary of ‘what history has to say’ about the beginning of bull markets. Just for fun, of course, as the future is highly ‘unpredictable’. That said, momentum for stocks can be a powerful force.
But in the long run, things have been overly positive. After rallying 20% from market lows, the S&P 500 averaged a 10% return over the next six months and 17.7% over the next 12 months, per Detrick’s research.
And here’s a fascinating chart. Essentially, only 7 stocks are driving the S&P 500 in 2023. The rest in total are flat …
That’s just crazy how 7 stocks can lift the total market by 11%?
And on a price to sales evaluation (how much revenue are you owning per share) these stock darlings are getting even more expensive.
While I won’t claim to know where markets are going nearterm, let’s not forget the lost decade for U.S. stocks. I don’t know about you, but I’m having early 2000’s flashbacks, ha.
While we don’t know the future for the markets, we can control the earnings that we buy. I would be cautious of very high valuations for certain stocks and ETFs.
The Fed watch
Next week we will be treated to a rate announcement from the Fed.
The Federal Open Market Committee on Wednesday is expected to maintain its benchmark lending rate at the 5%-5.25% range, marking the first skip after 10 consecutive increases going back to March of last year. While officials’ efforts have helped to reduce price pressures in the US economy, inflation remains well above their goal.
There is a strong chance that we will see rate hike in July, south of the border.
BoC hikes rates
The Bank of Canada raised rates another 0.25% this past week. Employers and consumers appear to not be reading the recession memo – they needed another reminder.
On the plus side of higher rates, we are being treated to some higher rates for our savings. Yes, EQ Bank keeps my busy with what feels like endless hikes to their GIC terms. 🙂
I would not argue with any retiree that would keep the next 3 years of spending needs in 5% yields. That beats the current inflation rate.
That sounds like a no-brainer.
The road to financial success
Here’s a wonderful tweet from twitter friend (and a great follow) Dividend Growth Investor.
The journey to incredible wealth creation can be a rocky road. We have to be mentally prepared for battles along the way. At times it’s easy, it’s wartime in other periods.
And at time’s we’re just grinding (buying on a regular schedule) and laying the base for the next explosion of wealth.
More Sunday Reads
At My Own Advisor, Mark looks at life and work balance – the end zone for many who build financial wealth. It leads to life health and financial health.
Bob at Tawcan asks – what if you run out of life? the save / spend balance. From that post …
We will reach financial independence. For us, it’s no longer a question of if we can reach financial independence. It’s a question of when. Perhaps there’s no need to focus and worry about the when. Enjoy the journey, we’ll get there when we get there.
That is a theme that I would embrace. We can’t sacrifice most everything now, with the goal of being financially free in the future. We have to live it up along the way. I moved to consulting in my 40’s, putting family and health well before a mind-blowing savings rate. Those were peak earnings years. But I turned them into peak living years.
For the week in review we can glide over to the Dividend Hawk. You’ll find some great links in that post.
And at MoneySense Kyle Prevost makes sense of the markets. There are some eye-catching chart is the weekly wrap, including the historical relationship between international and U.S. markets.
The weekly post at Banker on Wheels starts with a look at the 10-year projections from Vanguard. You’ll see that Vanguard projects greater returns from developed and developing markets, compared to the S&P 500. They also feel that U.S. growth will underperform over the next decade.
Get $80,000 from CPP and OAS in retirement?
Here’s a surprising stat and tweet from Mark McGrath …
That’s crazy. While delaying CPP and OAS does not work for everyone, it appears to be a benefit to most. We don’t know the score until we run the tables – the retirement funding software.
Many Cut The Crap Investing readers head on over to Cashflows & Portfolios to discover the optimal order and rate of account harvesting in retirement. You don’t know what you don’t know.
At Findependence Hub, John DeGoey looks at the value of advice. The cost is important of course. Unfortunately the majority of Canadians opt for high fee mutual funds, and usually receive no advice or poor advice. Most of the ‘advice’ comes from salespersons not real advisors.
I’m a fan of good advice, but that is not the norm in Canada. In fact it’s quite rare.
When you need more comprehensive advice and planning, you can look to a fee-for-service advisor. You can get conflict-free advice without having an advisor in your pocket every day.
A wonderful solution for advice, planning and low-fee ETF portfolios is Canada’s leading Robo Advisor – Justwealth.
From Larry Bates, the author of Beat The Bank, here are 7 questions to ask your advisor
Thanks for reading. Don’t forget to follow this blog. It’s free, and I’m also quite confident that it will pay off over the long run.
Have a great Sunday, and week.
Please, cut the crap investing …
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We make between $40 to $70 every month! And that’s on everyday spending. There are no fees with …
Last month we received $70 in cash. We were travelling and spening.
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