Today’s headline is borrowed from a Tweet that you’ll find later in this post. That notion is so bang on and perhaps summarizes what has been going on for a year or three, and well, forever. The investors and portfolio managers that have been scared off by the risks have been treated to some level of underperformance, or what we’d call opportunity costs. Greater returns were available for those who stayed invested and stuck to their investment plan. The economy and stock markets have been fooling most everyone. Bears sound smart. Bulls make money.
In a Tweet (below) you’ll find the recent and very generous returns for U.S. and Canadian stocks.
Awareness is preparedness
In this blog I often shine a light on risk. Awareness is preparedness. The idea is to reinforce the basic investment truth that we have to invest within our risk tolerance level. And the fact is, most investors take on too much risk. Studies show that when we enter recessions and severe stock market corrections most investors (or too many) will end up buying high and selling low. Essentially doing the opposite of how we build investment wealth over time.
Use the awareness of risk to embrace a portfolio that aligns with your risk tolerance level so that you can stay fully invested. We don’t use risk and the discussion of risk to time the markets. The last few years have offered a pronounced demonstration that guess work does not work.
Within our risk tolerance level we can build an ETF Portfolio, look to an all-in-one ETF portfolio solution or check out a Canadian Robo advisor for low-fee portfolios, advice and planning.
Justwealth is Canada’s top robo advisor.
It’s also easy to build a simple and effective stock portfolio.
The Canadian debt picture
And here’s a big ouchy on Canada’s debt servicing …
Of course that trend cannot continue. And a study from Scotiabank shows that profligate spending is responsible for 2% of the rate hikes.
Canada certainly needs to get its fiscal house in order. It goes without saying what needs to be done.
Bears sound smart. Bulls make money
And well said …
This Tweet / observation might sum it up nicely. Awareness is key, but fear is the enemy.
U.S. global dominance is just staggering. As I often write it is where they kept most of the best companies on earth. Canadians should be careful with that Canadian home bias.
Recent performance for Canadian stocks (XIU):
- 1-year 3.1%
- 3-year 32%
- 5-year 56%
- 10-year 110%
Those are also some very generous returns.
More Sunday Reads
Let’s check in with Dividend Hawk for the earnings reports and investment blogs of the week.
Included in the mix if The Dividend Guy’s thoughts on 35 stocks.
At Findependence Hub, a wake up call for those choosing mutual funds over Robo Advisors.
And at Banker on Wheels it starts with strategies to live off of your portfolio, by way of Vanguard.
You want a strategy that accomplishes 2 often-competing goals: 1) having enough money to support your desired lifestyle, and 2) ensuring there’s enough left for the future. We’ve got a strategy that can help you with both.
Vanguard
Of course, that is an educational goal of this blog as well. It’s not that difficult to build a successful portfolio for retirement. Readers of Cut The Crap Investing know that I embrace a ready-for-anything all-weather portfolio model for retirement.
Banker on Wheels also Tweeted on the David Ramsey 8% rule for retirement funding.
Be careful when you choose your “experts”;)
Also in the mix:
And from Lance Roberts and friends, is the 4% rule back?
Time to lock in GIC rates?
We knew it was coming and as I suggested. The EQ Bank post is updated with the first round of GIC rate cuts. Nothing too severe, but it may be the first of an ongoing trend if overnight rates are coming down next year. That seems like a good guess.
On the flipside, thanks to the belief that we’ve seen the end of rate hikes in Canada, the high yield stocks have been roaring back. And of course, bonds will do well as rates fall. Looking ahead as they always do, bond prices have responded in the last few weeks.
Just for fun (using the U.S.) here’s the time it took, historically, from the time of the last hike to the first cut …
And on the Canadian Wide Moat Portfolio front, the Canadian grocers are reporting generous gains in revenues and profits. You’ll find that summary in Kyle’s post for MoneySense – Making Sense of the Markets.
The insurers have been enjoying the higher rate environment. And you can certainly include those financials in the Wider Moat Portfolio.
Stocks are paying attention to that seasonal trend after a strong first half performance.
I’d be happy to see a Santa Claus rally. I’d take some profits for some Florida golf.
Help yourself – cut 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.
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Hi Dale,
Re: “Recent performance for Canadian stocks (XIU)”
The percentages you show are absolute (full period) returns. I calculated and added the annualized total returns in parentheses below:
1-year 3.1%
3-year 32% (9.7% annualized)
5-year 56% (9.3% annualized)
10-year 110% (7.7% annualized)
Thanks Bernie 🙂