Happy holidays and happy Sunday. This week we’ll kick things off with two videos on the same theme. The economist and financial prognosticator industry is massive. Just turn on BNN Bloomberg, CNBC, or other. The problem is, they all get it wrong, just about all the time. Charlie Bilello brings that to life with the week in charts video. And Preet Banerjee shows that the top stock market return guesser over the last 10 years missed the mark by about 10% annual. What an industry, with so many paid to be wrong. Throw mutual fund managers in the mix as well. Guesswork don’t work.
Charlie Bilello has a video that sums up the week, and more. We can see that economic forecasts and guesswork have absolutely no predictive ability when it comes to stock and bond returns. That’s a must watch.
That post includes a historic move in the bond market with 2 years of returns in 2 months.
We had 772 days for the Dow to move from 35,000 to 36,000. It was the longest wait in 10 years to climb another 1,000 points. And of course, that’s not the longest wait. It can take several years or a decade for an index to make new highs. That’s why we enter the retirement risk zone several years before the retirement start date.
Recent post: The waiting is the hardest part.
New highs suggests more new all time highs are likely on the way. Why? Stocks mostly go up. But once again anything can happen.
Did the bond market get too excited?
The video also looks at the history of bond markets in rate cutting cycles. Charlie shows that the markets may have front run much of the bond returns in the near term. Of course, we don’t yet know the extent of any Fed rate cuts and the pace of cuts. And none have happened yet.
You’ll also see charts showing real wage gains. For quite a while I have suggested that it’s all about employment. A strong consumer spends and supports the economy. That strength begins in the workplace with healthy businesses that can afford to hand out higher wages. That is THE event that has fooled economists the most.
Stock market targets are soooooo wrong
And for more on the ‘guesswork dont’ work’ file we turn to Preet Banerjee …
The top ‘guesser’ firm for stock markets is off an average of 10% per year. Of course, they are often factoring in that economic ‘stuff’.
I enjoy watching the economic numbers and I’ll listen to a select few economists. It’s more than interesting. And I think there is value in putting the risks on the table in this blog. Awareness is preparedness. The number 1 mistake of investors is taking on too much risk and not being prepared for recessions and severe stock market corrections. In theory risk management is not that hard. We are always prepared for the difficult periods. You don’t fix a ship in a hurricane.
We invest within our risk tolerance level. It’s a must to adopt and embrace a greater financial plan.
We do not change our strategy based on the massive economic and financial guesswork industry. At the core is long term optimism.
Bears sound smart. Bulls make money.
This kind of optimism works for me …
The U.S. dividend aristocrats
Dividend Growth Investor details the returns of the U.S. Dividend Aristocrats Index. It shows a period of underperformance and then a period of extensive outperformance vs the S&P 500. That demonstrates the importance of patience when you adopt an investment strategy.
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That dividend growth strategy outperformed when U.S. stocks got into trouble, especially during the dot com crash of the early 2000’s. The investor had to wait for value investing to come back in favour.
More Sunday Reads
At My Own Advisor we have the art and math of RRIF withdrawals. Mark outlines:
Here are two key experiences from others to share related to RRSP/RRIF withdrawals:
- Unless retirees have very high taxable income already; lots of assets (in the millions) whereby they already stomach paying higher taxes most retirees or semi-retirees should at least consider some RRSP withdrawals in their retirement years to help “smooth out taxation”.
- Beyond RRSP/RRIF income, should any retiree have a workplace pension and/or who may have other significant income streams in retirement (like non-registered investments that generate healthy dividends) ithey may find themselves in a higher tax bracket as they age into their 70s and 80s, via forced RRIF withdrawals, potentially losing out on government Old Age Secuirity (OAS) benefits.
It is essential that (almost all) retirees access a retirement cash flow plan. We need to know the optimal order and rate of account type harvesting. That is, RRIF vs TFSA vs Taxable vs Pensions vs CPP and OAS and other income. Only the software knows.
On the other side of the border FiPhysician looks at cashflows and retirement planning.
You’ll find a Canadian-focused retirement page at stocktrades.ca.
Finding joy in life
At The Retiremement Manifesto Fritz brings us 10 ways to find joy in life. Another very important post from Fritz. I am in agreement. Retirement takes a life plan and a money plan. Don’t just arrive at retirement’s doorstep wondering what’s next.
On the portfolio front here’s an update from Rob at Passive Canadian Income. Rob and family enjoyed a wonderful trip to Florida. He’s also enjoying portfolio and investment success.
While predictions are hard to make, let’s check in with Vanguard and see what their crystal ball has to say about 2024.
There is some very sensible evaluation in there. But the markets often have a mind of their own. The economy and market fooled most everyone in 2023. Will 2024 be any different?Be ready for some surprises is my prediction. 😉
We’ll be ready for most anything with an all-weather portfolio.
Dividend Hawk grabs the stories and blog posts of the week, every week. This week we shared in the dividends from Walgreens, RTX and Qualcomm.
And then for the weekly reads and podcasts shift to Banker on Wheels (bad pun, sorry ha). In the mix, BlackRock updates its ETF bitcoin filing to make access easier for the big banks.
Canada was first with spot bitcoin price ETFs. I hold bitcoin (ETFs) in my RRSP and TFSA. I’ve done very well. I’ll continue to hold that as a portfolio asset, while prepared for incredible volatlity. Of course I wrote the go-to piece on bitcoin for MoneySense back in January of 2021.
This week I twice updated the EQ Bank GIC rates. There were more rate cuts, of course.
Here’s a very good year-end checklist at Dividend Strategy.
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Have a great Sunday and week.
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Love your work—is there a year end TSX prediction roundup?
Thanks Gordon. I will love for one, for entertainment purposes. Ha.
Happy Holidays.
I learned from 2oo7/08 when very few predicted the magnitude of market despair on the horizon. And even if they did – David Rosenberg for one – they were still cautious in 2009 when stocks hit a generational low. Sigh … although the lesson is the old saw “hindsight is 20/20 vision” even I can’t resist a prediction – I predict the income from my 20 dividend growth stocks will go up in 2024. Already started with increases from TD, Enbridge, Royal and BMO.
If you are fortunate enough to have enough shares then you can simply never sell while collecting/living off the dividends.
Cheers, and Happy Holidays!
Dale, I was concerned when I read you would be back next week with a retirement email. I thought you were retiring!
I very much appreciate your insight and humour.
I do hope you can take some deserved time off over the holiday period. Wishing you and you clan the very best.
Thanks Marty. I will always be writing and helping, as long as I have a laptop and can somewhat figure out what order to put the words in. Even if that means finishing sentences with a preposition 😉
Happy holidays.