The first week of 2024 got off on the wrong foot for U.S. stocks. They slipped by 1.80%. North of the border the big Canadian dividend payers rose to the occasion delivering 1.5%. Given that, it might be fitting that I updated the Beat The TSX Portfolio post to include the returns for 2023. That said, the BTSX skipped a beat in 2023. The TSX was up 11.7% while the Beat The TSX Portfolio rang up 7.8%. The simple big dividend portfolio concept has a long history of beating the market. But there can be years of under performance and the concentrated portfolio usually comes with greater volatility.
Here’s the Beating the TSX Portfolio post on Cut The Crap Investing.
And falling in line the Canadian big dividend ETFs also underperformed in 2023.
David Burrows offered some context with the following chart after I posted the returns for the Vanguard High Dividend – ticker VDY.
Those greater returns also came with less volatility.
And here’s the chart I posted on Twitter / X – Vanguard VDY vs market comparison.
VDY still keeps the beat
We’ve used that ETF in my wife’s accounts since VDY inception. I was familiar with the ETF premise as I worked on the Vanguard Canada ETF launch. Recently, I sold the ETF and skimmed enough of the holdings to replicate the ETF and remove the management fees. I will soon write a post detailing the stock holdings, and I’ll track the performance vs VDY and the TSX Composite.
Walgreens cuts and Apple falls
Courtesy of GRIT here are the key events from the past week …
– JPMorgan stock hits new record high – Walgreens cuts dividend 47% ending 48-year streak of consecutive dividend increases – Barclay’s downgrades Apple to “underweight” – U.S unemployment rate stays flat at 3.7% in December – U.S adds 216,000 jobs in December. BUT: 10 of the last 11 months have seen downward revisions in jobs number (according to ZeroHedge) – U.S national debt hits new record high +$34 trillion – Janet Yellen says the US has achieved a soft landing – FED minutes released: officials in December saw rate cuts likely, but path highly uncertain – Bitcoin hits new 1-year high of +$45k – Bitcoin Spot ETF “basically done” and ready to launch according to Bloomberg analyst – could be as soon as next week! – Jim Cramer says Bitcoin can’t be killed – Canada economy in BIG trouble: Q3 GDP contracted at -4.4% NOT -2.4% as previously reported (according to National Bank) – Americans are increasingly tapping their retirement savings to cover housing and medical bills amid higher cost-of-living pressures – Global container shipping rates skyrocket +173% as carriers divert trade from the Red Sea
We started the year with some sector rotation. The losers became winners.
You can also have a read of my 2023 year in review for investors. It was another year that fooled most everyone, and it proved once again that ‘guesswork don’t work’.
Patient investors who stuck to their knitting were rewarded.
Many are still hoping for (and predicting) a soft landing in 2024, with rate cuts to help the cause. But who knows? You’ll have to wait for my 2024 wrap to get those answers.
More Sunday Reads
And here’s the first weekly wrap of the year from Dividend Hawk. With Hawk I shared in that juicy Telus dividend last week.
At My Own Advisor Mark we have the asset quilt edition that shows sector and style returns and ranking over the last 15 years.
Jonathan Chevreau (via Patrick McKeough) shows why Canadian investors should hold U.S. stocks. That’s a must for sure, and we should certainly contain our Canadian home bias. I am particular to U.S. multinationals for international diversification. But of course, investors can consider investing beyond North American stocks. You’ll get that diversification in the global asset allocation ETFs.
I tweeted this Canadian tidbit …
In the Globe & Mail, a few facts from a bearish article. from David Rosenberg – “This is a key factor. Productivity in the U.S. is expanding +2.5 per cent year over year which compares with a -2.5 per cent slump in Canada. This means that neutral rates will diverge from historical patterns, and interest rate differentials in the future will work against the Canadian dollar.
Canada and the U.S. are heading in opposite directions. And more mortgage-reset stress is on the way …
Popular portfolio returns
At Banker on Wheels we have the returns for popular portfolio styles.
Also include in the mix is – even advisors suggest that bitcoin might find a place in balanced portfolio. It’s possible that spot price bitcoin ETFs (holding bitcoin) will be approved in the U.S. next week. Over time, that is likely to move bitcoin to wider adoption and recognition. Not advice, but I’ve long suggested that investors consider a modest position, even if in the 2% portfolio weighting area. And be prepared to rebalance along the way.
My bitcoin RRSP weighting is 1% (gains were trimmed near the top), while in my TFSA it is in the 15% range.
Doc Graham at FiPhysician shows us why we humans are simply not wired to be successful investors, we have to fight our caveman urges and response to stress.
Know this, before you retire
The Retirement Manifesto is a favourite stop of Cut The Crap Investing Readers. Here’s the 5 things you need to know before you retire. That includes the notion that money won’t matter that much after you retire. And the transition to retirement may be more difficult than you expect. Another very good post from Fritz.
Get a financial plan and a fulfilling life plan for a successful retirement journey.
And more on the mission of this blog and all who support it …
And on the big 4 for Canadian oil and gas plays.
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