I am back on Seeking Alpha with a look at our U.S. (for my wife and me) stock portfolios. Like most we underperformed the market in 2023. As we know the cap-weighted U.S. market was dominated by the Magnificent 7. Though we had a very solid year. Our longer term beat over the market is still intact. It is a study in consistency and buy and hold. I’ve also run the numbers for my Canadian Wide Moat 7 and the (much better) Canadian Wider Moat Portfolio. We look at our Canadian and U.S. portfolios on the Sunday Reads.
There are many paths to building incredible wealth by way of investing (owning many wonderful companies), you don’t have to build a stock portfolio. Most are better off buying the stock markets of the world. You can do that in cheap fashion by way of the managed and wonderful all-in-one asset allocation ETFs.
Buy ETFs for free at Questrade
I choose to build stock portfolios, that’s not for everyone. And of course, this post is not advice. As we say on Seeking Alpha – Read. Decide. Invest.
The U.S. stock portfolio
Here’s the free-read link to the U.S. stock portfolio post on Seeking Alpha. And the key brag chart, ha …
In early 2015, I simply bought 15 of the largest cap dividend achievers, they were added to Apple, Berkshire and BlackRock. The dividend achievers index required a 10-year history of dividend growth, and applied financial health screens. I trusted the index methodology and large cap bias. The portfolio experience is a lesson in consistency and patience.
My Canadian stock portfolio
I will also soon update this post that covers the Canadian Wide Moat 7 and the Canadian Wider Moat Portfolio. I often beg readers to consider the better-performing wider moat option that includes the grocers and railways and a couple of no-brainer picks.
Here’s a key chart …
I will save the underperformance of the Wide Moat 7 for the post update, ha 😉
Again, I can find no better option for risk-adjusted returns (with market beat) than the wider moats. It is essentially the low volatility approach for the Canadian market. See BMO’s ZLB ETF.
I’ve also updated the Beat The TSX Portfolio post.
When defense rules – no surprise here
Apparently it is risk-off when the Fed begins to cut rates. And of no surprise to Cut The Crap Investing readers, it is the defensive sectors that rise to the top.
Rates are usually cut during periods of economic weakness, in an effort to spur growth.
Are markets expensive?
Markets are still relatively expensive, for the growth segment and the equal-weight index. That might suggest modest returns for the next several years. But of course, valuation can’t predict short term returns and corrections.
Last week I asked if U.S. stocks would save 2024. They’ve moved to new highs this week …
Canadian inflation is sticky as I predicted
While it’s not an investable guess (we get what we get), I did suggest in May that we’ll have sticky inflation. That is to say, it might be difficult to get inflation down to that 2% target. This guess helped me to earn my internet economist degree. It’s likely as useful and meaningful as a real economics doctorate.
Remember – guesswork don’t work. Macro is fun, but for entertainment purposes only.
And here’s a wonderful thread and breakdown courtesy of Professor Tombe.
And I think this sums up the mission of me, and this blog …
And on that journey, pay attention to fees that care about others (advisors and funds) and not you …
More Sunday Reads
Here’s the latest from Dividend Hawk as earnings season kicks into first gear. This past week Bell hit the send button on some generous dividends. Hawk and I were on the receiving end (as are most Canadians). You’ll also find a dozen or more earnings summaries led by U.S. financials. Plus, the blog posts of the week.
Hawk shared this podcast from Mike The Dividend Guy – 3 U.S. stocks for 2024.
And in the always-prolific weekly post on Banker on Wheels, we begin with – maybe you shouldn’t go 100% equities.
The balanced portfolio, it’s back
Another interesting hit on BOW this week – the naysayers were wrong about the 60/40 Balanced Portfolio writes Morningstar. For 2023 overall, the 60/40 portfolio posted its best returns since 2019.
You’ll find more evidence of that as I updated the returns for the core ETF portfolios on Cut The Crap Investing.
At My Own Advisor Mark pays off his mortgage to become debt free. Congratulations to Mark and his wife. That is wonderful, and a wonderful feeling. Managing, and potentially eliminating all debt (especially the mortgage) is a bedrock of successful financial planning. Most of us should try to enter retirement or semi-retirement with no debt, or very manageable debt.
They will celebrate with a trip, and with more money to invest in 2024 as they prepare for semi-retirement.
The Wonder Years
Fritz is back with another delightful post that echoes The Wonder Years – a fantastic (and super smart) sitcom that ran from 1988 to 1993. The show was moved along by young Kevin’s inner thoughts that were delivered by way of voice-overs, as Kevin tried to figure out life. Turns out that Kevin knew alot about life, and even retirement.
Turns out, the lessons Kevin learned as he tried to figure out adolescence are also very applicable to us as we try to figure out our paths in retirement.
The Retirement Manifesto
I’ll just offer one little teaser. Childhood is all about discovery and curiousity. In retirement, when we all might have a lot of free time (similar to when we were young) rediscover your curiousity. Wonderful!
OK, and one more – learn how to play again. When I was an ad guy I wrote this tag line for Kinder – Have you played today? It was aimed at the parents more than the kids.
Who’s your (dividend) Daddy?
And Dividend Daddy wonders …
He’s a prolific and very successful investor. I will often write that total return wins the day over dividends, but there is no discounting the fact that the dividend focus often leads to wonderful investor behaviour. At the same time we should consider that Canadian home bias and avoid sector concentration.
Why not do a bit better, with less risk?
At Findependence Hub, we have the Burn Your Mortgage podcast.
And I’ll leave you with a final and very important truth …
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OUR CASHBACK CREDIT CARD
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