It was a wonderful quarter for U.S. stocks. In fact, the S&P 500 index rose 10.2% during the first three months of the year, its best first-quarter performance since 2019. The Dow Jones Industrial Average and the Nasdaq Composite gained 5.6% and 9.1%, respectively. Canadian and International stocks also pitched in with a strong quarter. Given that, balanced portfolios of all stripes are rewarding patient investors. A global equity portfolio (XEQT) delivered 9.6%. It’s the best first quarter since 2019 on the Sunday Reads.
U.S. stocks had their best first quarter since 2019.
Looking for that soft economic landing
While the stock market saw intermittent sell-offs, it continued marching higher as robust corporate earnings and a strong labor market renewed hopes that the economy will avoid a recession.
The S&P 500 on Thursday logged its 22nd record-high close of the year. The first 17 were recorded during the first 50 trading days of 2024, the largest tally during that period since 1998, according to Bespoke Investment Research.
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Companies in the S&P 500 saw earnings grow 4.3% during the fourth quarter of 2023 from the prior year, according to FactSet data. Analysts polled by FactSet expect S&P 500 earnings to grow by more than 10% for all of 2024.
Let the good times roll?
In another positive sign for markets, history suggests that new highs at the beginning of the year often portend positive annual returns. The S&P 500 has seen an average 15.8% return in years that it notched new highs in January and February, in contrast to an average 9.2% gain for all years, according to CFRA Research data going back to 1954.
I like this quote that I read on Seeking Alpha …
All manner of genius is presently simply embarrassed by the market’s failure to stop going up.
Alex King – Cestrian Capital
Every sector (except real estate) offered gains in the first quarter.
And momentum is a powerful force. Of course past performance and trends are not guaranteed to repeat. But just for fun, have a look at this table.
While markets mostly go up, the chances of them going up are at a higher level in 2024. Of course that’s no reason to adjust your strategy. We adopt a simple investment plan and stick to it like glue. As I wrote a few months ago …
The watiting is the hardest part. We set the table for the next robust upturn, or three.
A nice mix of top performers
Our top performers for the quarter are a mix of Canadian energy stocks, tech and some defensives. Bitcoin leads the way.
Canadian stocks are helping out
Canadian stocks also had a solid first quarter with iShares TSX 60 (XIU) up 6.0%. That was the headline in last week’s Sunday Reads – Canadian stocks are better than you think.
And a report on Thursday offers hope that the Canadian economy still might have a pulse after many quarters of population-adjusted negative growth (aka recession).
This week I updated the post that looks at the BMO Low Volatility ETF – ZLB. That may be the best core Canadian ETF. I also compared that wonderful market-beating ETF to the Canadian Wide Moat portfolio.
And here’s a post on the move out of high fee Canadian mutual funds. More Canadians are making the sensible shift to ETF portfolios and building stock portfolios. But it’s not fast enough. There’s still $2 trillion in mutual funds, most of those funds being high-fee and very poor performing. The opportunity costs is just tremendous. Please share this blog with friends and family stuck in ‘the old way’ to invest.
Canadians can invest in all-in-one global ETF portfolios that can cut fees by 90% or more. I will update that post (that looks at the leading asset allocation ETFs) next week, to reflect first quarter performance.
More Sunday Reads
Keeping with the Canuck theme, at My Own Advisor Mark’s weekend reads offers The TSX turnaround.
At The Retirement Manifesto, Fritz puts together the building blocks for a successful and happy retirement. From that post …
I’ve realized a few things about building blocks:
- They aren’t just childhood toys.
- Building blocks exist throughout our entire lives.
- We’re never too old to play with them.
- Used wisely, they can help us live a better life.
At Findependence Hub, here’s how ETF fees work.
Savings ETFs
At Tawcan, Bob takes a look at the high-yield savings ETFs in Canada. Thanks for this clean comparison table.
We can still earn a real return above inflation these days. For those who want to lock in some genergous risk-free yield, they might check out the GIC rates at EQ Bank.
At the week in review at Dividend Hawk I found this post on Enbridge as they enter into an agreement to develop, construct, own, and operate natural gas pipeline and storage assets connecting Permian Basin natural gas supply to growing LNG and U.S. Gulf Coast (“USGC”) demand. Enbridge will take advantage of a growing trend and cash cow.
At Banker on Wheel’s Weekend Reads a link t0 the investment lessons from cycling the world.
At stocktrades.ca a few potential AI (Artificial Intelligence) plays in the Canadian market.
And here’s a wonderful post on learning how to spend in retirement, with an example of waiting too long to harvest the wonderful investment gains. It is a well known wealth management truth that too many retirees have difficulty spending in retirement. Perhaps we can learn from that real life demonstration. Manage the risks, but understand the benefits of harvesting dividends and selling shares to funds life’s experiences.
For example …
Setting sail
And Dividend Daddy is getting read to set sail. It’s nice to witness the benefits of successful long term investing.
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Cut the Crap Investing readers can earn a break on fees at Questrade by way of that partnership link. At Questrade, you can buy ETFs for free. It is a good place to build your stock portfolio as well.
Advice, planning and low-cost portfolios
Here’s Canada’s top-performing Robo Advisor, Justwealth. You can get advice, planning and l0w-fee ETF portfolios all at one shop. You can have it all.
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.
CASHFLOWS & PORTFOLIOS
The self-directed investor might consider the service provided by Mark Seed from My Own Advisor. He runs Cashflows & Portfolios where they will provide options for that optimal retirement funding strategy. That service is provided for a very reasonable fee.
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OUR SAVINGS ACCOUNTS
Make your cash work a lot harder at EQ Bank. RRSP and TFSA account savings rates are at 2.5% and 3.0%. You’ll find some higher rates on GICs up to 5.2%. They also offer U.S. dollar accounts. We use EQ Bank, they have been awesome.
OUR CASHBACK CREDIT CARD
We make between $40 to $70 every month! And that’s on everyday spending. There are no fees with …
The Tangerine Cash Back Credit Card
For February we received $40 in cash. That’s our lowest level of spending and cash back in years.
While I do not accept monies for feature blog posts please click here on the mission and ‘how I might get paid’ disclosures. Affiliate partnerships help me (try to) pay the bills for this site. But they don’t, ha. That will allow me to keep this site free of ads and easy to read.
It wasn’t until I read Beat the Bank that I found out that the MER was calculated on the value of my portfolio and not just the income I was earning. That was a huge wake up call for me. I started looking more closely at the MERs in my portfolio and worked diligently at reducing or eliminating them. I wonder how many people know this and how much it will cost over their investing timeline.
Nice start for sure. I’m doing better than I did in ’19 YTD, and that ended up a very good year. Lots of things are clicking- BTC, US, Energy, even Canada. We’ll see if ’24 continues to roll.
Have a good trip home!