A crazy week to forget on the Sunday Reads.

In last week’s Sunday Reads we looked at the projected rate cut path in Canada, and the recent stock market weakness. That weakness and jitters turned into a panic on Monday. But go figure, the stock markets then recovered nicely throughout the week. U.S. stocks ended up where they were a week ago. As I pointed to in last week’s post, this volatility is normal and expected, but it can be a dramatic ride. We’re best keeping this as a spectator sport. We stay the course and stick to our investment schedule. Retirees should be prepared for down days, weeks, months, years. It was a crazy week to forget on the Sunday Reads.

From last week – The path of rate cuts and bond yields spike. In the post I added updates on Monday and Tuesday, for what the heck is/was going on.

Expensive with so-so growth

In the Globe & Mail Ian McGugan offered a nice summary of the strange and bizarre (but not unexpected) behaviour of the stock markets in recent weeks.

With respect to U.S. stocks, we have an expensive market with so-so growth. There are signs of economic softening in the U.S. Ian adds …

Why are people so skittish? The U.S. stock market is expensive by most standard yardsticks. Its lush valuation makes sense only if you expect the U.S. economy to grow at an unusually rapid clip. However, that is looking rather doubtful. If anything, business activity seems to be slowing to humdrum levels.

That chart makes the case for a nice mix of Canadian and U.S. stocks, and still with an overweight to the U.S. market. And yes you’ll likely have some non U.S. international in the allocation as well. And you don’t have to buy the ‘expensive’ cap weighted S&P 500.

When I sold half of my BCE stock, I moved the proceeds to iShares Quality Dividend ETF – XDU.TO. The PE ratio is much more attractive. The trailing PE ratio is just above 18. You’re giving up some growth, most likely, but buying much more current earnings. I’m happy with the holding, and it is holding up much better than the market in the recent rotation (to value).

I did a minor rebalancing, adding those stock proceeds to cash that had accumulated in the account to top up that XDU position. It is now the largest holding in my CAD RRSP. That said, my little defensive basket of Pepsi, Walmart and JNJ did even better that XDU.

I directly hold U.S. growth stocks as well, where there is some nice exposure via …

Apple, BlackRock, QCOM.

Ian ended his piece with …

Think of low-vol strategies as a bet on the non-weird corners of an increasingly weird market. Right now, that sounds rather tempting.

Call me non-weird. I like that framing, ha. 😉 Readers will know I’m a big fan of defensive stocks working with cash, bonds and gold.

More Canadian low volatility stocks

Via the Globe & Mail, and from CIBC analyst Ian de Verteuil, more Canadian low volatility stocks to consider. That’s a good list.

The analyst also provided a list of top 20 low volatility S&P/TSX companies: Metro Inc, Loblaw Cos Ltd, Waste Connections Inc, Great-West Lifeco Inc, BCE Inc, Fortis Inc, Thomson-Reuters Corp, National Bank Canada, Hydro One Ltd, TMX Group Ltd, Empire Co Ltd, CGI Inc, George Weston Ltd, Altagas Ltd, Element Fleet Management, Stantec Inc, North West Co Inc, Canadian Utilities, Dollarama Inc and Winpak Ltd.

Of course you can always check the BMO Low Volatility ETF – ZLB. If you own a stock portfolio that’s a good index to go hunting for low vol. Or buy the ETF.

I will update the returns comparison in that post, this week. That is a perennial market beater. Just wow, this will be the key chart. XIC is the TSX Composite ETF. A beat of over 4% annual. That’s just crazy good.

More Sunday Reads

Dividend Hawk takes a close look at weekly earnings and more. You’ll find Canadian earnings from Manulife, Power Corporation, and Pembina Pipelines. Those are three holdings in my wife’s recently contructed VDY Plus portfolio. In her RRSP, the market-beating VDY was sold to create a Canadian stock portfolio. It’s a Canadian Wide Moat compilation of sorts. That portfolio is off to a very good start.

At Banker on Wheels a good observation on the last few weeks – the dumbest crash ever. Plus a good question – are you ready for more?

You’ll also find a very interesting comparison between the global stock market weightings from 1990 compared to today. Today when you buy a global market ETF, you’re owning a lot of the U.S. Of course, that has been very beneficial. The U.S. has trounced the world markets, and that is exactly why the weighting has increased. A cap weighted index increases the weighting of the big stocks delivering the greater total returns.

Loonies and Sense shared the BlackRock mid-year review.

At Stocktrades Dan offers his favourites for 2024 and beyond, for Canadian stocks that is.

The Core Canadian ETF Portfolios

I have updated the performance for the Core Canadian ETF Portfolios on Cut The Crap Investing. Here’s the ETF Portfolio performance update. Simple and sweet.

Here’s the money shot …

Drop me a note if you have questions on the portfolio models, or on what model(s) might be right for you.

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