Schwab’s SCHD is a popular U.S. dividend ETF that has been disappointing investors for a long time. Does that disappointment mean that the fund is going to shine when (if) the AI bubble bursts? And speaking of shining, we’ll take a look at gold. Can it go even higher? Plus, Canada’s most defensive sector ETF has a surprising history of outperformance. And retirees will want to check out the life plan ‘stuff’ in the Sunday Reads.
What to expect from the U.S. stock market over the next 10 years? Not much.
Once again, having lived through it, and invested through it I remember –
The lost decade for U.S. stocks.
Here’s more on Howard Mark’s thoughts – Expensive but not nutty. Howard Marks on U.S. stocks and the one thing investors should be doing right now.
He pointed to a JPMorgan chart from late last year that looked at what an investor’s annual return on average over the next 10 years would be if they had bought S&P 500 at a given price/earnings ratio. The P/E was 23 at the time, meaning that average return would be 2% to minus 2%, he said.
Of course there are other lost decades, such as the Depression era and the stagflation era of the late 60’s into the early 80’s. But don’t worry it was all ‘easily handled by a balanced portfolio with some inflation protection. We call that an all-weather portfolio of course.
Even a 5% allocation to gold during the stagflation era would have allowed you to breeze through the period. Add in oil and gas stocks and yer laughing.
Inflation fighters worked their magic once again in the recent bout of high inflation in 2021 and 2022. Check out – Using defensive sector ETFs for the Canadian retirement portfolio.
That portfolio idea (not advice) uses defensive sectors in concert with dedicated inflation fighters.
Is SCHD well-positioned for a dot com like correction?
I’ve penned extensively on the concept that retirees might pay attention to valuation issues and hedge that risk with a U.S. value-oriented holding. We’d continue to hold some U.S. market or U.S. growth, but layer in a value holding. The Schwab Dividend ETF SCHD is a popular choice. What’s up with SCHD? Or what’s down might be the appropriate question.
I offered this post exactly one year ago …
iShares U.S. Quality Dividend ETF is crushing SCHD in 2024.
I created a meaningful position in iShares Quality Dividend ETF XDU-T (Canadian Dollars) as a valuation slant. It outperformed SCHD in 2024 and that continues in 2025. In price terms SCHD is down 1.7% in 2025 while XDU-T is up 4.4%. We might attribute about 2% of that gain to the Canadian currency weakness vs the U.S. Dollar.
The S&P 5oo is up 13.66% in 2025. The Nasdaq 100, QQQ is up 18.36%. Money continues to flow to growth oriented stocks in the U.S.
Check out Justwealth, you can have it all
This article on Seeking Alpha (sign up or sub required) suggests that SCHD might be well-positioned if we do get a major correction and rotation to value and quality.
SCHD: Your bet on a cooling AI narrative.
The top 3 sectors for SCHD were leading sectors when the dot com bubble burst …
That chart tracks Energy, Consumer Staples and Healthcare vs Tech.
Who knows, but SCHD’s stubborn decline might be creating even greater value. Here’s an interesting table on sectors and valuation.
In the search for value you might also consider small cap, or mid cap or a classic value index ETF such as iShares VLUE. As I wrote for Findependence Hub, these might be challenging times for recent retirees who do no pay attention to valuation. You’ll find more bubble bursting ideas in that post 😉
Accumulators with decades to go might ignore the valuation “issue”.
I’m happy with XDU and some of my other U.S. value oriented stocks. In my U.S. RRSP account, my individual U.S. stock portfolio is up 20.7% in 2025. The core stocks are still driving the bus.
How much could gold shine?
Here’s a fascinating Tweet from Charlie …
Keep in mind that gold’s greatest run/success came during a period of stagflation. Today gold is a safe haven asset and gains its strength from the rising debts and deficits (fiscal mismanagement) of most developed nations. Even the U.S. Dollar is losing value and gold is a beneficiary of that weakness.
Gold returns by year …
And let’s go for the Charlie hat trick. Stocks love a low inflation, disinflationary environment. It is historically a wonderful hedge against the melting ice cubes known as the dollars you hold in your wallet or digital wallet …
America first, Canada second. That’s OK, eh!
BMO’s CEO is quite optimistic on the future prospects for Canada.
It might be America first, but it’s not necessarily America alone,” he told a business audience on Wednesday at the 2025 Toronto Global Forum. “If you’re Canada second in an America first world, and then there is a whole bunch of people behind you . . . this notion of advantage [for] North America starts to become real.
Of course the markets might be sniffing this out. The Canadian stock market is on a tear greatly outperforming U.S. stocks over the last year and in 2025.
More Sunday Reads
More at Findependence Hub – Why Canadians still love real estate even when the numbers don’t add up.
Dan at Stocktrades looks at the fastest growing tech stock that nobody’s talking about …
On The Retirement Manifesto, The glory days will pass you by.
At Booming Encore The Experience Dividend: How investing in experiences pays back in living a life without regrets.
That’s a very personal and important post –
What I didn’t fully understand at the time, but neuroscience now makes abundantly clear, is that new experiences aren’t just pleasant diversions. They’re essential tools for cognitive and emotional well-being, particularly as we navigate our 50s and beyond.
Novel experiences stimulate our brain’s ability to adapt and rewire itself, leading to increased cognitive flexibility and improved mood regulation. This neuroplasticity is our brain’s remarkable ability to form new neural connections. And the good news is that it doesn’t diminish with age if we keep challenging it with new experiences.
As we discuss at Retirement Club, the life plan is as important as the money plan. Booming Encore is a must follow on the life front.
Here’s the latest GIC rates and savings rates at EQ Bank.
From Gen-Y-Money, is the Costco membership worth it in Canada? A look at the numbers.
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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.
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Make your cash work a lot harder at EQ Bank. RRSP and TFSA account rates are at 1.75%, other savings rates up to 3.0%. You’ll find some higher rates on GICs up to 3.60%. They also offer U.S. dollar accounts at 3.0%. We use EQ Bank, they have been awesome.
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For September we received $53.28 in cash from everyday spending. You can select 3 categories for 2.0% cash back. Remaining categories pay up at 0.50%.
That cash went into my TFSA account to help buy some CBIL-T, CHPS-T and HURA-T.
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