In early December, Telus said it was launching a portfolio of “hybrid” cloud services.The Canadian Press
The best analogy I know for investing is trans-Atlantic sailing. The boat is the investment portfolio, the destination represents financial goals, and wind and weather conditions are markets. A sailor can check the usual wind direction and speed and estimate a time of arrival, and if winds are better than expected, they will get to the end of their trip early.
But anything can happen. If winds are weaker, or worst case reversed, it doesn't matter how badly they need to be on the other side of the ocean, they're not going to be on time.
Keep this metaphor in mind when reading this post from Ben Carlson of Ritholtz Wealth Management, who argues that investors are being delusional about expected returns. The winds are not favourable for most to reach their financial goals. And Mr. Carlson notes that the return assumptions for professional money managers are, "in a word — ambitious."
"It's impossible to predict the future but if investors think they're going to earn 11 per cent a year over the next 5 years at current interest rate levels, then they're either insane or they're lying to themselves. And if you look at their own assessment of performance expectations, my guess is that many of these funds aren't living in reality."
It's good advice right now for all investors. Don't think for a moment that the big gains of the past week are indicative of long-term returns.
Three big numbers to note
5% Gain in the S&P/TSX Composite index, including dividends, since the beginning of May. That includes a five-day winning streak - the longest since March - that ended on Friday.
$4.6 trillion Value increase in global equities since June 27
-6% Plunge in the iShares MSCI Turkey ETF in post-market trading Friday. News emerged just after market close that a group within Turkey's military has engaged in what appeared to be an attempted coup.
Stock picks
Three stocks for long-term investors
While stock market shocks happen often, the soaring markets post-Brexit vote show that the wounds heal quickly, writes John Reese. And he gives three stock picks for investors with a long-term perspective.
Telus Corp. The telecommunications company has recently broken out to the upside on the charts, writes Jennifer Dowty. It has also experienced a "Golden Cross" - when a short-term moving average crosses above a long-term moving average. She also gave a list of TSX stocks that either experienced a "Golden Cross" or "Death Cross."
Birchcliff Energy Ltd. This oil and gas stock has nearly doubled in value this year as natural gas prices rose, writes Dowty. It recently bought additional assets in the Montney region from EnCana, which will boost its production levels. A number of analysts just upgraded their ratings on the stock. In addition, there are 14 analysts with a buy recommendation for Birchcliff.
Advantage Oil & Gas Ltd. Analysts have bullish expectations for this Calgary-based company, writes Dowty. The stock has 14 buy recommendations and an average one-year forecast return of over 24 per cent. In addition, the shares recently experienced another bullish technical signal – a "Golden Cross."
The Rundown
A generation of low interest rates
What would you say if someone suggested there will be low interest rates for the rest of your life, asks Ian McGugan? While no one can predict the economic futures years away, the forces that have pulled rates lower over the last three decades show no sign of abating.
The overbought and oversold
The recent market rally has left no S&P/TSX composite member companies trading at oversold, technically attractive levels, writes our Scott Barlow. He takes a closer look at Stella Jones - the second most oversold stock in the benchmark.
A summer rally in store?
Sun, surf and a summer rally on the TSX? Jennifer Dowty writes that she's bullish on the Toronto stock market this summer especially since it's had a strong summer in seven of the past 11 summers.
Som Seif's investing lessons
We all make mistakes, particularly in investing, says Som Seif in this video. Early in his career, he tried to beat the markets, capitalize on hot tips from friends and buy hot stocks at their height -- all big mistakes. He lists the rules he has for himself to help him be a better investor that he's learned through his mistakes.
DavidsTea Inc. The Montreal-based tea retailer's stock bottomed out at $8.88 in February. However, its shares are up 60 per cent since then, writes David Milstead, and the company plans to add 40 new locations a year.
What's your investment return expectations?
Stocks may be soaring right now, but that doesn't mean returns will be higher in the long term, writes Rob Carrick. The Financial Planning Standards Council has sent out a fresh batch of investment return guidelines for planners, and they're not bad, but not as robust as you might like.
Ask Globe Investor
The Question:
Using the phrases: "Downside support, resistance… - what makes these anything more than past/historical data? I have to say that there are many who question some aspects of purely technical analysis."
The Answer:
You are correct on two counts. First, yes, support and resistance levels are based on historical data. Second, yes, many investors do not appreciate the value in technical analysis. You make a valid point. I believe knowing and understanding a company's fundamentals, in addition to understanding macro factors such as economic conditions and industry conditions, as well as market conditions are the most important metrics to an investor. However, I believe technical analysis can be a useful timing tool or serve to identify stocks that you want to have a closer fundamental look at."
-Jennifer Dowty, Globe and Mail equities analyst
Do you have a question for Globe Investor? Send it our way via this form. Questions and answers will be edited for length.
What's up in the days ahead
Gordon Pape may like real estate investment trusts, but he's not a fan of holding Canada's largest REIT right now. He'll tell us why he'd be selling RioCan. Ian McGugan Monday explains why falling bond yield payouts have driven up the cost of a comfortable old age by as much as a third. And Larry Berman will write next week about why a short-term bond fund right about now is looking a lot more attractive than an ETF that tracks the S&P 500.
Click here to see the Globe Investor earnings and economic news calendar.
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Compiled by Gillian Livingston and Darcy Keith
Scott Barlow