John Hood is president and portfolio manager, J.C. Hood Investment Counsel. His focus is options and ETFs.
BMO Covered Call Canadian Banks ETF (ZWB.TO)
I bought the BMO Covered Call Canadian Banks ETF last year to boost overall portfolio yield, but I now look at Canadian banks as oversold. You could also look at the Horizons HEF covered call on all financials, insurance, mutual funds.
iShares S&P 500 Index Fund CAD Hedged (XSP.TO)
The iShares S&P 500 Index Fund CAD Hedged is a core holding in client/personal accounts, various prices, held over many years.
Horizions Active Floating Rate Bond ETF (HFR.TO)
This floating rate bond is a good place to park money while waiting for direction or XSB short term bonds.
Past Picks: January 31, 2014
Vanguard Large-Cap ETF (VV.N)
Then: $91.60; Now: $85.93; Return: -6.19%; Total return: -4.33%
Vanguard FTSE Europe ETF (VGK.N)
Then: $52.68; Now: $45.26; Return: -14.09%; Total return: -11.49%
Horizons Floating Rate Bond ETF (HFR.TO)
Then: $10.16; Now: $9.90; Return: -2.56%; Total return: -0.67%
Total Return Average: -5.50%
Considering the past week's volatility and that U.S. markets are closed due to Martin Luther King Jr. Day, near-term predictions are difficult. Warren Buffet said that market forecasters existed to make fortune tellers look good. The problem, as Larry Swedroe remarked recently in his article Keep Calm and Step Forward, is that during volatile markets, investors tend to 'catastrophize' everything: all negative comments are accepted, and positive reports like increased employment numbers are ignored. My sense is that U.S. markets are oversold in a panic sell-off, but if there is a continuing rapid decline, I will still be looking to invest in U.S. markets as my largest core position.
Canada is my real concern, as we seem to have governments that are committed to gutting the oil industry by blocking pipelines.
I do not hold any emerging market or Chinese stocks but China's economy is still expected to increase 5 per cent and they have trillions in U.S.-dollar-denominated debt. Just because their market is a casino does not mean that the economy is tanking.