It should come as no surprise to readers that we here at Globe Investor can accurately guess how much attention a column or report will get before it’s posted or printed. There are topics that always work – dividends, the loonie, bank stocks, oil, and lately anything to do with marijuana - and others like central bank policy, China and European equities that are guaranteed to be met with widespread apathy.
Amidst all this information there remains one big, inexplicable surprise to me: two of the best performing global markets sectors, health care and technology, are subjects that get almost no reader attention at all when we write about them.
Merrill Lynch chief quantitative strategist Savita Subramanian’s recent summary of the fourth-quarter earnings season for the S&P 500 noted that, yet again, technology and health-care stocks showed the best profit growth, “Overall, 58% of companies beat on EPS, 50% beat on sales and 36% beat on both. Tech and Health Care once again had the most beats, while defensive sectors (ex-Health Care) had the weakest results.”
This represents the continuation of a pattern of strong results that has been ongoing for a number of quarters in a row, and yet when I write about health care and technology, few readers care.
I have two loose theories on why, according to our web traffic statistics, Canadians remain disinterested in these profitable market segments. One, the scars from the tech bubble are still fresher than I thought and a similar phenomenon is true in health care because of the late 1990s boom and bust in speculative biotechnology stocks.
The second theory is that Globe readers don’t read about tech and health-care stocks because they play such a small role in the S&P/TSX Composite.
In light of Blackberry’s recent struggles, the first theory makes sense. I hope the second theory isn’t true because it would be a shame for domestic investors to miss out on higher returns because of a provincial perspective.
Stocks to ponder
Barrick Gold Corp. Year to date, the share price is up 21 per cent. This month, the stock price experienced a bullish ‘golden cross’ pattern, where the 50-day moving average crossed above the 200-day moving average, said Jennifer Dowty.
CAE Ltd. While there was no increase in Canada’s defence spending in Wednesday’s 2017 federal budget, one of the companies that should benefit from higher defence budgets generally is Montreal-based CAE. Military-related clients accounted for more than 35 per cent of its revenue in the latest quarterly report, and if defence spending gears up as expected, CAE should benefit, said Gordon Pape.
Boyd Group Income Fund. On Wednesday, the unit price experienced a dramatic pullback after the fund reported weaker-than-expected fourth-quarter financial results and management guided to a soft first quarter. Unit price weakness has historically represented a buying opportunity, according to Jennifer Dowty.
Martinrea International Inc. The Canadian auto-parts company has a valuation that is out of line with the broader market. This bargain status makes the stock a compelling opportunity, said David Berman.
Hydro One Ltd. The utility stock's stock price is up just 2 per cent year to date, underperforming many of its peers and the overall sector return. The S&P/TSX utilities index is up 5 per cent. That being said, the share price recently broke out of a downtrend that has been in place for the past two months, writes Jennifer Dowty.
Why the big fall in oil isn't over yet.
The volatility in oil markets is mostly a matter of portfolio positioning by major aggressive players rather than fundamental supply and demand factors. Scott Barlow writes on why that means more downside for oil.
Canadian REITs vulnerable in shift to digital retail.
It seems equity investors are warming to the problems of the retail sector, not just by beating down the retailers’ shares, but also by whacking the real estate investment trusts which own the properties these retailers are increasingly vacating, said David Milstead.
Is the bull still running?
The head of one of Canada’s biggest equity funds says the bull market in stocks has room to run because dividend yields will remain attractive even if bond yields move higher. Martin Downie, manager of the $17.2-billion Investors Dividend Fund, said there’s a persuasive case to be made for investing in stocks.
Don't dump your dividend stocks
A couple nearing retirement has about $800,000 in dividend stocks. Should they sell to avoid the stock market correction they fear? Rob Carrick says no, even though there are many that would disagree.
The week's most oversold and overbought TSX stocks
Scott Barlow expected the list of oversold, technically attractive benchmark member stocks to be riddled with oil and gas companies, but that’s not the case. Junior energy stocks, like Baytex Energy Corp. and PrairieSky Royalty Ltd. are just out of buy range.
Don Coxe thinks it's time to ease up on equities
The famed investment strategist believes investors should move some cash into mid-term bonds, scale back overall equity exposure, and increase exposure to gold and silver miners. And Donald Trump and his recent shenanigans are a big reason why.
Ask Globe Investor
Where can I get an unbiased review of my portfolio?
Answer: If you're asking this question, you almost certainly have doubts about the performance, risk level or cost of your current portfolio. Perhaps you are managing your own investments and want to know if you are on the right track, or maybe you are working with an adviser and wondering if the portfolio is serving your interests - or the adviser's.
There are a few different routes you can take.
Some certified financial planners (CFPs) and registered financial planners (RFPs) will review your portfolio on a fee-for-service basis. One RFP I spoke to charges $200 to $400 for a simple review, which includes an analysis of the portfolio’s fees, asset allocation and diversification. Others may offer a portfolio review only as part of a more comprehensive financial plan that costs significantly more. If all you want is a portfolio review, make that clear up front and ask what the review entails and request samples of reports provided to other clients. To minimize potential conflicts of interest, focus on planners who work on a fee-for-service model and don't sell investment products.
A thorough portfolio review - with evaluations of strengths, weaknesses and specific recommendations - will cost more. For example, 5iResearch, which owns Canadian MoneySaver magazine, offers comprehensive portfolio reviews for a flat fee of $1,299. You can find an abbreviated sample portfolio review on 5i's website at www.5iresearch.ca/portfolio_reviews.
Some financial institutions offer a free portfolio review (in the hope of winning your business, of course). WealthSimple, one of the growing number of online "robo-advisers", offers this service.
Do you have a friend or relative who manages his or her own investments? A knowledgeable do-it-yourself investor will be able to give you an unbiased appraisal of your portfolio and may even welcome the opportunity to help you out. (Just be sure to return the favour by buying that person lunch).
A final tip is to do the portfolio review yourself and treat it as an opportunity to educate yourself. If you own mutual funds, look up the management expense ratios of each of your funds, which will give you a good idea of the annual cost you are paying (make sure to match the class of the fund you own, such as series A or series I, with the corresponding MER). If you own stocks, do they pay a dividend? Has the dividend grown steadily over the past five years? A growing dividend is usually a good sign. (Take a look at my model dividend portfolio at tgam.ca/divportfolio for some examples of solid, dividend-growing stocks. )
On the other hand, if you own stocks that don't pay a dividend and whose share prices have been going down or sideways for years, it might be a sign of excessive speculation or a scattershot investing approach that lacks a coherent theme. If something doesn't seem right about your portfolio - or if your returns haven't lived up to your expectations - it's time to investigate.
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
In Saturday's Globe Investor, Rob Carrick presents the second installment of the 2017 ETF Buyer's Guide, where he takes a look at Canadian bond ETFs. On Monday, our David Berman looks at the investment case for Sierra Wireless. He discovers something unusual: Street analysts - usually a bullish bunch on stocks in general - are actually calling for the share price to decline.
Click here to see the Globe Investor earnings and economic news calendar.
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Compiled by Darcy Keith and David LeederReport Typo/Error
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