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Globe Investor Cautious TD manager’s stock moves, reality check for BMO picks and the worst bond alternative ever: What you need to know in investing this week

Looking for investing ideas? Here’s your weekly digest of the Globe’s latest insights and analysis from the pros, stock tips, portfolio strategies plus what investors need to know for the week ahead.



TD fund manager of billions is turning cautious on markets. Here’s what he’s buying and selling

A much-anticipated agreement by the United States and China to resume trade talks has not changed TD Asset Management portfolio manager Michael O’Brien’s cautious outlook on the markets, Brenda Bouw writes. “On the truly fundamental areas of disagreement between the U.S. and China, nothing has really changed. We don’t appear to be any closer to a solution” says Mr. O’Brien, , the lead manager of the $3.4-billion TD Canadian Equity Fund and co-manager of about $6-billion across various TD funds. He believes markets “will continue to be wary about the potential for further trade deterioration.” Over all, Mr. O’Brien believes the best of times have come and gone for the markets this year. Here is what he’s buying and selling as he builds more resiliency into his portfolio.

Mid-year report card: Tracking BMO’s top 24 stock picks for 2019

In January, BMO Nesbitt Burns’ equity research department released its top 24 Canadian stock picks for 2019, Jennifer Dowty writes. Year-to-date, half of them have realized double-digit price returns. Eight stocks have reported modest to neutral price returns, while four have delivered negative price returns. Analysts remain bullish on all of their stock picks. Since the beginning of the year, only one stock was downgraded. Here is how they’ve performed.

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Read more: Wealthsimple Trade challenges Canada’s online broker establishment with free trades for stocks and ETFs

This is the worst bond alternative ever

Low interest rates – and they could get lower – are a big problem in investing today, Rob Carrick writes. Investors are reluctant to put much of their portfolio in bonds or GICs, and are considering alternatives. The worst bond alternative by far is preferred shares. Today’s preferred market is dominated by a type of share called the rate reset preferred, which is highly sensitive to interest rates. Rate resets were designed to adjust dividends higher to offset the effect of rising interest rates. When there’s an expectation of falling rates, as there would quite likely be if the stock market crashed, then rate reset preferreds are going to fall in price on the expectation of lower payouts. Check out what happened to these funds - the BMO Laddered Preferred Share Index ETF and Horizons Active Preferred Share ETF - when the stock market tanked last winter.

More from Rob Carrick: Low drama stocks are acing it in both up and down markets

Three attractively priced stocks that may help pave way to a dividend-enabled retirement

The idea of being able to support oneself with dividend income, while not having to dip into capital, can be quite appealing, Norman Rothery writes. Dividend stocks aren’t without risk, but those with the right policies are better positioned to survive downturns. A dividend reduction – or elimination – is not what dividend investors want to see. But I’d rather companies cut early and survive than pay too long and fold. It is one reason why firms should move away from fixed dividend policies and adopt variable ones. Most dividend investors start with a few of the big banks, utilities and other blue-chip stocks. Here are three low-P/E dividend stocks that might help boost diversification by industry.

Read more: Yield Hog: John Heinzl’s model dividend growth portfolio as of June 30, 2019

Four stocks that would score highly with the investing greats

When it comes to investing, preparation should be emphasized over luck, writes John Reese, CEO of Validea.com. And since it’s so hard to measure the influence of luck and skill, the focus should be on process. A good idea is to follow a disciplined, consistent strategy, with goals and objectives that are clearly defined and a process that you can stick with over the long term. You need to be able to stick with your strategy over periods where you appear to be losing more than you are winning. At Validea, we developed process-driven strategies inspired by the work of well-known investors, such as Warren Buffett and Peter Lynch. Here are four stocks that score highly on our guru models.

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What investors need to know for the week ahead

During the week ahead, eyes will be on the Bank of Canada’s announcement Wednesday, when it’s expected to keep rates unchanged. Companies releasing earnings this coming week include Alimentation Couche-Tard, PepsiCo, Cogeco, Delta Air Lines and Aritzia. Economic data on tap include: U.S. consumer credit numbers for May (Monday); Canadian housing starts for June and building permits for May (Tuesday); U.S. wholesale trade for May (Wednesday); and U.S. inflation figures for June (Thursday).

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