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.
Gordon Pape: These four ETFs are strong options for income investors during uncertain times
There are three things investors need to focus on in uncertain markets, Gordon Pape writes: cash flow, safety and diversification. He points to exchange-traded funds as a good way to meet these goals. They enable you to spread your risk over a large portfolio of securities and many offer very attractive yields. Below are four he thinks are worth considering in the current environment. Here’s why.
These skyrocketing Canadian transportation stocks are in the sweet spot of the pandemic economy
For travel and airline stocks, the global pandemic triggered a debilitating reversal of fortune from which a recovery will take years, Tim Shufelt writes. But for companies in the business of moving stuff, rather than people, it’s a much different story. The sudden acceleration of the retail shift from bricks and mortar to online has been a windfall for transportation and logistics companies.
In Canada, the main beneficiaries have been names such as TFI International Inc. and Cargojet Inc., which as of this past Tuesday have returned 127 per cent and 141 per cent, respectively, since their lows in March. Resilient consumer spending in North America is also helping support the recovery in rail traffic. Read more here.
Rob Carrick: Is 1% a fair fee for advice on stocks?
A reader asks Rob Carrick: “Is a 1-per-cent fee for ongoing financial advising in stocks a fair fee? How do I assess this adviser before I sign on?” His response: First off, my sense is that 1 per cent is a reasonable fee by the standards of the investment advice business in 2020. In fact, it’s a fee that some advice firms would hold for large accounts. Here are some thoughts on what an adviser would have to do to make that fee a good value for a client, including:
Does the adviser do any financial planning? Investment advice based solely on managing a portfolio of investments is bound to dissatisfy, even at a cost of 1 per cent. Success and failure in this case are determined strictly by what the market offers. A financial plan offers a better way. Your investments are regarded as a means to an end that is defined as a well-funded retirement, for example. The value of your fees is measured in how you are progressing toward your goal, not on what stocks are doing over a short period.
More from Rob Carrick: A new ETF offering 4-per-cent retirement income is going to be big
Lump sum or gradual investing: Which yields the better return?
A reader asks John Heinzl: In your column last week, you mentioned that studies have shown that investing a lump sum all at once usually produces better returns than investing in stages. Can you elaborate?
He responds: In one study, U.S. money management firm Fisher Investments compared the lump-sum and gradual investing strategies over 20-year periods beginning in 1926 and ending in 2009. The lump-sum investor was assumed to have put the entire sum into the U.S. market at the start of the 20-year period, while the gradual investor deployed the money in stages over the first 12 months, following a process known as dollar-cost averaging (DCA). Result: Lump-sum investing produced higher returns than DCA in 69 per cent of the 20-year periods examined.
“The reason is simple: More often than not, stocks move higher. You benefit more from being invested more of the time than you do trying to avoid near-term wiggles,” Ken Fisher, chairman of Fisher Investments, wrote in his 2011 book, Debunkery. “DCA really only helps if you know there is a falling market ahead. And if you could forecast that accurately, what do you need DCA for?” Read more plus response to another reader questions here.
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Balanced portfolio bulletin: The bond outlook is worse than you think
With Government of Canada bonds yielding 0.6 per cent, investors with balanced portfolios are carrying a fair amount of dead weight. Things could get worse, though, Rob Carrick writes. Some projections from investment dealer Richardson GMP suggest the years ahead could be quite the challenge for balanced or bond-heavy portfolios. Bond yields are expected to rise in the next 12 months, and that means falling bond prices. Combine projected yields and price declines and you get a total return that could easily be negative.
Here he digs into the numbers and looks at workarounds, which could include underweighting bonds, focusing on shorter-term bonds or emphasizing investment-grade corporate bonds.
What investors need to know for the week ahead
In the week ahead, two reports released on Monday take the temperature of the country’s real estate market: Canada’s new housing price index for August and the Canada Mortgage and Housing Corp.'s third-quarter housing market assessment. Other economic data on tap include: U.S. existing home sales for August (Tuesday); Canada’s survey of employment, payrolls and hours for July and U.S. new home sales for August (Thursday); U.S. durable goods orders for August (Friday).
Companies releasing their latest earnings include Aurora Cannabis, BlackBerry, Costco, Accenture, General Mills and Nike.
Parliament resumes on Wednesday with the Throne Speech and confidence vote, which could potentially lead to an early election. Read more here.
Looking for more money ideas and opinions?
- Three Canadian stocks among BoA’s top picks to benefit from a recovering global economy
- This growth stock with 11 buy calls is nearing oversold territory
- Three ways the federal government may increase taxes on principal residences
- Top Canadian stock picks from Credit Suisse
- This dividend stock hits a record high despite recent market weakness
- BMO’s top dividend growth stocks to play a bounceback in income sectors
- Yielding 5.9%, this stock is holding its value through market turbulence
- Here’s when it’ll be time to switch out of growth stars such as Apple and into unloved value stocks