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.
John Heinzl’s fearless predictions for how his Yield Hog dividend growth portfolio will hold up in a recession
A reader asked John Heinzl how he expects his Yield Hog portfolio will perform if there’s a recession. His response: I don’t have any special insight into how the stock market in general, or my model portfolio in particular, will perform over any short-term period, whether it’s during a recession or expansion.
I am, however, prepared to make a couple of predictions. First, regardless of what happens in the short run, the companies in my model portfolio will likely continue to increase in value over the long run. Stock prices reflect expectations about the earnings of the underlying businesses, and if those earnings are growing, share prices should ultimately rise as well.
The second prediction I’m prepared to make is that, even in a recession, many of the companies in my model portfolio will likely continue to raise their dividends. Unlike share prices, which bounce around in the short run, dividends are more stable and predictable.
More from John Heinzl: SNC-Lavalin, Tesla and more investing stars and dogs for the week
How to protect yourself from a Black Monday-like shock
This month marked the 32nd anniversary of Black Monday. On Oct. 19, 1987, the Dow Jones Industrial Average suffered its biggest one-day loss in percentage terms, dropping 22.6 per cent, Gordon Pape writes. “Record drop” are words no investor wants to hear, but we need to remember that these events happen periodically and to be prepared when they do. History shows us that any decline will be temporary, but the length of time it takes to recover can sometimes be years. So, what can you do to protect yourself from another 1987-type shock? Here are some suggestions. They include:
- Don’t panic: The worst investment decisions are made at times of high emotional stress.
- Diversify: Don’t put all your money in a few stocks.
- Don’t speculate: If anyone starts talking about the next hot stock, walk away.
‘Where’s the best place for my money – an RRSP, TFSA or both?’
Someone asked Rob Carrick whether they should invest in an RRSP, a TFSA or do both. His response: First, any high-interest-rate debt should take precedence over the registered retirement savings plan or tax-free savings accounts. Balances on credit card and unsecured credit lines are an example.
From there, let’s acknowledge that maximizing both the RRSP and TFSA is ideal. If pressed to choose one or the other without knowing someone’s personal details, I would vote for the TFSA. It’s quite possible you won’t get the best bang for your buck with a TFSA over an RRSP, but TFSAs are a savings and investing vehicle with a high level of customer satisfaction.
More from Rob Carrick: Six ways the Liberal election win will change your family finances
The lesson for all investors arising from the lewd comments of a billionaire fund manager
When the billionaire money manager Ken Fisher shocked a closed-door conference of financial professionals earlier this month with lewd comments, he unleashed a storm of controversy – one that small investors may want to follow, not just for its scandalous appeal, but for what it says about the investment business in general, Ian McGugan writes.
Mr. Fisher said winning a client’s trust is a lot “like going up to a girl in a bar” and then expanded on the analogy from there, according to CNBC and Bloomberg. He has since apologized, but clients have yanked more than US$2-billion from his namesake company in recent days. Ordinary investors may be just as disturbed by what his comments imply about the money-management business in general.
More from Ian McGugan: Uber and Lyft have had a bumpy ride, but it may be time for investors to get on board
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Mark Twain’s financial investments are a cautionary tale on risk-taking that all investors should heed
We know Mark Twain as the 19th-century humourist who wrote The Adventures of Tom Sawyer and other classics in American literature. Less well known are his financial speculations, which didn’t go well, Larry MacDonald writes. They culminated in a bankruptcy that left his family in dire circumstances – until he staged a remarkable comeback in his 60s.
His financial adventures stand as a cautionary tale on risk-taking. The high anxiety and sleepless nights he experienced could have been minimized with a diversified portfolio, periodically rebalanced back to a target asset allocation.
What investors need to know for the week ahead
Central banks will be in the spotlight in the week ahead, with both the Bank of Canada and the U.S. Federal Reserve making their latest interest rate announcements on Wednesday. The BoC is expected to leave its key lending rate unchanged; whether the Fed will stand pat or cut rates again is less clear.
Companies releasing their latest financial results this week include Alphabet, Facebook, Aurora Cannabis, Altria, BCE, Bombardier, Air Canada, WestJet Airlines, Starbucks, Beyond Meat, AT&T, Restaurant Brands International, T-Mobile, Walgreens Boot Alliance, General Motors, Mastercard, Merck, Pfizer, Shopify, Xerox, Cogeco, Fairfax, Great-West Lifeco, Maple Leaf Foods, MetLife, Suncor, DuPont, Freshii, Kraft Heinz and Berkshire Hathaway.
Economic data on tap include: U.S. goods trade deficit, and wholesale and retail inventories for September (Monday); U.S. pending home sales for September (Tuesday); U.S. personal spending and income for September (Thursday); Canadian and U.S. auto sales as well as U.S. employment figures for October (Friday).
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