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: It’s not bargain-hunting time yet
Every bear market brings out the bargain hunters, Gordon Pape writes. And with good reason. Some stocks go on sale at a once-in-a-decade price. But are they bargains at current levels? Yes, in terms of where they were priced in February. No, in terms of where they are likely to go from here.
We are experiencing the worst economic downturn since the Great Depression. Many businesses, large and small, will not survive. If you need any further evidence that this is not yet the time to go bargain-hunting, check out Warren Buffett’s comments at the recent Berkshire Hathaway annual meeting. When the world’s greatest value investor thinks stock prices are still too high, that should be a warning for the rest of us.
The risk of losing money in supposedly safe parking spots for investing cash
If you’re looking for a safe parking spot for investing cash in these troubled times, it’s hard to beat the high interest savings account packaged as a mutual fund, Rob Carrick writes. Covered by Canada Deposit Insurance Corp., these products are well-suited to investors who want to keep cash secure while they evaluate their investing options. A next-best choice is the high-interest savings account exchange-traded fund, a new but popular option for holding cash in your investment account. Finally, running a distant third, is the money market fund. Here he looks at their risks and rewards, and when to use them – or not.
More from Rob Carrick: A new way to tell if your adviser adds value or dead weight
What income options are best for my 90-year-old mom?
Readers asked John Heinzl about income options for a 90-year-old mother, for which they put $45,000 into a tax-free savings account with a discount broker. She would like to generate income. They want to know is it better to buy stocks such as Fortis, Algonquin Power & Utilities or Brookfield Renewable Partners for the TFSA, or an exchange-traded fund?
He responds: The good news for your mother is that, for self-directed accounts, there are more opportunities to keep costs low and generate a higher level of income. I own all three of the companies you mentioned (both personally and in my model Yield Hog Dividend Growth Portfolio). While no investment is a sure thing, these companies are on the lower-risk end of the spectrum and have track records of increasing their cash flow and dividends.
If your mother – and other family members who are presumably helping her – are not comfortable monitoring a portfolio of individual companies, low-cost ETFs are a good option because they provide added diversification with a single purchase. You do not need to sell ETF units to generate cash. Unless your mother asks to enroll her ETFs in a dividend reinvestment plan with her discount broker, she will receive the dividends in cash just as she would from stocks.
More from John Heinzl: RioCan REIT, Applied DNA Sciences and more investing stars and dogs for the week.
David Rosenberg: Five major points for investors right now (and my highest conviction call)
David Rosenberg has five major points for investors at this historic moment in time: “First, I want to emphasize that this crisis only completely fades away with either treatment or a vaccine, and it seems to me a treatment is far more likely to occur first. But even that seems to be many months away. Only then will most people feel comfortable socializing again and we can expect to see more sustainable consumer spending, beyond a brief pent-up demand lift in the third quarter.” You can read his four other points here, plus why gold is his highest conviction call.
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Questions every cottage owner needs to answer
Even if you didn’t head to the cottage this weekend for the traditional Victoria Day opening, there is some care-taking you can do on your major investment – of the estate planning kind. Tax expert Tim Cestnick writes that every owner of a vacation property needs to eventually answer six questions: 1) Who wants the property? 2) How will costs be covered? 3) Can the family work together? 4) What are the rules for sharing the property? 5) How do we transfer it? 6) When do we transfer it?
Here he examines the first three, including how will costs be covered. Get a handle on all expense, including property taxes, insurance, hydro, gas or propane, repairs, maintenance, landscaping, boat storage and repairs, furnishings and capital improvements. When you’re no longer around, will the next generation be able to afford all this? If the costs of the cottage can’t be managed by the kids, there may be no other option than to sell it.
What investors need to know for the week ahead
In the week ahead, Canadian markets will be closed Monday for the Victoria Day holiday. Economic data on tap include: U.S. housing starts and building permits for April (Tuesday); Canada’s inflation figures for April and wholesale trade numbers for March (Wednesday); Canada’s new housing price index and U.S. existing home sales for April (Thursday); Canadian retail sales for March (Friday). Companies releasing their latest earnings include Walmart, Home Depot, Lowe’s, NVIDIA and CAE.
Looking for more money ideas and opinions?
- Six reasons the equity rally is about to stall
- Short sales on the TSX: What bearish investors are betting against
- 16 high quality U.S. stocks to buy and hold
- The week’s most oversold and overbought stocks on the TSX
- Opinion: Seniors deserve help with expenses in the pandemic, but investment losses are another matter
- Repeat after me: The markets are not the economy
- CFO invest over $300,000 in this large-cap consumer staples stock