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A tally of investment gains in the past 12 months:

  • Bitcoin: Up about 150 per cent to an all-time high reached last month
  • The S&P 500 stock index: Up about 25 per cent
  • Nvidia Inc. shares: Up about 220 per cent
  • Japan’s Nikkei 225: Up about 45 per cent
  • The S&P/TSX Composite Index: Up about 10 per cent
  • Gold: Up about 14 per cent

The term ‘everything rally’ is being used to describe financial markets today and it’s somewhat of an exaggeration. The benchmark bond index in Canada was up only 2 per cent in the past 12 months, and several blue-chip dividend stocks continue to be shunned by investors Still, there’s a buoyancy to markets today that is clearly influencing investor behaviour. In the exchange-traded fund world, money flowed out of once-popular cash vehicles and into equity funds last month.

It’s past time for some of the money parked in high interest savings accounts and T-bill ETFs to be put to productive use. Stocks are flying and returns on cash vehicles will start falling as soon as the Bank of Canada starts lowering its overnight rate, possibly this summer. But let’s acknowledge something about ‘everything rallies’ - they tend to end badly.

Bear this mind if you’re investing right now in S&P 500 index ETFs, in tech stocks like Nvidia, in cryptocurrency and more. With every purchase you make right now, ask yourself how your portfolio would bear up in a correction.

Bonds are one way to offset the downside for stocks. While they’ve underperformed lately, bonds are primed to fulfil their traditional role as a portfolio stabilizer if stocks tank. Having a small holding in cash can also help limit the damage if the everything rally unravels. One-year guaranteed investment certificates still offer returns of as much as 5 per cent or a bit more for one year, and even two years in limited cases.

Another way to prudently invest in today’s markets is to use an asset allocation ETF, which is a fully diversified, all-in-one portfolio of bonds and stocks from Canada, the United States and the rest of the world. You can buy asset allocation ETFs with various stock-bond mixes, including 60-40 and 80-20.

The favourite type of asset allocation ETFs last month was the all-equity variety, which reflects the appetite for risk right now. The end of the everything rally will favour a more diversified approach.

-- Rob Carrick, personal finance columnist

Also see:

The highest-yielding stocks on the TSX, plus risk data

These stocks are driving TSX returns

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The Rundown

The U.S. stock market may have finally hit a real record, but it could be a problem

It’s been a splendid run for the market — so emphatically great that in just the first three months of the year, the S&P 500 index climbed to record highs on 22 separate days. But what most reports and commentary haven’t pointed out is that because inflation has also climbed sharply over the last few years, the value of stock prices has eroded, along with nearly everything else in the economy. When you factor in inflation, the stock market did not actually reach new heights. As Jeff Sommer of The New York Times tells us, that’s now starting to change.

Bond volatility key to scale of equity pullbacks

As implied U.S. interest rates revisit their cycle highs from last year and bond yields break out to fresh 2024 peaks, stocks may be at risk of getting vertigo. Yet the safety net, if required, could also come from the fixed income world – bond market volatility. Or more precisely, the lack of it. Jamie McGeever of Reuters explains.

Also see:

Uncertainty over rate cuts wobbles U.S. government bond market

How to avoid the true stinkers in your portfolio

Portfolio managers Jason Del Vicario and Steven Chen provide five things to look for when trying to avoid stock losers.

Others (for subscribers)

Number Cruncher: 13 notable U.S.-listed energy stocks on the rise

Friday’s analyst upgrades and downgrades

Thursday’s analyst upgrades and downgrades

Friday’s Insider Report: Executive nets $2.4-million selling this large-cap stock trading near a record high

Thursday’s Insider Report: RBC’s wealth management head receives a $2-million payday

Monica Rizk: Bullish on National Bank of Canada

Ted Dixon: Tamarack Valley Energy insiders buy as shorts get squeezed

How economists and market bets for rate cuts are reacting to Friday’s surprisingly weak Canadian jobs report

Globe Advisor

Why this mid-cap money manager seeks out ‘misunderstood’ stocks

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Ask Globe Investor

Question: I am considering using an in-kind transfer to move funds from a non-registered Canadian investment account to my TFSA account. I currently have $17,800 contribution room in my TFSA. I am semi-retired and otherwise I’m not able to use all the available TFSA contribution room.

I understand that if I transfer non-registered shares and ETFs to my TFSA, Canada Revenue considers it a deemed disposition. None of the investments in my non-registered account are in a loss position, so I understand I will have to pay 50-per-cent capital gains on the amount I have earned from these investments (which will be about $1,200). I also understand that once the funds have been transferred into my TFSA, any further increase in value will not attract capital gains tax. This is my rationale for transferring the funds to my TFSA.

My questions are as follows:

1. Even though it will attract capital gains, is it a good idea to transfer investments from a non-registered account into my TFSA, given that I have contribution room and no other way to contribute that much?

2. Is there a better or worse time of year to transfer investments from a non-registered account into my TFSA?

3. If my income is less in 2024 than it was in 2023, will that make any difference to the amount of capital gains? (I think not, but thought I’d ask).

4. Is there a way to offset the capital gains? - Kathleen D.

Answer: Your rationale is correct, and I suggest you go ahead with your plan. As to timing, the sooner the better. The markets are on the rise right now and the coming interest rate cuts should be a stimulus for more gains. To the extent that happens before you make the change, your capital gains will increase and so will your tax bill.

Your income does make a difference in the tax you will be assessed. The rule is that 50 per cent of your gains are taxable at your marginal rate. So, the higher your income, the higher your rate.

Capital losses can be used to offset capital gains, but you say you don’t have any. Once the money is in the TFSA, gains and losses have no tax impact.

--Gordon Pape (Send questions to and write Globe Question on the subject line.)

What’s up in the days ahead

David Berman takes a fresh look at the investment case for Canadian Tire.

BoC among central bankers in spotlight: World market themes for the week ahead

Click here to see the Globe Investor earnings and economic news calendar.

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