Savvy investors who gorge on economic data have faced a difficult period this summer: Stubborn inflation has bolstered bond yields and disappointing readings from China have pointed to a tough stretch for the world’s second-largest economy.
That adds up to some big headwinds for stocks. Indeed, major benchmarks have gone sideways over the past month and dipped since the end of July, raising questions about the health of the bull market that kicked in earlier this year.
However, The Globe and Mail Investing Club has sailed through these daunting challenges, suggesting that the collective wisdom of our readers is a force that the wizards on Wall Street and Bay Street might want to tap into.
Over the past month, the Readers’ Portfolio has gained 1.8 per cent – a fine performance that, if annualized, would point to a return that easily tops the historical long-term average for equity mutual funds.
Equally impressive, the portfolio has beaten both the S&P 500 Index (up just 1 per cent in Canadian-dollar terms) and the S&P/TSX Composite Index (down 0.7 per cent) over this one-month period.
Since its inception six months ago, the portfolio is up 17.9 per cent, including dividends. This longer-term performance also tops the S&P 500 and the S&P/TSX Composite Index, which are up 15.5 per cent and 5.3 per cent, respectively (also in Canadian-dollar terms and including dividends).
The strong performance has fuelled more than a few discussions around here about the stock-picking capabilities of Globe readers, and the shortcomings of our own. The Globe Hot List is tepid at best, with a total return of – oh boy – 1.9 per cent over six months.
As you may recall, we put out a request near the start of the year, asking for submissions of up to three stocks that would be held for one year.
Anything listed in the U.S. or Canada was fair game, as were approaches that favoured dividends, profit growth, value, momentum or any other strategy. Did you use a dartboard to select a random ticker? Hey, that’s okay, too.
We received more than 500 responses, and selected from these submissions the 12 most popular stocks to create the Readers’ Portfolio. The collection reflects a diverse set of themes that cover a lot of bases: traditional energy and renewables, banking and artificial intelligence, online commerce and old-school convenience stores, telecom and pipelines.
Like any portfolio, this one has its laggards – or longer-term plays, as we like to call them.
Algonquin Power and Utilities Corp. AQN-T announced in August that it will sell its renewable energy assets to become a pure-play utility. But renewables are in the dumps right now, and Algonquin’s share price is down nearly 6 per cent this year.
Enbridge Inc. ENB-T announced a big deal for U.S. natural gas utilities earlier this month, and partly financed the acquisitions with $4-billion in new shares that were priced at a sharp discount. Market reaction: kerplop.
Bank of Nova Scotia BNS-T and Toronto-Dominion Bank TD-T are struggling with concerns about the financial health of consumers.
But the other half of the Readers’ Portfolio is composed of stocks with solid double-digit gains that are delivering the real power.
Nvidia Corp. NVDA-Q, whose share price touched a fresh record-high earlier this month amid continuing enthusiasm for AI’s potential, is up 93.7 per cent since the contest began. Shopify Inc. SHOP-T is up 46.9 per cent. And Microsoft Corp. MSFT-Q is up 30.2 per cent.
There’s more here than red-hot tech stocks, though: Tourmaline Oil Corp. TOU-T, Brookfield Corp. BN-T and Alimentation Couche-Tard Inc. ATD-T are generating strong returns that give the Readers’ Portfolio a lot of momentum heading into the second half of this contest – but no trophy yet.
David Berman