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Email this10:09 am
December 16, 2020
Online
October 2024
GIC/term rates tanking, stock market inflated and overbought so I won't be stepping into equities in a big way until we get a decent pullback.
Treading water with increasing RRSP drawdowns seems to be a plan.
Ideas?
11:34 am
December 16, 2020
Online
ExtraSauce said
October 2024
GIC/term rates tanking, stock market inflated and overbought so I won't be stepping into equities in a big way until we get a decent pullback.Treading water with increasing RRSP drawdowns seems to be a plan.
Ideas?
FWIW:
"The market remains near all-time highs, a pattern often observed before major downturns. Despite the positive short-term signals, investors should remain cautious, as the economy could shift rapidly. Historical patterns show that markets can rally despite underlying negative indicators, only to experience sharp reversals once external shocks or economic slowdowns hit. This was evident in the periods leading up to the 2001 and 2008 recessions, where optimism and strong market performance preceded significant downturns."
https://www.bnnbloomberg.ca/markets/2024/10/15/mike-philbricks-top-picks-for-october-15-2024/
1:27 pm
October 27, 2013
Online
There are as many opinions on the current state of the stock market as there are analysts. The TSX Composite has trailed the performance of the US stock market in particular and has plenty of room to grow. More importantly for Canadians, Canadian blue chip dividend stocks have been lagging the general market and dividend yields remain strong.
The TSX60 (60 largest stocks in the Canadian market) as represented by the likes of XIU https://www.blackrock.com/ca/investors/en/products/239832/ishares-sptsx-60-index-etf#/ has provided a solid, and growing, eligible dividend investment income stream for almost the entirely of its 25 year existence. While market value of this ETF will fluctuate with market conditions, sometimes wildly, its generation of investment income has been growing year by year, the occasional bump due to varying capital gains components notwithstanding. Go to https://seekingalpha.com/symbol/XIU:CA/dividends/history and click on Max for the 25 year history of dividend payouts.
Everyone should have some of this ETF, or one of its peers, in their portfolio to supplement interest income from their fixed income investments.
1:50 pm
April 27, 2017
Offline
ExtraSauce said
October 2024
GIC/term rates tanking, stock market inflated and overbought so I won't be stepping into equities in a big way until we get a decent pullback.
Sounds like you plan to invest but you are also trying to time the market. It's a bad idea. We’ve seen similar sentiments on this forum in January:
“ If you ask me, I am not putting new money into the stock market at current level. It's whatever one's investment style and risk taking capability that dictates when and how much to invest. "Should not time the market" is a very useless 'useful saying', that seem to make a lot of sense, when it really isn't.”
Well, a typical boring balanced portfolio is up 15 to 20% since then. A “decent pullback” will certainly come but it may never reach the levels of early 2024. For all we know, we could be in the same place in 6 months time, talking about October.
The problem with waiting is that you could be waiting for a very long time, all the while missing on opportunity and time in the market. And over the long term time in the market is all that matters.
And interest on fixed income isn’t bad right now. It's above inflation which is a nice change.
4:12 pm
December 16, 2020
Online
AltaRed said
There are as many opinions on the current state of the stock market as there are analysts. The TSX Composite has trailed the performance of the US stock market in particular and has plenty of room to grow. More importantly for Canadians, Canadian blue chip dividend stocks have been lagging the general market and dividend yields remain strong.The TSX60 (60 largest stocks in the Canadian market) as represented by the likes of XIU https://www.blackrock.com/ca/investors/en/products/239832/ishares-sptsx-60-index-etf#/ has provided a solid, and growing, eligible dividend investment income stream for almost the entirely of its 25 year existence. While market value of this ETF will fluctuate with market conditions, sometimes wildly, its generation of investment income has been growing year by year, the occasional bump due to varying capital gains components notwithstanding. Go to https://seekingalpha.com/symbol/XIU:CA/dividends/history and click on Max for the 25 year history of dividend payouts.
Everyone should have some of this ETF, or one of its peers, in their portfolio to supplement interest income from their fixed income investments.
time is the key here.
Thanks for your thoughts. I agree that XIU is a good idea for long term hold, if it too was not at an all time high and I was a little younger. I've been in the market off and on since the ninetys and the times I've made the most was when patient and buying near the lows. Conversly, I've got slaughtered buying into strength after runups.
4:46 pm
December 16, 2020
Online
mordko said
Sounds like you plan to invest but you are also trying to time the market. It's a bad idea. We’ve seen similar sentiments on this forum in January:
The problem with waiting is that you could be waiting for a very long time, all the while missing on opportunity and time in the market. And over the long term time in the market is all that matters.
And interest on fixed income isn’t bad right now. It's above inflation which is a nice change.
==============================
Long term in the market, especially with the considerable likelihood of a market pullback, is a luxury afforded to those with less miles on their odometer.
My recent focus has transitioned from a once in a lifetime 2020 post covid fill-your-boots buying opportunity that realized considerable gains and has afforded me to retire with nary a care. In all selfishness, I'd like the Fed & BoC to keep rewarding savers so we could continue to not give a dam about market fluctuations. Hope springs eternal 😉
5:00 pm
August 16, 2024
Online
I like this article on a hypothetical situation about having terrible market timing. But again, investing in stocks is not recommended for money you'll need in the next 5 years.
I also read that right now stock and bond prices are correlated due to inflation.
Man, my savings really enjoyed the high interest rates.
5:14 pm
October 27, 2013
Online
I was responding to the specific title of this thread, i.e. the quest for income as rates fall. Dividend equities will/should benefit from continuing drops in rates in fixed income (GICs, bonds, HISAs) because just as the title of this thread says, investors will migrate toward dividend paying equities to replace lost/lower interest income. That will/should provide a tailwind (support) for dividend paying equities regardless of the direction of the overall equities market. It is a virtual certainty that XIU will be paying more in distributions/dividends 5 years from now (and even more 10 years from now) than it currently does.
FWIW, my mother still had a portion of her portfolio in dividend paying equities (a single Canadian dividend stock mutual fund) at the age of 96 when she passed away in 2015. I do not remember the exact numbers but it was in the order of 30 percent of her portfolio at age 80 and 15% of her portfolio at age 95 (general rule of thumb of 110-age for percentage in equities). It is never too late to diversify one's sources of annual income and it is important to remain invested over the long run... i.e. time in the market, rather than timing the market. $100k in XIU* today delivers ~$2.8k in tax advantaged dividend income (in a non-reg account) .
I am not trying to persuade investors to do what they are uncomfortable with but continued drops in BoC interest rates to perhaps 2.5-3% before they are done is going to hurt current interest income folks are receiving by as much as another 30-40% in just a few years.
* XIU is simply a proxy for dividend yielding ETFs proving a balance of income and capital appreciation. If one really wants to emphasize income over capital appreciation, there are dividend heavy ETFs like XDIV yielding 4.4% today (~$4.4k on a $100k investment). I am not recommending a specific dividend ETF.
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