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Discussion Starter · #1 · (Edited)
I try not to get emotional about money and investing, but I've got to admit that I really enjoy seeing these new all time highs.

Anyone else enjoying this?

My portfolio hit a new all time high in June, and I said to myself, that has to be the maximum, and it seems to have rocketed higher since then.

I realize this won't impress the retired people with large fortunes, but my investments have grown by ~ 150K in the last couple years, which is more than I could have saved through just paycheques alone. Markets have really been cooperating nicely.
 

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Discussion Starter · #32 ·
I like the new highs, but finding buying opportunities is getting hard.
If you were investing in a balanced fund or 50/50, it's pretty clear what you would buy right now: bonds.

You could even diversify into more asset classes, like gold, and these days you would be buying gold & bonds since they both are relatively low in the portfolio.

I added over $100K to my portfolio this year so far, and most of it went into gold and bonds. Why would I buy stocks, when I'm already overweight in them, and other assets can be bought cheap?

1 year chart of bonds
21862
 

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Discussion Starter · #40 ·
Bonds cheap? It's the only asset class I know of where I just can't understand how you generate a positive real return going forward.
There are many ways bonds can generate a positive real return. One way is if inflation drops. Another way is if interest rates go up in the coming years.

But in any case, bonds are supposed to help stabilize the portfolio. You get the high returns from stocks, and bonds add portfolio stability.

If you don't think you need portfolio stability, then no need for bonds.
 

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Discussion Starter · #41 · (Edited)
Agreed. Holding 50% of your bond allocation in a high interest savings is likely going to net you a better return without risk. Plus, benefit by rate increases.
Actually, staying invested in bonds is a far better way to benefit for a rising interest rate environment. Bonds performed very well from 1940-1980 as interest rates went higher over 40 years.

Bonds & GICs will outperform cash over the long term, virtually a guarantee (it's called the term premium).

For example, a typical bond ETF today like VAB has a yield to maturity of around 1.7% whereas even the highest paying high-interest savings account tops out at 1.25%. That means that you are sure to get a higher return by investing in a bond ETF today, than leaving the money as cash... which is exactly what you would expect based on the term premium (and yield curve).

Invest $1 in a HISA and it will be "working for you" at 1.25% or likely less. My best account pays 1.1%
Invest $1 in VAB or XBB and it will be "working for you" at 1.7%
Invest $1 in a 5 year GIC ladder and it will be something similar, around 1.7%

It's sad that people have this misconception that sitting in a cash account is somehow better than a bond fund. The exception to this would be 'short term bonds' where yeah, the return may not exceed a high interest savings account.
 

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Discussion Starter · #48 ·
For investing, I suspect it means we may not actually get the inflation because re-opening won't be as strong as suspected. Look at the drop in bond yields this week. Could be pricing in more easing too. These low rates are supporting the market despite the lower potential growth because of delayed full re-opening.
Inflation is notoriously difficult to predict. It's one thing that economists have a very poor accuracy rate in forecasting... and it may depend on the pandemic direction, so who knows.

Many people at CMF are confident about their inflation predictions. It seems that every 2 hours or so, someone confidently declares the future direction of inflation and interest rates. Silly stuff.
 

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Discussion Starter · #56 ·
Good article in Globe. Another adviser today telling you wisely to avoid long term and govt bonds. You also have to be more active and scrap traditional, inflexible investment plans. No more 'set it and forget it' approaches.
lol, more terrible advice. You've got to stop reading this trash Jimmy. These are the narratives of active managers and advisors.

You might as well watch CNBC while you're at it. They will tell you how to time the market as well.

Jimmy, just being real with you and telling you man... @MrBlackhill too ... "actively" navigating markets and using facile logic to reposition oneself does not work. It's a losing strategy in the long term and studies have shown this.
 

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Discussion Starter · #58 · (Edited)
They are trying to save you from yourself and the faulty outdated investment plans out there and you should be grateful
Active management doesn't work, and this has been proven countless times. Not sure what else I can tell you.

Advisors, active fund managers, and even hedge funds (with the smartest people on earth) cannot even beat passive investment strategies long term. So what does that tell you about their skills?
 

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Discussion Starter · #65 ·
I'm getting flashbacks of 2017. Sell your bonds! Buy short term bonds! Preferred shares is the new fixed income! (lol, ridiculous).
In retrospective, buying and holding aggregate bond funds was the right move in 2017. I don't know how it will turn out this time, but I don't think you can go wrong by sticking to ZAG, XBB or VAB. And I believe that's true even if this year and the next are negative. I'm crazy, right?
Yeah, these kinds of moods appear every once in a while. It's just human nature I suppose.

People who make all these prognostications, like the guys on CNBC and in the media, might get some of these calls right once in a while. For the short term anyway. The problem really is that they cannot successfully time their way through markets over the long term. We've seen the long term results of hedge funds and active, tactical fund... they suck.

Trying to time markets, asset classes, interest rates, is not a good strategy in the long term, assuming you have a 10+ year horizon.

Deciding on a strategy you like the best. And then stick with it. If you don't like 60/40 and think we now live in a world where you must be 80% stocks 20% preferreds, fine, then decide on that and stick with that, no matter what.
 

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Discussion Starter · #72 · (Edited)
I looked at my portfolio again on the weekend. Crazy, yet another all time high. Maybe this is what it felt like in the late 90s. Every day you look at the account, it's higher.

I think this is also the kind of market -- just like the 1990s -- which tests the discipline of people who are diversified (balanced funds and asset allocation). When a single asset, in this case stocks, takes off like a rocket, people start to feel like they should be fully invested in the rocket, and don't see the need for the diversification. This is demonstrated through many of the posts at CMF.

The point of diversification is not to get the highest return at all points in time. In fact it pretty much guarantees that you will hold some assets that are not performing well. At many times, diversification will be a drag on your returns.

@Jimmy you don't want that, right? Why would you want a drag on your returns. I think you should concentrate as much as possible into the highest returning area, especially whatever CNBC and the financial media promotes. That's what smart people do, I'm told.

Others like me will continue to hold diversified portfolios, even with some low performing components, and accept a drag on returns.
 

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Discussion Starter · #75 ·
You just shouldn't attack articles in the Globe because they disagree w your views
It's very fair for me to point out that active market-timers have terrible track records. The problem is that nobody is able to predict which way these things will go, and financial writers -- including the Globe and Mail characters -- are pretending they can time markets. They can't.

Instead of being upset with me, you should be upset with those G&M writers. They are the ones using amateur analysis to advise people on how to change their investments, which is reckless and irresponsible of them.

Jimmy do you not remember a few years ago, when emerging markets were all the rage? How about commodities? Didn't you ever turn on BNN and see these people talking every single day, about how the only place to invest is in commodities, the energy sector, and emerging markets?

Think about how much money investors lost, listening to these worthless people.

I'm vocal about this because many people really get sucked in by these kinds of writers, and think that if they read the G&M or watch CNBC, or investment newsletter, that some "smart guy" can tell them which assets or sectors are the right place to be.
 

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Discussion Starter · #77 · (Edited)
Gordon Pape
He absolutely is writing about market timing. He is predicting interest rates and inflation, and changing the asset allocation decision based on that. That's a tactical allocation change which may, or may not, work out positively for the investor.

I realize that some people like timing the markets and asset classes. That's fine, but I am pointing out that it's market timing.

What is fair is others here deserve to hear their opinions either way though
True, and we do hear a lot of market timing opinions here on a daily basis. I am pretty sure that both passive investing and market timing / tactical bets are discussed. @Eder just did one here as well. These views aren't exactly censored or anything, we hear them all the time. Here is Eder's market timing / tactical bet from above.

Eder is making a prediction about future rates of several things, and is using that to make a change to his portfolio allocation. That is called market timing. It's not inherently bad or anything... but let's recognize that it's timing the market:

I'm putting any maturing gic/bond into REIT's for the last 6 months. Not saying it is the right thing to do but changing conditions (not even beating the rate of inflation) requires me to not buy more.
 

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Discussion Starter · #79 ·
@james4beach People are free to tell their opinion, what's wrong with those articles that you hate so much?
What's wrong with my criticism that you hate so much?

They make the argument, I make the counter argument. Plus the argument presented in the G&M is the dominant mainstream argument. This is the message we hear all the time: you just have to be a smart guy, and figure out what markets will do, and get rich.

That's the majority opinion. What I'm voicing is the minority opinion. There is no lack of the G&M and CNBC argument. It's blasted constantly across all media, all day, every day.
 

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Discussion Starter · #96 ·
Doesn't feel like it to me.
I'm not seeing the high tech mania (ex. Nortel) and don't have as many co-workers talking about firing their advisor as they allegedly can do better one their own.
Well, Yahoo Finance is running a massive webinar, an introduction to trading meme stocks and crypto currencies. So there are a few signs of weirdness.

Valuations in the US are getting pretty extreme too. The most recent Morningstar survey that I saw, which cites analysts from JPMorgan, Vanguard, and Morningstar's own team, makes a projection of roughly 0% real return in US stocks over the coming decade.

It's pretty rare to see forward-looking forecasts of zero returns in stocks, so things are getting a bit heated for sure.
 

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Discussion Starter · #104 ·
Well that's a sharper drop than I was expecting.

Stocks really ran up pretty fast, so any correction at this point could be painful. Even if they fell down to the 200 day moving average (very plausible), the bull market could still be intact.

The TSX could fall another 7% and S&P 500 could fall another 8%, while still remaining in an uptrend.
 

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Discussion Starter · #107 ·
Escalator up, elevator down. One shouldn't be too surprised, this is really typical. People/institutions/bots are sometimes just looking for excuses to sell. Everyone needs their day in the sun.
It could also be the start of a major reversal. The UK is struggling to keep their economy open, and is probably going to be forced to shut down again with rising COVID hospitalizations. The same could happen to the US within the next few months, so maybe stocks are reacting to this.

This could even be the market reacting to less liquidity, since the Federal Reserve is now shrinking its corporate debt market support. This is one way in which the Fed is tightening... and stocks are mainly driven by Fed liquidity.

So who knows. But it could be happening for many logical reasons, or not. That's what makes stocks so fun :)
 

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Discussion Starter · #111 ·
I agree. All the indices are up compared to a month ago and now we're panicking on a 2% downward move in 2 days?
There is always the possibility that one trend is ending and another is starting. These things are impossible to know in real time. You only know it well after the fact.

I'm actually hoping the market to go down because I should have some decent money to buy stocks in early fall.
What if it enters a bear market, and keeps going down for years? Always a possibility. One never knows.
 

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Discussion Starter · #142 ·
With the poor track record of all these clowns who make forecasts, I can't believe anyone listens to them.

Nobody has any clue what's going to happen in markets. Stocks, bonds, interest rates, or inflation... nobody has any idea.

That's why I hold a passive stock & bond portfolio and tune out all the predictions and forecasts. And it makes no difference if once in a while, some clown in the media gets a prediction right. Anyone can get that success rate by accident.
 
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