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I know and agree and your pts are well taken. But even re balancing you would be taking some bond profits now. Just trying to be tactical. IMO I think we are in a lower growth environment too than in the past. Even still I wouldn't lose sleep if bond yields rose to 2.5% and I was still in cash at 2.1%.

I am really far more worried about the equity valuations.
 

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I am really far more worried about the equity valuations.
Scenario's show the best time to buy equities is when you have the money to invest. If RY say pulls back 5% do you buy or worry that it is otw to a 15% pullback....as Costner said in Bull Durham..."Don't think, Meat!"

(If your horizon is long term)
 

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Timing is a losing game.
Make a plan, follow your plan.

I know more than a few people who put off their plan to eek out just a bit more, and ended up paying dearly.
One of them delayed cashing out for his retirement.. at the end of 2008.
 

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Scenario's show the best time to buy equities is when you have the money to invest. If RY say pulls back 5% do you buy or worry that it is otw to a 15% pullback....as Costner said in Bull Durham..."Don't think, Meat!"

(If your horizon is long term)
Timing is a losing game.
Make a plan, follow your plan.

I know more than a few people who put off their plan to eek out just a bit more, and ended up paying dearly.
One of them delayed cashing out for his retirement.. at the end of 2008.
I agree but markets are off to a very fast start- up 3% last week alone so very toppy. I am not trying to 'time' the markets. Just DCA in over maybe a few installments over maybe 6 mos or a year vs a huge lump sum now for my peace of mind.

EM I will add to now. There is a little dip due to corono taking place in their markets today actually. Everything else maybe wait for a little 2-3% dip and DCA.
 

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I understand the hesitation to put all the money in at once and I think averaging in with several instalments is a sensible thing to do. I was sitting on a big chunk of cash a few months ago. I invested half of it immediately, and put the rest in a short term GIC. Once that matures in a couple months, I will invest that too.

Admittedly, I lost performance while I delayed investing that second half but I still like the idea of spreading it out a bit.

And I still think the best way to address the concern about chronically high equity valuations (or danger of a stock market bubble) is to reduce the % weight in equities. Consider this asset mix:

30% stocks (15% TSX index and 15% S&P 500 index)
70% bonds (50% XBB regular bonds and 20% XSH short term)

The return since 2013 was 6.5% CAGR and longer term return should theoretically be around 6% CAGR. To me that seems like a perfectly good result, pretty strong performance, without taking much equity risk.

Here's a link to that 30/70 portfolio showing a graph of the result, with performance statistics.


Edited to add this aside: in the above portfolio, if you replace XSH with gold, then you get my exact allocation. Here is a link to that portfolio showing 6.67% CAGR. I just didn't want to bother the board with my loony ideas about holding a weight in gold. But personally, I think gold is a useful asset for diversification and hedging. Historically it has helped protect portfolios from various catastrophes including the catastrophe of buying stocks at their all time high. So perhaps someone who is afraid of getting in at the worst possible time should consider this kind of approach.
 

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The coronavirus is already causing losses to global stock markets, and it will only become bigger because of world dependence on China as both manufacturers and consumers of products.

The supply chain of so many businesses is attached to China, either directly or through third party suppliers.

The auto companies are already shutting down plants all over the world due to a lack of parts. Millions of Chinese are quarantined and won't be out working or shopping.

I think investing more money today would be a risky venture.
 

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Shipping demand, to/from China is dropping like a lead balloon. Right now you can buy a long term charter for transporting bulk shipments, on a Panamax ship, to China, for around $2,300 per day. It costs about $5,000 per day to run the average Panamax ship. That is a pretty ugly shipping picture. The Baltic dry index is also at a low that I have not seen for quite a while, either.

I should point out that these numbers started getting pretty bad a few months before the virus, but lets just say the virus certainly did not help them any.
 

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Your Canadian weight is disproportionately high.... why not just own the sp500.... many arguments supporting just SP500 or a whole world index....
Remember 2000 - 2013 ? In CAD, the annualized returns over these 13 years were 4.0% CAGR for Canada and -1.3% CAGR for the S&P 500

That's a negative return for the S&P 500 over more than a decade. I think there is value in diversifying between these. Reduce the Canadian weight if you want, but I'd say don't bet too heavily on just the S&P 500.
 

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Recency bias plagues even the best investors. How soon they forget. FWIW, I don't see Canada outperforming in the same way it did in the first decade simply because the super commodity cycle is over BUT Canada has a pretty reasonable chance of keeping pace, and perhaps exceeding S&P500 in the current decade. It depends on what segments of our economy do well and whether the tech boom maintains momentum in the USA.
 

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Recency bias plagues even the best investors. How soon they forget. FWIW, I don't see Canada outperforming in the same way it did in the first decade simply because the super commodity cycle is over BUT Canada has a pretty reasonable chance of keeping pace, and perhaps exceeding S&P500 in the current decade. It depends on what segments of our economy do well and whether the tech boom maintains momentum in the USA.
I think that's exactly right. It's so easy to fall into the recency bias and return-chasing trap. I've certainly made that mistake over the years, for example, when I under-weighted the US for a long time because of that 2000 - 2013 period. That was a mistake too.

Canada, historically, has had performance similar to the US and I don't see why this would not continue. I think both the S&P 500 and TSX will experience 'reversion to the mean' and with similar expectations of long term return, I don't see why you wouldn't want to hold both.

I think going 100% US or 100% into any one market would be a big mistake.
 

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I charted SPY (S&P 500) against XIU (TSX index) as far back as both go, and put them on the same currency. The result is very interesting: they both have the exact same total return since inception! Both have been good investments. They have the same 20 year performance, but were strong at different times.
http://schrts.co/EBtQajah

xiu-spy.png

This also shows you that, contrary to popular opinion, the TSX index has been a very good investment. After all, everyone acknowledges that the S&P 500 has been a terrific investment. And the TSX has matched the S&P 500 over 20 years.
 

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I understand the hesitation to put all the money in at once and I think averaging in with several instalments is a sensible thing to do. I was sitting on a big chunk of cash a few months ago. I invested half of it immediately, and put the rest in a short term GIC. Once that matures in a couple months, I will invest that too.

Admittedly, I lost performance while I delayed investing that second half but I still like the idea of spreading it out a bit.

And I still think the best way to address the concern about chronically high equity valuations (or danger of a stock market bubble) is to reduce the % weight in equities. Consider this asset mix:

30% stocks (15% TSX index and 15% S&P 500 index)
70% bonds (50% XBB regular bonds and 20% XSH short term)

The return since 2013 was 6.5% CAGR and longer term return should theoretically be around 6% CAGR. To me that seems like a perfectly good result, pretty strong performance, without taking much equity risk.

Here's a link to that 30/70 portfolio showing a graph of the result, with performance statistics.


Edited to add this aside: in the above portfolio, if you replace XSH with gold, then you get my exact allocation. Here is a link to that portfolio showing 6.67% CAGR. I just didn't want to bother the board with my loony ideas about holding a weight in gold. But personally, I think gold is a useful asset for diversification and hedging. Historically it has helped protect portfolios from various catastrophes including the catastrophe of buying stocks at their all time high. So perhaps someone who is afraid of getting in at the worst possible time should consider this kind of approach.
Thanks. Right now I just have it sitting in cash or HISA ETFs in 3 accounts. I am looking at going 50/50 once everything is invested. The valuations for ZLB, XMS and all the low vol ETFs are silly right now but TLV (Invesco uses SD and has slightly different sectors real estate, financials ) is not too bad. Utilities and some other defensive sectors are way overvalued. This site from Morningstar is a good chart of the valuations of the US market and its sectors. Overall it is 5% overvalued. It shows utilities are 20% overvalued.https://www.morningstar.com/market-fair-value

I may hold off on EM for maybe a month now too until all the effects of corono are priced in and after reading some of the comments here. About the only thing I feel a little confidence in are PS. They are battered and interest rates here are at or near recent lows and pay a nice ~ 5.3% ytm.
 

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I think it is an OK time to invest. I'm in a similar situation to the OP with cash to invest. Just organizing my buy list now. Tentative buy list for income: 1) Enb, 2) CU, 3) Maybe BCE as 5g may help there. For growth: add to 1) BAM.A 2) OTEX I'd like to buy more BYD but it seems very pricey right now. maybe later once the euphoria wears off.

that should just about take care of my cash. That will give me 14 stocks in my non registered account. ( I paired it down from 30 stocks. Lot of crap accumulated in there.) I'm a little wary of ENB as I'm not sure their earnings are truly covering the dividend. Have to give it more thought. I don't buy this idea that dividends come from cash flow, so earnings don't matter. Doesn't add up to me.
 

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Discussion Starter #115
Update: Still haven't committed to new investments except for a few drug company shares bought last week. I don't feel so dumb now.
 

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Too many threads this week speaking of the current market situation but I thought I would put this here.My son recently got a good job with significant income and RRSP Match so he is sitting on $13300 cash in his RRSP ,I try not to get into his stuff as we are in completely different situations .He is 27 and this is his entire RRSP account what US stocks would you guys recommend for him? This will be for his retirement never going to use it for home buyers program etc.I want him to stick to US Stocks as he has only CAD in his TFSA that we have been building for him the past 8 years.
 

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One option are these ETFs which contain entire portfolios. In Canada we have VBAL etc but there are a collection of these in the US which actually are much better established than the Canadian ones, longer track records. These could be a good option for someone starting out in investing because they are simple, all-in-one funds that trade like stocks (so he gets to try out stock buying). They contain well diversified portfolios that are very appropriate for long term holding

AOM: moderate allocation, 40% stocks, has returned 7% annually
AOR: growth allocation, 60% stocks, has returned 8% annually
AOA: aggressive allocation, 80% stocks, has returned 10% annually

These returns are over 11 years and these are very strong returns. They have different levels of risk as indicated by the names and % stocks. It will be very difficult for an investor to beat any of these things long term. Certainly could be a good way to "get into the stock market" and start learning how it all works.
 

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Too many threads this week speaking of the current market situation but I thought I would put this here.My son recently got a good job with significant income and RRSP Match so he is sitting on $13300 cash in his RRSP ,I try not to get into his stuff as we are in completely different situations .He is 27 and this is his entire RRSP account what US stocks would you guys recommend for him? This will be for his retirement never going to use it for home buyers program etc.I want him to stick to US Stocks as he has only CAD in his TFSA that we have been building for him the past 8 years.
Would put up to $1000 on the table of the following ethe, gbtc, etcg sell in April 2023.

On the first .618 retrace rally of SPX would put $1000 down on Dec 2022 spx puts strike 1000. Sell half near the 08 lows, the rest between June & Oct of 2022

Near the 08 lows in silver would buy some SLV or better yet silver from gold money.

The rest of the money would want to keep as safe as possible.
 

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what US stocks would you guys recommend for him? This will be for his retirement never going to use it for home buyers program etc.I want him to stick to US Stocks
If you don't like the all in one portfolios, and actually want an individual stock, then I would strongly recommend Berkshire Hathaway BRK.B for a number of reasons.

It's a diversified company which holds many different segments (insurance, utilities) and is very well run, so it's virtually impossible that this company will crumble and disappear. Besides being a great company, investing in it will be an educational process. Your son can read Warren Buffett's letters (available on the web site) and also receive their annual reports in the mail. There's a lot of great info in those packages.

Finally, by being a shareholder, he can attend the annual shareholder meeting in Nebraska. It may be interesting for him to go check it out, because Berkshire makes this a real "event".

Berkshire Hathaway is one of the few companies that I can confidently say will survive any economic downturn. They are simply too well diversified, too robust, to collapse. There is huge risk in selecting individual stocks so if you're going to choose just one, BRK.B is a sound idea.
 
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