[Beaver101]

That's where an asset allocation plan helps. It tells you exactly what you are required to buy in order to satisfy your allocation targets.

... I'm sure an AA plan would help investors who are quite "disciplined" but then I am not. Actually hardly. My current AA plan is quite simple 50/50 equities/fixed income. But then do I sell my bond fund (which is in a doldrum now) so I can buy more equities? I'm very tempted but then that 50/50 gets shifted. Or do I sell some of my equities instead as I know they'll recover. Those are industries that can withstand some whippings (which don't include big names either as I'm not a fan of those). Decisions, decisions, decisions ... and who said investing is easy ...

 

[Ukrainiandude]

Unless your crystal ball is crystal clear, that is only a supposition or assertion. The odds seem to suggest there is a higher probability of markets continuing to go lower in the near term, but because no one actually knows anything, DCA in accumulation is the least stressful and potentially the most rewarding thing to do.

In all my years of accumulation, I have minimal memory or recollection of what went well (or bad) when in a measurable sense. What I do remember is lessons learned in an effort to avoid repeating them in the future. One of them is trying to guess market direction several months out is a fool's game.

I don’t disagree with you.
But it’s seems very unlikely that market will go up in this inflationary environment. Central banks might start to seriously consider substantial rates increase vs trying to put out the inflation spike with their current “pissing in the fire policy”.

 

[james4beach]

I don’t disagree with you.
But it’s seems very unlikely that market will go up in this inflationary environment. Central banks might start to seriously consider substantial rates increase vs trying to put out the inflation spike with their current “pissing in the fire policy”.

It could also go another way, nearly the opposite of what you say.

Say the central banks chicken out, pause the rate hikes, perhaps emboldened by a slight deceleration in CPI (which is definitely possible). In that case, asset prices could go berserk.

 

[MK7GTI]

I'm looking at a few US blue chippers but are still too expensive. Waiting for them to become a bit cheaper.

What is everyone else watching?

 

[zinfit]

I'm looking at a few US blue chippers but are still too expensive. Waiting for them to become a bit cheaper.

What is everyone else watching?

I am looking at the big companies with excellent balance sheets, low debt , great FCFs and have big cash on the balance sheets and have dominant and enduring business operations. Microsoft , Apple, Alphabet, Amazon , J&J , Nvdia are the names that are fitting that definition. Apple and Microsoft each have over a100 billion in cash. Alphabet has 150 billion. Each of them is an integral part of modern society. Might put Costco on that list. What is on your list? I should say I am a long from making that decision right now.

 

[Jimmy]

Many stocks are really well valued now. The analysts use a discount rate in their stock models generally similar to = RFree rate (10 yr bond yield) + inflation + the equity risk premium. At the bottom of the pandemic , this was .25% + 2% + say 3.5% = 5.75%.

Now RF is going up to 3% inflation is 7% and ERP is still 3.5% so = 13.5%. So stocks have really fallen in large part because of this as many continue to grow earnings and beat estimates. Good time to load up on anything really for that alone

When the world gets back to normal say, RF of 3%, inflation 3% ERP 3.5 % = 9.5%, So all else being = you can get a ~ 30% return alone just from the rate falling back to the mean over the next say 2 yrs.

 

[KaeJS]

Many stocks are really well valued now. The analysts use a discount rate in their stock models generally similar to = RFree rate (10 yr bond yield) + inflation + the equity risk premium. At the bottom of the pandemic , this was .25% + 2% + say 3.5% = 5.75%.

Now RF is going up to 3% inflation is 7% and ERP is still 3.5% so = 13.5%. So stocks have really fallen in large part because of this as many continue to grow earnings and beat estimates. Good time to load up on anything really for that alone

When the world gets back to normal say, RF of 3%, inflation 3% ERP 3.5 % = 9.5%, So all else being = you can get a ~ 30% return alone just from the rate falling back to the mean over the next say 2 yrs.

Interesting. I've never heard this before.

Can you explain some things?

What is the equity risk premium and how do you come to 3.5%?

And how exactly did you arrive at 30% return in your last assumption?

 

[Jimmy]

Interesting. I've never heard this before.

Can you explain some things?

What is the equity risk premium and how do you come to 3.5%?

And how exactly did you arrive at 30% return in your last assumption?

The ERP is just the expected return difference between riskier stocks and the 10 yr govt bond ( risk free return) . Equity Risk Premium Definition (investopedia.com) I have just seen 3.5 % used commonly.

Here is a table of ERPs ( Implied ERP by year) It actually varies ( I just used 3.5 which was a LT avg for simplicity) https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histimpl.html

I just took (13.5-9.5) /13.5 = a decline of ~ 30%. It is interesting how much of the market moves lately have been due to 2 parts of the equation - inflation and the 10 yr bond yield (Rf rate). You can see the wild moves this week when inflation came in in the US at 8% and no signs of slowing down that has spooked markets the most IMO. Then again inflation they usually try and keep in a 2% range. So people will require an 8% return (for US stocks) just for inflation alone.

 

[KaeJS]

Thank you for explaining. I see.

 

[GGuy]

I'm looking at a few US blue chippers but are still too expensive. Waiting for them to become a bit cheaper.

What is everyone else watching?

Watching these. Hard to call a bottom but with the pull back these 6 are now all yielding over 5% so could hold them forever and get decent return.

ENB 6.49
GWO 6.35
BCE 5.99
TRP 5.42
CM 5.21
BNS 5.19

"Banks don't do well in a recession" .... Recessions don't last forever but dividends do (at least with the banks).

 

[gardner]

Despite it still being overpriced, I started a small position in Loblaw. I looked at the other grocers and there's not much light between them on PE, yield and value. I hate that the big grocers are mostly privately controlled with only a small part of the equity being public. The multi-level scheme that gives the Westons effectively complete control with only partial ownership really gives me the willies.

 

[KaeJS]

Todays buys:

BCE
T
ENB
FTS
XEQT
XQQ
XSP

 

[Ukrainiandude]

XQQ
XSP

76.5%
% of QQQ's 102 holdings also in SPY

 

[KaeJS]

76.5%
% of QQQ's 102 holdings also in SPY

This is true!

But not everything is the same, including the weightings.

I have to buy XQQ because it holds things I wouldn't normally buy on my own, so it's a way of hedging myself.

 

[gardner]

I added a bit of XIC in the RRSP. Price seems cheap and I am now underweight on equity.

 

[james4beach]

Currently shuffling cash between banks to buy some GICs at the end of June.

I looked at my asset allocation spreadsheet on Friday. I'm exactly at my 30% target weight in stocks, and am only underweight bonds/GICs at the moment, so that's all I can buy. For me, buying stocks ist verboten.

If stocks keep tanking then I'd start to buy them as well, but I let my asset allocation plan tell me what to do. I wrote about my approach to the bear market in this other post.

 

[KaeJS]

Bought some more KMP.UN with some Manulife dividends I got.

 

[Gator13]

Currently shuffling cash between banks to buy some GICs at the end of June.

I looked at my asset allocation spreadsheet on Friday. I'm exactly at my 30% target weight in stocks, and am only underweight bonds/GICs at the moment, so that's all I can buy. For me, buying stocks ist verboten.

If stocks keep tanking then I'd start to buy them as well, but I let my asset allocation plan tell me what to do. I wrote about my approach to the bear market in this other post.

Do you mind sharing the breakdown of all your holdings? Your link mentions that it is based on your primary account. I believe you have also mentioned GIC's, 5-Pack, maybe a "gambling" account, etc. Thx

 

[james4beach]

Do you mind sharing the breakdown of all your holdings? Your link mentions that it is based on your primary account. I believe you have also mentioned GIC's, 5-Pack, maybe a "gambling" account, etc. Thx

Sure. Yeah, I do have the 5-pack in there. Here is my consolidated, overall breakdown of all my investments once I combine all accounts.

Equities, 30.0%
9.5% Canadian 5-pack (similar to XIU)
4.9% Canadian index (XIU)
0.7% Canadian sector picks/gambling (currently XEG)
1.5% Canadian growth stock picks
8.3% US index, S&P 500
5.1% US index, trend following

Fixed income, 48.4%
23.5% individual bonds (similar to XBB)
14.0% GICs
10.9% XBB

Gold, 21.6%
21.6% mix of CGL.C, MNT, IAU, and physical gold

 

[Gator13]

^ Thanks. A disciplined approach, but yet a structure that allows you to be active/hands on.

I am a dividend investor with a heavier equity allocation, but I appreciate a structured approach.