Canadian stocks are off to a strong start to begin 2019. Not only has the
S&P/TSX Composite Index risen roughly 9% to the beginning of February –
erasing two thirds of last year’s decline – but it is also one of the
world’s leading equity markets so far this year (see Chart 1). Given the
Canadian equity market’s procyclical behavior, it’s not surprising to see
it rally stronger than other global bourses in a risk-on period like the
one we’re in now. It’s also quite possible that Canadian stocks were
sufficiently on sale to warrant a bounce off levels that were consistent
with deeply pessimistic sentiment: Canadian stocks were, and still are,
trading at one of the cheapest levels to developed market equities in the
past three decades. So the question is, how confident are we that this
stellar performance can continue? Our answer: not very.
Despite improving financial literacy and a growing regulatory environment,
questionable investment strategies are still being used by some advisors,
and some investors keep falling into the trap. Keep in mind that 95% of
financial advisors are putting their client’s interests before their own
and are acting in a very professional manner. Here, I want to look at some
financial strategies that should raise big red warning flags.
The
Invesco U.S. Companies Fund
jumped out to a strong start this year, thanks to a strong contribution
from its healthcare and technology holdings. It gained 5.3% in January,
outpacing the U.S. Equity peer group (4.6%). Longer-term numbers are
also strong, with a 10-year average annual compounded rate of return of
13.9% to April 30, besting its category, but slightly lagging the S&P
500.
Truman Burbank is the unwitting star of Peter Wier’s end-of-millennium
movie masterpiece. Ever since birth, his life on The Truman Show
has been broadcast live around the clock and across the globe. A seemingly
idyllic world on the island of Seahaven is really a massive, dome-encased
studio equipped with 5,000 cameras to monitor all aspects of his life.
Unknowing to Truman, everyone in his impossibly sundrenched, pastel-dappled
town is an actor. Investors with U.S.-dominated portfolios over the last
decade may have begun to feel like Truman.
By Fund Library News Wire | Friday, February 15, 2019
By Mike Keerma
The big North American stock indices posted strong weekly gains on hopes
that the U.S. and China will reach a trade agreement of some sort before
the March 1 deadline. U.S. President Donald Trump’s declaration of a state
of emergency as a tactic for funding a wall at the Mexican border didn’t
have an impact on stock markets, as the
S&P 500 Composite Index
advanced 2.5% on the week, while the technology-weighted
Nasdaq Composite Index
rallied 2.4%. Toronto’s benchmark
S&P/TSX Composite Index
gained 1.3% on the week, as the price of
crude oil
surged 5.8% on the week, boosting energy issues, which comprise about an
18% weighting on the index.
