Investing

[Merged] Another bloody red day on the TSX

  • Last Updated:
  • Oct 18th, 2018 9:59 pm
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Apr 27, 2015
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Actually, your biggest mistake wasn't exchanging CAD$ to US$ regardless of the exchange rate. Because if you did that, you would be able to better participate in the increasing US market without having to think about exchange.
Actually I was talking about my FI portion. I was buying many US equities then, thanks to CIBC IE who converted currency at BoC spot rate
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Feb 5, 2017
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Canada represents something like 3% of the global stock market.
Everyone investing in the TSX should do his own math and determine the impact of taxes, div tax credit, currency risk, etc. on their own portfolio. It's only after doing this simple calculation that you will be able to determine if this 3% is enough (or too much). In any case, I do not see how could someone obtain a 75-100% TSX allocation. In my personal case, I have decided to allocate 15% of my portfolio to the TSX. Underperformance of the TSX in the last 10 years has nothing to do with it.
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alexcalvado wrote:
Feb 10th, 2018 7:51 am
Canada represents something like 3% of the global stock market.
Everyone investing in the TSX should do his own math and determine the impact of taxes, div tax credit, currency risk, etc. on their own portfolio. It's only after doing this simple calculation that you will be able to determine if this 3% is enough (or too much). In any case, I do not see how could someone obtain a 75-100% TSX allocation. In my personal case, I have decided to allocate 15% of my portfolio to the TSX. Underperformance of the TSX in the last 10 years has nothing to do with it.
Totally agree, Canada is too small of an economy to be investing a large portion of your portfolio in. In my case, about ~10% of my portfolio is invested in Canadian equities.
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Now it's Globe's turn to badmouth TSX/Canada (deservedly so)


Dead last: TSX returns turn negative after 10 years of miserable performance - The Globe and Mail
https://www.theglobeandmail.com/globe-i ... e37928458/
Already badly trailing the rest of the world, the latest setback in domestic equities has dragged the S&P/TSX composite index into negative territory since the precrisis peak nearly 10 years ago.

Not counting dividends, the main Canadian benchmark is now trading below its 2008 peak just prior to the onset of the global financial crisis.

As the U.S. stock market was transformed into a madhouse of volatility, the cross-border transmission of fear has dragged the S&P/TSX composite down by 5.2 per cent over the past week or so.


.......


Over the past year, the S&P/TSX composite index was the single-worst national index in the developed world. Down by 4 per cent in 12 months, domestic returns stand in glaring contrast to the gain in the S&P 500 index of 14 per cent over that time, even after accounting for the first correction in U.S. stocks in two years.

Whereas the United States still has a long way to go before it's in negative territory over the past 12 months, the relatively modest Canadian downturn was sufficient to wipe out all of last year's returns and then some.

....

The main Canadian benchmark is trading below cyclical peaks set in 2008, 2014 and 2017. Factoring in dividends does boost investor annual returns into positive territory, at about 3.9 per cent over the past 10 years. But the S&P 500 posted annual total returns of 9.8 per cent over the same time.

The problem is not necessarily an economic one. Through most of those years of domestic equity weakness, the Canadian economy has performed admirably.


....

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QSR just beat on profit, should be an interesting day for them
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I think today Jerry won't be disappointed with the color of the index, can't say about the magnitude.
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Jerry must be giggling with delight! TSX up more than S&P 500 / DOW / Nasdaq percentage-wise
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gibor365365 wrote:
Feb 9th, 2018 11:59 pm
I have 7 investment accounts and the worst ones both TFSAs as I don't have US stocks there because of dividend withholding tax.
I found it's a general misunderstanding of impact of US DIvidends withholding tax on the performance and proper asset allocation.

15% on DIVIDENDS resulted in "additional" MER of 0.05%!!! (correct me if I'm wrong but that is how it looks like: 0.03*0.15). While difference in performance between US stocks and CAN are ~10% . I'd rather go with another rule of thumb - place growing stock in TFSA first. In case you'll put US to RRSP and CAN to TFSA, you'd gain 0.05% now but will loose 15%-20% later when will do withdraw from RRSP.

I'm quite surprised many people do so (US to RRSP, CAN to TFSA) based purely on dividend tax withholding difference...

P.s. Non-reg is a different beast, here it COULD benefit from "home bias" but it depends...
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alanbrenton wrote:
Feb 12th, 2018 11:38 am
Jerry must be giggling with delight! TSX up more than S&P 500 / DOW / Nasdaq percentage-wise
LOL. not really, energy names still suck

and how can anyone be happy about TSX - last 10 sessions, 9 RED, and tiny +1% won't fix its worst worldwide index status

I'm more happy about some bounces in US instead of any bounce in TSX

12pm - you jinxed it, now USA up bigly > TSX in %
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asa1973 wrote:
Feb 12th, 2018 11:51 am
I found it's a general misunderstanding of impact of US DIvidends withholding tax on the performance and proper asset allocation.

15% on DIVIDENDS resulted in "additional" MER of 0.05%!!! (correct me if I'm wrong but that is how it looks like: 0.03*0.15). While difference in performance between US stocks and CAN are ~10% . I'd rather go with another rule of thumb - place growing stock in TFSA first. In case you'll put US to RRSP and CAN to TFSA, you'd gain 0.05% now but will loose 15%-20% later when will do withdraw from RRSP.

I'm quite surprised many people do so (US to RRSP, CAN to TFSA) based purely on dividend tax withholding difference...

P.s. Non-reg is a different beast, here it COULD benefit from "home bias" but it depends...
If you have 2% yield, 15% of 2% is 0.3% extra 'MER'.

Also, assuming you invest the tax refund due to the RRSP contribution and your tax bracket is the same in retirement as when working, the RRSP and TFSA will perform the same. There is of course some risk in terms of... well, dying - with a large amount in the RRSP - and that you'll be in a higher tax bracket in retirement due to OAS/CPP. But.. generally... no.
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daverobev wrote:
Feb 12th, 2018 12:22 pm
If you have 2% yield, 15% of 2% is 0.3% extra 'MER'.

Also, assuming you invest the tax refund due to the RRSP contribution and your tax bracket is the same in retirement as when working, the RRSP and TFSA will perform the same. There is of course some risk in terms of... well, dying - with a large amount in the RRSP - and that you'll be in a higher tax bracket in retirement due to OAS/CPP. But.. generally... no.
Ah, my bad. I had some back-of-napkin calculation before and remembered it to be 0.x%, forgot to translate from float to % :)
However, even 0.3% which is do a number to consider especially with 100k+ portfolio, still an order of magnitude less than difference in performance and a taxes you'd (probably) pay on RRSP withdrawal in future.

My point is still there - do not overestimate US withholding tax and thus over-complicate the portfolio :)
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asa1973 wrote:
Feb 12th, 2018 12:29 pm
Ah, my bad. I had some back-of-napkin calculation before and remembered it to be 0.x%, forgot to translate from float to % :)
However, even 0.3% which is do a number to consider especially with 100k+ portfolio, still an order of magnitude less than difference in performance and a taxes you'd (probably) pay on RRSP withdrawal in future.

My point is still there - do not overestimate US withholding tax and thus over-complicate the portfolio :)
But still, if you have allocation is both TSX/S&P, won't be better to invest US$ dividend payers into RRSPs?!
btw, AFAIK, on UK stocks , you don't pay div withholding taxes in TFSA.... not sure about Australian stocks
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jerryhung wrote:
Feb 12th, 2018 11:52 am
LOL. not really, energy names still suck
Jerry, IPL is 4%, ENB is 1.8% and KEY 1.4%...
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If you are a long term buy and hold type high negativity and pessimism equates to a perfect time to buy.
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^ the market's or Jerry's?

I used Jerry's and lost about $500 so far, haha.

JFL being bought out by Scotia. I wonder if the portfolio managers will remain intact.

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