Investing

Recession incoming! (part 2)

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angryaudifanatic wrote:
Jan 8th, 2019 10:35 am
I love how many of you are talking about Japan like it's a red herring.

The TSX hasn't done well compared to other world economies either :D
TSX index is a poor benchmark to reflect the Canadian stock market overall because it's very heavy on natural resources. Remove this sector from the picture and TSX now has done quite well.


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xgbsSS wrote:
Jan 8th, 2019 11:27 am
The TSX also has done very well too.

5 year return (with reinvested dividends) is 4.1%. This includes the downturn in oil prices.

10 year is 7.9%.
Compared with global indices, and certainly even compared to savings rates these days, that is an absolute embarrassment. "Done well"? By what metric?!
rodbarc wrote:
Jan 8th, 2019 11:36 am
TSX index is a poor benchmark to reflect the Canadian stock market overall because it's very heavy on natural resources. Remove this sector from the picture and TSX now has done quite well.


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That's equivalent of saying "The NASDAQ has done pretty alright in the last quarter if you remove FAANG stocks". You of all people know that is not a fair comment.
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angryaudifanatic wrote:
Jan 8th, 2019 11:36 am

Compared with global indices, and certainly even compared to savings rates these days, that is an absolute embarrassment. "Done well"? By what metric?!



That's equivalent of saying "The NASDAQ has done pretty alright in the last quarter if you remove FAANG stocks". You of all people know that is not a fair comment.
My answer will always be done well after inflation. Inflation has been fairly low of late.
And if you compare to other investments.... CAC40 (France)for instance. Savings accounts? The TSX return is still higher than that and even 5 year GICs. I really dont understand what you are getting at. And one year of negative returns doesn't count as proof

As an investor, especially long term, there are going to be times where returns are lower. TSX is a resource heavy index. Of course it is hasnt done as well recently as say the Nasdaq, S&P when tech has done well. Besides why do you have to have +10 % returns for it to be alright and single digit growth is a failure? That's just greed.

If you also look between 2000-2010, TSX handsomely beat the NASDAQ and NYSE. Performances fluctuate hence why diversification helps.

If it is still too measely of return, then don't invest in the market.
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xgbsSS wrote:
Jan 8th, 2019 11:55 am
My answer will always be done well after inflation. Inflation has been fairly low of late.
And if you compare to other investments.... CAC40 (France)for instance. Savings accounts? The TSX return is still higher than that and even 5 year GICs. I really dont understand what you are getting at. And one year of negative returns doesn't count as proof

As an investor, especially long term, there are going to be times where returns are lower. TSX is a resource heavy index. Of course it is hasnt done as well as say the Nasdaq, S&P when tech has done well. Besides why do you have to have +10 % returns for it to be alright and single digit growth is a failure? That's just greed.

If you also look between 2000-2010, TSX handsomely beat the NASDAQ and NYSE. Performances fluctuate hence why diversification helps.

If it is still too measely of return, then don't invest in the market.
Is your post for real? You want to compare GICs vs the TSX returns and you haven't taken into account a shred of risk? REALLY?

:facepalm:

I'll just leave this here.

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xgbsSS wrote:
Jan 8th, 2019 11:55 am
My answer will always be done well after inflation. Inflation has been fairly low of late.
And if you compare to other investments.... CAC40 (France)for instance. Savings accounts? The TSX return is still higher than that and even 5 year GICs. I really dont understand what you are getting at. And one year of negative returns doesn't count as proof
...
Not that I am necessarily disagreeing with you but comparing equity returns to 5 years GICs doesn't make sense. You'll have to look at risk adjusted returns and audifanatic is right, the returns in the past few years have disappointed. Having said that, I don't know what the future holds so I am still investing in TSX based on Canada's equity weighting in the global market (~4-5%).
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angryaudifanatic wrote:
Jan 8th, 2019 11:58 am

Is your post for real? You want to compare GICs vs the TSX returns and you haven't taken into account a shred of risk? REALLY?

:facepalm:

I'll just leave this here.

https://business.financialpost.com/inve ... ming-again
I most certainly am. An investment is an investment. I've been doing this for a while. GICs of the last 10 years have been at or under inflation when in the 90s and 2000s, they at least met or beat i t And again if I have a positive return over inflation, why would I fret that it isnt over 10% growth and when return was low for only the last while?
And if we look at 2000-2010, TSX outperformed. So why is it that the TSX is terrible when indicies more or less fluctuate overtime? What if tech becomes less profitable in the future?

Your Financial Post article shows nothing except what has been recent events. Economies and situations change. With trade wars in the US, we could see the US become less business friendly. Resources could become expensive again. Canada could see a change in goverment. We could actually have change to make a single securities regulator in the future.

The fact of the matter is that anything is in the realm of possibility. A mere 5 to 10 year period comparison of an index and declaring it is terrible just because it isnt as high, and when you actually look at the numbers that again 4%ish annually in the last 5 and 8%ish annually in the last 10, it is pretty silly to call it terrible. If Canada was having negative numbers or stagnancy, I would definitely agree, but that isnt the case.

And as @rodbarc has mentioned, resources alone has been the bain of the index numbers alone.
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ksgill wrote:
Jan 8th, 2019 12:00 pm

Not that I am necessarily disagreeing with you but comparing equity returns to 5 years GICs doesn't make sense. You'll have to look at risk adjusted returns and audifanatic is right, the returns in the past few years have disappointed. Having said that, I don't know what the future holds so I am still investing in TSX based on Canada's equity weighting in the global market (~4-5%).
Because he mentioned that the TSX barely beat savings rate. For the economy to really more or less to keep going, a return over inflation is all that is needed during a "stagnant" period. So if you compare a 5 year return on TSX verses a 5 year GIC bought 5 years ago, they are nowhere close.

Personally I dont do world equity based weighting because of the problem with overlap (for example Australia and Canada have fairly similar industrial makeup). I am mostly individual stock with over 90% in Canada, although my passive portfolio is 1/3 Canadian equity, 1/3 US and 1/3 other but this passive portion doesnt make up a large part of the portfolio.
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xgbsSS wrote:
Jan 8th, 2019 12:22 pm
Because he mentioned that the TSX barely beat savings rate. For the economy to really more or less to keep going, a return over inflation is all that is needed during a "stagnant" period. So if you compare a 5 year return on TSX verses a 5 year GIC bought 5 years ago, they are nowhere close.

Personally I dont do world equity based weighting because of the problem with overlap (for example Australia and Canada have fairly similar industrial makeup). I am mostly individual stock with over 90% in Canada, although my passive portfolio is 1/3 Canadian equity, 1/3 US and 1/3 other but this passive portion doesnt make up a large part of the portfolio.
Please keep in mind that the only person who brought up GICs into this conversation was you. My original post talked about the relative performance, or lack thereof of the TSX. None of my money is in any Canadian market/equity/fund or otherwise and I'm quite proud of that.

All of my money is in the US, and as I had alluded to in another thread, or it may have been this one actually, even in the last quarter of volatile trading, I did well, but that aside, if one had invested money in the 'DAQ, as an example, say 10 years ago, the performance of that is significantly stronger than the TSX.

If I'm going to take on risk, I better get sufficient return, and the TSX certainly does not pass that cost benefit analysis for me. You do what you want with your own money, but this discussion started because of the discussion on Japan, at which point my point was to talk about Canada, and that we really should not be holier than thou here. Sure, we've done better than the Japanese, but "our" market is a far cry from the performance of the US, as an example.
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angryaudifanatic wrote:
Jan 8th, 2019 12:43 pm
If I'm going to take on risk, I better get sufficient return, and the TSX certainly does not pass that cost benefit analysis for me. You do what you want with your own money, but this discussion started because of the discussion on Japan, at which point my point was to talk about Canada, and that we really should not be holier than thou here. Sure, we've done better than the Japanese, but "our" market is a far cry from the performance of the US, as an example.
And if that is how you want to invest, then great, good for you. And while the US is doing well now comparatively, can we say this will continue for sure?

All I merely said in the beginning is that the Canadian market has done reasonably well. The returns are more than positive. Sure the last few years, American markets have definitely outperformed. That wasn't the point either. And only a short while ago during the 2000s, the opposite was true (Canadian market beat the US).

Regardless this shows why a well-diversified portfolio is better for most people in the long run precisely because market performance between indicies will fluctuate overtime.
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xgbsSS wrote:
Jan 8th, 2019 12:56 pm
And if that is how you want to invest, then great, good for you. And while the US is doing well now comparatively, can we say this will continue for sure?
Rhetorical, but of course not. Otherwise we'd all be stinking rich :)
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ukrainiandude wrote:
Jan 8th, 2019 1:28 pm
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I know! Since posting a random chart with no context to the discussion didnt work, Ill post another one in a language most people here cant speak!
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angryaudifanatic wrote:
Jan 8th, 2019 11:36 am
That's equivalent of saying "The NASDAQ has done pretty alright in the last quarter if you remove FAANG stocks". You of all people know that is not a fair comment.
Sorry, I respectfully disagree because TSX benchmark is NOT a representation of the Canadian market. It's overweight on a few sectors and not exposed enough to others. Another reason to why I personally prefer to invest in individual stocks. Scan for positive operating growth results and buy with valuation in mind. Less risk than an ETF like XIC in my opinion.

A portfolio with the top 3 or 5 market cap stocks equally distributed from the 10 sectors had a much better performance.


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