Investment

Cutting through the Noise: When an investing strategy is easier said than done – The Globe and Mail

Published

10 months ago

January 13, 2024

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Tom Bradley is co-founder of Steadyhand Investment Management, a member of the Investment Industry Association of Canada’s Hall of Fame and a champion of timeless investment principles.

“I will be a steady, long-term investor.”

It’s easy to say and difficult to do. Particularly in the past few years. Think about what we’ve been through. In 2020, markets plunged when the pandemic hit and then quickly recovered, finishing the year well into positive territory.

2021 was the most speculative year I’ve seen in my 40 years in the investment business. It was hard not to suffer from FOMO as exciting growth – profits be damned – was the order of the day.

2022 was the opposite. Reality set in and investors prioritized profits and strong balance sheets. It was a down year but had a few positive runs, including a strong finish.

And then last year, the rebound continued, but again, it wasn’t a straight line. The stock market bobbed and weaved as expectations for inflation and interest rates flipped back and forth.

The swings were enough to make your head spin but they weren’t unprecedented. There are always risks to worry about. Stocks regularly zig and zag on their way to higher levels. And sometimes, there’s a bright shiny object that captures investors’ imagination and lures them in another direction. I’m referring to trends and products such as cannabis, crypto, AI, and more recently, higher-yielding GICs.

The point is that there’s a big gap between talking about sticking to a plan and actually doing it. Indeed, Joe Wiggins, a keen observer of investor behaviour and regular blogger, says “taking a long-term perspective is the most severe behavioural challenge that investors face.” Meeting the challenge means “frequently ignoring issues that we and everyone believes – at that moment – are absolutely critical. No wonder so few investors can do it.”

In this vein, I’d like to offer a few suggestions that will improve your chances of being a disciplined, long-term investor.

Pick a destination. You can’t stay on track if you don’t know where you’re going. Every decision should be made in the context of a plan that clearly defines the purpose of the money and when it will be needed. This helps determine what risk is to you. If the money is for near-term spending needs, then a weak stock market is a risk. If you’re making contributions to build your wealth for retirement, that same weak market is a godsend.

SAM is your friend. A strategic asset mix, or SAM, is a key part of any plan. It defines the mix of stocks, bonds and cash that best fits your goals and personality. SAM should encompass all your financial assets – TFSAs, RRSPs, company or government pensions, income properties, emergency reserves. It gives you a framework to act or, in most cases, not act, as you run the investing gauntlet.

Zoom out. You’re barraged with stock charts that go back five days, a month, or a year. None of them align with your investment time frame. Take a moment to go online and look at the path of a diversified portfolio, or the market indexes, over 10 years and longer. You’ll find that the critical issues Mr. Wiggins referred to disappear into a general trend that goes up and to the right.

Prepare to be contrarian. You know your portfolio will go through both wonderful and dreadful periods. You know it will be difficult to do the right thing in the heat of the moment. And you know what decisions you’ll need to make, perhaps topping up a spending reserve when markets are strong or sticking to your contribution schedule and averaging down when they’re weak. To do what you want to do, you need to prepare ahead of time when urgency is low and you’re feeling calm.

What’s love got to do with it? Emotion is an investor’s worst enemy, so instead of agonizing over where the market is going (which is impossible to do consistently), put your investment process on autopilot. Set up automatic monthly contributions and establish a routine to review your portfolio quarterly and meet your adviser annually.

K.I.S.S. According to Mr. Wiggins, simplicity reigns. “The idea that adopting a long-term approach to investing can have a profound positive impact on our results can seem perverse. How can something so easy – doing less/paying less attention – lead to better outcomes?”

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Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

3 days ago

November 6, 2024

Anne Joseph

NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

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Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

3 weeks ago

October 16, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

4 weeks ago

October 11, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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