This past year was one like no other as stock markets reached new highs in February, fell off a cliff in March before eventually recovering their losses and establishing yet new highs prior to year-end.
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Although there are plenty of financial matters on which financial advisors need to advise their clients these days, investment strategies are still a top priority.
After a year like 2020 – during which stock markets reached new highs in February, fell off a cliff in March before eventually recovering their losses and establishing yet new highs before year-end – there’s no doubt of the importance of keeping clients invested during good times and bad.
Furthermore, proper investment acumen and foresight are key to producing solid returns and income in the years ahead.
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Here are 10 investment-related strategies and themes that advisors were focused on this year:
Volatile stock markets and reduced consumer spending during the COVID-19 pandemic have resulted in many Canadians sitting on extra cash, wondering how and when to put it to work. Advisors recommend a prudent approach when investing cash in these unsettled times, not only in light of the threat of a second wave of the pandemic in the weeks ahead, but the uncertainty around the U.S. presidential election in November.
Although COVID-19 has been a vicious headwind for many stocks, it has emerged as a strong tailwind for others. That includes some Canadian companies flying under the radar that may benefit from changing consumer and corporate behaviour or could have a possible treatment for patients suffering from the coronavirus. Three portfolio managers shared their top small-cap picks.
Recession clouds are lurking, but there can be a silver lining. Global stock markets have been roiled by coronavirus fears and plunging oil prices. Still, certain dividend-paying stocks can help ease the pain. When the S&P/TSX Composite Index dropped by 35 per cent in 2008, some of these equities outperformed the market or eked out gains. Others outpaced the market in the ensuing years. At the very least, investors can get paid while waiting for a recovery. We asked three fund managers for their top recession-resistant stock picks.
Emerging markets may have enjoyed a strong start to the year, but they were sent tumbling in mid-March along with all world markets. The swoon sent the MSCI Emerging Markets Index, the broadest measure of emerging economies, down 32 per cent. Since then, emerging markets have rebounded nicely and look to be in a good position as recovery takes hold. The engine has been Chinese stocks, which make up 41 per cent of the index.
Faced with interest rates that will be low for several years, yield-hungry investors may want to seek opportunities among Canadian dividend stocks. Although higher-yielding dividend stocks are not without risk, there are firms with stable cash flows that will allow them to maintain and raise payouts – and their stocks still trade below pre-pandemic highs. We asked Stephen Groff of Cambridge Global Asset Management, Steve DiGregorio of Canoe Financial LP and Michael Simpson of NCM Asset Management Ltd. for their top picks.
Yield-seeking investors may want to hunt for bargains among real estate investments hit hard during the recent stock market collapse. Given falling interest rates, the robust dividend yields that some real estate investment trusts and stocks offer have become more attractive. Further, some of these firms have strong fundamentals to weather the current storm. Three fund managers share their top real estate picks.
Cybersecurity has become top of mind for many organizations as much of our interactions shift online because of COVID-19. The renewed focus on online safety is also a potential investment opportunity for financial advisors and investors looking for sectors that could withstand the current market volatility. Early during the pandemic, some cybersecurity investments saw either modest gains or single-digit losses compared to double-digit declines for broader indexes such as the S&P/TSX Composite Index or the S&P 500.
Dividends are rarely top of mind when investing in technology stocks. After all, companies in the high-growth tech sector often just reinvest their earnings back into their businesses. Still, there are some mature companies that offer decent dividend yields or others that can grow their payouts over time. They can also help investors ride out bumps in these typically volatile sectors. Three portfolio managers shared their top picks among tech stocks with payouts.
While the traditional portfolio asset mix of 60 per cent in stocks and 40 per cent in lower-risk bonds has served advisors and investors well for many years, some in the investment industry are now questioning its future. Alternative investments can potentially make up for shortfalls in this balanced portfolio for some investors, but others may want to consider other options.
It may be time for long-term investors to start nibbling at beaten-up cyclical, dividend-paying stocks to bet on an economic recovery – even though its timing is uncertain. Stock markets have rallied recently amid signs that the outbreak is stabilizing in the hardest-hit countries, but they could retest the March lows. Three dividend fund managers shared their top cyclical stock picks.
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.
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.
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.
