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Three strategies to avoid in crisis conditions, Rosenberg's 'no-brainer' investment, and more advice for portfolios right now – The Globe and Mail

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Mississippi-based independent investment firm Movement Capital published a useful article warning about how not to invest during crisis periods. The column “Three crisis strategies to avoid” cautions investors not to think only of extreme scenarios, to never underestimate risk, and to maintain a disciplined investment process.

In the first section, author (and founder of the firm) Adam Collins notes that extreme scenarios get more traction because business media “makes a living out of freaking us out.” He also points out that investors are psychologically anchored to the financial crisis because that was the most recent recession. But that crisis was extreme relative to average downturns, in both degree and time, and future recessions are unlikely to be as punishing.

Many investors are reassessing their risk tolerances, and Mr. Collins sees this as a positive. He recommends that investors first calculate the total dollar amount of their equity positions. Then, ask themselves if they could tolerate a 50-per-cent decline without giving up and going to cash. If the answer is no, they need to reduce their equity allocation, in his opinion.

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Abandoning discipline is the third counterproductive investment strategy for investors to avoid in the current crisis. The author quotes Ritholtz Wealth Management’s Ben Carlson, who stated “anyone can build a portfolio. Not everyone can stick to it.”

Mr. Collins used the metaphor of a hotel owner before a storm to underscore the importance of holding a diversified portfolio through periods of volatility, “Imagine you owned a hotel near the beach and a bad storm is coming. Business will slow down. Are you going to sell the hotel before the storm? No. You know the long-term value of the business isn’t impacted by a short-term event.”

Periods of fear and anxiety are the price investors pay for the long term wealth available in the stock market simply by buying and holding. The trick for most investors is to avoid getting in their own way – by panic selling quality stocks, for instance – when things get difficult.

— Scott Barlow, Globe and Mail market strategist

This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.

The Rundown

Buy stocks at the start of a bear market? History suggests that’s not such a bad idea

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Canadian stocks, as represented by the S&P/TSX Composite Index, fell into bear-market territory earlier this month. What happened historically after the Canadian market fell 20 per cent from its former highs in the past? Norman Rothery researched this and has some surprising findings.

Rosenberg: Odds of a depression have decreased. This is the ‘no-brainer’ investment to buy now

David Rosenberg sees some silver linings thanks to quick government action in response to the coronavirus crisis, including a decreased risk of a serious recession or even depression. And he’s got some investment advice to go along with it.

Is the worst of the global market selloff over? Here’s an unlikely source for optimism

The idea that the worst of the global selloff may be over has support from an unlikely source: Italy. Italy’s benchmark, the FTSE MIB, touched its lowest point in the current selloff nearly two weeks ago – an eternity given the furious pace of the downturn. David Berman explores this.

Investors look to 2008 for guidance on when to jump back in

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Investment banks are dusting off models from the 2008 financial crisis to gauge the right time to buy back into stock markets that have plunged 30% from their February record highs because of the coronavirus crisis. That inflection point is not easy to model when the virus is still spreading rapidly across Europe and the United States. But, for some, the signals for a reversal are in place. Read more from Reuters.

Canadian corporate bonds battered amid market carnage

The mad scramble for cash amid the coronavirus panic is putting enormous strain on the Canadian corporate bond market, which the country’s largest companies rely on for a steady source of financing. While high-quality credit typically serves as a safe haven in the midst of an economic shock, corporate bonds have plummeted alongside stocks over the past few bewildering weeks. Tim Shufelt reports

Crashing stock markets remind us that this is the No. 1 rule of retirement planning

A year ago, the idea of retirees keeping two or three years’ worth of expenses in cash seemed like the biggest waste of time ever. Stocks were soaring, and interest rates on high interest accounts and guaranteed investment certificates you could integrate into your investment account were in the range of 1 to 2 per cent. It seemed almost negligent to forgo double-digit stock market returns in favour of interest paid at a rate that barely kept pace with inflation. But after the stock market plunge that began in late February, it’s now clear that maintaining a cash cushion should be Rule No. 1 in building a retirement portfolio. Rob Carrick explains.

Goldman: These 26 stocks are well-positioned to get through a devastating economic downturn

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It’s awful out there. But some observers believe that there are opportunities among the stock market wreckage, and you don’t need to embrace a lot of risk to find them. David Kostin, a strategist at Goldman Sachs, identified 26 U.S. stocks in the S&P 500 that look well-positioned to get through a devastating economic downturn – yet, on average, these stocks are trading at valuations that are lower than they were at the depths of the financial crisis in 2009. David Berman reports

Others (for subscribers)

Wednesday’s analyst upgrades and downgrades

Tuesday’s analyst upgrades and downgrades

Wednesday’s Insider Report: Company leaders accumulate shares in these two bank stocks

Tuesday’s Insider Report: A billionaire businessman is scooping up this depressed stock

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How bad has the damage been? A look at the returns of every TSX 60 stock since the Feb. 20 highs

The highest yielding stocks on the TSX, plus risk data

Number Cruncher: Clusters, algorithms and forecasts: Ten stocks expected to outperform

Number Cruncher: Seven TSX cyclical stocks poised to benefit from eventual rebound

Others (for everyone)

Big Oil may have to break dividend taboo as debt spirals

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Investors eye cracks in $4.4-trillion U.S. ETF market as virus sell-off rages

After solid Q4, investors should brace for U.S. buyback come-down

Reopening U.S. economy too early could backfire for humans and markets, investors say

Globe Advisor

Could regulatory review open door to advisor incorporation?

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Ask Globe Investor

Question: Do you believe companies will cut their dividends in the current crisis?

Answer: Some already have. On Thursday, Ford Motor Co. (F) suspended its dividend to provide “near-term financial flexibility.” Analysts and investors speculate that aerospace company Boeing Co. (BA) and energy giant Exxon Mobil Corp. (XOM) could be next. Given how the pandemic is disrupting virtually every sector of the economy, I expect that we will see plenty of dividend reductions over the next few months.

That said, some dividend-paying sectors are in a better position to ride out the crisis than others. Utilities, power producers, pipelines and telecommunications companies, for example, provide essential services and benefit from contracted or regulated cash flows that insulate them, to an extent, from the economic shocks of the coronavirus.

“Despite their defensive characteristics, the utility, pipeline and telecom sectors have been hit as indiscriminate selling of all stocks grips the market. We believe this is a buying opportunity,” Odlum Brown analyst Cory O’Krainetz said in a note this week.

“It is certainly possible that growth could slow as businesses operate at reduced capacity, but that will likely be temporary and does not diminish the long-term value of the businesses. The businesses are also well capitalized and the names we favour have sustainable dividend payouts.”

Companies that Odlum Brown considers attractive, ranked in descending order of risk, include Enbridge Inc. (ENB), TC Energy Corp. (TRP), Telus Corp. (T), Rogers Communications Inc. (RCI.B), BCE Inc. (BCE), Canadian Utilities Ltd. (CU), Emera Inc. (EMA) and Fortis Inc. (FTS).

–John Heinzl

Do you have a question for Globe Investor? Send it our way via this form. Questions and answers will be edited for length.

What’s up in the days ahead

John Heinzl will explore the topic of looming dividend cuts further, and Brenda Bouw looks at how to use the Volatility Indicator as a signal for when to get back into the market.

Click here to see the Globe Investor earnings and economic news calendar.

More Globe Investor coverage

For more Globe Investor stories, follow us on Twitter @globeinvestor

Click here share your view of our newsletter and give us your suggestions.

You may also be interested in our Market Update or Carrick on Money newsletters. Explore them on our newsletter signup page.

Compiled by Globe Investor Staff

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How Does Investing In Killam Apartment Real Estate Investment Trust (TSE:KMP.UN) Impact The Volatility Of Your Portfolio? – Yahoo Finance

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<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="If you're interested in Killam Apartment Real Estate Investment Trust (TSE:KMP.UN), then you might want to consider its beta (a measure of share price volatility) in order to understand how the stock could impact your portfolio. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. First, we have company specific volatility, which is the price gyrations of an individual stock. Holding at least 8 stocks can reduce this kind of risk across a portfolio. The second type is the broader market volatility, which you cannot diversify away, since it arises from macroeconomic factors which directly affects all the stocks on the market.” data-reactid=”28″>If you’re interested in Killam Apartment Real Estate Investment Trust (TSE:KMP.UN), then you might want to consider its beta (a measure of share price volatility) in order to understand how the stock could impact your portfolio. Modern finance theory considers volatility to be a measure of risk, and there are two main types of price volatility. First, we have company specific volatility, which is the price gyrations of an individual stock. Holding at least 8 stocks can reduce this kind of risk across a portfolio. The second type is the broader market volatility, which you cannot diversify away, since it arises from macroeconomic factors which directly affects all the stocks on the market.

Some stocks mimic the volatility of the market quite closely, while others demonstrate muted, exagerrated or uncorrelated price movements. Beta can be a useful tool to understand how much a stock is influenced by market risk (volatility). However, Warren Buffett said ‘volatility is far from synonymous with risk’ in his 2014 letter to investors. So, while useful, beta is not the only metric to consider. To use beta as an investor, you must first understand that the overall market has a beta of one. A stock with a beta greater than one is more sensitive to broader market movements than a stock with a beta of less than one.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content=" View our latest analysis for Killam Apartment Real Estate Investment Trust ” data-reactid=”30″> View our latest analysis for Killam Apartment Real Estate Investment Trust

What we can learn from KMP.UN’s beta value

Given that it has a beta of 0.87, we can surmise that the Killam Apartment Real Estate Investment Trust share price has not been strongly impacted by broader market volatility (over the last 5 years). This means that — if history is a guide — buying the stock would reduce the impact of overall market volatility in many portfolios (depending on the beta of the portfolio, of course). Many would argue that beta is useful in position sizing, but fundamental metrics such as revenue and earnings are more important overall. You can see Killam Apartment Real Estate Investment Trust’s revenue and earnings in the image below.

TSX:KMP.UN Income Statement April 10th 2020TSX:KMP.UN Income Statement April 10th 2020

How does KMP.UN’s size impact its beta?

Killam Apartment Real Estate Investment Trust is a small company, but not tiny and little known. It has a market capitalisation of CA$1.8b, which means it would be on the radar of intstitutional investors. Small companies often have a high beta value, but they can be heavily influenced by company-specific events. This might explain why this stock has a low beta.

What this means for you:

One potential advantage of owning low beta stocks like Killam Apartment Real Estate Investment Trust is that your overall portfolio won’t be too sensitive to overall market movements. However, this can be a blessing or a curse, depending on what’s happening in the broader market. In order to fully understand whether KMP.UN is a good investment for you, we also need to consider important company-specific fundamentals such as Killam Apartment Real Estate Investment Trust’s financial health and performance track record. I urge you to continue your research by taking a look at the following:

  1. Financial Health: Are KMP.UN’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  2. Past Track Record: Has KMP.UN been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of KMP.UN’s historicals for more clarity.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.” data-reactid=”53″>If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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Vietnam to disburse $30 billion of public investment funds this year to tackle virus impact – TheChronicleHerald.ca

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HANOI (Reuters) – Vietnam will aim to disburse $30 billion in public investment funds this year, up 67% year-on-year, the government said on Friday, as it seeks to boost an economy hit hard by the coronavirus outbreak that has infected 255 people nationally.

Public investment, excluding investment made by state-owned enterprises, often accounts for around one-fifth of Vietnam’s total investment and is spent on infrastructure and social development projects.

The Southeast Asian country’s gross domestic product in the first quarter of this year grew at its slowest pace in 10 years, at 3.8% due to the pandemic.

(Reporting by Khanh Vu; Editing by Muralikumar Anantharaman)

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Vietnam to disburse $30 billion of public investment funds this year to tackle virus impact – The Guardian

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HANOI (Reuters) – Vietnam will aim to disburse $30 billion in public investment funds this year, up 67% year-on-year, the government said on Friday, as it seeks to boost an economy hit hard by the coronavirus outbreak that has infected 255 people nationally.

Public investment, excluding investment made by state-owned enterprises, often accounts for around one-fifth of Vietnam’s total investment and is spent on infrastructure and social development projects.

The Southeast Asian country’s gross domestic product in the first quarter of this year grew at its slowest pace in 10 years, at 3.8% due to the pandemic.

(Reporting by Khanh Vu; Editing by Muralikumar Anantharaman)

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