Blog

Category Archives: Terry’s Update

Terry Broaders

Weekly Update June 23 2017

“Well Begun Is Half Done” – Aristotle

 

TSX Rallies On Resource Stocks

Canada’s main stock index rallied on the strength of resource stocks, but shares in BlackBerry plunged after its first-quarter sales failed to meet expectations. The S&P/TSX composite index advanced 99.66 points to 15,319.56, with the base metals and gold sectors leading the way. Blackberry shares dropped more than 12% after the company announced a profit of US$671 million in its latest quarter, despite revenue falling to US$235 million compared with US$400 million a year ago. In New York, the Dow Jones industrial average shed 2.53 points to 21,394.76. The S&P 500 edged up 3.80 points to 2,438.30, while the Nasdaq composite gained 28.56 points at 6,265.25. The Canadian dollar was trading 0.15 of a U.S. cent lower to an average price of US75.37¢. The August crude contract was up US27¢ at US$43.01 per barrel and the July natural gas contract advanced US4¢ at US$2.93 per mmBTU. The August gold contract gained US$7 at US$1,256.40 an ounce and the July copper contract added US3¢ at US$2.62 a pound.

 

Canada’s Most ‘Emotional’ Investors Revealed 

Do you ever wonder why some people seem more prone to making rash or emotional investment decisions? Well, a new survey reveals which groups are most likely to buy stocks based on headlines and hype. Conducted by Hennick Wealth Management, the survey of Canadian investors found that higher income earners ($75K – $150K+) were more likely to make an investment decision based on a ‘hunch’ or a tip from a friend. 11.8% of high income earners said they would buy a stock solely on a friend’s recommendation compared with just 5.3% of low-to-mid income earners ($0K-74K.)

Men (13.7%) were twice as likely to make emotional investments and buy stocks based on a hunch than women (7.5%). Men (34.2%) were also much more like to buy a stock based on the recommendation of a friend compared with women (27.8%). “Men seem particularly influenced by ‘insider advice’ from other males when investing,” said Adam Hennick of Hennick Wealth Management.  “If you do take investment advice for a friend, try to do it from your friends that have been successful in investing. This seems obvious, but sometimes our desire to act on a hot tip can overwhelm our logic. Ask yourself, is this a person who’s actually done financially well in investing, or someone who just talks a good game.”

All savvy investors know that making decisions based on emotions is a recipe for disaster, so it should come as no surprise that 22.7% of Canadians said they have regretted an investment decision they made that was based on emotion. A staggering 69.2% of men with a high income regretted making an investment decision based on a hunch or gut instinct.

Sources: Bloomberg; Investment Executive; advisor.ca

Terry Broaders

Weekly Update June 2 2017

“In Nature Nothing Exists Alone” – Rachel Carson

 

U.S. Markets Hit Records In Spite of Weaker Than Expected Jobs Datat

U.S. stock markets shrugged off weaker than expected jobs data and hit all-time highs, while lower oil prices weighed on the Toronto stock market. The Toronto Stock Exchange’s S&P/TSX composite index retreated 27.16 points to 15,442.75, while the loonie lost 0.02 of a cent to US74.05¢. South of the border, all three of the main stock indexes hit new records, with the Dow Jones industrial average gaining 62.11 points to 21,206.29. The S&P 500 index added 9.01 points to 2,439.07 while the Nasdaq composite index rose 58.97 points to 6,305.80.
Canadian exports climbed to a record in April and first-quarter labour productivity approached a three-year high, further evidence that the economy is recovering after a long slump caused by low oil prices. In commodities news, the July oil contract was down US70¢ to US$47.66 per barrel.

 

IMF Warns About Housing and Household Debt 

The International Monetary Fund is warning about the risks to the Canadian economy due to a possible correction in the housing market and urged governments to do more to protect against them. In the preliminary findings of its annual review of the Canadian economy, the IMF said Wednesday that a further tightening of macroprudential and tax-based measures to mitigate speculative and investment activity should be considered. It also called for greater co-ordination between federal and provincial regulators as well as government efforts to collect more comprehensive data on real estate transactions.
Ottawa has moved several times in recent years to tighten mortgage lending rules, including expanded stress tests on mortgages. A foreign buyer tax of 15% was implemented in the Vancouver region last summer, while Ontario recently announced plans for a similar levy for the Greater Toronto Area. Cheng Hoon Lim, the IMF’s mission chief for Canada, said there are a few policies that could help deter speculation in the housing market and alleviate concerns about rising debt burdens. “Among these measures, a cap on household debt to income or more stringent qualification criteria for household debt above a certain threshold will go directly to addressing household indebtedness,” she said. The IMF also encouraged B.C. and Ontario to replace their foreign buyer taxes. “This could include a combination of prudential and tax-based measures that discourage speculative activity without discriminating between residents and non-residents,” it said.

Sources: Bloomberg; Investment Executive; advisor.ca

Terry Broaders

Weekly Update May 26 2017

“All The Boys and Girls of Today Are The Men and Women of Tomorrow ” – Jimmy Cliff

 

North American Stocks Flat

North American stock markets were relatively flat Friday, while the price of oil rebounded after dropping nearly US$2.50 a barrel the day before. The S&P/TSX composite index inched forward 6.20 points to 15,416.93 as the gold sector led the way. The June gold contract soared US$11.70 to US$1,268.10 an ounce, while the S&P/TSX global gold index gained 0.74%. “We’re still seeing the U.S. dollar sub-performing and I think that’s giving gold some support,” said Andrew Pyle, a senior wealth adviser at Scotia Wealth Management. The U.S. dollar’s lacklustre performance comes in part from doubts about whether the U.S. Federal Reserve will raise rates at its June meeting, as well as economic conditions not showing enough acceleration, he said.

Meanwhile, the July crude oil contract rose US90¢ to US$49.80 per barrel, helping the energy sector in Toronto gain 0.39%. The increase came a day after investors showed disappointment over OPEC’s decision to extend production cuts by nine months. Some had hoped for deeper and longer cuts.

In New York, the Dow Jones industrial average shed 2.67 points to 21,080.28. The S&P 500 index gained a meagre three-quarters of a point to a record-high 2,415.82, while the Nasdaq composite index rose 4.93 points to a record-high 6,210.19. The U.S. markets will be closed Monday for the Memorial Day holiday. The Canadian dollar fell 0.01 of a U.S. cent to an average price of US74.32¢.

 

Canadian Youth Rank 2nd In Financial Literacy 

Canadian youth surpass their global peers when it comes to financial literacy. A survey from the Organization for Economic Co-operation and Development (OECD) finds that 87% of Canadian students perform at or above a baseline level of proficiency in financial literacy. That compares to about 78% of students in the other OECD countries. Overall, Canada ranked second — tied with Belgium — out of 15 countries. China scooped the number-one spot.
About 22% of Canadian students surveyed are top performers in financial literacy — proficient at the survey’s highest level. These students can analyze complex financial products, solve non-routine financial problems and show an understanding of the wider financial landscape. A sample question asked students to identify and respond appropriately to a financial scam email message.
In the other OECD countries, only 12% of students are top performers. China was the exception, with 33% of students being top performers. On average, students with a bank account have higher financial literacy than students without accounts. More than three-quarters of 15-year-old Canadian students (78%) have bank accounts. That’s significantly higher that the OECD average of 56%. Four out of five Canadian students said that if they didn’t have enough money to buy something they really wanted, they would either save up to buy it or would forgo. About 52% of Canadian students report that they save each week or month.

In 2015, close to 48,000 students from 15 countries and economies took part in the financial literacy assessment. In Canada, approximately 3,400 15-year-olds from seven provinces (Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba and British Columbia) participated. worse when they were highly confident of their performance.”

 

 

 

Sources: Bloomberg; Investment Executive; advisor.ca; OECD

Terry Broaders

Weekly Update May 12 2017

“We Are A Fact Gathering Organization Only. We Don’t Clear Anybody. We Don’t Condemn Anybody” – J. Edgar Hoover, First FBI Director

 

Stock Markets Dip After Weak U.S. Economic Data

Major North American stock indices declined Friday after disappointing U.S. economic data and weak corporate earnings.  The Toronto Stock Exchange’s S&P/TSX composite index fell 12.67 points to 15,537.88. In New York, the Dow Jones industrial average lost 22.81 points to 20,896.61, while the S&P 500 index shed 3.54 points to 2,390.90. The Nasdaq composite index gained 5.27 points to 6,121.23. Those drops came as the U.S. Department of Commerce said retails sales in April rose 0.4% from March, falling below already-low analyst expectations, said Patrick Blais, a senior portfolio manager at Manulife Asset Management.

Shares of major department stores also fell Friday. Nordstrom’s stock, for example, slipped US$5.01, or 10.84%, to US$41.20 after the company released its first-quarter results Thursday. The Seattle-based chain’s same-store sales, which dropped by 0.8%, fell below analyst expectations.   “It kind of re-emphasized the risk that consumer spending will stay weak,” said Blais.  Consumer spending is a large part of the American economy, accounting for some 60% of GDP, he said. If U.S. consumers aren’t spending the fear is GDP growth will slow.

Meanwhile, the Canadian dollar fell 0.04 of a U.S. cent to an average value of US72.92¢. In commodities, the June crude contract gained a penny to US$47.84 per barrel and June gold rose US$3.50 to US$1,227.70 an ounce.

 

It’s Harder Than You Think To Detect Fraud And Lies 

Detecting lies and misleading statements isn’t easy; just ask the participants of a recent Journal of Behavioural Finance study, which tested the ability of 154 randomly selected, U.S.-based financial professionals.

The study was conducted by three City University of New York professors and Jason Voss, a content director at CFA Institute. They asked the participants, who were affiliated with the CFA Institute, to watch videos as well as listen to quarterly conference calls from public companies, and the goal was to assess how well they could identify liars and pinpoint misleading statements, reports The Wall Street Journal.  In particular, the calls they listened to were ones that “included statements that the SEC had identified as misleading or false,” says WSJ.  The average accuracy rate of the participants was 49.4% when it came to successfully identifying truth versus lies, says WSJ. According to the Journal of Behavioural Finance, their “lie detection accuracy was poor; participants performed no better than would be expected by chance. Accuracy in identifying lies about financial fraud was especially poor.”

Why did the finance professionals fail the test?  One reason they performed poorly, says WSJ, was due to truth bias (as Psychology Today explains, this bias is based on “a normal reaction because, in general, people tend to believe others,” and it’s hard not to believe what you hear, see and read). WSJ adds the participants “also did worse when they were highly confident of their performance.”

 

 

 

Sources: Bloomberg; Investment Executive; advisor.ca;

Terry Broaders

Weekly Update April 7 2017

“A Rich Man Is Nothing But A Poor Man With Money ” – W.C. Fields

 

TSX Ends Lower On Friday

Canada’s main stock index ended modestly lower on Friday as financial and natural resource shares lost ground, while concerns about escalating geopolitical tensions after a U.S. strike in Syria prompted a risk-off sentiment among investors. The Toronto Stock Exchange’s S&P/TSX composite index was down 30.05 points, or 0.19 per cent, at 15,667.13 shortly after the closing bell. Wall Street’s three major indexes edged lower on Friday to end well below session highs after a weaker-than-expected job report, a U.S. missile strike in Syria and comments by a key Federal Reserve official on the Fed’s plan to reduce its balance sheet. The Dow Jones Industrial Average fell 7.06 points, or 0.03 per cent, to 20,655.89, the S&P 500 lost 1.93 points, or 0.08 per cent, to 2,355.56 and the Nasdaq Composite dropped 1.14 points, or 0.02 per cent, to 5,877.81.
The news of the U.S.-Syria attack sent global stocks lower when it was announced, with the S&P 500 futures index falling as much as 0.5 per cent. But most of the losses ebbed after U.S. officials described the attack as a one-off that would not lead to wider escalation. U.S. employers added about 98,000 jobs in March, the fewest since last May and well below economists’ expectation of 180,000, as bad weather hit hiring at construction sites. However, wage growth ticked up slightly and the unemployment rate fell. Oil prices rose on Friday, trading near a one-month high and closing the week up 3 per cent after the United States fired missiles at a Syrian government air base, raising concern that the conflict could spread in the oil-rich region.

 

Canada Gains 19,400 Jobs 

Canada’s labour market pumped out another 19,400 net jobs last month, with the vast majority of the new work being full-time. However, Statistics Canada’s job survey Friday also showed the bulk of those new positions were created in the category of self-employment, which can include people working for a family business without pay. The report found that while 95% of the new jobs created last month were full-time, 95% of them were also self-employed positions. The agency says the country’s unemployment rate crept up in March to 6.7% from 6.6% because more people were looking for work. Compared to a year earlier, the categories of full-time and part-time work have each increased 1.5%.
The country lost 2,400 positions in the services sector last month, but added 21,800 factory jobs thanks to the biggest month-to-month surge in manufacturing work since 2002. The manufacturing sector added 24,400 positions, mostly in Ontario and to a lesser degree in Alberta, to climb back up to the same level it was 12 months earlier. Still, compared to its peak in the early 2000s, the manufacturing sector has about 630,000 fewer jobs, a drop of 27%, Statistics Canada said. Alberta easily saw the biggest overall job boost among provinces, adding 20,700 full-time jobs last month. At the other end of the spectrum, Quebec shed 17,800 full-time positions.

 

BLOG LINKS 

Your Tax Return Checklists for 2016 Tax Year Preparation 

 

Sources: Bloomberg; Investment Executive; advisor.ca;

Terry Broaders

Weekly Update March 31 2017

A Dog Is The Only Thing On Earth That Loves You More Than Yourself” – Josh Billings

 

TSX Ends Lower Despite BlackBerry Jump

Canada’s main stock index ended modestly lower on Friday, weighed by financial and railway companies, though better-than-expected results from BlackBerry offset some of the losses as its stock surged. The Toronto Stock Exchange’s S&P/TSX composite index was down 31.01 points, or 0.2 per cent, at 15,547.75. BlackBerry Ltd, which said it expects to be profitable on an adjusted basis in 2018 and nearly halved its operating costs, was one of the bright spots in the market. Shares surged 11.1 per cent to $10.30.
Wall Street fell on Friday, pulled down by Exxon and JPMorgan Chase as investors wrapped up a strong quarter and weighed whether corporate earnings reports will justify the market’s lofty valuations. Major indexes have hit multiple record highs since the election of President Donald Trump on bets that he would improve economic growth by cutting taxes and boosting infrastructure spending. The rally has also benefited from robust economic data and a pickup in corporate earnings growth. For the quarter ending Friday, the S&P 500 gained 5.5 per cent, its strongest quarterly performance since the last quarter of 2015. The Dow Jones Industrial Average fell 0.31 per cent to end at 20,663.22 points, while the S&P 500 lost 0.23 percent to 2,362.72. The Nasdaq Composite slipped 0.04 per cent to 5,911.74. Next week promises to be an interesting start to the second quarter. President Trump and Chinese President Xi Jinping will meet in Florida and the U.S. president has set the tone for a tense few days by tweeting that Washington could no longer tolerate massive trade deficits and job losses.

 

48% of Canadians Have No Will 

Warren Buffett famously noted that, when it comes to inheritances, the perfect amount to leave children is enough so that they feel they can do anything, but not so much that they can do nothing. Sounds like a plan for success. The only problem is, many Canadians don’t have a plan at all. A BMO report on estate planning finds that 48% of survey respondents don’t yet have wills. For those aged 35 to 54, that figure jumps to 55%. And, with family dynamics becoming more complex with multiple marriages and children, the lack of a will is sure to create problems. In fact, problems often arise even when a will is in place.
For example, almost 60% of those surveyed indicate they have received an inheritance, but nearly half feel the distribution of their parents’ estates wasn’t fair. And the survey found that leaving a fair amount to each beneficiary was important to many respondents’ parents. Better communication could have been a preventative measure, but 40% of respondents said their parents hadn’t discussed estate intentions with them.
The Oracle of Omaha addresses the problem with this wisdom, offered at the Berkshire Hathaway annual general meeting in 2013, and cited in the BMO report: “Your children are going to read your will someday. .… It’s crazy for them to read it, after you’re dead, for the first time. You’re not in a position to answer questions.”
The BMO Wealth Management survey was conducted by ValidateIt Technologies Inc. between December 7 and December 17, 2016. The online sample size was 1,003 Canadian respondents age 18 and over.

 

BLOG LINKS 

Your Can Now See Fees On Your Statements.  Reread How Fees Work In This Country.

Your Tax Return Checklists for 2016 Tax Year Preparation 

 

Sources: Bloomberg; Investment Executive; advisor.ca;