U.S. stocks for the long run, on the Sunday Reads. - Cut the Crap Investing (2024)

In the Sunday Reads we’ll take a look at a U.S. portfolio idea I put together for Seeking Alpha in mid 2023. The task was to avoid overvalued stocks including the Magnificent 7 that did most of the heavy lifting in 2023. Surprisingly, that portfolio has beat the market. I also take a look our U.S. portfolio performance for 2023. That is the real-life portfolio for me and my wife. The portfolio came up short of the market in 2023 delivering 15%, but it keeps the longer term market beat. There’s U.S. stocks and U.S. savings too, on the Sunday Reads.

Here’s the our U.S. stock portfolio performance for 2023. That’s a free-read Cut The Crap Investing post. Our U.S. portfolio has treated us so well and will be a main driver of our retirement income.

And on Seeking Alpha here’s 12 conviction picks beating the market without any help from the Magnificent 7. That link should bypass the paywall.

U.S. savings account exposure for Canadians

And Horizons has come out with a new U.S. Dollar savings account ETF.

It’s a U.S. Dollar high interest savings account in ETF form. The yield might land above 5%. It will pay monthly.

I have often penned on the ultra short term bond ETFs that are ‘cash like’ with no risk. Horizons offers CBIL for Canadian accounts and UBIL.U for U.S. accounts.

Also, EQ Bank GIC rates got another boost this week. Check out that post.

I’ve added the new Horizons U.S. cash ETF to the savings accounts in Canada post. At that time (early October 2023) I noted the yields in the Canadian high dividend space were very attractive, and that might point to very good value. So far (and yes things could change in a hurry), that is working out.

It was also a rare week, with Canadian stocks outperforming U.S. stocks, with the big dividend payers leading the pack. Have we turned the corner thanks to rate cut expectations in Canada?

Energy for the portfolio

And some good news for my portfolio from TC Energy …

And we were treated to a small dividend increase.

More Sunday Reads

From Banker on Wheels a post that shreds the 100% equity concept: it’s silly. Here’s the link to the Cliff Asness post.

And actually, as BoW points put, it was Karsten at Early Retirement Now (a wonderful blog) that did the real shredding of the 100% equities paper. There was only dust remaining after Big Ern was done putting the hurt on that ‘scholarly’ effort.

My take is that we can certainly choose to go all-equity when we are in the accumulation stage. But of course, we will have to de-risk at some point as we enter the retirement risk zone.

Risk flips upside down in retirement. Here’s why retirees own cash and bonds and GICs and other defensive assets.

And if we go all-equity or equity-heavy we should ensure that we have ample sector and geographic diversification. There are many all-equity asset allocation ETFs that essentially buy most of the large cap stocks on the planet. iShares XEQT holds over 9,000 companies.

You’ll find those all-equity models in that link that shows the spectrum of the leading asset allocation ETFs in Canada.

You also have the option to build your own ETF portfolio.

Can you own U.S. stock exclusively?

Many will advocate for U.S. stocks, given that many of the large multinationals are global behemoths, with sales in North America, Europe and Asia and emerging markets. There’s international and currency exposure. Warren Buffett, the world’s greatest investor, is in this camp. Though he does sprinkle in a few international holdings.

There is merit in the idea and we can factor that in. But certainly some direct international exposure is prudent.

Here’s an example from Colgate-Palmolive (CL) that we hold in my wife’s RRSP.

I really like this company, and stock, and have been topping that up. It is a defensive stock that is not very exciting. But ‘growth’ has picked up in recent quarters. In the last report, revenue grew 6.9% year over year, with expectations of ongoing annual organic growth in the 3-5% range. Fine by me for a defensive stock with ample geographic diversifcation, including emerging markets.

Looking to the Hawk

Dividend Hawk casts his eye on a busy earnings week.

On The Findependence Hub, the (well-read) Jonathan Chevreau says – read these 4 books if you care about democracy.

While the Hub’s focus is primarily on investing, personal finance and Retirement, Findependence has given me sufficient leisure time to absorb a lot of content on politics and the ongoing battle to preserve democracy and in particular American democracy. What’s the point of achieving Financial Independence for oneself and one’s family, if you find yourself suddenly living in a fascist autocracy?

See Also

5 Must-Know Tax Breaks for 2024 - NerdWallet

The roaring 20’s called, er hung up

Here’s a very good post from John Rapley in the Globe & Mail (paywall).

From that post …

Britain sank into recession this week. So did Japan, with its decline so bad that it lost its spot as the world’s No. 3 economy.

The only bright spot in the developed world appears to the U.S.

John states that the growth is now in the south with South Asia leading the pack at an expected growth rate of 5.6 per cent this year, and sub-Saharan Africa coming in next at 3.8 per cent.

Our Colgate Palmolive stock is now looking even brighter 😉

Here’s a very interesting post on Forbes (you’ll get 5 free reads) on what to expect for U.S. stocks and international stocks moving forward. The earnings yield for the U.S. market is quite low by historical standards. So many would say ‘curb your enthusiasm’.

Of course, we don’t know the future so any macro forecasting (economics) is mostly for entertainment purposes. But personally, I will pay attention to valuation (earnings yield) and will mostly avoid outrageously priced stocks or indices.

It simply makes a case for greater diversification. And all said, emerging markets have been a bad place for investors for a while. There are many additional risks. See China, for instance.

Canadian oil and gas over the last year

I’m glad to see my core four beating the market as a group – CNQ, IMO, SU and TOU.

I’m happy to hold and collect our Canadian energy dividends with less volatility. The reitree’s way to energy exposure and inflation protection.

At My Own Advisor Mark looks at moaty stocks.

But he forgot to link to the Canadian Wide Moat Portfolio post that tracks this wonderful portfolio idea 😉

And yes, my bitcoin continues to move higher and higher thanks to the U.S. bitcoin ETFs that are attracting considerable funds on a weekly basis. That’s money chasing a scarce asset, so this chart is no surprise.

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