Portfolio Investment: Best Investing Return on Investment

Picture of an open book with that title on it.

Portfolio Investment: Best Investing Return on Investment

Hi friend! Eighty percent of the world’s population is in emerging markets. Ninety percent of the world’s young people – age 30 and under – are in those markets.

Those consumers are increasingly shopping online, given the fact that smart phones are getting cheaper, and more people are getting on the Internet.

To find out what this all means, and how it translates into arguably the best portfolio investment of all the types of portfolio investment out there, don’t click away too soon, as the answer is coming up shortly.

But first, where is the market headed?

Still Up and Away

The U.S. hits solid three percent economic growth, crushing estimates.

Businesses are investing again.

U.S. third-quarter productivity surged, as jobless claims slide.

Unemployment in Canada and the U.S. is at multiyear lows.

Economic readings in the euro zone and Japan have been encouraging.

Global markets remain on solid ground.

Even worries about an imminent slowdown in China have faded.

Since 1990, there have been 39 times that the CBOE Volatility Index (VIX) has closed below 10, with 30 of those this year and 15 recently.

So now let’s re-visit the market, and see what lies ahead.

The following calculation looks at the market’s current price in comparison with a multiday trailing average.

A ratio greater than one is indicative of the market rallying higher.

The theory is that, the higher the ratio, the stronger the forecast.

Let’s take a look at Tuesday, November 28/17, and see what the numbers tell us.

The VOO Vanguard S&P 500 ETF NYSE had a close of 241.42.

Its 200-day exponential moving average ended at 223.40.

The resulting ratio of 1.08 suggests that we have a bullish signal.

Which means…

* Expect Higher Market *

If you are at all curious as to where the market will be this time next year, give this idea a shake.

Not exactly what you might call a stock market outlook next 5 years, but it’s good enough for me.

The only proviso is that it does not forecast market turns.

(Info via Nir Kaissar, Dec. 28/16, The Globe and Mail)

Please note that I own VOO Vanguard S&P 500 ETF NYSE.

I reviewed this portfolio investment in these blog posts:



Table of Contents:

Still Up and Away
The Story
High-Dividend Stocks
Dividend Payers Viewpoint
Dividends Versus Momentum
In Defence of Dividends
Rising Interest Rates
Realistic Returns
Is value investing dead?
The Only Way to Invest
Market Crashes
When to Bail
Junk Debt & Mkt. Direction
Diversification Be Damned
A Rock-Solid U.S. Bank
ETFs, ETN and Funds
7-10 Yr. Treasury Bond ETF
A Forever Investment
An Uber-Electric Utility
A Fortune 200 Energy Co.
Video Game Stocks
Electric Vehicle Play
Chips Ahoy
Apple-Cyprus Connection
More on Chips
ETFs Tracking Chip Makers
CISCO Enters Software Fray
A Defence Play
A Pfizer Spinoff
Tiger in the Yangtze
Number One in Cloud Space
A Swiss Army Knife Company
A Dividend King
A Free Cash Flow Gem
A Pharmaceutical Giant
A High-Dividend Yielder
Buffett Likes Phillips 66
A U.S. Global Behemoth
A Canadian Giant
A Hidden Technology Gem
A Popular Bank Trade
Yield Curve: The Truth
The Dow and 10-Year Yield
To Split or Not to Split
Are you a sheep?
Inspiration and Quotes

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The Story

Picture of a crowd of people looking away with the title at the top explaining the blog post’s main purpose.

So, what does it mean that 80 percent of the world’s population is in emerging markets, and 90 percent of the world’s young people – age 30 and under – are in those markets?

And, why should we care that those consumers are increasingly shopping online, given the fact that smart phones are getting cheaper, and more people are getting on the Internet?

Well, because this possibly represents a great portfolio investment and return on investment.

Take this ETF, for example…

The Emerging Markets Internet & eCommerce ETF (ticker EMQQ), valued at US$311- million, was founded by Kevin Carter.

It gained 63 percent this year through 5 Oct 2017, making it 2017’s best-performing emerging-markets ETF.

According to Bloomberg, this makes it the number one emerging-markets ETF, excluding leveraged funds.

This rules-based index invests in every publicly-traded company in the world whose main business is Internet – or eCommerce-related in emerging markets.

Market cap must be more than $300-million, and stocks need to trade more than $1-million volume per day.

As at September, the index included 43 companies.

The ETF’s biggest holding is a 9.3 percent stake in Alibaba, China’s largest eCommerce company.

Its first-quarter earnings report in August showed revenue growth of 56 percent – staggering for any company – making it one of the biggest in the world.

The ETF’s top holdings include Alibaba’s rival Beijing-based JD.com – a business in China that looks the most like Amazon.

This online retailer is the leading developer of drone-based delivery – destined to become the largest commercial user of drones.

According to Eric Balchunas, an ETF analyst at Bloomberg Intelligence, EMQQ affords an investor a lot of exposure to tech.

The only caveat is that 65 percent of the country allocation is to China.

So, you better like China, if you want to invest in this ETF.

(Info via Jon Asmundsson, as reported in The Globe and Mail/Bloomberg News, 17 Oct 2017)

High-Dividend Stocks

A company that raises its dividend is basically projecting a positive business image to investors.

(Info via John Heinzl, as reported in The Globe and Mail, 18 Oct 2017)

In theory, a company’s share price grows as its dividends grow.

Growth in dividend payouts and share price don’t move in lockstep, but there’s a close tie between the two over the long term.

If you’re looking for total returns that consist of dividends plus share price gains, look to the stocks that consistently grow their quarterly cash payouts to shareholders.

(Info via Rob Carrick, as reported in The Globe and Mail, 18 Oct 2017)

Generally speaking, companies paying growing dividends tend to be the large gaps in Canada – banks and large utility companies.

Both industries have historically paid steady dividends.

That said, there are reasonable dividend payers in the smaller-cap space in Canada.

Having exposure to both large-cap and small-cap companies provides additional diversification to a portfolio investment.

Small-cap companies tend to appreciate more quickly than large caps, particularly in bull markets.

(Info via Ian Tam, as reported in The Globe and Mail, 19 Oct 2017)

In the low interest rate environment of the past ten years, there has been an appetite for dividend stocks.

That’s due in large part to dividend yields being considerably higher than government bonds in most developed markets, including Canada, during that time.

Dividend stocks may remain attractive, but perhaps focus should be shifted to dividend growers moving forward.

According to BlackRock, stocks with a track record of dividend growth have tended to outperform in a rising rate environment, and may hold up well relative to other segments of the stock market that are more susceptible to higher rates.

iShares Core MSCI Quality Dividend Index ETFs may be worth considering in this regard as a portfolio investment.

Each of the five funds in that suite offer exposure to an index that targets companies with an above-average yield – ones that also have a history of growing, or at least maintaining, their dividend over time.

(Info via Pat Chiefalo, a managing director and head of iShares Canadian Product for BlackRock Canada)

Dividend Payers Viewpoint

According to Mr. Thorndike, the author of The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint, contrary to conventional wisdom, top chief executives who avoided dividends ultimately delivered stronger performance.

The reason is because dividends are not terribly tax efficient.

Like short-term gains, they are taxed at the higher ordinary-income rate in the United States.

There’s an additional charge on top of that for extremely affluent taxpayers, while long-term investments are taxed at a lower rate.

Dividend income in Canada does not carry the same level of taxation as in the U.S. but, even when dividends are grossed up, and incorporate the dividend tax credit, investors are still subject to a tax in non-registered accounts.

Even if an investor holds the stock beyond one year, the quarterly dividend payment is added to the year-end tax bill.

Companies tend to buy back shares when they trade near recent lows.

Paying out big dividends can be an indication that a company doesn’t see much opportunity to invest within the business, and sees even fewer opportunities to grow the business by acquiring other companies, or deploying the money in any other way.

Many people view dividend-paying stocks as safer bets than growth stocks, which tend to be newer companies, which have less of a track record to evaluate.

Shunning dividends completely may not be the thing to do, but finding stocks that offer value and pay dividends may be a winning long-term portfolio investment.

A company’s dividend yield may be lower than the average of S&P 500 companies, but the stock may look good, based on other metrics.

Ben Graham’s deep-value approach may be one way of evaluating a company.

Thor Industries Inc. (THO THOR Industries, Inc. NYSE):  This maker of recreational vehicles scores highly on the models tracking Mr. Lynch and Mr. Fisher, as well as that of James O’Shaughnessy, an investor who uses quantitative analysis to find mispriced stocks.

It fits Mr. O’Shaughnessy’s cornerstone growth investing strategy as a relatively cheap growth stock with persistently growing earnings.

Thor Industries, Inc. is estimated to report earnings on 11/27/2017.

The upcoming earnings date is derived from an algorithm based on a company’s historical reporting dates.

According to Zacks Investment Research, based on four analysts’ forecasts, the consensus EPS forecast for the quarter is $1.8.

The reported EPS for the same quarter last year was $1.49.

It is worthy of note that Warren Buffett, one of the best investors over the past 50 years, has not paid a dividend, because he believes he can deploy money better and more tax efficiently than most shareholders, even though he certainly likes stocks that pay dividends.

He prefers to use Berkshire’s cash to buy companies or, if the stock is trading cheaply, Berkshire shares.

Regarding paying a dividend, he is quoted as saying, “when the time comes.  And it could come reasonably soon.”

(Info via John Reese, as reported in The Globe and Mail, 2 Nov 2017)

Why Companies Cut Dividends:

  1. Weaker earnings
  2. Cash flow declines

Dividends Versus Momentum

Dividend stocks are ideal for investors seeking income and less volatility, while momentum stocks can be a great way to benefit from market upside.

Perhaps one of the best investment strategies is to adopt both investment styles in structuring your portfolio investment approach.

(Info via Emily Halverson-Duncan, as reported in The Globe and Mail, 14 Nov 2017)

In Defence of Dividends

Over more than four decades, the well respected market-research firm Ned Davis conducted a study, in which they scrutinized the total returns of dividend and growth stocks.

Their research concluded that, over the long haul, dividend-paying stocks tend to beat the market, and result in far better returns than stocks that don’t pay dividends.

The study showed that stocks in the S&P 500 that didn’t pay dividends delivered a 2.5% annual return from 1972 through 2015.

That would have turned a $1,000 investment into $2,910 during that time.

By comparison, dividend-paying stocks in the S&P 500 returned 9 percent annually over the same period – also beating the S&P 500’s 7.4 percent annual return.

In this scenario, a nine percent annual return over this period would have turned a $1,000 investment into $43,850.

(Info via Michael Vodicka, StreetAuthority, 23 Oct 2017)

Rising Interest Rates

One of concerns about rising rates is the potential negative effect on ‘bond proxy’ sectors, such as REITs and utilities.

Canadian financials are an attractive portfolio investment in a rising rate environment, partially due to the potential positive effect that further rate hikes could have on the net interest margins of the country’s big banks.

iShares Capped Financials Index (XFN.TO) may be worth considering in this regard as a portfolio investment.

(Info via Pat Chiefalo, a managing director and head of iShares Canadian Product for BlackRock Canada)

Historically, government bonds are one of the hardest hit asset classes when rates rise.

In an attempt to mitigate interest rate risk, while seeking attractive yield, ETFs take a more active approach, and seek the right balance between corporate and government, both domestically and globally, which may help dampen interest rate risk, while seeking attractive yield.

For one, iShares Strategic Fixed Income ETFs invest in a wide range of securities, and represent a potential portfolio investment.

They are regularly rebalanced to reflect up-to-date market conditions.

Some of the recent tactical changes include adjustments to the duration of the three funds in the suite, while maintaining exposure to credit and emerging market debt for potential income.

(Info via Pat Chiefalo, a managing director and head of iShares Canadian Product for BlackRock Canada)

With the Federal Reserve signalling continued gradual increases in the federal funds rate, bond prices will fall – and bonds with the longest maturities will generally get hit hardest.

(Info via Steve Bokor, as reported in Douglas magazine, Aug/Sep 2017)

Rising interest rates can adversely affect utility firms. 

Utilities will likely lose some investors to the bond market, if interest rates and the corresponding yields available on bonds begin to rise.

(Info via Investopedia, 7 Jul 2017)

It would appear that the U.S. dollar has the upper hand over the Canadian dollar.

We may see better growth in the United States than in Canada.

Accordingly, at a central-bank level, rates may go up in both Canada and the United States, but they might go up a little bit more in the United States than in Canada.

If NAFTA is killed, that could be far more negative for Canada than it is for the U.S., and the Canadian dollar could tumble as a result.

(Info via Jennifer Dowty, as reported in The Globe and Mail, 2 Nov 2017)

Consumer staples and telecoms are rate-sensitive stocks.

Realistic Returns

The MSCI world index returned only 7.2 percent annually over the past 30 years.

(Info via Ian McGugan, as reported in The Globe and Mail, 6 Nov 2017)

Perhaps the average investor has overly ambitious expectations in terms of portfolio investment?

Is value investing dead?

Over the long term, value investing has outperformed momentum investing but, over the last eight years, it hasn’t.

The Only Way to Invest

When it comes to investing your money and saving up for retirement, Warren Buffett and Tony Robbins recommend investing in index funds, especially if you’re a young and/or new investor.

“Consistently buy an S&P 500 low-cost index fund,” Buffett recently told CNBC’s On The Money. 

Index funds hold every stock in an index, such as the S&P 500, including big-name companies such as Apple, Google, and Microsoft, and offer low turnover rates, so that their fees and tax bills tend to be low.

Because this type of fund ebbs and flows with the market, it stays relatively constant, and avoids the risk that comes from picking individual stocks.

“The trick is not to pick the right company; the trick is to essentially buy all the big companies through the S&P 500, to do it consistently, and to do it in a very, very low cost way,” Buffett told On The Money.

Buffett also says that investing in index funds would be the advice he’d leave for his wife, should anything happen to him.

And, the Oracle of Omaha has put his money where his mouth is:  He made a bet that, over a ten-year period, low-cost index funds would outperform hedge, and so far he appears to be right.

Read all about it here:


Tony Robbins also stands by index funds.

In a recent interview with Business Insider, he says that it’s crucial to diversify your investments, and that index funds are one of the best investment strategies.

“You can’t put all of (your money) in one place,” Robbins tells the Business Insider.

Robbins goes into more detail on index funds in his book ‘Unshakeable,’ in which he explains that funds eliminate the human error – and therefore the risk – that is inherent in picking stocks individually.

“Index funds take a passive approach that virtually eliminates almost all trading activity,” he writes.

Because humans aren’t actively managing index funds, they also aren’t actively making mistakes.

“When you own an index fund, you’re also protected against all the downright dumb, mildly misguided, or merely unlucky decisions that active fund managers are liable to make,” Robbins writes.

(Info via Emmie Martin, reporter for CNBC, 1:59 PM ET Wed, 17 May 2017)

For the record, I own VOO Vanguard S&P 500 ETF NYSE.

I covered this portfolio investment in these blog posts:



Market Crashes

Market crashes always seem to come from out of nowhere. 

There is no magic indicator or red light that flashes when trouble is nigh.

So, be prepared for experts to be gobsmacked by the next market debacle.

They always are.

Regulators have long since installed circuit breaker rules on major exchanges to prevent a recurrence of the ’87 nightmarish crash.

Buying opportunities open up when the stock market crashes during fundamentally good economic times.

(Info via Ian McGugan, as reported in The Globe and Mail, 10 Oct 2017)

A correction usually occurs every few years, and it’s generally in the order of about 10 percent.

It can last a quarter or so.

(Info via Brenda Bouw, as reported in The Globe and Mail, 26 Oct 2017)

A 20 percent decline signals the start of a bear market.

Most corrections are over faster than you realize.

Resource companies usually benefit from the late stages of an economic cycle.

Prices of key materials trend higher, usually augmented by inflation, and shares of the companies that produce them follow in kind.

Copper is a prime component in the construction of the engines to power electric cars, and is benefiting from auto makers’ growing emphasis on such vehicles.

(Info on last three paragraphs via Gordon Pape, as reported in The Globe and Mail, 31 Oct 2017)

Electric vehicles represent less than one percent of all U.S. auto sales.

(Info via Bloomberg News, Reuters, as reported in The Globe and Mail, 3 Nov 2017)

In a market swoon, you could lose money in a balanced fund, but less than if you just hold equity funds or stocks.

Don’t use an investment savings account permanently.

It’s just a place to park money until the markets decline, and you’re ready to start buying.

(Info via Rob Carrick, as reported in The Globe and Mail, 2 Nov 2017)

An options strategy can be employed to manage the downside risk of stocks, in the event of a downturn.

When to Bail

A stock’s true value is relative to the company’s earnings – this according to Mr. Barry Schwartz (chief investment officer and portfolio manager at Toronto-based Baskin Wealth Management).

If past or potential earnings keep pace with the price of a stock, it’s up, up, and away for the share price.

If the price of the stock outpaces earnings growth, it’s time to say, “Sayonara baby!” 

In other words, let valuation be your guide.

Mr. Schwartz cites the big Canadian banks as examples of stocks that live up to their value – the Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, and Toronto-Dominion Bank.

Shares in all five have more than tripled since the 2009 low, but their prices have sustained price-to-earnings multiples in the teens.

“If you’ve got a rocket ship, getting off too early is a big mistake,” he asserts.

Portfolio investment diversification is his one exception to the rule.

He says that, as a stock outgrows other stocks in a portfolio to the tune of more than 10 percent, it can hold too much sway in the performance of the overall portfolio, and that it could be time to rebalance by taking some profits off the table.

Mr. Schwartz also suggests that an investor refrain from rebalancing, unless there is a plan for the profits – keeping it in cash, while waiting for a market pullback, being a bad idea.

Lorne Steinberg, president of Montreal-based Lorne Steinberg Wealth Management, counters.

He’s been trimming profits in his equity fund, and building up his cash reserves to 30 per cent.

“The stock market has been rising a lot faster than corporate earnings. That’s not sustainable forever,” he says.

“In this environment, it is prudent that, as the market goes up, you increase your cash position.”

The entire benchmark S&P 500 has outstripped its fundamentals, he says – currently trading at 22 times earnings, compared with its historic average of 16 times.

As interest rates rise, some of the ‘frothier’ sectors that usually pay healthy dividends, such as consumer staples, pipelines and utilities, are coming under pressure.

“If these asset classes did well because interest rates went down, it begs the question:  What happens when interest rates start to go up?” he adds.

To Mr. Steinberg, money is a form of cheap option that gains in relative value when markets fall.

“I’m waiting for the opportunity to buy more cheap stocks,” he says.

Even if broader markets were to continue rising, he says money can be deployed to individual opportunities in weak sectors, such as retail.

“We look for great businesses, which are strong financially, and have a stumble,” he says.

Bruce Murray, chief executive officer and chief investment officer at Toronto-based Murray Wealth Group, says he doesn’t fear a valuation crisis.

He’s quite comfortable with markets in record territory.

He harkens back to the last century for a comparison called the ‘Nifty Fifty’ – a collection of blue-chip stocks that outperformed the market with multiples in excess of 40 times earnings during the last sustained period of low interest rates, between 1930 and 1970.

The Nifty Fifty era came to an end in 1972 with the Arab oil embargo and the inflation that ensued.

He maintains that his firm is “still not afraid of stocks in companies leading the economic transition, like Amazon, Facebook, Google, and MasterCard, which comprise about 18 per cent of our global growth portfolio investment.”

“Global economies are strong, and the shift to electronic commerce still has a long way to go both generationally and geographically,” he says.

Mr. Murray says that an investor can still find opportunities now.

“We’re still finding stocks that we can buy so, when other stocks hit our target prices, we sell them, and switch into other stocks,” he says.

When he sells a stock, he does not keep the money in cash.

He posits that there are far better options: 

“Why would I hold money when I can find somebody who will pay me a three- or four-per-cent dividend yield that will grow?”

(Info via Dale Jackson, as reported in The Globe and Mail, 1 Nov 2017)

Stock news… Warren Buffett’s approach is to buy stocks at such attractive prices that you never have to sell them.

Most of the news is old (except for the NFP report due out the first Friday of every month), and is already reflected in stock prices.

It is not a valid reason to sell, unless the NFP report dictates you do so (especially in the case of the money market).

If you are selling longer-term holdings, then you have to deal with capital gains tax.

As is usually the case, even a perfectly timed exit and re-entry is at best a break even.

(Info via Barry Ritholtz, as reported in The Globe and Mail, 2 Nov 2017)

Junk Debt & Mkt. Direction

JNK SPDR Barclays High Yield Bond ETF:

The yields on junk debt are rising. 

These are high-yield bonds issued by companies that don’t qualify as investment grade.

A major buyer of low-quality debt, the above ETF slumped recently.

Bond prices move opposite yield.

As such, the declining value of the ETF suggests that investors are growing increasingly concerned about holding dicier debt, and are demanding higher yields to do so.

If this ETF were to continue to slump, that would be troublesome for a multitude of companies.

During the ensuing years after the financial crisis, a significant chunk of the corporate world opted for vast quantities of cheap debt.

A sudden jump in the cost of borrowing would give such companies a bad case of heartburn.

To boot, the recent turmoil in bond land should give investors of all persuasions pause in dealing with this asset class.

In the past, the high-yield bond market has offered a good window on how an investor is feeling about risk, and has been something to take into consideration when assessing what lies ahead for the stock market.

(Info via Ian McGugan, as reported in The Globe and Mail, 14 Nov 2017)

Since the above piece was written, this JNK ETF has recovered in price nicely, suggesting investors’ appetite for risk in the stock market is returning.

It serves as an additional check on where the stock market is headed – in addition to the VOO Vanguard S&P 500 ETF NYSE calculation in the Still Up and Away section at the beginning of this blog post.

Diversification Be Damned

“The myth that diversification can be achieved by collecting a bunch of different assets in various classes and sectors was debunked for many investors in 2008, as the financial crisis caused dramatic sell-offs in areas of the market that had previously been thought to be insulated from troubles in the world of banking.”

(Info via Jonathan Ratner, as reported in the Financial Post, 13 Oct 2017)

One way of addressing portfolio investment diversification is to maintain exposure to international and U.S. markets.

The U.S. market is a great diversifier.

Health accounts for 14.6 percent of the S&P 500, while tech takes up 23 percent.

(Info via Rob Carrick, as reported in The Globe and Mail, 16 Oct 2017)

One thought on diversification is to divide stock market holdings into equal portions of Canadian, international, and U.S. content.

(Info via Rob Carrick, as reported in The Globe and Mail, 28 Oct 2017)


ETFs that give you exposure to banks in Canada and State-side:

ZEB.TO BMO S&P/TSX Equal Weight Banks Index ETF TSE gives you exposure to the Big Six in Canada.

ZBK.TO BMO Equal Weight U.S. Banks Index ETF TSE

ZUB.TO BMO Equal Weight U.S. Banks Hedged to CAD Index ETF TSE

Among the biggest of banks in Canada, Canadian Imperial Bank of Commerce (CM) is a stand-out, what with price-to-book and price-to-earnings multiples that are below the peer average.

The stock also offers a sector-leading 4.6 percent dividend yield.

Bank stocks have had an impressive run but, while valuations have gone up from bargain levels, they’re not unreasonable.

There is room for stocks to go up further with dividend hikes, profit growth, and interest rate increases – all of which seem plausible.

(Info via David Berman, as reported in The Globe and Mail, 17 Oct 2017)

In Canada, one of the best investment strategies tends to be buying last year’s worst performer in the banking sector, because big banks have an uncanny ability of catching up to their peers.

As it turns out, smaller banks like Canadian Western Bank (CWB) can do the same thing.

When a Canadian bank stock is lagging its peers, an investor would be wise to push aside the market’s concerns, and see the underperformance as an investment opportunity.

(Info via David Berman, as reported in The Globe and Mail, 2 Nov 2017)

In this low-interest-rate environment, Canadian banks look attractive.

The yields are very attractive, and the dividends could continue to grow.

The economy appears to be strong enough to facilitate good credit quality.

Interest rates have ticked up a tad, which is good for margins at the banks.

(Info via Jennifer Dowty, as reported in The Globe and Mail, 2 Nov 2017)

Commodities and financials make up two-thirds of the TSX benchmark.

Financials account for 35 percent of the S&P/TSX composite index.

$BKX KBW Bank Index INDX:

Named after Keefe, Bruyette and Woods, a recognized authority in the banking industry, this is an economic index comprising the stocks of 24 banking companies trading.

It serves as a benchmark of the banking sector, and trades as ticker symbol BKX on the Philadelphia Stock Exchange, where it was created.

This index is weighted according to capitalization, and represents major banks and money centers across the country.

Mathematically, it is based on a tenth of the value of the Keefe, Bruyette and Woods Index (KBWI).

It began trading options in September of 1992.

(Info via Investopedia)

A Rock-Solid U.S. Bank

Through its Bank of New York predecessor, Bank of New York Mellon Corp. (BK) is one of the three oldest banking institutions in the U.S.

It is also among the oldest banks in the world, having been established in June, 1784.

The bank is viewed as a solid, well-diversified business that has a sustainable competitive advantage and a wide economic moat over its rivals.

It brings with it a solid corporate and management culture.

It has paid dividends to investors since 1785.

(Info via Vita Nelson, Founding Publisher and Editor, Moneypaper/dividend reinvestment expert and editor of DirectInvesting.com, as reported at MoneyShow.com, 26 Oct 2017)

ETFs, ETN and Funds

Over the past few years, high-speed traders have transitioned from quietly trading ETFs in the background to overseeing much of the market.

NYSE Arca hosts the majority of U.S. ETFs.

There, 83 percent of funds have elected to use an electronic firm such as Susquehanna International Group LLP or Virtu Financial Inc. as the lead market maker (LMM), instead of a bank or conventional broker-dealer.

The lead market maker for 125 ETFs on NYSE Arca was Amsterdam-based IMC, as at 4 Oct 2017 – up from just one 17 months earlier.

Other growers include Flow Traders NV, Jane Street Group LLC, and Latour Trading LLC.

Citadel Securities LLC is considering a move into the business.

LMMs are a fund’s linchpin, setting the price that investors pay to trade an ETF over an exchange.

They are required to post the ‘notional best bid-offer’ for most of the day.

This is the most attractive price at which an investor can buy or sell that fund.

In doing so, they receive a rebate from the ETF’s home exchange in return.

(Info via Rachel Evans and Annie Massa, as reported in The Globe and Mail, 17 Oct 2017)

DIA SPDR Dow Jones Industrial Average ETF NYSE

DXJ WisdomTree Japan Hedge Equity Fund NYSE 

EEM iShares MSCI Emerging Markets ETF NYSE

EMB iShares JPMorgan USD Emerging Markets Bond ETF Nasdaq

EWG iShares MSCI Germany ETF NYSE:  Germany’s economy is undoubtedly on a rip.  Unemployment is at 4.5%, the lowest since the Berlin Wall fell in 1989.  The IMF predicts that the economy will grow at above two percent, notes Gavin Graham, contributing editor to Internet Wealth Builder (Chief Strategy Officer, INTEGRIS Pension Management Ltd.).


GNR SPDR S&P Global Natural Resources ETF NYSE

HYG iShares iBoxx $ High Yield Corporate Bond ETF NYSE

IBB iShares Nasdaq Biotechnology ETF Nasdaq

IEF iShares 1-10 Year Treasury Bond ETF Nasdaq

JNK SPDR Barclays High Yield Bond ETF NYSE


KRE SPDR Regional Banking ETF NYSE

QQQ PowerShares QQQ Nasdaq


VGK Vanguard FTSE Europe ETF NYSE

XIV VelocityShares Daily Inverse VIX Short Term ETN Nasdaq

XLE Energy Select Sector SPDR Fund NYSE

XLF Financial Select Sector SPDR Fund NYSE

XLI Industrial Select Sector SPDR Fund NYSE

XLK Technology Select SPDR Fund NYSE

XLP Consumer Staples Select SPDR Fund NYSE

XLU Utilities Select Sector SPDR Fund NYSE

XLY Consumer Discretionary Select Sector SPDR Fund NYSE


For the average investor, ETFs and low-fee mutual funds are the way to go.

The classic bond or stock ETF is a passive fund that mirrors the returns of benchmark indexes, minus fees.

There’s little or no active human involvement in picking securities or timing buy and sell transactions.

(Info via Rob Carrick, as reported in The Globe and Mail, 11 Nov 2017)

An investor should find success through a well-diversified, equity-oriented, and passively-managed portfolio investment.

High management fees, portfolio churning, and short-term benchmark hugging are eating into return on investment.

(Info via Gail Johnson, as reported in The Globe and Mail, 14 Nov 2017)    

Why have ETFs in your portfolio?

  1. Diversification
  2. Convenience


An investor can get exposure to individual energy producers or materials stocks through XIU.TO, which also holds several growth stocks, like Alimentation Couche-Tard and Dollarama.

Similarly, DGRO provides exposure to a broad basket of U.S. stocks, such as Apple, Johnson & Johnson, Microsoft, and Procter & Gamble.

Both ETFs have very low MERs – 0.18 percent for XIU and 0.08 for DGRO.

That’s a small price to pay for the extra diversification those ETFs provide.

XIU.TO iShares S&P/TSX 60 Index ETF TSE

DGRO iShares Core Dividend Growth ETF AMEX


Reinvesting dividends is one of the best investment strategies, and buying a few more shares of an ETF here and there is a simple, low-stress way to deploy your dividend money, if you can’t decide which stock to buy.

(Info via John Heinzl, as reported in The Globe and Mail, 11 Nov 2017)

Balanced ETFs:

Balanced funds are a blend of bonds, stocks, and sometimes other investments, such as preferred shares and real estate.

They’re a convenient way for an investor diversify a portfolio investment.

They are a mainstay in the mutual fund industry, but the ETF business hasn’t gained much traction in this category yet.

Selection of ETF Balanced Funds (TSX)QMA, GMY, ZMI, XTR, HRA, PLV, PIN, and PRP

(Info via Rob Carrick, as reported in The Globe and Mail, 11 Nov 2017)

7–10 Yr. Treasury Bond ETF

IEF iShares 7-10 Year Treasury Bond ETF:

The iShares 7-10 Year Treasury Bond ETF (IEF) carries an expense ratio of 0.15 percent.

It is designed to track the investment results of an index made up of U.S. Treasury bonds, which have remaining maturities of between seven and 10 years.

Why IEF?

  1. Exposure to intermediate-term U.S. Treasury bonds;
  2. Focussed access on a specific segment of the U.S. Treasury market;
  3. Customized exposure to Treasuries for investors.

A ‘Forever’ Investment

(Most Popular Utility ETF)

Utilities may just be ‘the ideal forever-hold’ play because:

  1. Utilities benefit from a legal monopoly; and
  2. Utilities pay some of the best dividends in the S&P 500.

The Most popular utility ETF in the U.S. is XLU Utilities Select Sector SPDR Fund NYSE.

Here are its merits as a portfolio investment:

  1. Ranks first in its category;
  2. High dividend yield (number one in its category, and at a 60% premium to the S&P 500’s average 2.0 percent yield);
  3. Low expense ratio of .014 percent – 70 percent discount to the category average of 0.51 percent;
  4. Great liquidity;
  5. Diversified exposure to the domestic utilities;
  6. Holds 28 stocks all across the sector.

(Info via Michael Vodicka, StreetAuthority, 23 Oct 2017)

Stock news for your portfolio investment:

An Uber-Electric Utility

Consolidated Edison (ED Consolidated Edison, Inc. NYSE) is one of the largest electric utilities in the U.S.

Founded in 1823, it services millions of people in New York City, and has been paying a dividend since 1885.

You might call this one a ‘forever’ hold too.

(Info via Michael Vodicka, StreetAuthority, 23 Oct 2017)

A Fortune 200 Energy Co.

NEE NextEra Energy Inc. NYSE:

NextEra Energy is a Fortune 200 energy company with about 44,900 megawatts of generating capacity, about 13,800 employees in 27 states and Canada, and revenues of approximately $17 billion.

Subsidiaries include Florida Power & Light (FPL), FPL FiberNet, and NextEra Energy Resources (NEER).

(Info via Wikipedia)

Video Game Stocks

GAMR PureFunds Video Game Tech ETF AMEX:

The easiest and most diversified way of investing in video game stocks is the U.S.-traded ETFMG Video Game Tech ETF.

(Info via Scott Barlow, as reported in The Globe and Mail, 24 Oct 2017)

Electric Vehicle Play

Skittish on Tesla?

Josh Brown of CNBC likes ALB Albemarle Corp. NYSE, saying he thinks the run is far from over – even after the shares hit new all-time highs 23 Oct 2017, after rising 43 percent year-to-date.

He owns Albemarle as a way to play the electric vehicle space, without having to own auto stocks directly.

This Charlotte, N.C.-based company makes lithium, which is used in electric vehicles – a growing part of the auto market.

Companies like Mercedez-Benz, Tesla, and Volvo are expanding in that space.

Quoting Brown on the ‘Halftime Report,’ “If you want to be bullish on electric vehicles, but you don’t trust what Musk is doing financially at Tesla, the play is lithium.”

Demand will remain high for Albemarle’s products, given automakers need lithium to manufacture electric vehicles.

According to Brown, Albemarle is in a strong position due to the fact that there are very few companies manufacturing lithium, and demand for electric vehicles is on the rise.

Chips Ahoy

Brown also owns NVDA NVIDIA Corp. Nasdaq, the Santa Clara, California, company that is a leader in chips for artificial intelligence and gaming.

He posits that the company has a commanding lead in that space, in that it manufactures the two fastest chips for AI applications.

The stock has risen 60 percent this year, and it trades at 55 times forward earnings.

Other players in this space:  Advanced Micro Devices Inc, Applied Materials Inc., Intel Corp., Lam Research Corp., Micron Technology Inc., and Texas Instruments Inc.

Chips are ubiquitous.

They were once mainly confined to computers and phones.

These tiny devices are now showing up in places like autonomous driving systems and washing machines.

Consumers are becoming conditioned to expect even the simplest gadget to think for itself, thus creating a need for even more powerful components and more storage to accommodate the avalanche of data they create.

Even Apple signalled the importance of chips for its products by designing its own application processors, which showed up in the iPhone maker’s products in 2010.

Recently, Google announced its first consumer-device chip, and has designed its own co-processors to help with certain functions in its data centres.

The moves by Internet and traditional hardware companies into this business reflect a surge of interest in the components, as these companies plan on making their consumer products and data centres more efficient with custom devices.

In the move towards making cars self-driving, auto makers are increasingly packing electronics into their vehicles in order to make them aware of their surroundings, and make decisions on how to navigate them.

(Info in last nine paras above via Ian King and Jeran Wittenstein, as reported in The Globe and Mail, 25 Oct 2017)

Apple-Cyprus Connection

CY Cypress Semiconductor Nasdaq:

The word is out… Cypress scored an earnings beat of 31.25 percent for the fiscal third-quarter results 26 Oct 2017.

A ramp-up in USB-C demand across both PC devices and smart phones helped fuel these results.

The latest generation iPhones come equipped with fast-charging capabilities, thus adding more fuel to their hot USB-C business.

Cypress already supplies the chip (CYPD2104) to enable this technology in the iPad Pro, so it is likely that Apple has engaged the company to fast-charge the new iPhones.

USB-C has been designed into 75 PC models that will go into production by the end of 2017, thus further enhancing Cypress’s financial prospects.

Further good news for Cypress comes from Apple’s plans to accelerate iPhone X production significantly from the last quarter of 2017 through the first quarter of 2018.

Thirty-five percent market share in the fast-growing USB-C space belongs to Cypress, and that’s only expected to grow through 2021.

Beyond the USB-C phenomenon, several design wins at various automakers have boosted Cypress’s automotive business.

The top eight automakers globally have all approved its chips, which will greatly enhance growth projections.

Cypress’ plans include powering fast-growing automotive trends, such as advanced driver assistance systems (ADAS), infotainment systems, and other connected-car systems.

Audi’s latest A8 sedan deploys Cypress’ connectivity platform for powering in-car entertainment and Internet hot-spot functionality – a notable win for Cypress.

Such achievements can only enhance Cypress’ visibility in the automotive semiconductor market.

Applications, such as ADAS, will be strategic to driving automotive semiconductor sales.

One estimate has it that ADAS component shipments will rise significantly all the way into 2025, giving Cypress an edge, given its relationships with top automotive component suppliers.

(Info via Harsh Chauhan, Fool.com, 24 Oct 2017)

More on Chips

NVDA NVIDIA Corp. Nasdaq(See earlier comments by Josh Brown.)  

This maker of graphics chips for gaming has extended its technology reach to include driverless cars.

Nvidia is seen as a leader in artificial intelligence training, and it has deals with a ton of automakers.

INTC Intel Corp. Nasdaq:

This U.S. chip giant recently bought an Israel-based leader in computerized vision for vehicles (Mobileye N.V.).


This California-based semiconductor maker has offered to buy NXP Semiconductors N.V. in the Netherlands.

If the deal goes through, Qualcomm will acquire cameras, sensors, and software that will allow cars to be almost fully autonomous.

(Info via Report on Business, The Globe and Mail, Nov 2017)

Apple (NASDAQ:AAPL) supplier Taiwan Semiconductor Manufacturing (TSMC) produces the A11 chip for the iPhone family.

Apple’s build rate is good news for the other companies in Cupertino’s supply chain – such as Broadcom (NASDAQ:AVGO), Cypress Semiconductor (NASDAQ:CY), and Skyworks Solutions (NASDAQ:SWKS).

Skyworks gets 40% of its revenue by supplying connectivity chips to Apple.

Broadcom is the supplier of the wireless component feature, building on its radio frequency content in the iPhone 7/7S.

iPhone 8 and iPhone 8 Plus have a glass back that works with Qi chargers that are available as accessories and in airports, cafes, cars, furniture, and hotels.

Qi is an open, universal charging standard created by the Wireless Power Consortium (WPC).

(Info via Apple Support, Harsh Chauhan (Fool.com), and StockWinners.com)

ETFs Tracking Chip Makers

SMH VanEck Vectors Semiconductor ETF NYSE

SOXX iShares PHLX Semiconductor ETF Nasdaq is the largest and oldest ETF tracking chip producers.

CISCO Enters Software Fray

Cisco Systems Inc (CSCO) will buy software company BroadSoft Inc (BSFT) it said 23 Oct 2017 in a deal that boosts Cisco’s collaboration tools, and helps the company diversify its offerings away from routing and switching.

BroadSoft specializes in software used by major cable and telecommunications networks.

This gives Cisco a stronger foothold in selling products to big telecom firms, which can then provide integrated mobile, video, voice and other forms of electronic communications for their small and medium-size business customers.

BroadSoft’s products, which are delivered over the cloud, or the Internet, will improve Cisco’s collaboration portfolio.

Cisco’s current products in that unit, such as WebEx, are based on premise, which means they are installed on devices.

The acquisition gives Cisco more firepower to sell into its massive installed base over the coming years.

Like other large technology companies, Cisco has been focusing on high-growth areas, such as cloud computing, the Internet of Things, and security.

BroadSoft provides services and software that enable cable, fixed line, and mobile service providers to offer so-called unified communications over their Internet protocol networks.

BroadSoft has historically sold its products to large telecommunications companies such as AT&T Inc (T.N) and Verizon Communications Inc (VZ.N), which then resell the software to their business customers.

Cisco and BroadSoft share a lot of the same customers.

The BroadSoft deal is Cisco’s second major acquisition this year, following the deal for privately held AppDynamics Inc. in March.

Cisco will now be able to cover a wider swath of the market.

(Info via Liana B. Baker, Munsif Vengattil, Reuters, 22 Oct 2017)

A Defence Play

Leidos (LDOS) is, by contract dollar value, the seventh largest U.S. government contractor.

The company keeps adding new contracts to its revenue stream, which translates into higher share prices.

(Info via Briton Ryle, Editor, The Wealth Advisory, 26 Oct 2017)

A Pfizer Spinoff

ZTS Zoetis Inc. NYSE:

Zoetis, Inc. (/zō-EH-tis/) is the world’s largest producer of medicine and vaccinations for livestock and pets.

Now a completely independent company, the company used to be a subsidiary of Pfizer, the world’s largest drug maker, but before it was spun off.

With recent expansions into Southeast Asia and China, the company now operates in 70 countries.

Contemporaneous with the spinoff in June, 2013, S&P Dow Jones Indices announced that Zoetis would replace First Horizon National Corporation in the S&P 500 stock market index.

(Info via Wikipedia)

Tiger in the Yangtze

Cantor Fitzgerald that gave Alibaba (BABA) a price target about 20% above where it was trading 22 Sep 2017.

The Wall Street brokerage gave Alibaba a rating of overweight (the equivalent of a buy) and a price target of 213.

Alibaba shares closed at 181.48, 15 Nov 2017.

The stock has doubled in price this year.

It hit an all-time high of 180.87, 19 Sep 2017.

Early Sep 2017, Oppenheimer analyst Jason Helfstein raised his price target on Alibaba to 200 from 190.

Several stock price-target hikes were issued Aug 2017, following a quarterly earnings report that exceeded expectations (as did its outlook):  Earnings Per Share 0.94, Consensus EPS Forecast 0.73, % Surprise 28.77.

Alibaba reported earnings 11/02/2017 before market open, coming in at $1.02, for a 21.43 percent surprise to the upside.

The report was for the fiscal quarter ending Sep 2017.

The consensus EPS forecast for the quarter was $0.84 – this according to Zacks Investment Research, based on five analysts’ forecasts.

The reported EPS for the same quarter last year was $0.63.

Alibaba’s e-commerce business in China, where it derives the majority of its revenue, continues to benefit from improving user engagement and strong user growth, as well as higher click-through rates.

(Info via Brian Deagon, Investors.com, 22 Sep 2017)

The Chinese e-commerce giant’s sales are still growing rapidly, but the market isn’t expecting its profit margins to move much over the next few years.

Any margin improvement is pure upside. 

The company should be able to exploit (its) data and data mining.

It keeps learning more about its customers. 

(Info via Noah Blackstein, star growth fund manager, as reported by Tim Shufelt in Report on Business, The Globe and Mail, Nov 2017)

Number One in Cloud Space

Since it began paying a dividend in 2005, Accenture (ACN) has raised its dividend every year, chalking up annualized dividend growth in excess of 20 percent during that time period.

Accenture is well positioned to provide shareholders with strong dividend growth in the years to come, given its:

  1. Clean balance sheet;
  2. Capital-light business model;
  3. Excellent free cash flow generation;
  4. Healthy payout ratios; and
  5. Proven durability.

One of the largest professional services companies in the world, Accenture provides a wide range of end-to-end services and solutions in:

  1. Consulting;
  2. Digital technology;
  3. Operations;
  4. Outsourcing; and
  5. Strategy.

Started in the 1950s, the company now serves more than 40 industries, delivering virtually every business function needed by its customers through its offices in 55 countries around the world.

Accenture plays a leading role in helping its clients migrate to digital solutions with their products and services through:

  1. 3D printing;
  2. Artificial intelligence;
  3. Cloud computing;
  4. Data analytics;
  5. Robotics;
  6. Security; and
  7. Virtual reality.

With a seemingly clear lead in the digital arena, Accenture stands to benefit from many of the trends of the digital age, and this is fuelling a lot of the company’s growth.

As an example, Accenture is the number one enterprise services provider for the cloud.

The company provides cloud services for nearly 80 percent of the Fortune 100 companies, and is the number one provider to all of the leading players in the ecosystem today such as:

  1. Microsoft;
  2. Oracle;
  3. SAP; and
  4. Salesforce.

(Info via by Brian Bollinger, DailyTradeAlert.com, October 27, 2017)

A Swiss Army Knife Company

HON Honeywell Intl NYSE:

Ever since Honeywell spun off ASIX last year, its stock has taken off – up 132% on its own.

Honeywell International Inc. is an American multinational conglomerate company that produces a variety of aerospace systems, commercial and consumer products, and engineering services for a wide swath of customers, from major corporations and governments to private consumers.

Honeywell is a Fortune 100 company.

The company ranked 73rd in the Fortune 500 in 2016.

(Info via Wikipedia)

A Dividend King

JNJ Johnson & Johnson NYSE:

One of the largest health-care companies in the world, this company has a highly diverse product portfolio.

J&J’s growth catalysts:

  1. A large pipeline of new drugs… Immunology and oncology are attractive branches of medicine, and the company is targeting these areas.
  2. J&J will accelerate growth through acquisitions. Earlier in the year, it announced its intentions to buy standalone R&D company Actelion, which focuses on rare health conditions.

The stock currently pays a 2.5% dividend yield.

The dividend has been increased for the past 55 years.

That qualifies it for to be included in the list of Dividend Kings, which is a small group of just 22 stocks with over 50 years of consecutive dividend increases.

(Info via Bob Ciura, editor of Wyatt Research’s Daily Profit, in conjunction with MoneyShow.com)

A Free Cash Flow Gem


Within the Canadian telco sector, Telus is expected to show one of the highest (rates of) free cash flow growth in 2018, 2019 and 2020.

That is going to be fuelled by lower capex and EBITDA growth, and will facilitate the company being able to grow their dividend faster than most other company in the telecom sector.

Reasons to like Telus:

  1. EBITDA growth – The company has invested heavily in improving its network’s technological performance, and that is going to drive much better growth and retention, both on wireless and wireline.
  2. Free cash-flow improvement – resulting from the peak in capex spending underway in 2017. The company has been engaged in very high capital spending over the past four years, which is likely to have peaked in 2017.  Capex spending is still expected to be high, although the trend is for it to be declining.  This will amplify the EBITDA growth that the company is seeing on the free cash flow line.
  3. When it comes to positioning the company for the long term, its investment in fibreto-the-home is not only going to help them increase revenue per customer, and gain market share in wireline, but it’s also going to position the company to be a leader, yet again, in wireless. It will help them achieve very high wireless data speeds for data-demanding customers.  Another reason to like Telus is their very high exposure to wireless – close to 65 per cent of earnings coming from wireless, where all of the growth right now is going in terms of consumer spending.  Also, they have the lowest exposure among all the companies in Canada to TV revenues, which is seeing continued pressure, as customers move from the traditional TV environment to over-the-top entertainment content like Netflix.

(Info via Jennifer Dowty, with input from Maher Yaghi, the telecom, media and technology analyst at Desjardins Securities, as reported in The Globe and Mail, 2 Nov 2017)

A Pharmaceutical Giant

ABT Abbott Laboratories NYSE:

This health care company has a large portfolio of branded drugs.

It is expected to grow earnings by 13.4 percent this year.

(Info via Peter Ashton, as reported in The Globe and Mail, 10 Nov 2017)

A High-Dividend Yielder

Duke Energy (DUK):

For an income-seeking investor, Duke Energy is one of the best high-dividend stocks (dividend yield of four percent) to be considered as a portfolio investment.

This electric power company has paid uninterrupted quarterly dividends for 91 years.

In 2017, it increased its dividend for the 13th consecutive year.

Here’s what’s to know about Duke Energy:

  1. Duke Energy’s history goes all the way back to the early 1900s.
  2. The company is the largest electric utility in the U.S. today.
  3. Over $22 billion in annual revenues.
  4. Operations reaching across the Midwest and Southeast regions of the US.
  5. Duke Energy is a regulated utility company.
  6. It serves approximately 7.5 million electric customers and 1.6 million gas customers, including customers from its recent $4.9 billion acquisition of Piedmont Natural Gas.

(Info via Brian Bollinger, as reported in DailyTradeAlert.com)

Buffett Likes Phillips 66

Warren Buffett’s Berkshire Hathaway currently has a 15.77% ownership stake in the stock – Phillips 66 (PSX)having initiated its position in August 2015, thereby becoming the company’s largest institutional.

Mr. Buffett says that Berkshire bought Phillips 66 because “we like the company… and… the management very much” – not because it is a refiner or an integrated oil company.

Phillips 66 is a downstream energy company.

Its diversified business portfolio includes:

  1. Chemicals,
  2. Marketing,
  3. Midstream,
  4. Refining, and
  5. Specialty operations.

PSX has consistently returned excess cash to shareholders in the form of both dividends and share buybacks.

It raised its quarterly dividend by 11% in July 2017, and recently announced a US$3-billion buyback authorization.

According to William Selesky, Senior Analyst: Basic Materials, Argus Research Corporation, his company is raising its 2017 EPS estimate to $4.38 from $4.16, based on its expectations for modest margin improvement and increased stock buybacks over the remainder of the year.

The 2017 consensus estimate is $4.43.

The company is also boosting its 2018 estimate to $5.88 from $5.67, which assumes stronger pricing and higher volumes next year.

The 2018 consensus estimate is $5.88.

Argus Research is reaffirming its buy rating on Phillips 66, and raising its price target to $108 from $96.

This is based on the expectation of the shares benefiting from stronger earnings and margins going forward, driven by improving industry fundamentals, as well as from the company’s focus on dividend increases and stock buybacks.

(Info via William Selesky, Senior Analyst: Basic Materials, Argus Research Corporation, as reported at The MoneyShow.com, 11/03/2017 5:00 am EST)

A U.S. Global Behemoth

TXT Textron, Inc. NYSE:

Textron (NYSE: TXT) is an American global aerospace, defence, security and advanced technologies industrial conglomerate.

Textron includes Beechcraft, Bell Helicopter, Cessna Aircraft, and other components.

(Info via Wikipedia)

A Canadian Giant

CTC/A.TO Canadian Tire Corp, Ltd. TSE:

Canadian Tire Corporation, Limited is a Canadian retail company which sells a wide range of automotive, hardware, home, leisure, and sports products.

Some stores also sell food products and toys.

(Info via Wikipedia)

A Hidden Technology Gem

DXC Technology Company NYSE:

Headquartered in Tysons Corner, Virginia, DXC Technology is an amalgamated technology services company formed in 2017 from the merger of Computer Sciences Corporation (CSC) and the Enterprise Services business of Hewlett Packard Enterprise (HPE) – formerly EDS.

DXC provides consulting services and information technology to businesses and governments.

The company operates in more than 70 countries.

It trades on the New York Stock Exchange as ‘DXC,’ and is a component of the S&P 500 index.

(Info via Wikipedia)

NB:  More stock news coming in future blog posts.

A Popular Bank Trade

A popular trade for foreign hedge funds for a number of years has been short-selling Canadian banks, and using the proceeds to buy U.S. bank stocks.

The trade centers on the prediction that U.S. banks (and the U.S. dollar, if the fund doesn’t hedge the currency) will do better than their Canadian counter-parts.

In many cases, the hedge funds with this position are predicting the unwinding of the domestic real estate rally and subsequent negative effects on Canadian credit markets.

The continued strength of U.S. banks could mean that, for now at least, short covering is in its final stages, and that the domestic bank stock rally is coming to an end.

(Info via Scott Barlow, as reported in The Globe and Mail, 1 Nov 2017)

Yield Curve:  The Truth

The Treasury yield curve measures the difference between shorter-term and longer-term U.S. government debt, such as two-year and 10-year Treasuries.

Normally, 10-year Treasuries yield more than two-year notes – hence, providing a greater return for lending money for an additional eight years.

Narrowing of the gap between the two can be a growing concern for stock investors, because a flat yield curve often suggests that a recession is on the horizon.

The yield curve typically slopes upwards, with long-term bonds paying higher interest rates than shorter ones.

The rationale is that it is assumed that growth, and therefore inflation by definition, will be higher in the future.

But, when a bond investor expects slower growth, or little inflation, that investor buys longer-term bonds, thereby pushing their prices up and their yields down.

The result can be a flat yield curve, or even an inverted one.

Historically, a flat yield curve is an ominous sign for the economy, and an inverted one is deadly.

A flat yield curve is bad for banks, which derive their revenue from the difference in rates – collecting money form depositors at short-term rates, and lending to say home buyers at much longer ones.

Bank stocks make up the largest percentage of the S&P 500 – nearly 20 percent.

For an investor, there isn’t much concern about a flat yield curve.

Generally speaking, stocks have done worse when the curve when the yield curve went completely flat, or even negative.

Beyond that, the curve hasn’t done a very good job of predicting where the S&P 500 is going.

In 1990, for example, the difference in two- and 10-year Treasuries was just 0.42 of a percentage point, or 0.25 of a percentage point narrower than it is now.

The S&P 500 returned more than 30 percent the following year.

The yield curve went completely flat in 1998, before widening again.

It was two and a half more years before the recession hit.

The yield curve was also flat in early 2006.

One could conclude that the bond market hasn’t been wrong – just early.

The Central Banks are complicit in distorting the yield curve

The Federal Reserve has been recently been raising short-term rates, while European Central Bank has stepped up its bond buying efforts.

That’s pushed investors looking for yield in government bonds to the U.S.

In sum, stocks have generally done well at relatively low yield spreads.

(Info via Stephen Gandel, as reported in The Globe and Mail, 10 Nov 2017)

The Dow and 10-Year Yield

Forty-two of the epic 54 records the Dow turned in this year occurred when the 10-year yield was south of 2.4 percent.

(Info via David Rosenberg, as reported in The Globe and Mail, 27 Oct 2017)

To Split or Not to Split

Stock splits, in and of themselves, don’t really add any economic value.

After a two-for-one split, you own twice as many shares, but each share is worth half as much as before the split.

So why do companies do it?

The logic goes that companies want to improve the liquidity of their shares, and maintain buying interest among retail investors, feeling that they might balk, if the share price becomes too high.

To a certain extent the reasoning may be a holdover from days of yesteryear, when investors usually had to buy shares in multiples of 100 – called ‘board lots.’

Fast forward to today and, thanks to new-age trading systems, an investor can now easily buy less than 100 shares.

That may partially account for the fact that, although stock splits remain in vogue with some companies, others – such as Alphabet, Amazon, and Priceline – have let their shares prices rise above US$1,000.

The truth is that a stock split won’t increase the net worth of an investor, but research suggests that it can send an important message about a company’s strength.

In a 1996 study, David Ikenberry of Rice University examined 1,275 U.S. companies that had split their shares between 1975 and 1990, and compared them with companies that had not split their shares.

The finding was that the splitters outperformed the non-splitters by eight percentage points after one year and by 16 percentage points after three years.

It’s not logical to conclude that the split itself caused those results.

It could very well be that the splitters were already performing well – as reflected in their high share prices – and that momentum may have simply carried on after the split.

(Info via John Heinzl, as reported in The Globe and Mail, 28 Oct 2017)

Are you a sheep?

According to USA Today, 450 sheep jumped to their deaths in 2005.

One sheep jumped.  

Another followed.  

Then, a flock of sheep jumped off a cliff for no apparent reason.

Shepherds were shocked, as they watched another 1,500 jump.

Many died.  

Some survived by landing on pillows.

They were all caught up in a wave of herd instinct.  

There was no logic to what they did.  

They just followed one another over the cliff because they were all doing it.

Sound familiar?

This is the very same thing investors and traders do.

We buy when everybody else is buying, and we sell, well, when everybody else is, all the while never questioning what we’re doing (not moi).

Here’s a perfect example:  

In 2009, Kiplinger’s ran an article by Robert Frick, entitled, ‘Don’t Trust the Crowd.’  

It noted:

The herd mentality insidiously gets you to see things in a different light.

A recent experiment concluded that we may actually be hard-wired to buy into what the crowd is telling us.

The experiment, which was conducted at Emory University, had participants look at an object (an assemblage of cubes), and then judge how it would look if it were rotated slightly.

However, there was a twist.

Some participants, who were actually actors hired for the experiment, were told to give wrong answers, in an effort to affect the opinions of their fellow participants.

As was to be expected, the real subjects, influenced by the actors, gave incorrect answers – this in spite of what they saw with their own eyes.  

It was the crowd’s opinion that actually changed their perception of the problem.

Participants ‘saw’ the objects differently.

The herd, it would appear, altered their perception of reality.

The awareness of just how easily we are influenced, as illustrated by that article, allows an investor or trader to think outside the herd.  

“Then, you can focus on one of the best investment strategies – spreading your risk across many types of investments, and periodically redistributing your money among them.”

(Info via TradeWins Publishing)

Or, how about this… why not just buy into an all-encompassing ETF like VOO Vanguard S&P 500 ETF NYSE – then, you don’t have to worry about the herd, as you have all your bases covered in one fell swoop.

No other sheep to worry about.

That’s my take on this herd thing.

BTW, I covered VOO in these two blog posts:




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“I found a copy of your book ‘One more Zero’ several years ago, and never got around to reading it completely till recently.  I liked the approach and searched around for more information.  I found your FX Mentor site, and read that material recently.  It seemed very good; however, it was old.  I read a few reviews from other sites, and others agreed you were a great guy and as legit as they come; however, the only credible negative comments seemed to be that the material needed to be updated.  I searched around some more, and found your current site (TradingSmarts), and read the eBook you offered (Secret of Rich Traders).  Some of the basic concepts were included in the Zero book.  Your friend Barrie has taken the available commodities data, and it would seem has made it very useable.  I was especially interested in your critique about the Jan /15 Swiss franc move.  I was using a broker (Square 4, I think) at the time, working with a guy named VEGAS.  I was not in the market at that point, but I did a critique of their MT4 feed for that whole period to see IF any SL orders would have been honoured.  The answer was ‘some.’  Of course, you have no way of knowing if yours would have been one of them!  That is a very scary prospect for an FX trader!  Since that date, I have not traded FX (not that I was any good anyway), waiting to find a way to avoid such gap situations during what would otherwise be a quiet (and liquid) trading day.  It certainly looks like you have a means to address that.  That is why I am so interested in your revised book and strategies.  The pivot foundation is solid.  With added focused COT data and a few filters and techniques/hacks that seem to fine-tune entry and exit, I can’t see such a comprehensive strategy being either risky or unprofitable.  Until you get it finished, I am working on a potentially very profitable weekly options strategy for U.S. Stocks and a short term (m1) strategy I developed that trades the DAX through CFD’s on MT4.  If I can ever get that finished, I believe I can build (or have programmed) an EA so it trades overnight by itself.  I have an experienced programmer in Vietnam who worked on another EA last year for me.  That one flopped due to some irreconcilable software issues, and it simply wasn’t as good a system as the one I’m working on.  Just haven’t had time to do all that.  (I also do consulting work in the motor vehicle industry).  Anyway, really looking forward to your new offering.  I think it will be a home run smash hit.  For those that know what is important, boy there is so much garbage out there.  Can’t wait to get my hands on it.  All the best.”  Bill C.

“Hi.  I do believe this is a great Web site (Forex Trading Techniques: The Ultimate Three Strategies).”  Jasa P.


What is ‘Duration?’

Expressed as a number of years, duration is a measure of the sensitivity of the price – the value of principal – of a fixed-income investment to a change in interest rates.

Bond prices are considered to have an inverse relationship with interest rates.

Accordingly, rising interest rates are a sign of bond prices likely falling, while declining interest rates are indicative of bond prices likely rising.

The Reflation Trade:  a bet on global economic revival and growth that is lifting shares of financials, materials and health-care stocks.

Delta:  The ratio of the change in price of an option to the change in price of the underlying asset.

Also referred to as the hedge ratio.

Applies to derivative products.

For a call option on a stock, a delta of 0.50 means that for every dollar the stock goes up, the option price rises by fifty cents.

It can refer to the difference between actual and expected growth.

Hedge means mitigating risk.

Momentum – a positive rate of change:  That could be earnings momentum, or share price momentum, which is a confirmation of earnings and fundamental momentum.

(Info on hedge and momentum via Jonathan Ratner, as reported in the Financial Post, 13 Oct 2017)

A stock’s ‘beta’ is a measure of the volatility, or systematic risk, in comparison to the market as a whole.

If a stock’s beta is 1.17 (as it is with BK at the time of this writing) compared to the S&P 500, the stock is considered to be 17% more volatile than the market.

(Info via Vita Nelson, Founding Publisher and Editor, Moneypaper/dividend reinvestment expert and editor of DirectInvesting.com, as reported at MoneyShow.com, 26 Oct 2017)

Hedging a Company’s Convertible Bonds:  A holder of a convertible bond engages a hedge by selling the company’s shares short.

The price of the convertible bonds and company’s shares tend to move in in lockstep with each other; accordingly, any losses resulting from a price decline on the convertible bond can be countered by the gain in the shares sold short.

(Info on hedging via Larry MacDonald, as reported in The Globe and Mail, 24 Oct 2017)

Notional Profit:  A contract usually takes several years to be consummated.

If the profit on these contracts is only recorded after their completion, wide fluctuations in the profit figures of contractors may be noted from year to year.

The profit in respect of each contract in progress is transferred to the profit and loss account of the year by calculating the notional profit – in order to avoid these fluctuations in the reported profits, and to reflect the revenue in the accounting period during which the activity is undertaken.

The portion of notional profit that is to be transferred to the profit and loss account depends on the stage of completion of a contract.

(Info via Wikipedia)

Free Cash Flow to Enterprise Value (FCF/EV) is a valuation metric that gives the cash flow yield.  The higher the yield, the better the value.

Free Cash Flow is important, because it is more difficult to manipulate, compared with other accounting metrics, such as earnings.

Enterprise Value, calculated as market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents, gives a clearer picture of a company’s total value than market cap alone.

Dividend Yield is the projected annualized dividend payments divided by the current share price.

Dividend Payout Ratio is the dividend payment divided by earnings.   

A lower number is preferred, as it implies safety in the dividend.  It could also signal the ability for a future dividend increase.  

Anything above 100 could signal the potential for a dividend cut.

Earnings Momentum is the change in annual earnings versus the previous quarter.  

A positive number implies earnings are increasing, the opposite being true for a negative number.

This could also be suggestive of potential future dividend raises or cuts.

Debt-to-EquityA smaller ratio is indicative of a company having lower levels of debt, and can be seen as a sign of safety.

Market Cap is a safety factor. 

Generally, larger companies are more diverse and stable.

(Info via Sean Pugliese, an investment portfolio manager at Wickham Investment Counsel, as reported in The Globe and Mail, 2 Nov 2017)

Quant Fund:  An investment fund that selects securities based on quantitative analysis.  

In a quant fund, the managers construct computer-based models to ascertain whether or not an investment is attractive.

(Info via Investopedia)

Quant funds respect both the downside and the upside of momentum.

Many quants tie their fortunes to groups of companies with common characteristics, such as low cost or high profitability. 

But, even if those wagers are correct, the potential returns are limited without volatility, which has all but disappeared in today’s market.

(Info via Dani Burger, as reported in The Globe and Mail, 3 Sep 2017)

Quantitative analysis refers to business, economic, or financial analysis that aims to predict or understand behaviour or events through the application of mathematical calculations and measurements, and statistical modeling and research.  

Quantitative analysts aim to represent a given reality in terms of a numerical value.

(Info via Investopedia)

The Momentum TradeA strategy among equity quants that bets the winners will keep winning.

Market-Neutral MomentumBets on the biggest gainers over the past 12 months, while shorting the worst.

While equity managers can make out-sized bets on technology stocks, market-neutral quants typically hedge out sector risks, leaving them unable to take advantage of one of the few winning wagers of 2017.

(Info via Dani Burger, as reported in The Globe and Mail, 3 Sep 2017)

American Depository Receipts traded on the NYSE indirectly let you hold the same shares traded on the Tokyo exchange.

Developed by Nobel laureate William F. Sharpe, the Sharpe Ratio is a measure to calculate risk-adjusted return. 

It has become the industry standard for such calculations. 

It is the average return earned in excess of the risk-free rate per unit of volatility or total risk.

(Info via Investopedia)

Advance/Decline Line (A/D)A technical indicator that plots changes in the value of the advance-decline index over a certain time period. 

Each point on the chart is computed by taking the difference between the number of advancing/declining issues, and adding the result to the previous period’s value, as delineated in the following equation:

A/D Line = (# of Advancing Stocks – # of Declining Stocks) + Previous Period’s A/D Line Value

This indicator is used by many traders to confirm the strength of a current trend and the likelihood of a reversal.  

If the A/D line is sloping downwards, but the market is up, it’s usually a sign that the market is losing its breadth, and may be setting up to head in the opposite direction.  

If the market is trending up, and the slope of the A/D line is up, the market is considered to be healthy.

(Info via Investopedia)

David Rosenberg, of Gluskin Sheff + Associates, noted that the NYSE A/D line has stalled since late September, and is now testing the 20-day moving average to the downside. 

“Breadth is lacking,” he said.

(Info via Financial Post, 31 Oct 2017)

Market breadth is a technique employed in technical analysis that is designed to gauge the direction of the overall market by analyzing the number of companies advancing relative to the number declining.

(Info via Investopedia)

Master Limited Partnership (MLPs)A limited partnership that is publicly traded and, as such, enjoys the benefits of paying no tax at the company level, as well as the liquidity that comes from being traded on a major stock exchange.

They generally deal in the production, processing, storage, and transport of commodities, such as natural gas and oil.

As such, this makes them sensitive to fluctuations in the price of the underlying commodity.

A high dividend yield also makes them attractive in low interest rate environments.

One factor that might work against MLPs could be seasonality, as investors begin to engage in tax-loss selling by the end of the year.

That is when an investor dumps underperforming stocks in order to reduce or negate capital gains taxes.

(Info via Chuck Mikolajczak, as reported in The Globe and Mail/Reuters, 12 Nov 2017)

Adjusted EBITDAadjusted earnings before interest, taxes, depreciation, and amortization

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)A measure of a firm’s operational profitability that is independent of its capital structure.

EV or Enterprise ValueReflects the market value of a business, including its debt and equity, while adjusting for cash.

It’s an estimate of what a private buyer might have to pay for a firm, while settling its debts at the same time.

EV/EBITDARoughly analogous to the more familiar price-to-earnings ratio.

Generally speaking, a value investor is attracted to stocks with low ratios.

Examples of Good NumbersStock trades at EV/EBITDA of five and at a price-to-earnings ratio of four.

It pays a 2.5 percent dividend yield.

It has almost doubled its book-value-per-share.

(Info via David Milstead and Norman Rothery, as reported in The Globe and Mail, 11 Nov 2017)

Investment Definition/Investment MeaningThe action or process of investing money for material result or profit.

GMVGross Merchandise Value

An Exchange-Traded Note (ETN) is a senior, unsecured, unsubordinated debt security issued by an underwriting bank.

It is similar to other debt securities in that an ETN has a maturity date, and is backed only by the credit of the issuer.

An ETN is designed to provide an investor with access to the returns of various market benchmarks.

(Info via Wikipedia)

Inspiration and Quotes

Image with inspirational message on it

“Buy rumours, sell news.”  Anon

“Crypto currency, the digital currency, is only fit for use by drug dealers, murderers and people living in North Korea.  Bitcoin is a fraud that will ultimately blow up.”  Jamie Dimon (JP Morgan boss)

“I think that my biggest attribute to any success that I have had is hard work. There really is no substitute for working hard.”  Maria Bartiromo, American journalist

“Gravity is a fickle mistress.”  Anon

“The stone age didn’t end for a lack of stones.”  Anon

“The first shall be last, and the last shall be first.”  The Good Book (the best selling book of all time; average of 2.2 copies per family in the U.S.)

“Don’t be fooled by all these siren songs (new fangled ETFs).”  John C. Bogle

“There’s a crack in everything.  That’s how the light gets in.”  Leonard Cohen

“Hard work never killed anybody, but why take a chance?”  Edgar Bergen

“The purpose of life is a life of purpose.”  Robert Byrne

“Your time is limited, so don’t waste it living somebody else’s life.  Don’t be trapped by dogma – which is living with the results of other people’s thinking.  Don’t let the noise of other people’s opinions drown out your inner voice.  And, most important, have the courage to follow your heart and intuition.  They somehow already know what you truly want to become.  Everything else is secondary.”  Steve Jobs, 1955 – 2011

“The enemy of your enemy is your friend.”  Anon

“Stay hungry.”  Arnold Schwarzenegger

“Every great why needs a great how.”  Anon

“There’s no evidence that I will any better reach 100 if I had lived on broccoli and water.”  Warren Buffett, who loves Coke both as a beverage and a company

“If you abandon your principles for convenience, they’re not your principles.”  Anon























































http://www.stockcharts.com/  (Ticker Info)

https://pixabay.com/  (Images by Pixabay – except inspirational image)


I hope you found this Portfolio Investment: Best Investing Return on Investment blog post to be instructive, and that you are now better equipped to make investment decisions.

I am not suggesting for one minute that there are easy ways to make money, but knowledge is power, and hopefully the information in this blog post makes you a better investor/trader.

If you still have questions about any of the content in this blog post, finances, money, or personal finance in general, please give a shout.

If you would like to have private investing lessons with me, you can reach me here.

Or, if you would simply like to use me as a trading adviser, please use the contact link.

Please feel free to tell me about yourself here, so that I can better understand your investment strategies.

If you’ve not yet gone through my previous blog posts, here’s the list: 


After Hours Trading

Trading Volume

Stock Trading Stops

Currency Trading Strategy

How to Pick Stocks

Stock Trading Rules

Three Winning Stock Trading Strategies

Forex Trading Techniques

Forex Pivot Points

MACD Divergence,

ADR Indicator

Best Forex Indicator

The HNW Club


Market Update

Margin and Leverage

Support and Resistance

Stock Market Forecast Next Five Years

Trading Forex News

SimpleFX Trading Tool

Stocks to Buy Today

Investment Strategies

And, feel free to check me out here.

If you would like to help me start a forum and be a moderator, I would love to hear from you.  Just drop me a line using the Contact provision at the bottom of my site.

If you would like to be featured in my blog, I would love to share your success story – or even your trading experience.  Please send me a message using my Contact form at the bottom of this page.

I won’t live long enough to know it all, and I won’t live long enough to make all the mistakes myself.  So, hearing your story will be most helpful not only to me, but also for my other beloved readers.

Please share this post.  Sharing is caring.  Thank you!

I look forward to your articles, feedback, ideas, stories, and suggestions for my blog.  Please post these on my blog at the Contact link below.  

HAVE FUN and ENJOY LIFE!  Remember – FAMILY comes first!

Here’s To Your Success and Quality of Life,


Peter R. Bain
PS:  Don’t let them steal your dreams!
PPS:  I will help you achieve your dreams!

About Peter R. Bain

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Peter R. Bain

I am a speaker, trader, writer, aviator, car nut, Harley enthusiast but, above all else, I am here for you at TradingSmarts, which I founded some 15 years ago.

TradingSmarts is your best friend when it comes to finding anything and everything to do with trading.  Through my blog you will always find guides, news, reviews, tutorials, and much, much more.

TradingSmarts is a ‘NO-BS, No-Holds-Barred, Take-No- Prisoners’ site for traders who want the straight-bill-of-goods on how to make a full-time income trading less than part-time. 

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