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The Weekly Lineup: From Blue Chips to Bubbles

U.S. Blue Chips on a Tear!

Stock Market GrowthUnless you had your head buried in the sand the last two weeks, you probably noticed the big U.S. blue chips such as JNJ, HD, and MCD having been going through the roof!  If you are holding any of these stocks you are certainly seeing some nice capital appreciation. I always felt U.S. stocks were undervalued compared to our Canadian counterparts. JNJ for example, is trading at $65.01 an increase of 12.7% from its recent low of $57.66 on March 16th. McDonald’s (MCD) is now trading at $78.60 an increase of 7.6% of from its recent low of $72.99, and the list goes on… Flight to safety?

These stocks are the Dow Jones Industrial Average (DJIA) companies. Another way to take advantage of that growth, if you don’t want to contribute to your RRSP or buy stocks directly, is through an index-fund that tracks the DJIA. Two low cost alternatives that come to mind are in the TD e-series funds: TD Dow Jones Industrial Average Index, and TD Dow Jones Industrial Average Index ($US).

Many U.S. and Canadian companies were also raising their dividends over the last two weeks, leaving no doubt the North American economies are showing signs of a recovery, or at least companies feel they are in a solid position compared to a year ago. Companies usually don’t raise their dividends unless they feel they are in a profitable situation to do so – at least that is the theory.

What Isn’t a Bubble?

Everything is going up these days!  So the question is what isn’t a bubble? Gold, silver, oil, global stock markets, and even bond prices are at all time highs. This is a good time to stick with your strategy, and keep your asset allocation in check ;) Remember just a short while ago on March 11th when the Japan Earthquake hit, short term bonds increased in value as a harbour of safety.  Or conversely if you are a dividend investor, remember to keep cash on the sidelines to buy into the lows. You want to be in a position where you are prepared for downturns if they happen, and implementing your strategy -not reacting emotionally!

TD Waterhouse TFSA Needs a Change

This week I discovered that TD Waterhouse isn’t such a good deal!  For a TD Waterhouse TFSA, you can have one free withdrawal per year, and any withdrawal after that is $25 per withdrawal. WOW kinda takes the fun out of savings doesn’t it? I have verified this by phone and in-branch.

However you can have a TFSA through TD Bank and there are no fees for setup, deposits, or withdrawals! So I am in process of moving my e-series holdings outside of the Waterhouse TFSA to a TD Mutual Funds TFSA (for holding TD e-series index funds). Time for a new broker?

Note: I just confirmed this with the local TD branch manager. It turns out you cannot hold e-series funds in a TD Mutual Funds TFSA. But you can hold them in a TD Waterhouse TFSA as mentioned above.

Guest Posting on the Dividend Ninja

Guest Post with the Ninja

I’ve been asked by a couple of great finance bloggers this past week or so, if they can guest post with the Dividend Ninja. Of course I love this idea! :) It gives my readers new perspectives and information. Guest posting also gives bloggers who need a boost to their traffic, some additional exposure. If you write quality content that is not previously published, then send me an email. Contact info at the bottom right!

The Weekly Lineup

And last but not least, here is what the Dividend Ninja enjoyed around the blog world this week:

  • Have your say on the Top Money Blogs. Vote for your favourite Canadian Personal Finance or Investing Blog on the Globe and Mail! You can view the nominees and vote from the site. My two favourites are the Canadian Couch Potato and Boomer and Echo ;)
  • In Make Sure You Aren’t Falling Behind, Andrew Hallam asks “If you had invested $200,000 in the world’s stock and bond markets on September, 11, 2006 (and didn’t add a penny to it) would you have made money?” A real-life example on the power of Passive Index Investing.
  • The Dividend Boy is a new kid on the block, and his blog is a great beginning to his journey into dividend investing. I like his approach, and the way he openly shares his portfolio with readers. He wrote an interesting piece on Shaw Communications, the first telecom stock for his portfolio. Perfect timing DB on that purchase!
  • The Passive Income Earner wrote an excellent article on the Dividend Aristocrats – The S&P500 Version.  With the high Canadian Dollar US Stocks in an RRSP are looking attractive. I take advantage of the S&P 500 through an index-fund, but any of these stocks are great choices. I think PIE put a lot of work into this!
  • Speaking about “bubbles” 20’s Money tracks the Dow vs Gold ratio in the Most Important Chart for the Next Few Years? Unless my economics deceive me, this chart is tracking inflationary-deflationary cycles in the economy.
  • Think inflation is just something economists talk about on BNN? Think again! Inflation is a real measure that affects all of our lives. Echo covers this issue well in My Personal Rate of Inflation. Well done Echo!
  • Clark at Million Dollar Journey continues his series on the basics of technical chart patterns. In this post he covers Stock Chart Continuation Patterns – Triangles and Channels. It’s always good to get back to basics! If your undecided about a particular stock, then go back to the technicals – the chart will tell you the story.
  • The Asian languages, as with hieroglyphics, are simply beautiful to gaze upon.  Add a poetic story and picture, and voila it’s an art of work! Kevin at Invest It Wisely provides a Chinese translation of Tiger Mom – Approach is not the only way… Use Google Translator to read the story!
  • For those of you who think you can beat the market, the long-term stats prove otherwise. Rick Ferri discusses the disappointments of active management in Beating the Market: A Century of Failure.
  • My Own Advisor wrote an excellent piece on Why Become a DIY Investor? For those who aren’t familiar – DIY is Do it Yourself!   The three main reasons according to My Own Advisor are:  being tired of management fees, tired of having someone else make your investment decisions for you, and realizing it’s not that difficult to get started.  Good article!

PS
Anyone buy into “Sell in May and Go Away”?

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12 Responses to "The Weekly Lineup: From Blue Chips to Bubbles"

  1. Echo says:

    Thanks very much for including my article on personal inflation and for your recommendation in the best of the blogs contest. We really appreciate the support!

    I’m not a believer in the “Sell in May and Go Away” theory since I think you have a better chance of capturing stronger returns by staying invested in the market. As you said, if you keep some cash reserves on hand you can buy into the dips.

    Have a great weekend!

  2. DividendStockOnline says:

    I’ve never been a fan of the sell in May theory. My long term dividend investment strategy keeps me from short term trade temptations.

  3. @Echo
    Your welcome! Your blog is one of my favourites.

    @DSO
    Hi! Thanx for dropping by :) Yup it really doesn’t make any sense for long-term investment strategies, does it? Cheers!

  4. Mark says:

    “Time for a new broker?”

    I would be interested in an article where you discuss the best choices amongst the brokers for dividend investors and index investors, for both big and small portfolio. I would be curious to know if the problems with Questrade are as bad as people make it out to be.

  5. Thanks for the mention! You have a great list of articles this week.

    Enjoy your weekend!

    Cheers,
    Mark

  6. I don’t believe in “Sell in May” as I am a long-term buy-and-hold guy. However, things are a little pricey after a very recent run-up. I almost always buy monthly as part of a cost-averaging strategy, but May might be the first month since I’ve started where I stay on the sidelines. We’ll see. As you said, it’s always a good idea to have some cash reserves so you can pounce on opportunities.

  7. @Dividend Mantra
    Thanx for posting. You are wise to sit on the sidelines and wait ;)

  8. I think last week (was it Thursday?) I was thinking I should have “Sold in May and went away” but then today, it was ridiculous- everything went up, up, and even more up.

    I think if things slow down, it might be agood time to pick up some more dividend stocks.

    Things are though, at an all time high. What recession? :)

  9. @youngandthrifty
    Thanx for dropping by :) This reminds me of the euphoria during the Summer of 2008, after markets had risen for some consecutive 2 years. Investors just became complacent to rising markets as a fact of life. Surprise!

    When things look too good to be true, they are too good to be true. I’m not one to even try and predict the market, but staying the course and sticking with your strategy is key! At some point there will be a turn-around ;)

  10. This is a great list of articles. I’m with you on the prices of assets; though I saw an interesting chart that showed that equities had the lowest return and gold the highest out of different asset classes in the last 10 years. If you were to make a contrarian bet maybe that shows that equities will be a good bet for the next 10 (but I see equities as being for the long term anyways).

  11. @Invest It Wisely
    Kevin, thanx for dropping by :) I do ennjoy reading your articles as well. Predicting markets is kinda futile, but seems gold has done very well indeed over the last 10 years.

    In my 20′s (some 20 years ago) I remember reading a book on asset allocation where he had a very early couch potato: 25% T-Bills, 25% Bonds, 25% Equities, and 25% gold. That would have been an interesting portfolio with the gold bullion wouldn’t it?

    Cheers

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