Stocks - The Best Buys 2

[flamesfever]

Originally Posted by DoubleK

Thanks for taking the time to post that.

Do you recall what happened with wages during that period? In my mind, wages and housing are the sticky parts of inflation now, you addressed housing in your post which remains a problem now.

Did the US Fed print money to finance the Vietnam war just as they did today to fight COVID?

Looking at published graphs, I believe the wages from 1965 to 1981 rose with inflation from 4 to 9%. However, adjusted for inflation they gyrated from +4 to -6%.

As for wages today, if we are going to bring in half a million immigrants per year for the next number of years, I think our wages will probably stabilize relative to inflation. I think our doctors, nurses, and a majority of healthcare workers deserve a significant raise and/or increase in benefits.

As for house prices in Calgary, IMO I think they will probably rise along with inflation and the price of oil and gas. I think it's imperative that companies actively reinvest a significant portion of their income in maintaining or increasing their reserves and production. Hopefully they don't become too jaded by the Federal Government's effort to reduce emissions.

According to published information, the Vietnam war was financed by higher taxes and inflation.

[bluejays]

Originally Posted by flamesfever

Looking at published graphs, I believe the wages from 1965 to 1981 rose with inflation from 4 to 9%. However, adjusted for inflation they gyrated from +4 to -6%.

As for wages today, if we are going to bring in half a million immigrants per year for the next number of years, I think our wages will probably stabilize relative to inflation. I think our doctors, nurses, and a majority of healthcare workers deserve a significant raise and/or increase in benefits.

As for house prices in Calgary, IMO I think they will probably rise along with inflation and the price of oil and gas. I think it's imperative that companies actively reinvest a significant portion of their income in maintaining or increasing their reserves and production. Hopefully they don't become too jaded by the Federal Government's effort to reduce emissions.

According to published information, the Vietnam war was financed by higher taxes and inflation.

Doctors need raises? I have friends in the profession and they make bank. Each chooses a "secretary" who knows to play the loopholes and charge as much as possible. How much of our taxes go to road maintenance, healthcare, education and law enforcement? I imagine it's a ton and most of those are paid more than fairly. Anyway, debates aren't settled in any way on random forums as we're all average joes, but I don't know what the case is for playing doctors more when they're paid quite handsomely as is.

[Enoch Root]

Originally Posted by DoubleK

I seriously doubt anyone on CP was investing when Volcker was Fed Chair.

We haven't seen this many rate increases of this size, consecutively.

If JPOW sticks to his guns, each 50 bps is going to hurt more and more.

Well that's a hot take. And thank you for reminding me that I am old.

The rate hikes may be coming fast here, but things were far worse in the Seventies and early Eighties, as we had chronic inflation that wouldn't go away, along with a lack of growth, due to (among other things) high interest rates. The term stag-flation was coined, and it is one of the worst situations you can have: rising prices, but no growth. (deflation is worse, but thankfully we haven't seen that since the 30s, and I am reasonable confident that there were no CPers around for that )

The stock market struggled though one of the longest bear markets ever, and "the Death of Equities" was declared in 1983. (Which almost perfectly timed the bottom, and the beginning of the greatest bull run in history, btw)

[V]

The S&P was around 105 for 14 years. That’s bonkers to me. I know it’s common knowledge, but when you watch the charts from the late 60s to the early 80s, it’s just crazy, and why I support Powell trying to break the economy to get inflation under control. Can you imagine the last 12 months of bear market and then finding out values don’t really start getting better until almost 2040? Bonkers.

[bizaro86]

Originally Posted by V

The S&P was around 105 for 14 years. That’s bonkers to me. I know it’s common knowledge, but when you watch the charts from the late 60s to the early 80s, it’s just crazy, and why I support Powell trying to break the economy to get inflation under control. Can you imagine the last 12 months of bear market and then finding out values don’t really start getting better until almost 2040? Bonkers.

Freedom 95 baby!

[bluejays]

The market has really taken a bit more of a hit these past few weeks. Not sure the Santa Claus rally will happen but looking to add now that I have 70% cash. BNS has been pummelled (bought at $93 I think) and AAPL (bought at $153). Looking to double down on at least Apple. What are peoples thoughts on the new year ahead?

[Enoch Root]

Originally Posted by bluejays

The market has really taken a bit more of a hit these past few weeks. Not sure the Santa Claus rally will happen but looking to add now that I have 70% cash. BNS has been pummelled (bought at $93 I think) and AAPL (bought at $153). Looking to double down on at least Apple. What are peoples thoughts on the new year ahead?

I agree that BNS is cheap. They have been pummeled (more than the other banks) primarily because of their South American exposure. And I don't see why that wouldn't be reversed when the global rally begins. So I like BNS, personally.

[monkey brewery]

Originally Posted by bluejays

Doctors need raises? I have friends in the profession and they make bank. Each chooses a "secretary" who knows to play the loopholes and charge as much as possible. How much of our taxes go to road maintenance, healthcare, education and law enforcement? I imagine it's a ton and most of those are paid more than fairly. Anyway, debates aren't settled in any way on random forums as we're all average joes, but I don't know what the case is for playing doctors more when they're paid quite handsomely as is.

Doctors are actually compensated quite well in Alberta, nearly at parody with the US. What doctors have that nurses, teachers, and other public servants lack is a remarkably strong and well organized members association to advocate on their behalf. Lessons learned from the early-mid 90s.

[CaptainYooh]

The 2008 recession came in somewhat unexpected, like a stone wall popping up in front of a bullet train. March 2020 market drop was also hard to predict. Now, with a long 6-month recession almost at the door and almost universally expected, I wonder if selling all stocks held in RRSP portfolios would be a sensible and safe strategy? Downside would be missing on the market bottoming out and starting to gain sharply. Upside - peace of mind and relative safety/preservation of the principal ready to be deployed when things get better. My hesitation is caused by the high quality of stocks in my portfolio. But they are not immune. I've lost a lot of money on Fairfax and BNS in 2020, both very safe and solid, supposedly... Sounds like I've already made up my mind, but would like to hear others' talking.

[GGG]

I think you’ve missed already the opportunity already. Not that it won’t go down more but to time the point you get back in you need to be able to predict when the fed will end its inflation fight and move to stimulate growth. Since the market is likely better than you at predicting it I don’t see how you capture the opportunity that makes up for the risk. Essentially everything is priced in so you are gambling on interest rates and geopolitics.

Now could their be an opportunity for more growth at an acceptable level of risk here? Possibly.

[Enoch Root]

Originally Posted by CaptainYooh

The 2008 recession came in somewhat unexpected, like a stone wall popping up in front of a bullet train. March 2020 market drop was also hard to predict. Now, with a long 6-month recession almost at the door and almost universally expected, I wonder if selling all stocks held in RRSP portfolios would be a sensible and safe strategy? Downside would be missing on the market bottoming out and starting to gain sharply. Upside - peace of mind and relative safety/preservation of the principal ready to be deployed when things get better. My hesitation is caused by the high quality of stocks in my portfolio. But they are not immune. I've lost a lot of money on Fairfax and BNS in 2020, both very safe and solid, supposedly... Sounds like I've already made up my mind, but would like to hear others' talking.

My professional opinion is that this would not be a sensible strategy. Nor a particularly safe one, ironically. And the reason I say that is that once you have made the market timing decision to exit the market, you will be emotionally invested in your decision, and will feel pressure to act again. And should the market move against you, you will find (if you are like most people) more and more pressure to act.

Market timing is extremely difficult at the best of times. Getting out of the market 10 or 11 months into a bear market, is only that much more challenging.

[CaptainYooh]

Originally Posted by Enoch Root

...Getting out of the market 10 or 11 months into a bear market, is only that much more challenging.

I measure my portfolio performance annually and it was almost 25% up by June. Then everything started to slide, of course. Not that it's the key factor, but I get your point.

Originally Posted by Enoch Root

... the reason I say that is that once you have made the market timing decision to exit the market, you will be emotionally invested in your decision, and will feel pressure to act again. And should the market move against you, you will find (if you are like most people) more and more pressure to act...

Not sure I follow your reasoning. Please elaborate on the "pressure to act" behavior. (For some reason I thought you're a lawyer, not a finance guy.)

[bizaro86]

Originally Posted by CaptainYooh

The 2008 recession came in somewhat unexpected, like a stone wall popping up in front of a bullet train. March 2020 market drop was also hard to predict. Now, with a long 6-month recession almost at the door and almost universally expected, I wonder if selling all stocks held in RRSP portfolios would be a sensible and safe strategy? Downside would be missing on the market bottoming out and starting to gain sharply. Upside - peace of mind and relative safety/preservation of the principal ready to be deployed when things get better. My hesitation is caused by the high quality of stocks in my portfolio. But they are not immune. I've lost a lot of money on Fairfax and BNS in 2020, both very safe and solid, supposedly... Sounds like I've already made up my mind, but would like to hear others' talking.

If you believe a recession is universally expected, is there a reason you wouldn't expect that information to be reflected in existing securities prices?

How will you decide when to get back in, and what will you do if the market jumps 20% in the 6 months after you sell. If, like most people who try this, the answer is "wait for the drop" you risk missing years of returns.

I think this is a bad plan - time in the market beats timing the market is an old saw for a reason.

[V]

For a contrarian point of view, the market is going to retest its lows and likely fall below it. 3200 is a likely target for the S&P. AAPL is likely going to $100.

The problem you may have, though, is that after you sell everything in your registered accounts, you can’t buy them again for 60 days. So hopefully the market didn’t bounce and return in the time you had to wait.

[bizaro86]

Originally Posted by V

For a contrarian point of view, the market is going to retest its lows and likely fall below it. 3200 is a likely target for the S&P. AAPL is likely going to $100.

The problem you may have, though, is that after you sell everything in your registered accounts, you can’t buy them again for 60 days. So hopefully the market didn’t bounce and return in the time you had to wait.

I think the vast majority of people who think stuff like that would be better off keeping their portfolio of well selected businesses/funds and just buying some puts. If you're right you cash in the puts and have cash to buy at the new lows. If you're wrong, you've lost only a small percentage of your money on options premiums and have kept your holdings benefiting from continued gains.

[chedder]

Originally Posted by V

The problem you may have, though, is that after you sell everything in your registered accounts, you can’t buy them again for 60 days. So hopefully the market didn’t bounce and return in the time you had to wait.

This isn't a thing in registered accounts. You may be thinking of superficial loss rules in non-registered accounts.

[Slava]

Originally Posted by chedder

This isn't a thing in registered accounts. You may be thinking of superficial loss rules in non-registered accounts.

And that’s only 30 days.

Not that I’d sell everything now, just saying.

[V]

Are you serious? I had an accountant tell me that if I bought and sold the same security within 60 days it would be deemed taxable and not sheltered in the registered account. Is this inaccurate?

[DoubleK]

Originally Posted by V

Are you serious? I had an accountant tell me that if I bought and sold the same security within 60 days it would be deemed taxable and not sheltered in the registered account. Is this inaccurate?

Sounds like you need to give Slava a call in the morning.

[V]

Originally Posted by Slava

And that’s only 30 days.

Not that I’d sell everything now, just saying.

Technically, the “30 days” is really 61 days because the Tax Act defines the purchase period as one “that begins 30 days before and ends 30 days after the disposition.”

https://financialpost.com/personal-f...26dfa7cc0/amp/