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Tag: etf

  • Making sense of the markets this week: March 10, 2024 – MoneySense

    Making sense of the markets this week: March 10, 2024 – MoneySense

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    Right now, the U.S. economy is strong. There is no reason to cut interest rates. In my view, this is a win-win situation. If the economy were to falter quickly, the Federal Reserve would cut rates to help businesses. If the economy continues to grow at 3% to 4%—which is the current prediction for the first quarter of 2024 in the U.S.—the central bank won’t have to act. In both cases, the stock market will go up. We’ll see on March 28, when the U.S. Bureau of Economic Analysis will announce the U.S. 2023 Q4 GDP.

    Bitcoin is skyrocketing thanks to the SEC

    Wow. Just wow. For a brief moment on March 5, 2024, bitcoin recently hit an all-time high slightly above USD$69,200, beating its previous peak of USD$69,010 in November 2021. The cryptocurrency has been rising since October 2023, but prices really started to surge in January after the U.S. Securities and Exchange Commission (SEC) approved bitcoin exchange-traded funds (ETFs). American retail investors have been waiting a long time for a way to invest in cryptocurrency without having to own the digital tokens themselves. Now they can choose from 10 bitcoin ETFs, including funds from investment giants BlackRock and Fidelity. Collectively, the new bitcoin ETFs have already attracted billions of dollars. An ethereum ETF is likely around the corner. (Canadian investors already had access to bitcoin ETFs—Purpose Investment’s bitcoin ETF launched in February 2021, and at least three ethereum ETFs were launched by various Canadian firms a few months later.)

    Source: Wall Street Journal

    For me, this is an asset class that is still speculative. I’m not alone. Executives from Vanguard say they are not offering crypto products because they don’t see an “enduring” role for them in long-term portfolios. SEC chair Gary Gensler made a point of saying the approval of bitcoin ETFs was not an endorsement, and that he views crypto as a “speculative, volatile asset.”

    Right now, there is no government body or country backing digital currencies—at least, not yet. Until this happens, I don’t know where they fit into the economy. My view: At this point, crypto represents too much risk for most investors. It’s certainly not a core holding for the investors I work with.

    Gold also has been rising of late, and I met with David Garofalo of Gold Royalty Corp. about the rise of gold on March 6, 2024.

    TSX significantly underperforming the S&P 500 

    The TSX Composite Index is up just 5% year over year compared to nearly 30% for the S&P 500. Why has the TSX fallen short? Primarily because of which economic sectors it focuses on. Specifically, there is a lack of high-growth technology stocks in Canada. The majority of the TSX is made up of banking, oil and gold stocks. For a while now, banking has been flat at best. Oil stocks have dropped in price. Even though gold is at an all-time high, gold stocks have not fared as well. Meanwhile, 40% of the companies on the S&P 500 are in the technology sector, which led to its strong performance. BMO senior economist Robert Kavcic points out that just “five [tech companies]—Nvidia, Microsoft, Amazon, Meta and Apple—have alone accounted for almost half of the net 1,200 point increase in the S&P 500 over the past year.” More than half the companies on the Nasdaq are also technology stocks. Even the Dow Jones Industrial Average has a growing number of technology stocks, including Apple, Salesforce and Amazon.

    Two tables show S&P 500 and TSX stock index performance as of March 1, 2024
    Source: BMO Global Equity Weekly

    The TSX did very well during the China-driven metals super-cycle, when that country was buying up all the copper, aluminum and iron ore it could to build infrastructure. Those days are over. China’s economy is slowing, and that’s impacting Canadian companies and the TSX. 

    Canada’s economy is the secondary reason the TSX isn’t doing as well as U.S. indexes. Canadian GDP grew by 1% over the last year, while U.S. GDP grew by 3.2%. As a result, Canada is not as attractive to foreign investment as the U.S. We discussed the TSX’s underperformance on the Allan Small Financial Show.

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    Allan Small

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  • Making sense of the markets this week: March 3, 2024 – MoneySense

    Making sense of the markets this week: March 3, 2024 – MoneySense

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    Nvidia doesn’t have much room left for multiple expansion when it comes to an increased share price for the stock. After accounting for its incredible earnings day, Nvidia is still trading at a P/E ratio of 66x. Even fellow tech heavyweights Microsoft and Apple are only at 36x and 28x respectively. Consequently, if Nvidia continues its incredible bull run, one would have to believe that the demand for chips will continue to skyrocket and that Nvidia will be able to hold off competitors like AMD and Intel. —K.P.

    RRSPs are not a scam or a rip-off

    With the deadline to contribute to registered retirement savings plan (RRSP) officially passed as of February 29, we wanted to quickly address the becoming prominent idea that RRSPs are some sort of scam.

    We’ve noticed an increasing number of inquiries from friends and family over the last few years that go something along the lines of, “RRSPs are just a rip-off because you have to pay tax on them anyway.”

    Since you’re reading a column called “Making sense of the markets,” you’re probably aware that RRSPs are not in fact an asset. The fact that some Canadians don’t understand is shocking. It’s important to understand precisely what RRSPs are.

    RRSPs are a type of investment account—one that’s registered. It’s a place where you can hold investments, and it has powers that protect investments from taxation. If you think you’re purchasing RRSPs as an asset, then you might have gone to a bad wealth management company. A good financial advisor helps you understand what asset you were investing in. A bad financial advisor will be vague by using phrases such as “invest in RRSPs.” Investment information is often murky so money can be put into whatever high-fee investments (such as mutual funds) they wanted to sell that day. (Need an advisor? Check out MoneySense’s Find A Qualified Advisor tool.)

    Of course, an RRSP doesn’t avoid taxes entirely. It defers tax on the contributed amount from when you relatively earn a lot of money (while working) to when you earn less money (when retired). If you get a tax refund when you contribute or owe less taxes when you contributed to a RRSP, that’s essentially the government saying, “Since you contributed to your RRSP, your taxable income this year is not as high as it would’ve been. So you don’t owe us that money now. Oh, and if you have children, we’ll likely increase your Child Care Benefit cheque, as well.” 

    If you get a refund, then invest it and let all of that money compound in low-fee investments for the next several decades, you’re very likely to be happy with the results. But those people who say “RRSPs are scams” are usually salespeople pedalling life insurance for higher commissions. 

    Yes, for some Canadians investing within a tax-free savings account (TFSA), it means they could come out ahead of investing within an RRSP. Yet, for the vast majority of Canadians, they could end up in a pretty similar place. Don’t forget, if you invest inside a TFSA, you don’t get that tax refund to stuff right back into your investment account—you’re contributing after-tax income. When deciding on a TFSA or an RRSP, you would need to know exactly how much income you and your spouse will have when you retire. 

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    Kyle Prevost

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  • When are TFSAs and RRSPs actually taxable? – MoneySense

    When are TFSAs and RRSPs actually taxable? – MoneySense

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    TFSA day trading: Do you pay tax?

    Tax-free savings accounts (TFSAs) are mostly tax-free. When you buy and sell an investment for a profit, that is generally tax-free inside a TFSA, regardless of the type of investment. 

    One exception could be if you are day trading in your TFSA. If you are engaging in frequent trading activity, there is a risk your profits could become taxable as business income. For most long-term, buy-and-hold investors, this is not an issue. There’s no specific guideline about what constitutes day trading in your TFSA, but factors like the frequency of trades or the holding periods, for example, could indicate you are using the account this way.

    Taxes on U.S. stocks in a TFSA

    U.S. stocks held in a TFSA are subject to 15% withholding tax on U.S. dividend income. Withholding tax would apply to other foreign stocks held in a TFSA, with rates starting at 15%, depending on the country. Only Canadian stocks are not subject to withholding tax on their dividends inside a TFSA. 

    Does this mean you should only hold Canadian stocks in your TFSA? Not necessarily. If your TFSA is your primary investment account, or a big part of your overall investments, you may need to hold non-Canadian stocks to have proper diversification. If it is a small part of your overall portfolio, you may be able to have a bias towards Canadian stocks in your TFSA, but that may or may not be the best investment strategy depending on the value and type of your other investment accounts. Canada is a small part of the global stock market and has little exposure to sectors like technology and health care, so foreign stocks help diversify and can increase risk-adjusted returns. 

    Can you avoid foreign withholding tax by holding Canadian mutual funds or exchange traded funds (ETFs) in your TFSA, Tawheeda? Unfortunately, no. They, too, are subject to withholding tax on foreign dividend income, so even though you will not see withholding tax on your TFSA statement, the mutual fund or ETF itself would have withholding tax before receiving dividends from foreign stocks. 

    TFSA withdrawals are always tax-free. However, if you overcontribute to your TFSA, in excess of your TFSA limit, you may be subject to a monthly penalty tax, plus interest. A similar penalty applies if you overcontribute to your registered retirement savings plan (RRSP).

    When do you pay tax on an RRSP?

    When you buy and sell for a profit in your RRSP, the proceeds are not generally subject to tax. RRSPs are generally only taxable when you make withdrawals. Unlike your TFSA, business income treatment does not generally apply to day trading in your RRSP. One exception could be if you are trading non-qualified investments in your RRSP, which would be uncommon. Qualified RRSP investments include things like cash, guaranteed investment certifications (GICs), bonds, qualifying mortgages, stocks, mutual funds, ETFs, warrants and options, annuity contracts, gold and silver, and certain small business investments.

    How are dividends taxed in an RRSP?

    U.S. dividends may or may not have withholding tax in your RRSP, Tawheeda. If you own U.S. stocks directly in your RRSP, there will be no withholding tax. If you own U.S. stocks through a U.S. ETF, you will not have withholding tax, either. However, if you own U.S. stocks indirectly through a mutual fund or an ETF listed on a Canadian stock exchange, that mutual fund or ETF will be subject to U.S. withholding tax on any dividends before it receives them, even though you will not notice any withholding tax on the dividends or distributions you personally receive from the fund. You see, a Canadian mutual fund or ETF is itself considered a non-resident of the U.S., subject to 15% withholding tax. The account the fund is held in does not matter. The withholding tax will still apply.  

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    Jason Heath, CFP

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  • Making sense of the markets this week: February 25, 2024 – MoneySense

    Making sense of the markets this week: February 25, 2024 – MoneySense

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    Retail earnings highlights

    All numbers below are in U.S. dollars.

    • Walmart (WMT/NYSE): Earnings per share of $1.80 (versus $1.65 predicted). Revenue of $173.39 billion (versus $170.71 billion predicted).

    • Home Depot (HD/NYSE): Earnings per share of $2.82 (versus $2.77 predicted). Revenue of $34.79 billion (versus $34.64 billion predicted).

    Walmart continued to show why it deserves its best-in-class status for mass retailers. Quarterly revenue was up 6% and e-commerce sales were up a massive 23%. No doubt shareholders were excited about the 9% dividend raise the company announced.

    The big news from “the big blue retailer,” a.k.a. Walmart, was that it’s buying TV manufacturer Vizio for $2.3 billion. The move makes sense given how many Vizio TVs Walmart sells. The company pointed out that the acquisition would be a major boost for its advertising business, as it could now better track customer data. Look forward to massive Black Friday Vizio sales for years to come.

    “Our market is on its way back to normal demand conditions. We’re not quite there yet, but the pressures we saw in 2023 are receding.”

    —Richard McPhail, Walmart CFO

    Home Depot announced that its sales were down about 3% from 2022’s fourth quarter, but that was significantly less of a pullback than it had been expecting, given the current high interest rate environment.

    Canadian earnings: who needs profits anyway?

    Sometimes you have to wonder if the analysts who predict quarterly earnings know what they’re talking about. Take Nutrien, Suncor and Loblaw, which all reported their earnings. Loblaw’s quarter was predictably boring, and the stock moved up slightly, score one for the analysts. However, Nutrien came in way below earnings expectations, yet the stock went up 7%. Suncor on the other hand had a great earnings report, but shares were down slightly on the day.

    Canadian earnings highlights

    Here are the numbers released this week. Note: Nutrien is a Canadian company based in Saskatoon, but trades on the New York Stock Exchange and reports in U.S. dollars.

    • Suncor Energy Inc. (SU/TSX): Earnings per share of $1.26 (versus $1.07 predicted). Revenue of $14.14 billion (versus $12.69 billion predicted).
    • Nutrien (NTR/TSX, NYSE): Earnings per share of USD$0.37 (versus $0.65 predicted). Revenue of USD$5.40 billion (versus $5.20 billion predicted).
    • Loblaw (L/TSX): Earnings per share of $2.00 (versus $1.90 predicted). Revenue of $14.53 billion (versus $14.53 billion predicted).

    Analysts usually point to anticipated forward guidance being the key in instances like this. So, because the future doesn’t look great for oil prices (recessions, supply increases, etc.) and Nutrien believes potash demand will increase going forward, the stock market is looking ahead and not simply reacting to last quarter’s news.

    Nutrien shareholders definitely miss the days of sanctions crippling the supply of Russian potash to the market, despite the bump on Thursday. The fourth quarter price was USD$235 per tonne, compared to USD$526 per tonne a year earlier.

    In more positive news, Nutrien’s CEO Ken Seitz said, “We do see potential for firming of potash prices,” and went on to add that Red Sea logistics issues were likely to continue to add to cost pressures for the foreseeable future.

    Suncor announced that it had set a new oilsands production record at 757,400 barrels per day, however, profit margins were down on lower oil prices. The oil giant also announced it would be bringing in a familiar corporate face as its next board chair, as Russ Girling (former CEO of TC Energy Corp) would be taking over fromMichael Wilson.

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    Kyle Prevost

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  • Bitcoin On Steroids: Technical Factors Fueling Rally To $70,000

    Bitcoin On Steroids: Technical Factors Fueling Rally To $70,000

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    The price of Bitcoin has been on a tear in recent weeks, surging over 30% and breaching the $50,000 mark. At the time of writing, Bitcoin was trading at $52,377, up 1.3% and 8.8% in the daily and weekly timeframes, data from Coingecko shows.

    This bullish momentum has ignited fresh optimism among investors, with many wondering if the world’s leading cryptocurrency is poised for another assault on its all-time high of $69,000.

    Analysts point to several key technical factors that could propel Bitcoin towards new heights in the coming months. Here are three of the most prominent:

    Halving Frenzy

    April 2024 marks the next Bitcoin halving, a highly anticipated event that occurs roughly every four years. During this event, the block reward for miners, currently 6.25 BTC, is slashed in half, effectively reducing the rate at which new Bitcoins enter circulation. This engineered scarcity has historically triggered significant price rallies, and analysts predict a similar outcome this time around.

    Source: IntoTheBlock

    IntoTheBlock, a quantitative crypto analysis firm, estimates a surge to a new all-time high just one month after the halving. They reason that miners, better prepared for the halving’s impact this time, will hold onto their rewards, limiting selling pressure and potentially boosting the price. Additionally, the halving reduces Bitcoin’s inflation rate from 1.7% to 0.85%, further enhancing its store-of-value appeal.

    The CEO of Sound Planning Group and an investment adviser representative, David Stryzewski, gave an explanation of his belief that the price of bitcoin is about to experience a significant upswing on the Schwab Network on Thursday.

    He clarified that the triggers for the rising price momentum for bitcoin are the impending halves of the cryptocurrency and the recently introduced spot exchange-traded funds (ETFs) that the U.S. Securities and Exchange Commission (SEC) approved last month.

    Macroeconomic Tailwinds

    The Federal Reserve’s dovish monetary policy stance, aimed at combating deflationary pressures, is another factor buoying Bitcoin’s prospects. The anticipation of interest rate cuts and increased liquidity injections into the financial system could benefit Bitcoin alongside other risk assets.

    Bitcoin market cap remains in the $1 trillion territory. Chart: TradingView.com

    ETF Explosion

    The long-awaited approval of Bitcoin Exchange-Traded Funds (ETFs) in late 2023 has opened the floodgates for institutional investors to enter the crypto market. These investment vehicles, which track the price of Bitcoin without requiring direct ownership, have already attracted billions of dollars in inflows. This surge in institutional participation is expected to continue in Q2 2024, potentially pushing the price of Bitcoin even higher.

    The Impact Of US Elections 

    Furthermore, the upcoming US presidential election in November 2024 could provide an additional tailwind. If a Bitcoin-friendly candidate emerges victorious, it could lead to policies that accelerate cryptocurrency adoption and further legitimize Bitcoin as an asset class.

    Not Without Risks

    The remarkable surge of Bitcoin as it tries to go a notch higher to the vaunted $70,000 level can be attributed to a convergence of key technical factors, propelling the cryptocurrency into uncharted territory. The relentless growth of the hash rate, improved scalability solutions, and ongoing developments in the blockchain ecosystem are collectively fueling this rally.

    Featured image from Freepik, chart from TradingView

    Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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    Christian Encila

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  • Making sense of the markets this week: February 18, 2024 – MoneySense

    Making sense of the markets this week: February 18, 2024 – MoneySense

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    Shopify struggles

    Canada’s second-largest company (or third, depending on the day) had a relatively strong earnings day on Tuesday, but the company’s share price took a beating based mostly on decreased earnings expectations going forward.

    Shopify earnings highlights

    Shopify is listed on both the Toronto and New York Stock exchanges, and it announces earnings in U.S. dollars.

    • Shopify (SHOP/TSX): Earnings per share of $0.34 (versus $0.31 predicted), and revenues of $2.14 (versus $2.08 predicted).

    Shares of Canada’s tech darling were down over 13% on Tuesday, but even with the massive pullback, the share price is still up 14% year to date (YTD).

    Shopify’s CFO Jeff Hoffmeister reported the good news that more products were sold on the Shopify platform than ever before. The fourth quarter included the all-important holiday shopping activity, and Hoffmeister announced that Shopify has moved $75.1 billion-worth of merchandise. That was a 23% increase on last year’s numbers. Net earnings came in at $657 million, compared to a loss of $623 million during the fourth quarter in 2022.

    President Harley Finkelstein said Shopify handled the orders for 61 million customers worldwide on the Black Friday weekend. 

    “Our platform handled a staggering 967,000 requests per second, which is the same as 58 million requests per minute, nearly 80% higher than our peak traffic just two years ago.”

    —Harley Finkelstein

    So, where’s the struggle? Growth is not the same as profitability. With Shopify stating its free cash flow is going to be substantially lower than previously indicated, investors were quick to pounce on the bad news.

    Finkelstein tried his best to put a positive spin on future growth opportunities.

     “There are opportunities for us to go beyond Europe. Of course, we’ve talked about Latin America and the Asia-Pacific in the past, but we definitely see a lot of opportunity there[…] I mean, we’ve captured less than 1% of market share in global retail sales, even as our product and geographies have expanded.”

    There’s no question Shopify’s been an incredibly innovative company, and it is all the more noteworthy for keeping its home base in Canada, despite many tech companies moving shop. It’s very likely the company will be consistently profitable, but trying to forecast the “when” and the “how much” of that long-term profitability is a very difficult endeavour. In this age of higher-for-longer interest rates, investors appear to be demanding durable profits sooner rather than later, and consequently, shareholders will have to buckle up for a bit of a volatile rollercoaster.

    Can Shopify keep up the growth momentum while controlling costs? Investors are betting on it. But Tuesday’s dip would indicate that it’s not at all certain about those bets.

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    Kyle Prevost

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  • How do dividends work for Canadian ETFs? – MoneySense

    How do dividends work for Canadian ETFs? – MoneySense

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    What are ETF dividends?

    Dividends are a portion of profits that a company shares with its shareholders, typically paid quarterly. Canadian stock markets include many companies that pay a high dividend. The dividend yield is the annual dividend per share divided by the price per share.

    Selecting and managing your own dividend stocks can be time-consuming, however. Here’s where Canadian dividend exchange-traded funds (ETFs) enter the scene. They offer investors a diversified stock portfolio, which could include dividend-paying companies, that’s easy to manage. For example, the Fidelity Canadian High Dividend ETF (FCCD) holds 65 dividend-paying stocks, as at Jan. 15, 2024.

    There are several varieties of dividend ETFs, including ETFs comprising U.S. or international stocks—for example, Fidelity’s U.S. High Dividend ETF or International High Dividend ETF.

    How do dividends work in Canada?

    Not all companies pay dividends—it isn’t mandatory to do so. However, paying a healthy dividend can make a company’s stock attractive to income-seeking investors. A company’s board of directors decides the amount to be paid to shareholders based on factors such as profitability, cash flow and the company’s future investment plans. Many companies aim to pay a consistent dividend, which often grows over time.

    To be eligible to receive the dividend, an investor must own shares on what’s referred to as the “ex-dividend date”—the first date that the stock trades without the right to receive the dividend. The actual list of those who will receive dividends is prepared on the “record date,” which is typically the business day after the ex-dividend date.

    Dividends are paid on a per-share basis, so the amount of money shareholders receive depends on the number of shares they own. For example, if a company announces a dividend of 10 cents per share, and you own 100 shares, then you would receive $10 of dividends.

    In the case of ETFs, since the fund owns the underlying shares, it receives all the dividends it is eligible for. After receiving the dividends and subtracting expenses, the ETF could either distribute the net dividends to unit holders or reinvest them. To help maximize the effect of compounding, you could choose the dividend reinvestment plan (DRIP), where the dividend distributions you receive from a fund are used to purchase additional units of the same fund at the current market price. For example, FCCD distributes dividends monthly, and investors can opt into a DRIP to automatically purchase more units.

    When do dividend hikes, cuts and pauses happen?

    Consistent and increasing dividends are often viewed as a sign of a company’s financial health. Investors often read into changes—or lack thereof—in a company’s dividend policy.

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    Aditya Nain

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  • Video: How to choose ETFs, for Canadian investors – MoneySense

    Video: How to choose ETFs, for Canadian investors – MoneySense

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    There are more than 1,300 exchange-traded funds (ETFs) available for Canadian investors. How do you know which you should choose? Watch this video and use our ETF Screener Tool. Check out this video where Journalist Michael McCullough talks about choosing ETFs on The Wealthy Life with Sybil Verch.


    MoneySense’s ETF Screener Tool
    USE TOOL

    Watch more MoneySense videos:

    The post Video: How to choose ETFs, for Canadian investors appeared first on MoneySense.

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    MoneySense Editors

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  • Making sense of the markets this week: February 11, 2024 – MoneySense

    Making sense of the markets this week: February 11, 2024 – MoneySense

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    Disney is back on track

    Even with all the iconic brands under its corporate umbrella, Disney has struggled the last few years, as its share price is down 11% since February 2019.

    Things might be looking up now that CEO-extraordinaire Bob Iger is back in the captain’s seat after “retiring” back in 2020.

    Disney earnings highlights

    All earnings and revenues for Disney, PayPal, McDonalds, and Eli Lilly below are in U.S. dollars.

    • Disney (DIS/NYSE): Earnings per share of $1.22 (versus $0.99 predicted), and revenues of $23.55 billion (versus $23.64 billion predicted). 

    Disney shares were up over 7% in extended trading on Wednesday after the earnings call. And the call highlighted the following reasons for increased profit guidance in 2024:

    • Disney will meet or surpass its goal of cutting costs by $7.5 billion this year.
    • The House of Mouse company will also invest $1.5 billion into a partnership with game software developer Epic Games.
    • Disney’s “experiences” division (think theme parks and cruises) saw a 7% increase in revenues versus last year. 

    Yet, the biggest Disney revelation this week came from its sports streaming division.

    With Amazon trying live football broadcasts this year, it appears the more traditional names in media have decided to fight back. 

    Disney (through its ESPN subsidiary), Fox and Warner Bros. Discovery announced joining forces to create a new sports streaming service. The planned platform has yet to be named, but it would feature current sports programming from ESPN, ESPN2, ESPNU, SECN, ACCN, ESPNEWS, TNT, TBS, TruTV, FS1, FS2, BTN, UFC, as well as the main ABC and Fox broadcasts. 

    Iger stated, “The launch of this new streaming sports service is a significant moment for Disney and ESPN, a major win for sports fans and an important step forward for the media business.”

    When you think about the possibilities of bundling a new live sports service with current Disney+, Hulu, and Max (the HBO streamer), you will have re-created a substantial amount of the old American cable bundle, plus streaming of classic movies and TV shows. Now, all we need to know is the price, and if and when it would be made available to Canadians.

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    Kyle Prevost

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  • Making sense of the markets this week: February 4, 2024 – MoneySense

    Making sense of the markets this week: February 4, 2024 – MoneySense

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    Facebook thrives—the rest of tech, not so much

    While all four of the tech titans that announced quarterly earnings this week managed to beat their predicted earnings and revenue targets, only Facebook announced earnings that really got investors excited.

    Big tech earnings highlights

    All numbers below are in U.S. currency.

    • Microsoft (MSFT/NASDAQ): Earnings per share of $2.93 (versus expected of $2.78) and revenues of $62.02 billion (versus $61.12 billion predicted).
    • Alphabet (GOOGL/NASDAQ): Earnings per share of $1.64 (versus expected of $1.59) and revenues of $86.31 billion (versus $85.33 billion predicted).
    • Meta (META/NASDAQ): Earnings per share of $5.33 (versus $4.96 predicted) and revenues of $40.1 billion (versus $39.18 billion predicted). 
    • Apple (AAPL/NASDAQ): Earnings per share of $2.18 (versus $2.10 predicted) and revenue of $119.58 billion (versus $117.91 billion predicted).
    Source: CNBC

    With Meta, often referred to as Facebook, announcing excellent ad revenue growth, decreased expenses, and even introducing its first-ever dividend ($0.50 a share, paid in March), it was no surprise to see share prices pop in after-hours trading on Thursday. That said, the 14% surge (on top of a 12% year-to-date gain) caps off an incredible run for Facebook that has seen the share price quadruple since November 2022. This good news comes despite the virtual reality unit at Facebook losing $4.65 billion this quarter (which is about what the entire company of Air Canada is worth as a comparison).

    When Microsoft and Alphabet released earnings on Tuesday, it was puzzling to see the solid earnings results lead to substantial drops in share prices for both companies. This price movement was likely due to sky-high expectations that led to outsized price run-ups in 2023 and the first month of 2024. 

    Considering that bigger picture is important, as Microsoft is still up over 7% year to date, and Google (despite an 8% loss on Wednesday) is up nearly 2% so far in 2024.

    Both Google and Microsoft announced that their cloud computing services were large growth vectors, and that layoffs were in the works in the name of cost-cutting and efficiency.

    Apple had similar earnings results to Google and Microsoft, as they beat their earnings projections but share prices were down 4% in after hours trading on Thursday, as several red flags were apparent in their quarterly earnings numbers. Most notably, a 13% sales decrease in China, and decreased revenue guidance for iPhones going forward. The stock is basically flat year-to-date.

    CP and Brookfield keep a steady hand on the profit tiller

    On our side of the border this week, the notable earnings calls included Brookfield Infrastructure and CP Rail.

    Canadian earnings highlights

    All figures in Canadian dollars, unless otherwise stated.

    • Brookfield Infrastructure Corp (BIP/TSX): Earnings per share came in at a loss of USD$0.20 (versus positive USD$0.11 predicted) and revenues were USD$4.97 billion (versus USD$2.03 billion predicted).
    • Canadian Pacific Kansas City Ltd. (CP/TSX): Earnings per share came in at $1.18 (versus $1.12 predicted) and revenues were $3.78 billion (versus $3.68 billion predicted).

    Before you get too worried about those wonky results from Brookfield, keep in mind that their reported numbers are often quite complicated to make sense out of due to their unique corporate structure and accounting practices. Given that the massive infrastructure conglomerate is often buying and selling large utilities, its quarterly numbers can look misleading. In this instance, the market took the news in stride, as BIP was up over 1% on the day.

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    Kyle Prevost

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  • Here Are The Largest Institutional Buyers Of Bitcoin This Week

    Here Are The Largest Institutional Buyers Of Bitcoin This Week

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    The Spot Bitcoin ETFs have lived up to the hype, as these funds have ramped up institutional adoption of the flagship cryptocurrency, Bitcoin. This is further evident in a recent analysis that captured how much Bitcoin BlackRock and other issuers amassed in this week alone. 

    Spot Bitcoin ETF Issuers Purchased Over 19,908 BTC This Week

    Data from the on-chain analytics platform Lookonchain shows that the Spot Bitcoin ETF issuers combined to purchase over 19,908 BTC ($860 million) this week. Meanwhile, it is worth mentioning that Lookonchain’s data didn’t capture WisdomTree’s BTC purchases in its analysis, suggesting that the figure could be way higher when the asset manager’s purchases are also factored in. 

    Further data obtained from Arkham Intelligence provided insights into how much Bitcoin Wisdom Tree obtained for its Bitcoin fund this week. 74 BTC is shown to have gone into the asset manager’s wallet address for its Spot Bitcoin ETF. The addition of these crypto tokens means that all Spot Bitcoin ETF issuers combined to purchase almost 20,000 BTC this week alone. 

    Interestingly, Bitcoin ETFs were recently reported to hold 3.3% of Bitcoin’s circulating supply, underscoring their success since launching. Data from Lookonchain shows that these ETFs currently hold over 657,000 BTC (excluding WisdomTree). 

    Matt Hougan, Bitwise’s Chief Investment Officer (CIO), also revealed how these funds have seen flows of $1.7 billion after their first 14 trading days. This is more impressive as he made a comparison to Gold ETFs, which saw $1.3 billion in a similar time frame. In another X post, he mentioned how these Spot Bitcoin ETFs have taken $700 million in net inflows this week alone.

    BTC price recovers above $43,000 | Source: BTCUSD on Tradingview.com

    BlackRock Finally Trumps Grayscale

    Bloomberg analyst James Seyffart mentioned in an X post that BlackRock’s IBIT looks to have become the first ETF to trade more than Grayscale’s GBTC in a single day. Before now, Grayscale had continued to record the most daily trading volume, although IBIT had come close on a couple of occasions. 

    From the data that Seyffart shared, IBIT looks to have recorded $301 million in trading volume on February 1, while GBTC saw $290 in trading volume. However, he further stated that the total trading on the day “was kind of a dud,” with all Spot Bitcoin ETFs combined recording $924 million in trading volume.

    Institutional Bitcoin buyers

    Interestingly, that happened to be the first day that the daily volume for Spot Bitcoin ETFs was under $1 billion. The Bloomberg analyst didn’t, however, give any opinion as to what could have caused this relatively sub-par performance. 

    Featured image from U.S. Global Investors, chart from Tradingview.com

    Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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    Scott Matherson

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  • Making sense of the markets this week: January 28, 2024 – MoneySense

    Making sense of the markets this week: January 28, 2024 – MoneySense

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    As their shareholders expected, Johnson & Johnson and Procter & Gamble had solid, if unspectacular, earnings reporting days. These companies aren’t strangers to predictable growth, as J&J and P&G have raised their dividend payout for 61 and 67 consecutive years, respectively.

    GE shares were more or less flat, despite the earnings beat, as shareholders await the results of the company breakup. The plan is to break away both GE’s aerospace and energy divisions into their own companies.

    CNR keeps profits on the right track

    Canadian National Railway (CNR/TSX) announced earnings per share of $2.02 (versus $1.98 predicted) and revenue of $4.47 billion (versus $4.38 predicted) on Tuesday. Share prices were up slightly on this news. Shareholders appear to largely agree with management’s prediction that increased Canadian economic activity in the second half of the year will lead to a profit boost.

    Gross ton miles (GTM) came in at 118,687 million versus 118,272.3 million estimated by analysts. 

    Management painted a very positive picture when it came to future projections. CNR chief executive officer Tracy Robinson stated, “Through 2023, our team of dedicated railroaders leveraged our scheduled operating model to deliver exceptional service for our customers and remained resilient in the face of numerous external challenges. Looking forward, we are optimistic as CN-specific growth initiatives are producing volumes. While economic uncertainty persists, we have the momentum to deliver sustainable profitable growth in 2024.”

    The current guidance for management states that 2024 will see a 10% increase in earnings per share, with record revenues from potash, refund petroleum and propane. International volume is back to pre-pandemic levels, fully recovering from the British Columbia dockworkers’ strike last summer. For more details on CNR, please check my article on Canadian railway stocks at MillionDollarJourney.ca.

    Bank of Canada HODLs—ahem, hangs on for dear life

    As most economy experts predicted, the Bank of Canada (BoC) decided to hold the policy interest rate steady at 5% this week. It was the fourth consecutive time the BoC has decided not to increase or decrease the rate. There appears to be a growing consensus that the Bank will be forced to cut rates in April or March, but BoC governor Tiff Macklem did hedge everyone’s bets by stating that the BoC isn’t taking future rate increases off the table, in case inflation pressures persist. He added that it would be “premature” to discuss interest rate cuts.

    Takeaways from the BoC announcement include:

    • Where rates may go: Macklem stated that BoC discussions around the interest rate are now shifting from “how high will it go?” to “how long will they stay at the current level before being reduced?”
    • Housing prices are high: An admission that “Shelter costs remain the biggest contributor to above-target inflation” means the BoC is semi-responsible for a solid chunk of the relatively high CPI numbers that we’re seeing.
    • No recession… maybe: “We don’t think we need a deep recession to get inflation back to target. But we do need this period of weak growth,” Macklem also stated.
    • Inflation’s moving target: Given that December’s CPI increase was 3.4%, it wasn’t a surprise to hear the BoC governor say, “Inflation is still too high, and underlying inflationary pressures persist. We need to give these higher rates time to do their work.”
    • Unemployment rates: Job vacancies are trending upward and are now close to pre-pandemic levels.
    • GDP growth expectations: The BoC expects zero GDP growth in the first quarter, and only 0.8% for the year.

    While Canadian borrowers are likely to grimace at the idea of inflation rates “doing their work,” the recent core inflation figures have backed the BoC into a bit of a corner. If a rate-cutting cycle started, only for inflation to once again trend upward, it could have devastating effects on people’s confidence that the BoC will eventually get inflation back in line. Once that confidence goes… it’s very difficult and economically painful to get it back. Options markets now believe there is about a 50% chance of a rate cut in April, with a very low probability of a cut in March, and a high probability of at least one cut by June.

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    Kyle Prevost

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  • Building a “core and explore” portfolio with an all-in-one ETF – MoneySense

    Building a “core and explore” portfolio with an all-in-one ETF – MoneySense

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    For investors who embrace this hybrid strategy, new all-in-one exchange-traded funds (ETFs) can offer a one-ticket solution for their portfolio’s core. Many all-in-one ETFs are lower-cost investments that are bundled together so that investors don’t have to track or manage them. These products often include ETFs and pooled stocks and bonds, which are rebalanced, if the investment mandate permits.

    With an all-in-one ETF as their portfolio’s core, investors can then be a little bolder with their room to explore. Here’s what to consider before getting started.

    Take stock of your needs

    All-in-one ETFs can be appropriate if you have a medium- to long-term savings goal, such as home renovations, a sabbatical or retirement.

    First, consider how much you need to save, how much stable income you’ll have from other sources and when you’ll need your money. Think about your risk tolerance, as well. Are you a cautious type or more adventurous? What is your investment horizon? Is your financial position better suited for an investment with fewer ups and downs or one that’s more volatile but has the potential for higher long-term returns?

    For example, Fidelity All-in-One Balanced ETF (FBAL) is a low- to medium-risk option, with a mix of approximately 59% global equity, 39% global fixed income and 2% cryptocurrencies (as at Oct.31, 2023]. If you’re a less conservative investor with an eye for growth, Fidelity All-in-One Growth ETF (FGRO) has a higher equity weighting, with approximately 82% global equity, 15% global fixed income and 3% cryptocurrencies (as at Oct. 31, 2023) and has a medium level of risk. Both ETFs were launched in 2021.

    Two more funds, Fidelity All-in-One Conservative ETF (FCNS) and Fidelity All-in-One Equity ETF (FEQT), joined the program in 2022. The more conservative of the two, FCNS, offers a global multi-asset strategy with a neutral mix of approximately 40% global equity, 59% global fixed income and 1% cryptocurrencies (as at Oct. 31, 2023) and has a low-to-medium level of risk. FEQT has a neutral mix of approximately 97% global equity and 3% cryptocurrencies (as at Oct. 31, 2023) and has a medium level of risk.

    You can hold Fidelity’s All-in-One ETFs in a tax-free savings account (TFSA), registered retirement savings plan (RRSP), first home savings account (FHSA) or registered education savings plan (RESP).

    Decide how much of your portfolio will be the “core”

    Core holdings are usually investments that strive for consistent results. They typically include a mix of equities and fixed income, weighted to the investor’s risk tolerance. The core can be globally diversified across countries and regions—Canada, the U.S. and international markets.

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    Anna Sharratt

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  • Bitcoin Spot ETFs Approved After 14 Years- The Journey So Far

    Bitcoin Spot ETFs Approved After 14 Years- The Journey So Far

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    The year 2024 marks the dawn of a new era, not just for technology but for finance, as a major victory was achieved for Bitcoin Spot ETFs (Exchang-Traded Funds). It’s now the era where the past will be appreciated for its foresight and doggedness. 

    When the pioneer cryptocurrency and digital currency, Bitcoin launched in January 2009, it was nothing like a real-world asset or of an ‘agreed’ digital value, but an almost neglected bag of gold as it faced enough rejection from all phases. Even with Satoshi’s Whitepaper, Bitcoin wasn’t given a cordial welcome in the world of finance.

    However, for all its promise, BTC remained shrouded in an air of mystery and skepticism. It took several years for Bitcoin to cement its value in the world of technology, finance, and the digital economy, assuming a giant role amidst many other cryptocurrencies. 

    However, On January 10, 2024, the SEC, in its official filing, approves all 11 Bitcoin Spot ETFs. This long-awaited green light from the US SEC marked a watershed moment, not just for Bitcoin, but for the entire cryptocurrency industry. 

    The 14-year journey to this point was arduous and paved with skepticism; regulatory hurdles loomed large, with the SEC citing concerns about market manipulation and investor protection as justification for repeated rejections. Attempts like Bitcoin futures ETFs offered limited exposure, failing to capture the true essence of a spot ETF’s direct price tracking. 

    Bitcoin Spot ETF Explained

    The recent approval of Bitcoin spot ETFs has stirred excitement across the financial landscape. But what exactly are these instruments, and what impact will they have on the future of BTC and, more broadly, on the investment landscape?

    Bitcoin “Spot” ETFs (exchange-traded funds), unlike their futures-based counterparts, don’t track the price of Bitcoin futures contracts. Instead, they take a more direct approach, holding the underlying asset – Bitcoin itself – in secure digital custodians. 

    This eliminates the potential for “basis risk,” a phenomenon where futures prices deviate from the actual cash price of Bitcoin. Simply put, Spot ETFs offer a more straightforward and transparent way to gain exposure to BTC’s price movements, akin to traditional gold-backed ETFs.

    Bitcoin Spot ETFs function similarly to their traditional counterparts, such as those tracking stock market indices. They pool investor capital, purchasing Bitcoin and holding it securely. Each share of the ETF represents a fractional ownership of the pooled Bitcoin, allowing investors to participate in the market without directly holding or managing the cryptocurrency themselves. This eliminates technical complexities and potential security risks, particularly for those with limited crypto experience, potentially broadening the base of Bitcoin investors. 

    The Genesis Of Bitcoin ETFs (Early Days and Conceptualization – 2013-2017)

    The earliest sparks of a Bitcoin ETF concept date back to 2013, when the Winklevoss twins first proposed their Gemini ETF. Winklevoss twins, Cameron and Tyler, both tech entrepreneurs with a vision in 2013, submitted the first application for a Bitcoin ETF, the Gemini ETF, sparking the decade-long journey to regulatory approval. 

    This audacious proposal was outrightly rejected by the SEC during the tenure of its former chairman, Jay Clayton, who later resigned in 2020 and became a supporter of cryptocurrency. Interestingly, Clayton is now actively involved in crypto regulations when he joined the advisory board of Fireblocks, a crypto custody platform.

    The following years were a crucible of innovation and uncertainty. While Bitcoin’s market capitalization surged, attracting both fervent supporters and cautious observers, the SEC remained hesitant. The regulator’s concerns about market manipulation, price volatility, and the nascent state of blockchain technology were cited as justifications for repeated rejections of subsequent ETF proposals, including Grayscale’s attempt to convert its Bitcoin Investment Trust into a spot ETF.

    Yet, amidst the rejections, there were flickers of progress. Technological advancements improved blockchain security and custody solutions, addressing initial concerns about vulnerability and potential wash trading. The global adoption of Bitcoin, particularly in Canada with its approval of Spot ETFs in 2021, served as a compelling case study for increased accessibility and market stability.

    This period also saw the SEC’s stance slowly evolve. The appointment of Gary Gensler as SEC Chair in 2021 brought a newfound openness to dialogue and exploration of potential regulatory frameworks for cryptocurrencies. The approval of the first US-listed futures-based bitcoin ETF in October 2021, despite its limitations, offered a glimpse of what could be.

    The Turning Point: A Decade Of Persistence Pays Off (2018-2023)

    While the 2017-2018 crypto boom and subsequent crash sent shockwaves through the industry, it also served as a crucible, forging resilience and fueling a renewed focus on compliance and innovation. Industry figures like Grayscale, undeterred by previous rejections, continued to refine their proposals, incorporating crucial safeguards and addressing regulatory concerns.

    This relentless pursuit of approval finally yielded results in 2023. In May, Cathie Wood’s ARK Investments filed for a spot bitcoin ETF, setting a definitive deadline for the SEC’s decision. 

    Then, in June, BlackRock’s entry into the arena with its own Spot Bitcoin ETF application sent ripples of excitement through the financial world. This move by a traditional financial giant signalled a crucial shift in sentiment, demonstrating growing institutional confidence in BTC’s potential.

    The months that followed were a whirlwind of activity. A flurry of applications from firms like Fidelity and Invesco poured in, fueled by the momentum of BlackRock’s move and the prospect of imminent approval. In August, a pivotal legal victory for Grayscale in the D.C. Circuit Court further strengthened the case for spot ETFs, forcing the SEC to re-examine its previous rejections.

    Finally, the SEC, in a historic decision, greenlighted 11 spot bitcoin ETF proposals, including those from BlackRock, Fidelity, and VanEck. This moment marked the culmination of a decade-long struggle, signifying the mainstream acceptance of investor participation in the cryptocurrency space.

    Ripples Across The Crypto Landscape: Implications Of Bitcoin Spot ETFs (2024)

    The arrival of spot ETFs has cast a wide net, sending ripples across various spheres of the financial world. There are a lot of potentials and challenges presented by spot ETFs, vital impact on market stability, institutional adoption, and regulatory oversight. There are positive predictions that the Bitcoin market cap could rise above $1 Trillion after the launch of Bitcoin Spot ETFs.

    Let’s contemplate the broader significance of this pivotal moment, what it means for the future of finance, and its relationship between technology and traditional financial systems here.

    Investor Crossroads

    For retail investors, Spot ETFs offer a convenient and familiar way to participate in the Bitcoin market without directly holding the cryptocurrency. This opens the door to broader adoption and increased liquidity, potentially leading to smoother price discovery and reduced volatility. The influential American magazine, Forbes predicted the BTC price will trade as high as $80,000 as a result of Bitcoin Spot ETFs’ approval. 

    The year 2024 is also shaping up to be a good one, if not one of the best seasons for cryptocurrency, especially Bitcoin, as it’s the season for Bitcoin halving, which will have another mega impact on the crypto industry. 

    However, the inherent risks of Bitcoin, including price fluctuations and potential exposure to fraud, must not be underplayed. Investors should approach spot ETFs with cautious optimism, ensuring a proper understanding of the technology, market dynamics, and associated risks before venturing in.

    Institutional Embrace Bitcoin

    The arrival of spot ETFs marks a significant step towards institutional acceptance of Bitcoin. The involvement of established financial institutions like BlackRock and Fidelity lends credibility to the cryptocurrency and paves the way for further integration with traditional financial products and services.

    Concerns remain about the impact of institutional involvement on market manipulation and potential conflicts of interest. However, regulatory oversight and robust compliance frameworks will be crucial in ensuring a fair and transparent market for all participants.

    Market Redefined

    Spot ETFs could potentially lead to greater market stability by introducing institutional investors and their risk management expertise. This could mitigate some of the inherent volatility of the cryptocurrency market, attracting a wider range of investors and fostering sustainable growth.

    The SEC’s approval represents a cautious acceptance, not a blank check. Further regulatory clarity and potential adaptation of existing frameworks might be required to effectively address the unique challenges posed by the integration of cryptocurrencies into mainstream financial systems.

    Beyond Bitcoin

    Spot ETFs could act as a gateway for investors to explore the broader crypto landscape. Their familiarity and ease of access might encourage exploration of other promising blockchain-based projects, accelerating the overall growth and development of the cryptocurrency ecosystem.

    The success of spot ETFs will hinge on the continued evolution of blockchain technology and associated infrastructure. Scalability, security, and user experience will remain key areas of focus for ensuring the smooth functioning and widespread adoption of crypto-based financial products.

    The 11 Spot Bitcoin ETFs products (with their ticker symbols) approved  on January 10, 2024, are:

    • Blackrock’s iShares Bitcoin Trust (IBIT)
    • ARK 21Shares Bitcoin ETF (ARKB)
    • WisdomTree Bitcoin Fund (BTCW)
    • Invesco Galaxy Bitcoin ETF (BTCO)
    • Bitwise Bitcoin ETF (BITB)
    • VanEck Bitcoin Trust (HODL)
    • Franklin Bitcoin ETF (EZBC)
    • Fidelity Wise Origin Bitcoin Trust (FBTC)
    • Valkyrie Bitcoin Fund (BRRR)
    • Grayscale Bitcoin Trust (GBTC)
    • Hashdex Bitcoin ETF (DEFI)

    Conclusion

    The approval of Bitcoin spot ETFs is a watershed moment, not just for the cryptocurrency itself, but for the entire financial landscape. It marks a new chapter in the saga of Bitcoin, one where its disruptive potential can be harnessed within the framework of established financial systems.

    Also, this path forward is paved with both opportunities and challenges. Navigating regulations and addressing investor risk concerns are important to ensure seamless integration with traditional financial systems and regulatory bodies, which will be crucial in determining the ultimate success of this technological leap.

    Final Thoughts

    The approval of Bitcoin spot ETFs is not merely a regulatory green light; it’s a resounding declaration of Bitcoin’s arrival on the main stage of finance.

    Related Reading: Celestia Network: How To Stake TIA And Position For 5-Figure Airdrops

    However, the journey is far from over. This approval is a milestone, not a destination. As we stand at this turning point, it’s important to remember the spirit of defiance that birthed BTC. It was born from a desire for autonomy, for freedom from centralised control, and for a more equitable financial system. 

    While ETFs offer a bridge between this decentralized world and the established financial order, it’s crucial not to lose sight of these core principles.

    BTC price struggles post-Bitcoin Spot ETF approval | Source: BTCUSD on Tradingview.com

    Featured image from Cryptopolitan, chart from Tradingview.com

    Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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    Scott Matherson

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  • Making sense of the markets this week: January 21, 2024 – MoneySense

    Making sense of the markets this week: January 21, 2024 – MoneySense

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    The acquisition looks to be turning out quite well for America’s largest bank, as it claimed that the former First Republic Bank contributed $4.1 billion in profit in 2023.

    Dimon provided some macroeconomic context in forward guidance. “The U.S. economy continues to be resilient, with consumers still spending, and markets currently expect a soft landing.” 

    Of course, being a banking CEO, he then had to hedge his position by saying deficit spending “may lead inflation to be stickier and rates to be higher than markets expect.” 

    New Morgan Stanley CEO Ted Pick cited two “major downside risks” as reasons for concern: geopolitical conflicts and the U.S. economy. 

    Mirroring Dimon’s “on one hand, and on the other hand” PR formula, Pick stated, “The base case is benign, namely that of a soft landing. But, if the economy weakens dramatically in the quarters to come and the [U.S. Federal Reserve] has to move rapidly to avoid a hard landing, that would likely result in lower asset prices and activity levels.”

    Like their Canadian banking brethren, the U.S. banks all reported substantial increased provisions for credit losses. This money, set aside to cover the inevitable increase in interest-led loan delinquencies, also weighs on banks’ bottom lines.

    Canadians looking for exposure to U.S. banks can get it through TSX-listed ETFs, such as the Harvest US Bank Leaders Income ETF (HUBL), RBC U.S. Banks Yield Index ETF (RUBY) and BMO Equal Weight US Banks Index ETF (ZBK). Investors can also get single-stock exposure to JPMorgan, Bank of America and Goldman Sachs in Canadian dollars through Canadian Depository Receipts (CDRs) listed on the Cboe Canada Exchange.

    Check MoneySense’s ETF screener for all ETF options in Canada.

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    Kyle Prevost

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  • Making sense of the markets this week: January 14, 2024 – MoneySense

    Making sense of the markets this week: January 14, 2024 – MoneySense

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    2023 asset returns versus the last 10 years

    As we enter the New Year and investing columnists write their prediction columns, it’s also a worthwhile exercise to take a look back at the history of just how varied returns have been across various asset classes. The chart below comes from Wealth of Common Sense blogger Ben Carlson. It shows and the equities shown were available on the major U.S. stock exchanges.

    Source: A Wealth of Common Sense

    Here’s the Canadian total market data below for comparison. Slide the columns right or left using your fingers or trackpad, or hover your mouse over the table to reveal a scroll bar below.

    2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 10-year
    CAD total market 10.55% -8.32% 21.08% 9.10% -8.89% 22.88% 5.60% 25.09% -5.84% 11.75% 7.62%
    Source: SPG Global

    My main takeaways from Carlson’s data:

    • The year 2022 was really bad for the value of most assets; 2023 was really good.
    • Commodities saw a real drop from 2022.
    • Despite excellent years for commodities in 2021 and 2022, the 10-year returns remain negative.
    • Reversion to the mean is pretty clear if you look at the last 10 years across all the asset classes.
    • If we go all the way back to the end of 2008, the S&P 500 is up nearly 350%. That’s a pretty incredible run.
    • Bonds have had a pretty rough stretch the last 10 years, only outpacing cash by 0.7% per year.

    I couldn’t track down the total return of Canadian stocks over the past 15 years, but the S&P/TSX Composite Index has increased by more than $2.75 trillion since 1998, when SPG Global started keeping track. That’s a total return of nearly 600%! (Exclamation point warranted.)

    So, despite some bad years, for every $1 you invested in the broad Canadian stock market as far back back in 1998, you’d have $6 today. Sure, inflation would have eaten up some of that gain, but that’s still a great run.

    Any time we look at these types of charts, we know that people who forecast based on trends of the preceding year are rarely correct. Returns over one-year timeframes are mostly “a random walk.” That said, equities (large-cap, small-cap, U.S. or Canadian) come out on top more often than not.

    Speaking of asset classes, bitcoin exchange-traded funds (ETFs) started trading Thursday, after the U.S. Securities & Exchange Commission approved 11 ETFs tied to the spot price of bitcoin. I’ll have more to say about this next week.

    The small short? The big long?

    Much of the world was introduced to short selling via the movie The Big Short, based on the book by Michael Lewis of the same name (WW Norton, 2011). When you “short” a stock, you’re essentially placing a bet that the stock’s price will go down within a given period of time. The more it goes down, the more money you make. If it goes up though, the losses can pile up quickly.

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    Kyle Prevost

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  • Nearly 10 hedge funds are set to launch spot crypto ETFs in Hong Kong, HashKey says

    Nearly 10 hedge funds are set to launch spot crypto ETFs in Hong Kong, HashKey says

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    With Hong Kong on the verge of approving spot crypto ETFs, almost a dozen hedge funds are queuing up to submit applications for the new financial product.

    In an interview with Chinese news outlet Caixin, HashKey Group COO Livio Weng revealed that approximately a dozen hedge funds are preparing to submit applications for the launch of spot crypto exchange-traded funds (ETFs) in Hong Kong as the city is poised to become the first market in Asia allowing the listing of these financial products.

    While the timeline for Hong Kong regulators to approve the applications remains uncertain, Weng mentioned that up to eight of the hedge funds are already in the “actual advancement stage,” although specific details were not provided.

    This development follows a joint circular issued by the Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA) in December 2023, in which the regulators acknowledged the growing interest in launching spot crypto ETFs. The SFC emphasized its readiness to accept applications for the authorization of funds with exposure to cryptocurrencies, including spot crypto ETFs.

    It’s worth noting that Hong Kong has already granted permission for futures crypto ETFs in the region, including Samsung Bitcoin Futures Active ETF, CSOP Bitcoin Futures ETF, and CSOP Ether Futures ETF. These ETFs are available to Hong Kong investors with portfolios exceeding $2 million through UBS’ local branch.

    While financial regulators in Hong Kong express their willingness to consider the approval of spot crypto ETFs, their overall stance on the broader crypto market appears to be cautious. In late December 2023, the Financial Services and the Treasury Bureau (FSTB) and the Hong Kong Monetary Authority (HKMA) issued a joint statement outlining their decision to permit retail investors to purchase stablecoins.

    Despite this move, the regulators emphasized that stablecoin issuers would have to obtain a special HKMA license before offering their services in the region. The licensing requirements include comprehensive measures such as full backing of all stablecoins in circulation with reserves matching the face value, proper segregation and custody of reserve assets, transparent disclosure practices, and regular reporting.

    Moreover, stablecoin issuers seeking approval will need to establish a physical presence in Hong Kong by opening an office. This office should include a CEO, a senior management team, and key personnel to ensure compliance with regulatory standards and effective oversight.


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    Denis Omelchenko

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  • ETFs and RESPs: It’s always a good time to invest in education – MoneySense

    ETFs and RESPs: It’s always a good time to invest in education – MoneySense

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    With that in mind, here’s a key date to circle on your calendar: Dec. 31. That’s the deadline for making RESP contributions to maximize government RESP grants each year. The Canada Education Savings Grant (CESG) matches 20% of what you put in, up to a limit of $500 annually. To receive the full $500, your contributions must total at least $2,500 by the end of December. The lifetime CESG maximum per beneficiary (child) is $7,200, and you can only catch up one year at a time—so, you can see why that annual deadline merits attention. That’s especially true if you only have a few years to save before your child heads off to school.

    Now is a great time to plan your contributions for this year. Here are some things to consider.

    Despite its name, an RESP is much more than just a cash savings account. In fact, just holding cash in an RESP may not always be the best strategy, as inflation can erode its value over time. It’s worth looking into different ways to grow that money.

    There’s no one-size-fits-all answer for the best RESP investment options. The right mix for your family will depend on several factors, including your financial circumstances, how much time you have, and how comfortable you are with risk. To help you make the most of your RESP, the Canada Revenue Agency (CRA) provides a list of “qualified investments” for this account, including the following:

    • Bonds: These can be either government-issued or corporate-issued. Bonds are generally seen as a safer investment compared to stocks, offering fixed interest payments over time.
    • Guaranteed investment certificates: GICs are issued by financial institutions, and you can choose terms such as one, two, three or five years. At the end of the term, you’ll receive a guaranteed amount of interest. Generally, you must wait until then to access your money.
    • Stocks: Investing in individual stocks can offer high returns, but they generally come with higher volatility than bonds and GICs. It’s essential to thoroughly research the companies you’re thinking about investing in—and remember, picking stocks can be risky!
    • Mutual funds: These funds can hold a mix of stocks, bonds and other assets. They offer diversification and are managed by financial professionals. Investors pay a percentage of the value of their investment towards annual management fees.
    • Exchange-traded funds: ETFs are similar to mutual funds in that they can hold a mix of assets like stocks and bonds. However, ETF shares trade on stock exchanges, just like individual stocks. Most ETFs are passively managed, but more active ETFs are coming onto the market.

    ETFs are a fast-growing asset class in Canada. They offer investors numerous benefits, including:

    • Built-in diversification: ETFs may bundle various assets, providing wide exposure across different sectors, asset classes and geographies, which helps in reducing investment risk.
    • Professional management: With ETFs, a fund manager oversees the selection and rebalancing of holdings, often trying to replicate specific stock market indices (such as the S&P 500), thus reducing the complexity of managing individual stocks and bonds.
    • Ease of transactions: ETFs are traded on stock exchanges and are accessible through financial advisors and online brokers.
    • Flexible asset allocation: ETFs offer a spectrum of asset allocation options, so they may be suitable for investors with different risk tolerances and investment timelines.

    Choosing the best ETF for your RESP largely depends on two variables: your time horizon (how long until your child needs the funds) and your risk tolerance (how much market fluctuation and potential losses you can comfortably handle).

    To simplify this decision-making process, one option to consider is an all-in-one ETF, such as those offered by Fidelity. These ETFs offer different asset allocations and risk classifications. Fidelity’s All-in-One ETFs have the following target asset allocations and risk classifications (as at Oct. 31, 2023):

    Fidelity All-in-One ETFs Conservative Balanced Growth Equity
    Risk classification Low to medium Low to medium Medium   Medium
    Ticker FCNS FBAL FGRO FEQT
    Equity 40% 59% 82% 97%
    Fixed income 59% 39% 15% 0%
    Crypto 1% 2% 3% 3%
    Source: Fidelity Investments Canada ULC

    Fidelity’s suite of All-in-One ETFs offers strategic diversification, with most of them giving you exposure to global bonds and stocks from all market sectors. Interestingly, they even include a small exposure to cryptocurrency (1% to 3% depending on the fund), adding a modern twist to traditional investment portfolios. (Read more about crypto in Fidelity ETFs.)

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    Tony Dong

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  • Making sense of the markets this week: January 7, 2024 – MoneySense

    Making sense of the markets this week: January 7, 2024 – MoneySense

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    A look at 2024

    Since we made this crystal ball thing look pretty easy last year with our 2023 markets forecast, we’re at it again for 2024. And, it’s always good to begin a market predictions column with the caveat that this stuff is really hard to do.

    It’s impossible to make accurate predictions consistently, especially about the markets, as there are just too many variables at play to always get it right. I mean, if you could tell me the outcomes of wars, upcoming elections, more pandemics and unexpected natural disasters of 2024, then I could give my some predictions with a little more confidence. 

    All that said, there are some big-picture trends and general rules of thumb that Canadian investors can apply to their thinking about the year ahead. 

    So, with those caveats out of the way, here’s a look at how we see the markets playing out this year.

    Canada’s TSX 60 will gain 15%, outperforming the 8% gain for the S&P 500

    It’s not that Canada’s economy is going to do better than America’s, or that our domestic companies have any hidden advantages. A prediction for TSX 60 outperformance is simply a bet that lower valuations may suffer less from the negative headlines than any higher-priced valuations of the S&P 500 composite index.

    The 500 biggest companies in the U.S. had a fabulous 2023 and finished up 23% for the year. The markets always look ahead, true, and I think they foresaw sunny skies for late 2024 as early as spring 2023. Consequently, there would have to be additional excellent news coming to light for a repeat of such a strong year.

    Canada, on the other hand, saw its TSX 60 index go up about 8%. There were a lot of negative headlines about lack of economic growth in Canada, and no equivalent of an “AI bubble” to drive a positive narrative for boring companies like Canadian railways or pipelines.

    Right now, a TSX 60 exchange-traded fund (ETF), such as XIU, trades at about a price-to-earnings (P/E) ratio of 13x. An S&P 500 ETF, like SPY, clocks in at about 24x. I don’t think there’s any debate that the U.S. has more world-beating companies and a much more favourable tax environment than Canada. But are American companies that much better that they should be valued so much higher? Based on historical averages, we’re betting no.

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    Kyle Prevost

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