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  • Making sense of the markets this week: November 19, 2023 – MoneySense

    Making sense of the markets this week: November 19, 2023 – MoneySense

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    Target shareholders finally avoid slings and arrows

    The big headlines in U.S. retail this week centred around Target shares seeing a massive 18% spike, while Walmart shares came down over 8% after Thursday’s earnings announcement. However, we look behind those headlines to the context of those moves to get the real story.

    U.S. Retail earnings highlights

    All earnings numbers in this section are in USD.

    • Walmart (WMT/NYSE): Earnings per share of $1.53 (versus $1.52 predicted). Revenue of $160.80 billion (versus $159.72 billion estimate).
    • Home Depot (HD/NYSE): Earnings per share of $3.81 (versus $3.76 predicted). Revenue of $37.71 billion (versus $37.6 billion estimate).
    • Target (TGT/NYSE): Earnings per share of $2.10 (versus $1.48 predicted). Revenue of $25.4 billion (versus $25.24 billion estimate).
    • Macy’s (M/NYSE): Earnings per share of $0.21 (versus $0.00 predicted). Revenue of $4.86 billion (versus $4.82 billion estimate).

    While the quarter was obviously a great redemption story for Target, these volatile stock moves were based on sky-high expectations for Walmart (the stock hit an all-time high this week before the earnings announcement) and a relatively terrible year for Target so far. It’s still down over 14% year to date even after the earnings bump.

    Target’s C-suite commented that its improved margins were due to progress made on inventory management and reducing expenses, as well as reduced shrinkage (theft).

    Walmart’s team stated the company is still worried about pressure on the U.S. consumer despite higher online sales (24% increase in the U.S. and 15% worldwide this year) and increased grocery revenues. 

    Walmart CEO Doug McMillon believes price relief might soon be in the cards, saying that general merchandise and grocery prices should, “start to deflate in the coming weeks and months.” He said, “In the U.S., we may be managing through a period of deflation in the months to come. And while that would put more unit pressure on us, we welcome it, because it’s better for our customers.”

    We’re fairly certain that Walmart will be able to resist that “unit pressure” and that it will manage to satisfy both shareholders and customers, given its track record over the years.

    CPI goes down, stocks go up

    If you needed confirmation that U.S. interest rates are still foremost on investors’ minds, this week’s Consumer Price Index (CPI) from the U.S. Department of Labor was a big checkmark. Stocks rallied after Wednesday’s news that headline CPI was down to 3.2% annually (before coming down slightly later in the day’s trading session).

    Source: CNBC

    CPI summary index report highlights

    The main takeaways from the CPI report included:

    • Core CPI (which excludes food and energy prices) is still at a 4% annual rate of increase.
    • Both the headline CPI and core CPI numbers were lower than anticipated Wall Street estimates, which led to market optimism. 
    • Gasoline costs were down 5.3% annually.
    • Shelter costs were up 6.7% annually and were a major part of the overall headline inflation raise.
    • Travel-related categories ,such as hotel pricing and air travel, were also down substantially.
    • Used vehicles are down 7.1% from a year ago.
    • With unemployment rising from 3.2% to 3.9%, there should be less pressure to increase wages in most sectors going forward, thus contributing to a reduction in both headline CPI and core CPI.

    Market watchers at CME Group report that the chances of any immediate interest rate hikes by the U.S. Fed have declined to nil. As you might expect, this confidence drove down long-term bond rates and raised future expectations for corporate earnings (and share prices).

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    Kyle Prevost

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  • What Canadian investors can do in times of world crisis and war – MoneySense

    What Canadian investors can do in times of world crisis and war – MoneySense

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    Emotions in investing

    The humanitarian crises taking lives and garnering headlines are heart-wrenching—particularly for Canadians who have family and friends in the affected regions. More broadly, no one knows for sure how these crises will affect global economies, access to resources and financial markets. It’s understandable that investors are scared and making investment decisions based on their fear. Some people are selling their equities and leaving the markets. As an advisor, it’s my job to help take the emotion out of investing.

    We know from previous wars, terrorist attacks, pandemics and other terrible events that people, governments and markets are resilient, and can even become stronger than they were before. This happened after 9/11, the global financial crisis and the global COVID-19 pandemic. The historical evidence suggests that the best thing investors can do when the world experiences a crisis is to separate feelings about the tragedy from the facts about the businesses you’re invested in and look for buying opportunities. 

    Impact of global crises on investments

    The impact of wars and other traumatic events on the markets tend to be relatively short-lived. That’s because unlike fiscal policy—such as raising interest rates—the events themselves are not “economic” in nature.

    For example, if war breaks out in an oil-producing country, will that affect the price of oil? Theoretically, it shouldn’t, because other, larger producers can offset any lost supply from the war-torn country.

    But, as we know, perception can be more powerful than reality when it comes to the stock market. The initial, automatic reaction could be a spike in oil prices—and then prices should adjust with time.

    What is a Canadian investor to do?

    So, what do you do as an investor in Canada? Not an awful lot. As investment advisors, we get paid to grow people’s wealth. When markets sell off for reasons that are more temporary than related to economics and performance, it’s important to take emotion out of decision-making and not go into panic mode about your investments.

    Markets may dip, but they don’t usually collapse. It’s possible your portfolio’s value may drop for a period of time. In the past, after a crisis has ended—and regardless of the outcome—the markets have regained stability, and investment returns have bounced back.

    A crisis investment strategy

    My best advice in the face of a world crisis: Stay calm, take a deep breath and focus on the fundamentals. Keep your risk profile front and centre, and think about where you want to put your money. My approach is to be sector agnostic and look for good value wherever I can find it.

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    Allan Small

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  • Making sense of the markets this week: November 12, 2023 – MoneySense

    Making sense of the markets this week: November 12, 2023 – MoneySense

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    Disney (and most U.S. companies) surprise to the upside

    With 88% of companies in the S&P 500 having now reported results, nearly 9 in 10 have surpassed earnings estimates. Consumers continue to feel worse about the economy, and companies just continue to make more money. It’s quite an odd time to try to make sense of the markets.

    U.S. earnings highlights

    This is what two American companies reported this week. All figures below are in U.S. dollars.

    • Uber (UBER/NASDAQ): Earnings per share of $0.10 (versus $0.12 predicted), and revenues of $9.29 billion (versus $9.52 billion predicted). 
    • Disney (DIS/NYSE): Earnings per share of $0.82 (versus $0.70 predicted), and revenues of $21.24 billion (versus $21.33 billion predicted).

    Disney’s outperformance was chiefly due to ESPN+ subscriptions and continued revenue increases at theme parks. Investors appear to be big supporters of CEO Bob Iger’s announcement that Disney will “aggressively manage” its costs and will now be targeting $7.5 billion in cost reductions (up from a $5.5 billion target earlier in the year). Shares were up 4% in after-hours trading on Wednesday. 

    “As we look forward, there are four key building opportunities that will be central to our success: achieving significant and sustained profitability in our streaming business, building ESPN into the preeminent digital sports platform, improving the output and economics of our film studios, and turbocharging growth in our parks and experiences business.” 

    — Disney CEO Bob Iger

    Uber, on the other hand, had a more subdued day. The earnings miss was contextualized by CEO Dara Khosrowshahi, when he pointed out that gross bookings for people-moving mobility were up 31% year over year (YOY), while UberEats gross bookings were up 18% YOY. The markets appeared to agree with Khosrowshahi’s spin, as shares were up 3% on Tuesday, despite the earnings news.

    Canadian fossil fuels profitable—for now

    Despite a United Nations report stating that Canadian fossil fuels should be kept in the ground, the sector continued right on pumping out profits this quarter. 

    Canadian earnings highlights

    Here’s what came out of the earnings report. 

    • Keyera Corp. (KEY/TSX): Earnings per share of $0.36 (versus $0.50 predicted). Revenue of $1.46 billion (versus $1.60 billion estimate).
    • TC Energy Corp. (TRP/TSX): Earnings per share of $1.00 (versus $0.98 predicted). Revenue of $3.94 billion (versus $3.91 billion estimate).
    • Suncor Energy Inc. (SU/TSX): Earnings per share of $1.52 (versus $1.36 predicted). Revenue of $12.64 billion (versus $12.85 billion estimate).

    While accounting changes at Keyera resulted in an earnings-per-share miss, shareholders appeared to take the news in stride. Share prices were down less than 1% on Wednesday. Management highlighted the Pipestone expansion being on track and to be completed in the next two months, as well as a recent credit upgrade. The company was in great shape going forward. With net debt to adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) at 2.5 times, the company is on the conservative side of its 2.5- to 3-times target range.

    TC Energy was up nearly 1% on the day after positive earnings news and the announcement that the new Coastal GasLink was completed ahead of the year-end target. Management also stated that it is taking steps to strengthen the company’s balance sheet, including selling off $5.3 billion in asset sales that will be used to pay down debt.

    Despite total barrels of oil produced falling from 724,100 to 690,500 in last year’s third quarter, Suncor outperformed expectations and shares rose 3.7% on Thursday. Investors were forgiving in the decrease of adjusted earnings due to lower crude oil prices and increased royalties.

    The company attributed the decrease in adjusted earnings to lower crude prices and a weaker business environment, as well as increased royalties and decreased sales volumes due to international asset divestments.

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    Kyle Prevost

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  • What Canadian investors can learn from the BlackBerry story – MoneySense

    What Canadian investors can learn from the BlackBerry story – MoneySense

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    1. Starting and scaling a global tech leader from Canada is hard 

    “We are a risk-averse country,” says McNish. “We are dominated by large corporations, whether in banking or technology or real estate.” BlackBerry—then known as Research in Motion, and RIM for short—only got noticed in Canada after it was backed by American investors and banks, and lauded by the likes of Bill Gates, Oprah Winfrey, Michael Dell and GE’s Jack Welch. 

    “That is something that as a country and as a marketplace we should fix,” she says. But until that happens, be realistic about how Canadian tech companies stack up against foreign, especially American, competitors that come by this support more easily.

    2. First-mover advantage is worth less than you’d think 

    Photo of author Jacquie McNish by Fred Lum

    BlackBerry is credited with inventing the now ubiquitous smartphone product category, but many other tech firms had already tried to merge cellphone technology and internet capabilities by the time it came along. 

    “For 10 years prior to that, the landscape was littered with failures by major companies. Even Apple in ’93 tried to do a message pad that would be transmitted over a network,” McNish says. 

    BlackBerry’s breakthrough came from finding ways to conserve network bandwidth. When wireless carriers instead switched to selling data, and bandwidth exploded, that advantage became moot. The new competition, Apple’s iPhone, promised pictures, maps, video—“things that BlackBerry said was an impossibility,” she says.

    3. Corporate partnerships are key

    BlackBerry’s first big break came in 1997. “It had basically been blessed by a major telephone carrier in the United States as the future” when it introduced the first BlackBerry device, a pager called the Bullfrog, McNish notes. Apart from its appeal to consumers, BlackBerry offered carriers a mutually beneficial business proposition. The company’s market position began to crumble when it took those partnerships for granted. 

    When Steve Jobs unveiled the iPhone in 2007, McNish says, “he also brought on stage a very important individual who was an AT&T senior executive who was offering billions of dollars for the exclusive right to sell the Apple iPhone for a number of years” as well as committing to upgrade the company’s network to handle the soaring volume of data that entailed.

    4. Beware cognitive dissonance

    Apple’s announcement proved a turning point. Jobs, who had earlier dismissed the idea of making a smartphone, tacitly acknowledged the market opportunity that BlackBerry opened up. “And then the second critical moment was when people started asking Jim Balsillie and Mike Lazaridis, the two senior people at the top of BlackBerry, were they worried about it,” McNish says. “They brushed it off.”

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    Michael McCullough

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  • Responsible investing is growing in Canada. Which ESG factors matter most? – MoneySense

    Responsible investing is growing in Canada. Which ESG factors matter most? – MoneySense

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    According to the 2023 Canadian Responsible Investment Trends Report, released on Oct. 26 by the Responsible Investment Association (RIA), the answer is yes: investors continue to prioritize responsible investing, and more growth is expected as local and international reporting standards improve. Survey responses are from Canadian institutional asset managers and asset owners who answered questions in mid-2023. The data shared paints a picture of the industry on Dec. 31, 2022. Here are some highlights from the report.

    About half of assets under management are invested responsibly

    With $2.9 trillion of assets under management in responsible investments (RI) in Canada, this is no small industry. And while this number is a slight decrease from the previous year, that’s a product of market conditions: it actually reflects a higher proportion of all Canadian professionally managed assets than in 2021, and RI’s market share has grown from 47% to 49%.

    Responsible investing is a risk management strategy

    You might think the main motivation for anyone choosing responsible investing is what’s in the ESG acronym: environmental, social and governance factors. And while those are definitely important—14% of survey respondents said their organization’s primary reason for choosing RI was to fulfill its mission, purpose or values—there are many other factors at play. One of the big ones? A common goal for any type of investment: minimizing risk and maximizing value.

    In fact, 35% of organizations surveyed said that minimizing risk over time was their primary reason for choosing responsible investing, and a further 41% ranked it second or third. And 61% said that improving returns over time was one of the top three factors influencing their choice to prioritize ESG investments.

    Another issue that mattered to many respondents was fiduciary duty—their obligation to maximize their clients’ returns—which 26% listed as their organization’s primary motivation.

    Which ESG factors do organizations consider? All of them

    The risks facing our society due to climate change are top of mind for Canadians, and the investors here are no exception. This year, 93% of respondents said that greenhouse gas emissions were a factor they considered in their investment decisions, an increase from 85% in 2022. Climate change mitigation and climate change adaptation were the other top environmental factors mentioned by respondents, at 84% and 76% respectively.

    Top social factors mentioned by respondents include equity, diversity and inclusion (81%), human rights (76%), labour practices (76%), and health and safety (71%). The governance factors that respondents deemed significant included board diversity and inclusion (87%), executive pay (71%) and shareholder rights (70%).

    Many strategies make for comprehensive decisions

    Organizations surveyed use a number of tools to help themselves include ESG factors in their decision-making. These three topped the list:

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    Kat Tancock

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  • Making sense of the markets this week: November 5, 2023 – MoneySense

    Making sense of the markets this week: November 5, 2023 – MoneySense

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    Both hardware and software continue to siphon profits from all over the world back to the U.S.A. and into shareholders’ pockets. No big surprises.

    Air Canada and Cameco fly high

    Air Canada was so confident in its profits this quarter that executive vice-president of network planning and revenue management Mark Galardo stated:

    “We see relatively strong demand for (the fourth quarter) in almost every single geography that we operate in, in almost every single segment that we operate in. […] We’re not seeing any major slowdown at this point in time.”

    Canadian earnings highlights

    Three very different Canadian companies saw quite different quarterly results this week.

    • Air Canada (AC/TSX): Earnings per share of $2.46 (versus $1.60 predicted). Revenue of $6.34 billion (versus $6.09 billion estimate).
    • Cameco (CCO/TSX): Earnings per share of $0.32 (versus $0.13 predicted). Revenue of $575 million (versus $718 million estimate).
    • Nutrien (NTR/TSX, NYSE): Earnings per share of USD$0.35 (versus $0.65 predicted). Revenue of USD$5.37 billion (versus $5.74 billion estimate).

    Despite Air Canada’s results, share prices closed down slightly on Monday, as shareholders appear skeptical that the good times can continue. You can read more about investing in Air Canada at MillionDollarJourney.ca.

    Cameco’s quarterly report didn’t dive into operations too deeply, but instead it focused on the bigger picture for nuclear energy. President and CEO Tim Gitzel stated:

    “Increasing average global temperatures and the fires and floods that are becoming more and more frequent can’t be ignored. The evidence continues to point to our carbon-based energy systems as a key contributor to the problem. This has led to electron accountability and proposals by countries and companies for achieving net zero targets taking center stage. And today it’s clear, achieving those targets does not happen without nuclear power. That itself is a notable difference, but it goes even deeper. This time policymakers are not shying away from proposing nuclear as a key part of their energy mix, some even reversing their previously anti-nuclear stance.”

    Despite the positive long-term view and substantial earnings beat, share prices were nearly flat on Wednesday, closing at $56.88. That said, the stock is up about 10% this week, as we go to press.

    Nutrien’s bad quarter can be chalked up to the volatile price of potash. (Nutrien is a Canadian company based in Saskatoon, but trades on the New York Stock Exchange and reports in U.S. dollars.) As an almost pure play on the resource, Nutrien’s stock generally rises and falls with supply and demand in that single market. It’s similar to the dynamics behind an oil producer.

    With more potash products from Russian and Belarus slipping through the sanctions net and onto the world market, Nutrien’s brief period of market dominance is at its end. That said, the share price didn’t move much this week, so it appears the market somewhat anticipated the bad news. It rose 2.3% to USD$55.39 at the close Thursday. 

    The U.S. Fed tones down hawkishness 

    The U.S. Federal Reserve continues to be the predominant market mover. 

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    Kyle Prevost

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  • Financial advisers make rich people richer. But is that all there is?

    Financial advisers make rich people richer. But is that all there is?

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    In 1989, author Marsha Sinetar wrote a bestselling book, “Do What You Love, The Money Will Follow.” She urges readers to pursue a career that stokes their passion.

    Many advisers take that advice. They love what they do. And the money follows: Median pay for U.S. financial advisers was $95,390 in 2022, according to the Bureau of Labor Statistics.

    Lately, though, the passion is waning for some advisers. They still love the practice of wealth management — customizing financial plans, constructing client portfolios and analyzing the ever-growing menu of investment products.

    They’re just not as enamored of their clients’ wealth. Reassuring wealthy retirees that they can afford to buy a second (or third) vacation home has its merits. But helping them accumulate more and more wealth rings hollow after awhile.

    Steve Oniya, a Houston-based certified financial planner, works with a diverse mix of clients. He enjoys helping them achieve their goals, regardless of their net worth. “It’s more gratifying helping them get over some hurdles to get to the life that they really want,” he said. “You make more of an impact that way.”

    He compares his work to a firefighter’s job. Some days, they rescue people from burning buildings. Other days, they put out a dumpster fire. Yet they’re always driven to excel and perform at a high level.

    Nevertheless, if an adviser serves rich clients who hoard their money, don’t give to charity and lack perspective on what matters most in life, a day at the office can feel dispiriting. “Sometimes advisers may be passionately opposed to certain clients’ values,” Oniya said. “In those instances, end the relationship or limit the scope.”

    Oniya said he does not find clients’ wealth objectionable. He sees his role as an ally who seeks to understand — and not judge — others’ beliefs and values.

    “I like to stay in the neutral camp,” Oniya said. “It’s easy to empathize with another person and see they are a person who needs help just like others. We’re generally here to advise them on how to be more efficient and effective financially in attaining their goals.”

    The arc of an adviser’s career comes into play as well. To build a practice, newly minted financial planners might welcome pretty much anyone with sufficient assets.

    Once they establish a stable book of business, advisers may get picky in deciding whom to serve. Their onboarding process might get more rigorous in an effort to determine if they’re aligned with a potential client’s aspirations, goals and priorities.

    Some advisers shift gears as they gain experience working with different types of clients. They come to realize what they like most about the job and adjust their practice — and the type of clients they serve — accordingly.

    “Everyone evolves,” said Angeli Gianchandani, a professor of marketing at University of New Haven’s Pompea College of Business. “Advisers may see there’s a greater reward and opportunity helping people in a different income bracket.”

    As a self-test, advisers at a career crossroads might want to ask themselves how they’d respond to two clients. The first one says, “You saved me $5 million. Now I want to save $10 million to buy a bigger yacht.”

    The other says, “You helped me pay off my student debt” or “You helped me save enough for a down payment to buy my first house.”

    “You may feel more valued and appreciated as an adviser” if you pave the way for someone who lacks vast wealth to build a nest egg for the future, Gianchandani says.

    Advisers who have misgivings about helping wealthy people attain greater wealth are not alone. Brooke Harrington, a sociology professor at Dartmouth College, interviewed 65 wealth managers between 2007 and 2015. About one-quarter expressed qualms about helping lower ultra-wealthy clients’ tax liabilities.

    Still, another 25% did not feel such qualms. They saw their role as defending their clients from an unjust tax code.

    More: Wall Street legend Byron Wien dies at 90. Here are his ’20 life lessons’

    Also read: The IRS is auditing the rich. Can you fly under the radar if you’re not wealthy?

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  • Making sense of the markets this week: October 29, 2023 – MoneySense

    Making sense of the markets this week: October 29, 2023 – MoneySense

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    IBM’s business is split into two key divisions: IT consulting and software. The latter is the primary revenue driver. The software unit generated $6.27 billion revenue, up 8% versus the consulting division, generating $4.96 billion in revenue, up 6%. Like many tech companies, IBM’s software division is also investing in AI to drive future growth.

    Amazon

    Amazon announced record third-quarter profits after the close Thursday and surged 5% Friday morning (at press time) after strong growth in its highly profitable Cloud business. While the stock was up 40% on the year, shares had fallen 8% in the previous two days after rival Alphabet warned that cloud customers were curbing spending. 

    Growth is growing…

    While North American bank stocks answered the question about how the economy is fairing, technology stocks answered questions about growth. The big message with tech is that growth is still there, and it will continue to be going forward. In today’s market, investors looking for growth need to own at least a few big-cap tech stocks. These companies are becoming the consumer staples of tomorrow. That includes stocks from companies like food and grocers and utilities that ground portfolios. That’s because, when the market dips, people still have to buy food and heat their homes. In today’s digital age, the technologies we’ve been talking about are embedded in our everyday lives and are poised to continue to grow.

    Bank of Canada pauses interest rate hikes 

    The general consensus going into the week was that Bank of Canada Governor Tiff Macklem would push the pause button on another interest rate hike. And that’s exactly what he did on Wednesday. Even though interest rates didn’t go up another quarter point—which was the plan—the damage has been done. Some Canadian investors and the markets worry that another rise in interest rates could increase the pressure on individual households and businesses, ratcheting up the fear and likelihood of a recession. 

    Source: Bank of Canada

    The Bank of Canada (BoC) itself was under a lot of pressure from provincial premiers to hold off on a rate hike precisely for these reasons. That’s despite not being closer to the 2% inflation target the BoC has set its sights on. For me, though, the question has always been: Is 2% a realistic target? And even if it is, how much pain is the BoC willing to inflict on the economy to achieve it? 

    Personally, I’d rather see a 3% inflation rate target, along with strong employment and healthy consumer spending, over targeting 2% inflation and lost jobs and a recession. Some analysts are predicting that the recession that was expected this year will take hold next year.

    I’m surprised we’re here, in the third week of October, still talking about interest rate hikes. I thought by now the central banks would have stopped relying on them so heavily. The Bank of Canada has raised interest rates 10 times since March 2022.

    It’s interesting that both the BoC and the U.S. Federal Reserve keep referencing the lag effect between when a rate hike is implemented and when its effects show up in economic data. Yet, neither specify just how long this can and/or should take. How do we know if the hikes are working? Are they willing to blow everything up because we’re stuck on 2% inflation? 

    When you have the cost of borrowing tripled, in some cases because of all these interest rate hikes, I have to wonder whether the BoC is sending an inadvertent message to Canadians: “You are living beyond your means. You’ve enjoyed a run of many years of low interest rates, where money was basically free with no worry about what happens later, when the cost to carry debt rises. The days of high interest are here now for the foreseeable future.”

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    Allan Small

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  • How to plan for retirement for Canadians: A review of Four Steps to a Worry-Free Retirement course – MoneySense

    How to plan for retirement for Canadians: A review of Four Steps to a Worry-Free Retirement course – MoneySense

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    At $499, the course does represent a major investment, but the outlay could be considered a bargain if it helps some DIY retirees escape the clutches of conflicting securities salespersons who actually do care more about their own retirement than that of their clients.

    Consider some of the impressive testimonials. Long-time consumer advocate and former Toronto Star personal finance columnist Ellen Roseman asked Prevost “Where have you been all this time?! … Most of us need guidance on taking money out of our savings without depleting our resources once we leave work—and I suspect this interactive multimedia approach to learning will be far more interesting and memorable than simply reading a book. Kyle has done his research and provides plain-spoken views about what’s good and what’s bad in the process of making our retirement income last as long as we do.”

    Fee-only financial planner and financial columnist Jason Heath (of Objective Financial Partners) says “Kyle’s course is a great resource for someone preparing for retirement or already retired … His background as a teacher definitely comes across in the course. Too many financial industry people do a poor job of conveying financial topics in a way that makes sense. The approach of the course is meant to teach and empower, and it definitely does just that.”

    My review of Worry-Free Retirement

    So, let’s take a closer look at the course, which I dipped into in a few weeks in order to write this review. It comprises 16 units, each starting with a short audio-visual overview, followed by more in-depth backgrounders, videos and links to other content. I’d suggest focusing on a single unit per session, as there’s plenty to digest. 

    The first unit takes you through how much money you’ll probably need to retire in Canada. Subsequent units are devoted to the major government programs like the Canada Pension Plan (CPP) and Old Age Security (OAS), and employer-sponsored pension plans, including both defined benefit and defined contribution plans. Later the course also tackles that perennial retirement chestnut, the 4% safe withdrawal rule (to which Prevost isn’t married but sees as a good starting point for guest-imating retirement income). 

    I’m particularly partial to unit six, titled “Working for a Playcheck,” as that term was coined by Michael Drak and myself in our jointly authored 2014 book, Victory Lap Retirement. Units seven and eight go into some depth in investing: what to invest in and how to buy and sell securities. 

    Units nine and 10 go into depth on registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs), then handles the whole topic of decumulation and the crucial transition (at the end of the year you turn 71) from RRSPs to RRIFs. No doubt, I will personally revisit that module at the end of next year! 

    Unit 11 examines how you can create your own pension through annuities. Units 12 and 13 look at mortgages: whether one should retire with one (spoiler: one shouldn’t) and deciding between downsizing and reverse mortgages or home equity line of credits (HELOCs). 

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    Jonathan Chevreau

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  • Making sense of the markets this week: October 22, 2023 – MoneySense

    Making sense of the markets this week: October 22, 2023 – MoneySense

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    Finally, A&W Revenue Royalties Income Fund (AW/TSX) reported earnings roughly in line with shareholders’ expectations. Share prices barely moved on Wednesday when it was announced that royalty earnings were up 5.4% in year-over-year comparisons. Perhaps the only thing juicier than the Papa Burger is its current dividend yield of 6.26%.

    Have you heard? The Canadian Financial Summit is free: 

    In case you missed it, the Canadian Financial Summit is taking place RIGHT NOW!  Don’t miss out FREE sessions with familiar faces from MoneySense (see below). Registering for the Summit is exactly $0, and you can click here for more details.

    Jonathan Chevreau 

    The Personal Finance Book Hall of Fame

    After reading every new book on the Canadian personal scene for several decades, (as well as writing a few himself), Jonathan Chevreau led an all-encompassing discussion on the best personal finance books ever written. He talks about books written exclusively for Canadians, as well as those written for international readers. We’ve got classics, new takes, lesser-known gems, and best-in-class selections. Don’t miss this one if you love to get your info from written text.

    Michael McCullough

    Top Canadian ETFs for This Year and Beyond

    With so many ETF options available, it can be hard for investors to know what to put into their portfolios. MoneySense’s executive editor, Lisa Hannam, hosts as journalist Michael McCullough looks at the makeup of the ETF market. Hewill share, based on MoneySense’s ETF All-Stars Report, the ETF products Canadians could consider buying today.

    Allan Norman, MSc, CFP, CIM

    All your FHSA questions answered

    The first-home savings account is brand spanking new, and Canadians have questions. In the similar format of MoneySense’s popular Ask A Planner column, executive editor Lisa Hannam will ask Certified Financial Planner Allan Norman real questions from Canadians about the FHSA, from what it is to where to open this account.

    Lisa Hannam

    Personal finance trends to plan for in 2023 and 2024

    MoneySense executive editor Lisa Hannam and columnist Kyle Prevost work together on the popular column Making Sense of the Markets. It contextualizes headlines for Canadian investors, so together the duo will be looking at the headlines from the year and those to come, including interest rates, crypto (remember that asset?), employment, AI, GICs and so much more. 



    About Kyle Prevost


    About Kyle Prevost

    Kyle Prevost is a financial educator, author and speaker. He is also the creator of 4 Steps to a Worry-Free Retirement, Canada’s DIY retirement planning course.

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    Kyle Prevost

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  • Why stocks are likely to be especially volatile this October

    Why stocks are likely to be especially volatile this October

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    The U.S. stock market has been volatile in September. Brace yourself for October.

    September has the reputation of being the worst month for the stock market, but October far and away is the most volatile month of the year — as you can see from the accompanying chart. So if this October follows the historical averages, the stock market won’t lose as much as it has so far in September but investors will still feel whipped around.

    You might think October’s historical volatility can be traced to the U.S. market crashes that occurred in 1929 and 1987, each of which occurred during that month. But you’d be wrong: October remains at the top of the volatility rankings even if those two years are removed from the sample. Nor is there any trend over time in October’s place in those rankings: If we divide the period since the Dow Jones Industrial Average
    DJIA
    was created in 1896 into two periods, October is the most volatile in both the first and second halves.

    Why would October be the most volatile month? I’m not aware of any plausible theory, and that normally would be a reason not to expect the historical pattern to continue. But not in this case.

    That’s because an expectation of volatility can itself lead to greater volatility. So the fact that past Octobers have been so volatile is a reason to expect this coming October to also be a particularly choppy month on Wall Street.

    If so, our job is not to get spooked by October’s volatility into going to cash. Of course, you may have other reasons why you might want to reduce your equity exposure. But if you were otherwise wanting to be heavily invested in equities, fasten your seat belt and hold on.

    Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

    More: Wall Street analysts expect the S&P 500 to rise 19% over the next 12 months. Here are their 10 favorite stocks.

    Plus: Let’s debunk the bears’ top arguments against further stock market gains

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  • Government shutdown looms: Here’s how to help preserve your investment portfolio.  

    Government shutdown looms: Here’s how to help preserve your investment portfolio.  

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    “ The economic impact of a shutdown and the potential implications on your portfolio depend largely on how long the shutdown lasts. ”

    The potential for a U.S. government shutdown can raise alarm for investors and send the phone of a financial adviser like me ringing off the hook. Headlines in front of them, my clients are increasingly asking about potential portfolio implications and how they should respond.

    There is certainly a measured response, which includes not overreacting to the headlines and sticking to your long-term investment plan, and I’ll show you how to draw it.

    Government shutdown explained

    First, it’s important to understand what is happening. During a shutdown, the federal government will suspend all services that are deemed nonessential until a funding agreement is reached. This is much different than a default — which can happen when the government can’t pay its debts or satisfy its obligations. A default can have significant ramifications on U.S. creditworthiness and in turn, the global financial system. You may recall lawmakers’ discussions earlier this year regarding raising the debt ceiling — a solution to avoid defaulting. 

    A U.S. default has never happened, but shutdowns have occurred more than 20 times since 1976. Unlike a default, a shutdown does not affect the government’s ability to pay its obligations, and many critical government services, like Social Security may continue. When weighing the two, one can presume that markets may react more negatively to a default.   

    Markets may experience heightened volatility in response to the shutdown uncertainty, but markets do not react consistently to the news. In the past we have seen U.S. stocks — as measured by the S&P 500
    SPX
    — finish positively after more than half of these shutdowns. Results are similar for fixed-income securities, as we’ve seen an even split between positive and negative returns in the bond markets in shutdowns since 1976. 

    Of course, all investing is subject to risk, past performance is not a guarantee for future returns, and the performance of an index is not an exact representation of any particular investment. 

    The economic impact of a shutdown — and the potential implications on your portfolio — depend largely on how long the shutdown lasts. The longer the shutdown, the more Americans experience dampened economic activity from things like loss of furloughed federal workers’ contribution to GDP, the delay in federal spending on goods and services, and the reduction in aggregate demand (which lowers private-sector activity). 

    Read: Government shutdown: Analysts warn of ‘perhaps a long one lasting into the winter’

    A measured response 

    A government shutdown is just one of many factors, both positive and negative, that can cause fluctuation in the market, so it’s important to treat it just as you would other fluctuations.

    With so many variables, it’s impossible to precisely predict the effects the shutdown will have or determine how long it will last. This can seem scary for many, so it’s important to remember your long-term financial plan and focus on the factors you can control.  

    First, do not try to time the market. Doing so based on short-term events is never a good idea, and volatility is unpredictable. Even if the markets fall, we don’t know when they might recover. If you make an emotionally charged decision, you run the risk of missing out on potentially substantial market gains. 

    Instead, focus on the following: align your asset allocation with your risk tolerance; control your costs; adopt realistic expectations; hold a broadly diversified portfolio and stay disciplined. Doing so can help you weather any form of market uncertainty, including a shutdown.

    Stick to healthy financial habits

    In addition to not making any sudden moves in your investment portfolio, now is a suitable time to make sure you are keeping up with healthy financial habits, especially if you are a federal employee facing a furlough. This can look like readjusting your budget based on your current needs, keeping high-interest debt to a minimum, paying the minimum on all debt to keep your credit score in good standing and continuing to save.

    Remember, using your emergency fund to navigate tight times is exactly what you have saved for and tapping it in this instance is considered a healthy financial habit. Just be sure to replenish it when you have the funds to do so. As a good practice, Vanguard recommends having three- to six months of expenses saved in readily accessible investments.

    With a level, long-term approach and a personalized financial plan, you can be prepared for this potential storm and the inevitable ones to come. 

    Lauren Wybar is a senior financial adviser with Vanguard Personal Advisor. 

    More: Bill Ackman says Treasury yields are going higher in a hurry, and that investors should shun U.S. government debt

    Plus: Social Security checks will still come if there’s a shutdown. But there are other immediate threats to America’s benefits.

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  • Stocks are trapped in a trading range. Something’s got to give.

    Stocks are trapped in a trading range. Something’s got to give.

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    The U.S. stock market, as measured by the S&P 500 Index SPX, is trapped in a trading range, and volatility seems to be damping down considerably. The significant edges of the trading range are support at 4330 and resistance at 4540. Both of those levels were touched in the latter half of August. A breakout from this range should give the market some strong directional momentum. 

    Since Labor Day, prices have hunkered down into an even narrower range. Typically, the latter half of September through the early part of October…

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  • You can invest in market winners and still lose big. Here’s how to avoid the hit.

    You can invest in market winners and still lose big. Here’s how to avoid the hit.

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    Investors should think twice before picking an actively managed mutual fund according to its style category. By “style category,” I’m referring to the widely used method of grouping mutual funds according to the market-cap of the stocks they invest in and where those stocks stand on the spectrum of growth-to-value.

    This matrix traces to groundbreaking research in 1992 by University of Chicago professor Eugene Fama and Dartmouth College professor Ken French, and has since been popularized by investment researcher Morningstar in the form of its well-known style box.

    In urging you to think twice before picking a fund based on this matrix, I’m not questioning the existence of important distinctions between the various styles. Fama and French’s research convincingly showed that there are systematic differences between them. My point is that there also are huge differences within each style as well. You can pick a style that outperforms all others on Wall Street and still lose a lot of money, just as you can pick the worst-performing style and turn a huge profit.

    This points to the two types of risk you face when picking an actively managed fund. You have the risk associated with the fund’s style (category risk) and you also have the risk associated with the particular stocks that the fund’s manager selects (so-called idiosyncratic risk). Idiosyncratic risk often overwhelms category risk, especially over shorter periods.

    To illustrate, consider the midcap-growth style. As judged by the Vanguard Mid-Cap Growth ETF
    VOT,
    this style produced a 28.8% loss in 2022. Yet, according to Morningstar Direct, the best-performing actively managed midcap-growth fund last year produced a gain of 39.5%, while the worst performer lost 67.0%.

    This best-versus-worst performance spread of over 100 percentage points is illustrated in the accompanying chart. Notice that the comparable spread was almost as wide for many of the other styles as well. Though I haven’t done the research to compare 2022’s spreads with those of other calendar years, I have no reason to expect that they on average were any lower.

    “ The only way to eliminate idiosyncratic risk when investing in particular styles is to invest in an index fund.”

    The only way to eliminate idiosyncratic risk when investing in particular styles is to invest in an index fund benchmarked to the style in question. If you are enamored of a particular fund manager and willing to bet he will significantly outperform the category average, just know that you also incur the not-significant idiosyncratic risk that the fund will lag by a large amount.

    The bottom line? By investing in an actively managed fund in a style category, you will be incurring the risk not only of that category itself but also the not-insignificant idiosyncratic risk of that particular fund. Fasten your seatbelt if that’s the path you take.

    Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

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  • August used to be the best month for the stock market. Then it became the worst.

    August used to be the best month for the stock market. Then it became the worst.

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    August the best month for average stock market performance? Or is it the worst?

    The answer depends on the period of stock-market history you examine. Over the 90 years from the Dow Jones Industrial Average’s
    DJIA,
    +0.50%
    inception in 1896 until 1986, August on average was far ahead of the other months — more than four times larger, as you can see from the table below. August outperformed the other months’ average by 1.4 percentage points. This difference is significant at the 95% confidence level that statisticians often use when determining if a pattern is genuine.

    In the years since then, in contrast, August has been the worst month for the stock market, on average, lagging the other months’ average by 1.7 percentage points. Since 1986, in fact, August has been a worse month for the stock market than even September, whose reputation for stock market losses is widely known.

    August’s average DJIA return

    		 Average return of all other months

    		 August’s rank among all 12 months
    1896 to 1986

    		 +1.8%

    		 +0.4%

    		 1st
    After 1986

    		 -0.8%

    		 +0.9%

    		 12th

    If the 36 years since 1986 were all that statisticians had to go on, they would conclude that August’s underperformance was significant at the 95% confidence level — just the opposite of the conclusion that emerges from the 90 years prior. But when analyzing the Dow’s entire history since 1896, August’s performance is no better or worse than average.

    This August, in order to use history as a basis for investing, you’d first need to come up with a plausible explanation of what changed in the 1980s that caused August to swing from best to worst.

    Though I’m not aware of any such explanation, it’s always possible that one exists. To search for it, I analyzed monthly values back to 1900 for the Economic Policy Uncertainty (EPU) index that was created by Scott Baker of Northwestern University, Nicholas Bloom of Stanford University, and Steven Davis of the University of Chicago. We know from Finance 101 that the stock market responds to changes in economic uncertainty, so we’d be onto a possible explanation of August’s seasonal tendencies if the EPU underwent some fundamental change in 1986.

    But no such change shows up in the data. August’s average EPU level is no different than for any of the other months of the calendar, either before or after 1986.

    Another possible explanation might trace to investor sentiment. To investigate that possibility, I analyzed stock market timers’ average recommended equity exposure levels, as measured by the Hulbert Stock Newsletter Sentiment Index (HSNSI). I was looking to see if, after 1986, the HSNSI was significantly different at the beginning of August than in other months, on average. The answer is “no.”

    A plausible explanation might still exist for August’s change of fortune beginning in the mid-1980s, notwithstanding my inability to find one. But absent such an explanation, the most likely explanation is that it’s a random fluke.

    It would hardly be a surprise if randomness is the culprit. Most of the patterns that capture Wall Street’s attention are in fact nothing more than statistical noise. The reason we nevertheless insist that significant patterns exist is because — as numerous psychological studies have shown — we’re hardwired to find patterns even in randomness.

    That’s why your default reaction to all alleged patterns, not just those involving August, should be skepticism. The odds are overwhelming that they aren’t genuine. Only if those patterns can survive the scrutiny of a skeptical statistician should you even begin to be interested.

    Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com

    More: Puzzled by the stock-market surge? Overshoots are the new normal, Bank of America strategist says

    Plus: Here’s how long the stock market rally may last

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  • ‘Oppenheimer’ gives stock investors another reason to be bullish about nuclear energy

    ‘Oppenheimer’ gives stock investors another reason to be bullish about nuclear energy

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    One of the hottest movies of the summer is the staggeringly good biopic “Oppenheimer,” about the man who oversaw the frantic race to develop the atomic bomb during World War II. 

    The atom bomb dropped on Hiroshima, Japan on Aug 6, 1945 was a fission-style device. This also happens to be the same basic physics behind nuclear reactors that are in use today. It’s a reminder that technology can be, at its essence, agnostic: Whether it is used for malevolent or benevolent purposes (in nuclear fission’s instance, an instrument of death or clean, carbon-free electricity) depends upon the intent of the user. 

    Fission reactors generate about 10% of the world’s electricity today. The United States gets even more of its electricity this way, about a fifth.

    These percentages are likely to rise as global demand for electricity — and concerns about global warming and climate change — rise. This will present opportunities for long-term oriented investors. The lion’s share of this demand — about 70%, says the Paris-based International Energy Agency (IEA), will come from India, which the United Nations says is now the world’s most populous country, China, and Southeast Asia. Put another way, “the world’s growing demand for electricity is set to accelerate, adding more than double Japan’s current electricity consumption over the next three years,” says Fatih Birol, the IEA’s executive director.

    While fossil fuels remain the dominant source of electricity generation worldwide — the Central Intelligence Agency estimates that it provides about 70% of America’s electricity, 71% of India’s and 62% of China’s, for example—the IEA report says future demand will be met almost exclusively from two sources: renewables and nuclear power. “We are close to a tipping point for power sector emissions,” the IEA says. “Governments now need to enable low-emissions sources to grow even faster and drive down emissions so that the world can ensure secure electricity supplies while reaching climate goals.”

    “ The Biden administration is a big booster of nuclear energy. ”

    It’s helpful that the Biden administration is a big booster of nuclear energy, which the White House sees as an integral part of its broader effort to move the U.S. economy away from fossil fuels. The Department of Energy says that the country’s 93 reactors generate more than half of America’s carbon-free electricity. But price pressures from wind, solar and natural gas (which the feds call “relatively clean” even though it emits about 60% of coal’s carbon levels) have putseveral reactors out of business in recent years. 

    The bipartisan infrastructure bill that Biden signed into law in November 2021 includes $6 billion, spread out over several years, for the so-called Civil Nuclear Credit Program, designed to keep reactors — and the high-paying jobs that come with them — running. If a plant were to close, it would “result in an increase in air pollutants because other types of power plants with higher air pollutants typically fill the void left by nuclear facilities,” the administration says. U.S. Energy Secretary Jennifer Granholm has said the Biden administration is “using every tool available” to get the country powered by clean energy by 2035.

    The private sector is beginning to stir. Last week, Maryland-based X-Energy said it would build up to 12 reactors in Central Washington state, for Energy Northwest, a public utility. These wouldn’t be the behemoth-type reactors we’re used to seeing, but “advanced small, nuclear reactors.” X-Energy, which is privately held,  has also been selected by Dow
    DOW,
    -1.40%
    to construct a similar facility in Texas.  

    Other companies are also rolling out new technology to meet demand. Nuclear fusion — a breakthrough in that it creates more energy than the Oppenheimer-era fission model and at a lower cost — is likely to be the basis for reactors in the years ahead; the Washington, D.C.-based Fusion Industry Association thinks the first fusion power plant could come online by 2030. After seven rounds of funding, one fusion company, Seattle-based Helion Energy, is currently valued at around $3.6 billion, and appears headed for a public offering.    

    Here too, the Biden administration is getting involved. In May, the Department of Energy announced $46 million in funding for eight other fusion companies. “We have generated energy by drawing power from the sun above us. Fusion offers the potential to create the power of the sun right here on Earth,” says Granholm.  

    There are several opportunities here for long-term investors. You can pick your way through any number of publicly held companies, including more traditional utilities, or spread your bet across the industry through a handful of exchange-traded funds. The largest of these is the Global X Uranium Fund
    URA,
    +0.78%    ,
    with about $1.6 billion in assets. It’s up about 9% year-to-date. The VanEck Uranium + Nuclear Energy Fund
    NLR,
    +0.41%
     is up almost 10% and sports a 1.8% dividend yield. These are respectable year-t0-date returns, even though they lag the S&P 500
    SPX,
    +0.32%
    (up close to 19%) by a wide margin. 

    More: Net-zero by 2050: Will it be costly to decarbonize the global economy?

    Also read: Fukushima’s disaster led to a “lost decade” for nuclear markets. Russia, low carbon goals help stage a comeback.

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  • 5 Steps To Source The Best Real Estate Investment Deals

    5 Steps To Source The Best Real Estate Investment Deals

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    In a real estate market that is always changing, where do you find the best deals? With today’s digital connectivity and social influencer trends, it may seem that online is the place to begin. A quick search could lead to web listings or services which depict a few properties in your area.

    However, in my experience, I’ve found that in the commercial real estate world, many options are not readily in the public eye. In addition, finding a great investment property typically involves several viewings or more. If you only tour one place, you won’t have others that can be used for comparison. Seeing only a limited number of properties could lead to risks such as overpaying or missing details in a building which set it apart from the competition.

    When new investors ask me for advice on sourcing deals, I always share that it truly is a numbers game. In my experience as an investor, I’ve sometimes looked at dozens—or even hundreds—of opportunities before buying one. Following this process means you need to have a great pipeline in place. If you have a system, you’ll be able to monitor deals over time and spot the gems. Let’s break down this approach into steps you can follow as you build your own real estate portfolio.

    Step 1: Establish A Pipeline Tracker

    You’ll want a place where you can store information about properties. You might start this in Excel or another database system. For each possibility, include the address of the place, a link to the property, contact information for the listing broker or owner, and the deal metrics. Add in details that allow you to quickly analyze and decide if a property is within your range.

    Step 2: Check Publicly Available Options

    Look for online listing sites—you’ll find places like Co-Star, LoopNet, and many others that typically post what brokers send them. Keep in mind that what you view are the opportunities brokers decide to publicly share with the masses. The best deals might not be readily available to wide audiences—and you won’t be able to catch a glimpse of the opportunities that are off market on these sites.

    You can also search broker websites; start by identifying who the most active investment sales brokers are in your area. In some secondary and tertiary markets, you may find that brokers act as generalists. For instance, a sales broker might also offer services as a leasing broker. Add whatever you find in these places to your pipeline tracker.

    Step 3: Build Relationships With Brokers

    After you find the names of the active brokers in your area, call them up. Ask to meet and get to know them, and share any information with them that could be helpful. As you build a relationship, they may tell you what they have in their own pipeline. Forming these connections could take time, especially if you are a new investor, but they are worthwhile in the long-term.

    Step 4: Canvas The Area

    There’s really no substitute for getting out and walking around a neighborhood or driving through a sector you are considering. I recently carried out an online search for retail properties in Connecticut, and only found a couple that were publicly listed. When I drove through the area, I discovered multiple retail properties with “for sale” signs in front of them. I also spotted some interesting places with potential that were offered for lease and had vacancies. All of these could be entered into my pipeline as potential targets.

    Step 5: Identify Vacant Or Mismanaged Properties

    Here’s another time when you’ll want to do some research and then make a call. If you see a property that’s sitting and seems inactive, find out why. Check data providers like Reonomy to get information about the property and owner. Then reach out to the owner and ask if they have plans for the place.

    Once you’ve carried out these initial steps, you’ll have the beginnings of a pipeline you can use as a resource. Remember that the most important part of finding a great deal lies in the follow through. Sometimes the best opportunities are those that have been sitting on the market—or off the market—for months. If you circle back to them, you may discover that the seller’s motivation has changed, especially in this market. They might lower their price or be willing to change their terms. You could then move forward and acquire an incredible property. Over time, the pipeline can become an invaluable tool to help you build your portfolio and realize your investing goals.

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    James Nelson, Contributor

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  • When workers are an employer’s No. 1 priority, stockholders benefit too

    When workers are an employer’s No. 1 priority, stockholders benefit too

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    The deep uncertainty that the COVID pandemic created in the workforce hasn’t waned. U.S. workers are struggling with inflation, burnout, and fresh waves of layoffs. This comes as people expect more from employers — more leadership, more urgency, more action, and better jobs.

    The public’s perspective is clear and consistent: companies need to prioritize their employees. In today’s unstable economic climate, worker wages and treatment are more important to Americans than ever.

    When it comes to creating U.S. jobs with strong wages, good benefits, safe environments and opportunities for upward mobility, a handful of companies lead the pack.

    Bank of America
    BAC,
    NVIDIA
    NVDA
    and Microsoft
    MSFT
    are the top-three companies in JUST Capital’s 2023 rankings of America’s most JUST companies. They all share one crucial thing in common — a clear commitment to addressing worker issues and investing in employees.

    Since 2018, JUST Capital’s rankings have provided a snapshot of how U.S. companies are measuring up to the public’s priorities, as determined through an annual survey to identify issues that define principled business behavior. Companies that are just provide a clear benefit for investors. For example, If an investor purchased an index tracking the JUST 100 companies at its March 2019 inception, the index would have generated 13.3% in excess return versus the Russell 1000 as of December 2022.

    Worker issues have risen to the forefront of Americans’ vision for what is a just business. Paying a fair and living wage, supporting workforce advancement, protecting worker health and safety, and providing benefits and work-life balance are top priorities for the public. Notably, regardless of demographic differences including political affiliation, Americans agree that companies should do more to address worker needs. 

    What makes a great company?

    Bank of America demonstrates strong leadership on the top priority — paying a fair, living wage – by raising its minimum wage to $22 per hour, a key step in its pledge to offer a $25 starting wage by 2025. In addition, employees receive an extensive benefit package, including 16 weeks of paid parental leave for primary- and secondary caregivers, and career development opportunities through tuition assistance and professional training.

    NVIDIA works to ensure equal pay for equal work, performing detailed pay equity analyses, and is one of only a few companies to disclose pay-analysis results separated by racial and ethnic categories. Like Bank of America, NVIDIA is one of 10% of Russell 1000
    RUI
    companies that offer at least 12 weeks of paid parental leave for both caregivers, providing 22 weeks of paid leave to primary caregivers.

    Microsoft offers at least 12 weeks of parental leave for both caregivers, in addition many other generous paid-time-off benefits, including 15 days of paid vacation and an additional 10 days of paid sick leave for every worker — a policy still rare for many companies. Additionally, Microsoft discloses the results of its pay-equity analyses, going above and beyond other companies by disaggregating pay ratios for specific racial and ethnic categories — including Black, Asian and Latinx — all of whom are paid on par with their white counterparts.

    “ When companies ensure the economic security, advancement, equity and safety of their workforces, employees are more engaged and productive. ”

    These efforts provide tangible benefits to employees, but prioritizing workers offers much more to companies than just an assurance of moral good. When companies ensure the economic security, advancement, equity, and safety of their workforces employees are more engaged and productive, strengthening their companies’ business in turn.

    Americans expect the private sector to better support employees. Effective business leadership today puts workers at the center of an organization’s strategy. When businesses take this approach, we get much closer to an economy that works for all Americans.

    Alison Omens is chief strategy officer at JUST Capital. 

    Also read: Tech companies are hiring — a lot — despite recent wave of layoffs

    More: Unemployment rate is now 3.5%. Is this the last chance for job switchers to jump ship?

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