Bears sound smart. Bulls make money.


By Dale Roberts, cutthecrapinvesting

Special to Financial Independence Hub

Today’s headline is borrowed from a Tweet that you’ll find later in this post. That notion is so bang on and perhaps summarizes what has been going on for a year or three, and well, forever.

The investors and portfolio managers that have been scared off by the risks have been treated to some level of underperformance, or what we’d call opportunity costs. Greater returns were available for those who stayed invested and stuck to their investment plan. The economy and stock markets have been fooling most everyone. Bears sound smart. Bulls make money.

In a Tweet (below) you’ll find the recent and very generous returns for U.S. and Canadian stocks.

Awareness is preparedness

In this blog I often shine a light on risk. Awareness is preparedness. The idea is to reinforce the basic investment truth that we have to invest within our risk tolerance level. And the fact is, most investors take on too much risk. Studies show that when we enter recessions and severe stock market corrections most investors (or too many) will end up buying high and selling low. Essentially doing the opposite of how we build investment wealth over time.

Use the awareness of risk to embrace a portfolio that aligns with your risk tolerance level so that you can stay fully invested. We don’t use risk and the discussion of risk to time the markets. The last few years have offered a pronounced demonstration that guess work does not work.

Within our risk tolerance level we can build an ETF Portfolio, look to an all-in-one ETF portfolio solution or check out a Canadian Robo advisor for low-fee portfolios, advice and planning.

Justwealth is Canada’s top robo advisor.

It’s also easy to build a simple and effective stock portfolio.

The Canadian debt picture

And here’s a big ouchy on Canada’s debt servicing …

Of course that trend cannot continue. And a study from Scotiabank shows that profligate spending is responsible for 2% of the rate hikes.

Canada certainly needs to get its fiscal house in order. It goes without saying what needs to be done.

Bears sound smart. Bulls make money

And well said …

This Tweet / observation might sum it up nicely. Awareness is key, but fear is the enemy.

U.S. global dominance is just staggering. As I often write it is where they kept most of the best companies on earth. Canadians should be careful with that Canadian home bias.

Recent performance for Canadian stocks (XIU):

  • 1-year 3.1%
  • 3-year 32%
  • 5-year 56%
  • 10-year 110%

Those are also some very generous returns.

Dale Roberts is the owner operator of the Cut The Crap Investing blog,  and a columnist for MoneySense. This blog originally appeared on Cut the Crap Investing on Nov. 19, 202and is republished on the Hub with permission.

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