Best First Quarter since 2019!


By Dale Roberts

Special to Financial Independence Hub

It was a wonderful quarter for U.S. stocks. In fact, the S&P 500 index rose 10.2% during the first three months of the year, its best first-quarter performance since 2019. The Dow Jones Industrial Average and the Nasdaq Composite gained 5.6% and 9.1%, respectively. Canadian and International stocks also pitched in with a strong quarter. Given that, balanced portfolios of all stripes are rewarding patient investors. A global equity portfolio (XEQT) delivered 9.6%. It’s the best first quarter since 2019 on the Sunday Reads.

U.S. stocks had their best first quarter since 2019.

Looking for that soft economic landing

While the stock market saw intermittent sell-offs, it continued marching higher as robust corporate earnings and a strong labor market renewed hopes that the economy will avoid a recession.

The S&P 500 on Thursday logged its 22nd record-high close of the year. The first 17 were recorded during the first 50 tading days of 2024, the largest tally during that period since 1998, according to Bespoke Investment Research.

Companies in the S&P 500 saw earnings grow 4.3% during the fourth quarter of 2023 from the prior year, according to FactSet data. Analysts polled by FactSet expect S&P 500 earnings to grow by more than 10% for all of 2024.

Let the good times roll?

In another positive sign for markets, history suggests that new highs at the beginning of the year often portend positive annual returns. The S&P 500 has seen an average 15.8% return in years that it notched new highs in January and February, in contrast to an average 9.2% gain for all years, according to CFRA Research data going back to 1954.

I like this quote that I read on Seeking Alpha …

All manner of genius is presently simply embarrassed by the market’s failure to stop going up.

Alex King – Cestrian Capital

Every sector (except real estate) offered gains in the first quarter.

And momentum is a powerful force. Of course past performance and trends are not guaranteed to repeat. But just for fun, have a look at this table.

While markets mostly go up, the chances of them going up are at a higher level in 2024. Of course that’s no reason to adjust your strategy. We adopt a simple investment plan and stick to it like glue. As I wrote a few months ago …

The watiting is the hardest part. We set the table for the next robust upturn, or three.

A nice mix of top performers

Our top performers for the quarter are a mix of Canadian energy stocks, tech and some defensives. Bitcoin leads the way.

Canadian stocks are helping out

Canadian stocks also had a solid first quarter with iShares TSX 60 (XIU) up 6.0%. That was the headline in last week’s Sunday Reads – Canadian stocks are better than you think.

And a report on Thursday offers hope that the Canadian economy still might have a pulse after many quarters of population-adjusted negative growth (aka recession).

This week I updated the post that looks at the BMO Low Volatility ETF – ZLB. That may be the best core Canadian ETF. I also compared that wonderful market-beating ETF to the Canadian Wide Moat portfolio.

And here’s a post on the move out of high fee Canadian mutual funds. More Canadians are making the sensible shift to ETF portfolios and building stock portfolios. But it’s not fast enough. There’s still $2 trillion in mutual funds, most of those funds being high-fee and very poor performing. The opportunity costs is just tremendous. Please share this blog with friends and family stuck in ‘the old way’ to invest.

Canadians can invest in all-in-one global ETF portfolios that can cut fees by 90% or more. I will update that post (that looks at the leading asset allocation ETFs) next week, to reflect first quarter performance.

More Sunday Reads

Keeping with the Canuck theme, at My Own Advisor Mark’s weekend reads offers The TSX turnaround.

At The Retirement Manifesto, Fritz puts together the building blocks for a successful and happy retirement. From that post …

I’ve realized a few things about building blocks:

  • They aren’t just childhood toys.
  • Building blocks exist throughout our entire lives.
  • We’re never too old to play with them.
  • Used wisely, they can help us live a better life.

At Findependence Hub, here’s how ETF fees work.

Savings ETFs

At Tawcan, Bob takes a look at the high-yield savings ETFs in Canada. Thanks for this clean comparison table.

We can still earn a real return above inflation these days. For those who want to lock in some genergous risk-free yield, they might check out the GIC rates at EQ Bank.

At the week in review at Dividend Hawk I found this post on Enbridge as they enter into an agreement to develop, construct, own, and operate natural gas pipeline and storage assets connecting Permian Basin natural gas supply to growing LNG and U.S. Gulf Coast (“USGC”) demand. Enbridge will take advantage of a growing trend and cash cow.

At Banker on Wheel’s Weekend Reads a link t0 the investment lessons from cycling the world.

At a few potential AI (Artificial Intelligence) plays in the Canadian market.

And here’s a wonderful post on learning how to spend in retirement, with an example of waiting too long to harvest the wonderful investment gains. It is a well known wealth management truth that too many retirees have difficulty spending in retirement. Perhaps we can learn from that real life demonstration. Manage the risks, but understand the benefits of harvesting dividends and selling shares to funds life’s experiences.

For example …

Setting sail

And Dividend Daddy is getting read to set sail. It’s nice to witness the benefits of successful long term investing.

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Dale Roberts is the owner operator of the Cut The Crap Investing blog.  A  former ad guy and investment advisor, Dale now helps Canadians say goodbye to paying some of the highest investment fees in the world. He is also an occasional contributor to MoneySense.  This blog originally appeared on Cut the Crap Investing on March 31, 2024 and is republished on the Hub with permission.

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