OT: Lets talk about stocks (Part 3)

[HuGort]

I’m getting into the market more regularly starting in January using a DCA approach and mostly focusing on ETFs / some mutual funds.

I’d also like to add a couple of individual stocks that I could hold for the year or longer. Any feedback on what those of you in this thread are doing, would be appreciated as I’ll do my own research but am only looking for a few targets if anyone cares to share. Thx in advance.

Any feedback on from


How has the Royal compared with other Canadian bank stocks — has it outperformed them say in the last 5 years?

I don't really know. I held some TD for a few years but dumped them recently.

My Royal Bank stocks has increased 44x over 40 years. I put $7,000 in it, that account worth $328,000 now. But I had the dividend comeback to a cash account. Which I spent over the years. Most of it, best I can remember. I did bit of quick math, my return was somewhere over 12%, annually. Averaged out over 40 years. But that doesn't include the dividend. Which usually hangs between 4-5%.

Going by RY growth and earnings, it should continue on similar path. I'll be dead and gone, but if Brandon leaves it alone, just spends the dividend. If it goes another 44x. Be in 10s of millions in 2064.

 

[Runner77]

 

[QuebecPride]

I've held Royal Bank since about 1984. It was like $3 a share back then. $133 now.

About 10% return+ 4.5% yield you will get. Double my money about every 5 years. Averaged out over long term. I've never had a Mutual Fund come close to that.

Doubling every five years, i doubt that. RBC hasn't beaten the S&P500 since 1984, and the index hasn't doubled every five years since then. I'm sure you've experienced nice returns with RBC, but expecting 15% a year on any stock is very hopeful and you're setting yourself up to be disappointed in the future.

 

[HuGort]

Doubling every five years, i doubt that. RBC hasn't beaten the S&P500 since 1984, and the index hasn't doubled every five years since then. I'm sure you've experienced nice returns with RBC, but expecting 15% a year on any stock is very hopeful and you're setting yourself up to be disappointed in the future.

You're not counting dividend. It's 10%. Plus yield

 

[QuebecPride]

You're not counting dividend. It's 10%. Plus yield

I understand what you're saying. I understand what shareholder yield is.



Expecting any stock to double every 5 years in the long term is delusional. I know that is a strong word, but it's bonkers man. It will happen that a stock doubles in the next year or 5 years, but nobody knows which stock right now, and if they did, they would not be posting about it on HFboards. It's very hard to predict, and harder yet to repeat that prediction because it involves a lot of unknowns and luck.

Don't get me wrong, Royal Bank is a great company and has been great for its investors for a long time. I own some in my index funds. But expecting 15% total return per year is not realistic.

 

[Runner77]

Any recommendations on which platform to use for trading stocks? I know a few people using Wealth Simple. Is that a good place to go with or are there better options?

 

[Hockey Outsider]

I’m thinking of going in with ETF investments rather than individual stocks and doing DCA. I’ll concurrently invest similar amounts in mutual funds with a financial advisor and then compare the net outcome after fees over say one year. I want to find out if I can beat the advisor using ETFs alone.

What positions did you end up selling off, if I may ask?

It's highly unlikely that, over the long run, mutual funds will beat ETF's. Why? The management fees are much higher, and most mutual funds are substantially the same as ETF's (but you need to pay them for the "privilege" of their active management).

Here's the composition of VCE (a Vanguard ETF tracking the TSX as a whole) by industry:

And the same thing for a BMO Canadian equity mutual fund:

It's not quite the same, but it's very close. The top five holdings in VCN are (in order): Royal Bank, TD, Shopify, Enbridge, and Canadian Natural Resources. The top five stocks in the BMO fund are (in order): Royal Bank (1st vs 1st), Canadian Natural Resources (2nd vs 5th), TD (3rd vs 2nd), CP Rail (4th vs 5th) and Constellation (5th vs 11th).

Again, not identical, but very similar. This is what I call a "closet" ETF. In reality the holdings are very similar to an ETF, but the management fee is many multiples higher. The management fee on VCN is a microscopic 0.05%. For BMO, it's 2.39%. That might not sounds like much, but over thirty years, the management fee will erode more than half your return. If you invest $10K today, and the fund returns 7% every year for 30 years, you'd end up with $140K in a theoretical zero-fee environment. VCN would leave you with $137K, and the BMO fund leave you with just $58K. Over 30 years, Vanguard would take less than 2% of your total return; the mutual fund would take more than 58%. It's robbery.

The counter argument is - maybe the BMO fund did so well that the higher fee is justified by performance. Here are VCN's returns:

Same thing for the BMO mutual fund:

Over every time period, the Vanguard ETF performs better. Over the long run, VCN does better by about 1.9% (7.2% vs 5.3% ten year return). The mutual fund does slightly better before taking the management fee into account, but the gap in the fee isn't close to being justified by actual performance.

You might think that I've picked this specific ETF and this specific mutual fund to make a point. I assure you, I haven't. Pick any Canadian equity ETF, and any Canadian equity mutual fund from the big banks, and the results will be the same. Mutual funds prey on people who don't know any better. If you want broad exposure, invest in ETF's. Most mutual funds are designed to enrich the banks, and the higher fees are almost never justified by performance.

Links:
- Vanguard ETF
- BMO mutual fund

 

[Hockey Outsider]

I’m thinking of going in with ETF investments rather than individual stocks and doing DCA. I’ll concurrently invest similar amounts in mutual funds with a financial advisor and then compare the net outcome after fees over say one year. I want to find out if I can beat the advisor using ETFs alone.

What positions did you end up selling off, if I may ask?

One other point to make. ETF's trade like individual stocks, so the brokerage charges you a fee every time you buy and sell. Generally speaking, there are no fees to purchase index funds - but the management fees on index funds are higher (usually around 0.50%).

I analyzed this perhaps ten years ago. My conclusion was, assuming you're making to 1-2 purchases per month, the breakeven point was around $30,000. (In other words - once you have more than $30,000 invested, the extra fee you're paying each time you buy an ETF, is more than offset by the lower management fee you're charged each year).

The point I'm trying to make - DCA is usually a good idea. But try to make sure, if you're making small but regular contributions, that the brokerage fees don't become too expensive.

 

[LeHab]

Chapter 20 of Benjamin Graham’s book “The Intelligent Investor” is titled “The Margin of Safety as the Central Concept of Investment”. In this chapter, Graham revisits the core of the text which is the “Margin of Safety”. The Margin of Safety is the single-most important concept that Graham speaks about throughout the book and is at the heart of the Value Investing Philosophy. Graham explains that the Margin of Safety is the difference between the intrinsic value of a stock and its market price. He emphasizes that investors should only buy stocks when they are priced substantially below their intrinsic value. Graham also highlights the importance of achieving a margin of safety in investing. He advises investors to be patient and disciplined in the face of market fluctuations. Graham reminds us that even if one trend seems to be a “new-wave” of the market, it is likely to end.
In summary, Chapter 20 of “The Intelligent Investor” provides insights into the importance of the Margin of Safety as the central concept of investment. Graham emphasizes that investors should only buy stocks when they are priced substantially below their intrinsic value and highlights the importance of achieving a margin of safety in investing. He also reminds us to be patient and disciplined in the face of market fluctuations.

Related classic book is Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor from the 90's. Methods & Lessons from the past, still relevant for risk averse value investors. Book became a collectible and resells these days for thousands of dollars.

 

[LeHab]

One other point to make. ETF's trade like individual stocks, so the brokerage charges you a fee every time you buy and sell. Generally speaking, there are no fees to purchase index funds - but the management fees on index funds are higher (usually around 0.50%).

I analyzed this perhaps ten years ago. My conclusion was, assuming you're making to 1-2 purchases per month, the breakeven point was around $30,000. (In other words - once you have more than $30,000 invested, the extra fee you're paying each time you buy an ETF, is more than offset by the lower management fee you're charged each year).

The point I'm trying to make - DCA is usually a good idea. But try to make sure, if you're making small but regular contributions, that the brokerage fees don't become too expensive.

Here is a recent comparison for various stocks and ETFs buying and selling brokerage fees - no mutual funds:

Best online brokers in Canada for 2024 - MoneySense

It’s the best of the best in our 2024 list of online brokers in Canada. Find out who takes the top spot—and which platform is best aligned with your goals and needs.

www.moneysense.ca

Also a good read from investopedia:

https://www.investopedia.com/articles/investing/102915/why-are-etf-fees-lower-mutual-funds.asp

 

[Runner77]

Here is a recent comparison for various stocks and ETFs buying and selling brokerage fees - no mutual funds:

Best online brokers in Canada for 2024 - MoneySense

It’s the best of the best in our 2024 list of online brokers in Canada. Find out who takes the top spot—and which platform is best aligned with your goals and needs.

www.moneysense.ca

Great read comparing online brokers in Canada but it raises more questions than it answers.

So many variables to consider, I can’t decide which way to go, especially if trying to keep commissions to a minimum is a priority:

---

No doubt, $0 commissions are attractive. Who doesn’t want free transactions? But before you rush to move your money to a no-commission firm, ask yourself: “Why is this firm, which is clearly in the marketplace to make money, willing to absorb all of my costs?” After all, even a not-for-profit business has operating costs to cover, including wages, system upkeep and general operations. Simply put, if there are no commission charges, then the brokerage is earning fees elsewhere. Perhaps it’s through inflated foreign exchange rates, limited or delayed market data, or order-flow partners (where the online broker sends customers’ buy and sell orders to a partner for processing and gets paid for each one).

Wealthsimple Trade started the trend a few years back to announce its presence, but it has stock and ETF availability issues along with a scaled-back offering. National Bank Discount Brokerage and Desjardins Online Brokerage now offer $0 commissions for stocks and ETFs, and they do have some minor costs in the small print.

TD Direct Investing and CIBC Investor’s Edge jumped into the fold, too. TD offers the first 50 stock trades per year for free, but only on its scaled-back mobile-based platform, TD EasyTrade, which is basic at best. And CIBC only offers $0 commissions to investors under age 25.

 

[Ben Grimm]

https://www.forbes.com/advisor/investing/best-online-brokers/

https://www.investopedia.com/best-online-brokers-4587872

https://www.nerdwallet.com/best/investing/online-brokers-for-stock-trading

I use Schwab. My son uses M1.

 

[QuebecPride]

Any recommendations on which platform to use for trading stocks? I know a few people using Wealth Simple. Is that a good place to go with or are there better options?

Go look at Rob carrick's liste on the Globe and Mail, he explains which platforms are better for which investors. Personally I use Disnat and it's good enough for me. I've used Virtual Brokers (now CI trading) and it was okay too.

My main thing was free transactions on ETFs.

One other point to make. ETF's trade like individual stocks, so the brokerage charges you a fee every time you buy and sell. Generally speaking, there are no fees to purchase index funds - but the management fees on index funds are higher (usually around 0.50%).

I analyzed this perhaps ten years ago. My conclusion was, assuming you're making to 1-2 purchases per month, the breakeven point was around $30,000. (In other words - once you have more than $30,000 invested, the extra fee you're paying each time you buy an ETF, is more than offset by the lower management fee you're charged each year).

The point I'm trying to make - DCA is usually a good idea. But try to make sure, if you're making small but regular contributions, that the brokerage fees don't become too expensive.

Most discount brokerages nowadays have no fees on transactions. Maybe TD and RBC still charge some, but i'd say 8 out of 10 brokerages have no fees on ETF transactions.

 

[QuebecPride]

Roughly what is your distribution? I'm

89% VTI
10% JPST
1% VZ

TFSA:

65% VXC
26% QXM
9% Fun portfolio (LEV, HERO, EDGE, XMD, XCS, ETHX.B, CBON, BTCC.J)

RRSP:

25% VEQT
37% FTQ fonds de solidarité
37% CSN fondaction
1% LEV

FHSA:

In a savings account, will invest in CDs once they're available at my institution.

Overall, since most of my money is in TFSA, it's roughly (excluding FHSA which is not really long term investments, will withdraw in 3-4 years)

53% VXC
22% QXM
6% FTQ
6% CSN
4% VEQT
9% Fun portfolio as seen above.

 

[Ben Grimm]

After the market went up every week for 8 weeks, I did profit taking and am now half in VTI and half in BND. My 2 favorite stocks right now are Nvidia and VZ. VZ has a 7% dividend.

Here are 3 stocks — other than Nvidia — getting an AI premium from Wall Street

I keep my $ in a Roth.

Roth IRA

Open a Schwab Roth IRA, with key advantages like tax-free growth potential for earnings and contributions, and qualified withdrawals that can be taken tax-free.

www.schwab.com

 

[Ben Grimm]

The End of 2023. Happy New Year!
​

S&P 500 falls slightly Friday, but rides 9-week win streak to end 2023 with 24% gain: Live updates

Stocks fell slightly on Friday, but the S&P 500 closed out 2023 with a surprising gain of 24%.

www.cnbc.com

Tech stocks just wrapped up one of their best years in past two decades after 2022 slump

The Nasdaq climbed 43% in 2023, one of the sharpest rally for the tech-heavy index in 20 years.

www.cnbc.com

https://www.cnbc.com/2023/12/29/apple-underperformed-mega-cap-peers-in-2023-due-to-revenue-slide.html

Prosecutors say they will not pursue second Sam Bankman-Fried trial

Prosecutors have decided against pursuing a second trial against disgraced FTX founder Sam Bankman-Fried.

www.cnbc.com

 

[tinyzombies]

Anyone eyeballing the BTC spot ETF? How is that going to go down? If it's pegged to actual Bitcoin, what's the opening price going to be? Zero??

 

[Mrb1p]

TFSA:

65% VXC
26% QXM
9% Fun portfolio (LEV, HERO, EDGE, XMD, XCS, ETHX.B, CBON, BTCC.J)

RRSP:

25% VEQT
37% FTQ fonds de solidarité
37% CSN fondaction
1% LEV

FHSA:

In a savings account, will invest in CDs once they're available at my institution.

Overall, since most of my money is in TFSA, it's roughly (excluding FHSA which is not really long term investments, will withdraw in 3-4 years)

53% VXC
22% QXM
6% FTQ
6% CSN
4% VEQT
9% Fun portfolio as seen above.

J'ai pas mal d'argent dans LEV, on va tu faire d'l'argent un jour ou bin si jsuis mieux de juste roll over and die ?

 

[Ben Grimm]

Anyone eyeballing the BTC spot ETF? How is that going to go down? If it's pegged to actual Bitcoin, what's the opening price going to be? Zero??

https://bitcoinmagazine.com/busines...-ahead-of-potential-spot-bitcoin-etf-approval @tinyzombies

 

[tinyzombies]

https://bitcoinmagazine.com/busines...-ahead-of-potential-spot-bitcoin-etf-approval @tinyzombies

yea, but what's the opening price? btc has already priced it in to some extent they are saying.

Also have my eye on nano stock- Intel, etc.

 

[Ben Grimm]

yea, but what's the opening price? btc has already priced it in to some extent they are saying. Also have my eye on nano stock- Intel, etc.

@tinyzombies Idk but I'm a fan of your HoH/ATD posts and recommend not buying crypto and buying Nvidia.

 

[tinyzombies]

@tinyzombies Idk but I'm a fan of your HoH/ATD posts and recommend not buying crypto and buying Nvidia.

priced in tho, no?

 

[MasterD]

J'ai pas mal d'argent dans LEV, on va tu faire d'l'argent un jour ou bin si jsuis mieux de juste roll over and die ?

Never forget about opportunity cost. It might or might not go back up, but while you're waiting, others are making moulah.

Personnally I'm ride or die 10% VCN 90% XAW in all my accounts except RESP where I have some PSA.to

depends on your age, needs.. some solutions are better than others. Recession will wipe a lot of gains, I'm doing a few different strats , probably head into bonds soon as the rates start to drop and rotate with the trends a bit.

Lots of recessions have + market returns. People lose their jobs but companies' financials can look great. It sucks but it's what it is.

 

[Habs]

Lots of recessions have + market returns. People lose their jobs but companies' financials can look great. It sucks but it's what it is.

they eventually do, for sure. I'm watching the retail side bail on shipping companies, and other major companies like johnson and johnson, etc.. I think it will be a good time to get in once the dust settles. I'll get into bonds for a bit, watch people get too emotional and jump in later. I'll also start writing calls again at some point. Buffet is dumping into cash, probably going into treasuries for another year. Still bullish on gold stocks and AI

 

[QuebecPride]

J'ai pas mal d'argent dans LEV, on va tu faire d'l'argent un jour ou bin si jsuis mieux de juste roll over and die ?

Aucune idée lol, je suis un fan de l'entreprise, mais ça a pris une méchante drop depuis leur entrée en bourse. J'en rachète de temps en temps, mais je suis à genre -75% sur ma position. Pense pas vendre tout de suite, mais bon, difficile à prévoir. Comme tu peux le voir, c'est ma seule position directe dans une entreprise, le reste c'est via des fonds.