The Slow Boat to Safety with Stocks NOT Bonds

It doesn't seem to matter what news we get the markets continue to swell, swoon and in general have a hard time hanging onto any slim gains they make.

But isn't this what we've been hearing from the MSM on a daily basis about how overvalued markets are and how we need a correction. Well, isn't this one now?

Oh for sure it is.

Stocks ripped higher on Monday, sank on Tuesday, rocketed up on Wednesday, died on Thursday and again rolled over and tanked more on Friday.

How low is low and how high is high?

Nobody knows anything so it's hard to know when to bail on the market or buy more of your favourite stocks.

Selling Energy

I prefer to go with and buy what's working.

I bailed on all my energy stocks today. Sold all my ARX, TOG and WCP right at the open. Crude closed down 10% and most of the sector just plopped hard.

It saved me at least $1K once the market closed and I wanted to minimize my losses and lock in my small gain on Arc Resources.

If I was looking for an energy play I like Freehold Royalties at this point. It has a high yield of 10% but they actually make money on their royalty stream of wells. I wouldn't buy it for the dividend but for it's upside potential.  

How much lower can oil fall? Who thought it would fall 9.5% or $4 today?

The Canadian economy will start to feel it if these ridiculous prices continue. In the meantime I'm sitting this one out as I see no need to hurry back in. 

What will you miss? Even if you miss the first 10% rise there will still be time to jump back in.

Buying for Yield

I added to some existing stock positions in our RRSPs this week. If I only knew they would get cheaper on Friday eh?

Good for you if you did.

44 shares of CM
70 shares of BNS

40 shares of TD

I bought these stocks to increase the income in our retirement accounts. I had no concern about what I was paying, I'm only interested in increasing the income these accounts generate.

I keep coming back to the banks because on a p/e basis they're cheap and in the case of CIBC it is the highest yielding bank at 5.9%.

That to me is amazing when it's 10 year average is 4.9%

In 2009 it paid out $3.48 in annual dividends per share

It now pays out $5.64

Individual investors seem to shy away from it's nominal price which is mostly above $100. They would rather buy something cheaper. I'm buying for the yield and the growth of that yield over time. Of course I want to pay the cheapest price possible but sometimes you never know when it's going to go lower. I wish I would have bought today but c'est la vie!

Buying Bonds for Yield

Not likely!

Bond prices are rising and yields are in free fall. Not for an income investor. Those managers and advisors who prescribe to Modern Portfolio Theory want you in bonds.

It's your soft landing in tough times like now. Yabbut income sucks man!

A 10 year Canadian Bond now yields 0.71%

A 5 year GIC where I bank pays you 1.5%

This kind of rush to safety ensures you will be poor and die poor after taxes. This to me is the dumb money. Savers are getting crushed here.

I'm not saying go buy stocks, but I'm not buying bonds or savings accounts. You choose. I just showed you what I chose this week.

Check out the yield chart on a 5 year Canada bond;

Now yields 0.68%

From 2% 5 years ago to less than 1%. It's lost over 60% in the last 2 weeks alone. Imagine investing in bonds for income. No don't do that.

Never the less the herd is rushing into bonds and pushing down these yields to generational low levels.

Beyond weird. Always do the opposite of the herd or you'll get stampeded to death. I'd be selling any bonds I owned here. Just me.

Why is this Happening?

Corona Virus
Blockades

Climate Change

Protests

Lack of Pipelines

Political Food Fights

Money is fleeing Canada
Buffett cancels Canadian LNG Investment

Who knows but Canada is not really the poster child for where investors go to spend money.

Money is cheap and about to get cheaper. Be careful where you find shelter.

Where will you go? Stocks or Bonds?