“There’salwaysaBullMarketsomewhere”

JimCramer,Host,CNBC’sMadMoney

Diversifytofindit

Disclaimer

• TheOttawaBranchoftheNationalAssociationofFederalRetireesandthefacilitatorofthisseminardonotinanywayofferfinancialorinvestingadvice.

• ThisseminarandtheinformationinthisPowerPointpresentationareprovidedforeducationpurposesonly.

• Investinginvolvesrisk.Anypersonalinvestingdecisionsshouldbemadeonlyafterindividualduediligenceand/orwiththeassistanceofaregisteredfinancialadviserorbroker.

• OttawaBranchtakesnoresponsibilityforanyinvestmentdecisionsthatparticipantsmaymake.

Acknowledgements

• NAFROttawa,LindaandRamin,fororganizingandsponsoringthewebinars

• MichaelPatenaude,OttawaShareClubfortheexcellentgraphs

• FrankSchilder foractingasZoomMaster

Frequentlyusedacronymsandterms

• ETF– ExchangeTradedFund.Amutualfundsoldlikeastockwith(usually)lowerfeesthanmutualfunds

• MER– ManagementExpenseRatio.Thefeesin%thatyoupaytoamutualfundorETFtocoverthecostofmanagingthefundandpayingthepersonwhosoldyouthemutualfund

• Index– aselectedlistofstocksorotherinvestmentschosentoreflecttheaveragevalueofatypeofstocks,bondsorotherassets

• S&P500– TheStandardandPoors indexofthe500largestUSstocks

• TSX300– The300largestCanadianstockissuingcompanieslistedontheTorontoStockExchange

Agreatstrategistoncesaid:

• Thereareknownknowns.• Thereareknownunknowns.• Buttherearealsounknownunknowns

- thethingswedon’tknowwedon’tknow.

• LooselytranslatedfromDonaldRumsfeld,U.S.SecretaryofDefence,2001-2005

FactsversusOpinions

ThevalueofInvestingAdvice&MarketTiming

• FromtheGlobeandMail,ReportonBusiness,August16,2019:• “Theargumentforgoldisgettingbrighterbytheday”,TimShufelt,G&M

• “Theargumentagainstgoldstocks….Don’tdoit”,BMOCapitalMarkets

• SinceAug16,2019• Goldbullionisup36%• GoldminerETFXGDisup42%• AsofAug31,2020

Indexinvesting– boomordoom?

• 60%ofUSStockMarketiscontrolledbyIndex(Passive)investing

• 25%ofallIndexmoneyisgoingintothefivelargesttechstocks– theFAANGs

• CurrentS&P500PricetoEarningsratio=28:1.

• Average=16:1

2rulesforlongterminvestingsuccess

• 1.Developandsticktoalowcost,diversified assetallocationstrategy

• 2.Focusontimeinthemarketratherthantimingthemarket

• ProbabilityoflossS&P500• 1year 26%• 3year 16%• 5year 11%• 10year 6%

Themostimportantfactofinvesting– regressiontothemean.Source:AWealthofCommonSense.com

Themostimportantfactofinvesting– regressiontothemean.

Stockmarkets– whatcouldpossiblygowrong?Note2000– 2013/14period

Pollquestion1

• Ifyouhad$100,000toinvesttoday,howmuchwouldyouinvestinstocks?

JimCramer,thealwaysenthusiastichostofCNBC’sMadMoney,endseveryshowwiththisquote

“There’salwaysabullmarketsomewhere”.

Selectinvestmentsthatoftenactdifferentlythanstocks

• Goldandgoldminers

• LongTerm,HighQuality,GovernmentBonds

• SelectedRealEstateInvestmentTrusts(REITs)

• AlternativeInvestments(Infrastructure)

GoldBullionversusS&P500NegativeBeta

GoldMinersvsgoldbullionPositiveBeta

LongTermGovernment BondsIt’snottheinterestrate,it’sthecapitalgain

LongTermGovernment BondsIt’snottheinterestrate,it’sthecapitalgain

30yearUSGovtbondexampleCurrentinterestrate1.4%Ifratedropsto0.9%Bondvalueincreasesby13%

RealEstateInvestmentTrusts(REITs)vsTSX

AlternativeInvestmentExamples

• Cellphonetowersystems

• Urbanwaterandgasdistribution

• Gaspipelines

• TollRoads

• Containerports

BrookfieldInfrastructurevsTSX&S&P500

Pollquestion2

• TheaverageCanadianactivelymanagedmutualfundcharges:

Investmentvehicleexamples

• GoldBullionETFs: MNT,CGL,CGL.C(MER0.4- 0.6)

• GoldMinersETF: XGD(MER0.65)

• LTGovernmentBondETF: ZTL(MER0.25)

• REITManagedETF: RIT(MER0.98)

• AllinOneETFs: VBAL,XBAL,ZBAL,HBAL(MER0.2- 0.25)

“AllinOne”AssetAllocationETFs(.25%MER)

AllinOneAssetAllocationETFs(2)

Performance,1YearJuly31,2020

• VCIP ConservativeIncome 8.0%

• VCNS Conservative 7.9%

• VBAL Balanced 7.6%

• VGRO Growth 7.1%

• VEQT AllEquity 6.6%

• VCN TSX 1.5%

• VUN S&P500,C$ 15.8%

The“AlwaysaBullMarketSomewhere”modelportfolio

• BalancedETF 80%• Goldbullion/minersETF 5%• REITETF 5%• AlternativeETFlike 5%• Cash 5%

Disclosure

• Thepresenterand/orhisfamilyholdthefollowinginvestmentsmentionedinthewebinar:

• VBAL

• XGD

• RIT

• ZTL

• BIP.UN

NextWebinars

• September23 GoldasPortfolioInsurance

• October7 BondsandPreferredsharescanstillmakemoney

• October21 OneDecisionInvestmentPortfolios

Questions?