Issues
One of the hardest things for an investor to do is to NOT SELL a company whose shares are surging.
When a stock is flying, many will say it's a bubble. Many will say the move is unsustainable. Many will say it is overvalued.
But is it?
One tip for investors who find themselves in the happy position of owning a stock up
100%, 200%, 300% or more is to ignore the stock price. That's right, ignore it. Look only
at the fundamentals. How is earnings growth? How is cash flow? Are sales accelerating? Is
debt being paid down? Is the company buying back stock? Are insiders buying?
We've noticed many stocks this year rising rapidly. Many are in the AI field. But many, such
as Eli Lilly (up 21% year to date and 111% over one year), are simply great growth companies.
In many cases, though, earnings growth is faster than stock price gains. What does this
mean? Well, it means even at a much higher stock price, your stock might actually be cheaper than it was before, due to its fast earnings growth.
So, before simply selling, look under the hood. Your 'expensive' stock might actually be
'cheap', if it is growing fast enough.
Sharing with You,
Peter Hodson, Editor
Featuring: Rita Silvan, Barbara Stewart, Janet Gray, Richard Morrison, Danielle Neziol, Lana Sanichar, Brian...
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Last year once again reminded us of the importance of staying invested. The
market in 2023 started off strong, dipped, recovered, dipped again, then had a
big run in the fourth quarter.
Traders and short-investors likely had a very hard time: In 2023 one minute the world was
ending with high inflation, high interest rates and a looming recession. The next minute,
rates were falling, economists were talking about a 'soft landing' and all was good again.
But investors who simply held on, or, better yet, kept buying on a regular basis, likely
did very well in 2023. We enjoyed a solid 2023 performance, but a lot of it came in the last
nine weeks of the year, and the move was enough to make up for several mistakes (yes, we
still make those!).
So, as 2024 moves unrelentingly forward, keep this in mind: it is not timing the market,
it is time IN the market. Yes, a very old stock market saying. But, clearly, one of the best:
give your companies enough time to make you wealthy.
Peter Hodson CFA
Founder and Head of Research
5i Research Inc.
Featuring: Matt Poyner, Julie Petrera, Rita Silvan, Colin Ritchie, Chris White, Barbara Stewart, Michael Huynh
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Happy New Year MoneySavers.
Did you enjoy 2023? There was, as always, lots of action in the capital markets, and
things did not look good in the early days, with interest rates rising and regional banks in
the US imploding on a daily basis. In March, some worried about a repeat of the 2008 financial crisis.
But strong job numbers, a recovery in corporate earnings, lower inflation and a belief that interest rates have peaked (not to mention a giant bitcoin rally) saved the day.
Going into 2024, confidence is coming back. There is $6 trillion in cash sitting on the sidelines. It might be a good year, but we know better than to make such predictions.
Don't change your investment strategy suddenly. Keep to your plan. You do have a plan, don't you? If you are thinking of buying a GIC, we might move faster than normal. In Canada, at least, with weaker economic growth, interest rates are likely to fall earlier and faster than rates in the USA.
And, don't forget to contribute to your TFSA, the best account for investors. The 2024 contribution limit is $7,000. Never bought a house? The First Home Savings Account is a hybrid of a TFSA and RRSP, and will help new home buyers with an $8,000 annual contribution, up to $40,000 lifetime.
Sharing With You,
Peter Hodson
Featuring: Brian Quinlan, Rino Ravanelli, Jason Heath, Donald Dony, John De Goey, Fred J. Masters, Barbara...
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