Weekend Reading – Markets in turmoil
Hey Folks!
Welcome to a new Weekend Reading edition, about markets in turmoil.
As always, before a quick take on the headline a few recent posts:
While dividends are never guaranteed they are good when they happen! I wrote about more dividends flowing in below:
I shared our latest dividend income update here:
Weekend Reading – Markets in turmoil
An abbreviated edition this weekend, given some travel plans but I thought this was pretty good with thanks to @CharlieBilello.
“This is the funniest table in finance right now Returns from buying when CNCB goes full alert “Markets on Turmoil”” – Source: https://x.com/AndreasSteno/status/1820906827724316832
No doubt earlier this week spooked a few investors:
Wall Street took a beating on Monday this past week, as fears of a looming U.S. recession triggered a global market sell-off. The S&P 500 plummeted over 4%. Japan’s Nikkei 225 tanked the most since the Black Monday crash in October 1987. The tech-heavy Nasdaq tumbled 3.1%. Warren Buffett’s Berkshire Hathaway sold a bunch of Apple.
And while institutional investors were buying the dip, retail investors were sellling.
“We estimate retail investor performance has declined by 10% since the peak in US equities as of today (vs. 8.5% drop in the S&P). Year-to-date, their portfolio is down by -4.9%,” they wrote. – Source, Yahoo.
I wondered a few weeks ago where might U.S. stocks go from here. I still believe they might trend further downward. We’ll see?!
I’ll continue to stick with my plan and when in doubt about where markets are headed, I just keep buying.
Weekend Reading – Markets in turmoil
Will I buy more AQN? No!!
Not unexpected, but Algonquin Power (AQN) cut its dividend but what I didn’t expect is the big sale of some renewable assets.
For those asking, I still hold a very small amount of AQN but only in my taxable account and it’s less than 0.25% of my portfolio at the time of this post. If the stock does not recover over time, I will sell it off to offset any capital gains in the coming years…since I have a bunch of (gains) to consider.
Do you hold AQN stock and if so, what are you going to do about it?
And, for those that invest with AQN like I do in a taxable account: a reminder you can sell your AQN shares for the loss and then carry it back to offset any capital gains you might have had in the previous three years. (you can do this with most software, when you file your tax return for 2024 next year and not need to file a T1-ADJ request).
A good reminder about turmoil in general and how to deal with it:
“Finish each day and be done with it. You have done what you could. Some blunders and absurdities no doubt crept in; forget them as soon as you can. Tomorrow is a new day; begin it well and serenely and with too high a spirit to be cumbered with your old nonsense.” – Ralph Waldo Emerson
6 Lessons From 6 Years of Retirement was a fine read recently, by Fritz at Retirement Manifesto.
Have a great weekend!
Mark
I have a small amount of AQN left, sadly it’s in my TFSA which isn’t great. I dumped half when it had a minor recovery a while ago, I was hoping it would go up a bit again and I’d sell more. Now it’s down yet again. I don’t plan to spend my TFSA so I will probably wait a bit to see if it gains a buck before selling…It only makes up 0.2% of my overall portfolio but I hate taking losses in my TFSA!
Ya, I wouldn’t worry too much about anything less than 1% of your portfolio but if you feel better selling it, selling some, all good. Every investing decision is personal and I get that. 🙂
I suspect the price will rise again after the drama of the dividend cut is done. Seems there are management changes happening too which should be positive. Could be an acquisition target too.
I don’t intend to touch anything inside my TFSA until 20-years from now.
Mark
I sold all my AQN stock a long time ago when I made the switch from individual stocks to broad market ETFs. I still have telco stocks, and being honest, I wish I’d sold the lot years ago. To date, the dividends haven’t been cut. Mark, do you have telco stock, and if so, what are your thoughts; perhaps it’s a topic for a future post?
Right now, I’m holding onto our telco stock in the hopes that declining interest rates result in price increases.
I’m doing the same, Bob = holding BCE and Telus and hoping they can survive some major debt obligations, lower rates should help. We’ll see?!
At last check, BCE <2% of the portfolio and Telus <5%.
Will consider a post for sure!
Mark
Similar to Zack, but I still have a small amount of AQN. Will likely dump it.
Ya, I might do the same eventually. We’ll see. Not buying more right now but not selling either. At last check, with something like 0.20% or 0.21% of the entire portfolio, AQN it’s a rounding error. Not great of course, don’t get me wrong. But for context my emergency fund is worth more than this stock. 🙂
Anything you have your eye on?
Mark
I sold my AQN when they announced divesting their renewable energy assets was a possibility over a year ago; it seemed like a short sighted move and a step away from why I purchased AQN to diversify away from fossil fuel in my portfolio. I lost money on the stock but you have to learn from your mistakes and move on.
I can see that, Zack. I think when to sell stocks just like when to buy individual stocks is a very personal and can be a tax-oriented decision.
I think while I am working full-time, not sure it makes as much sense to sell now vs. later but I might – we’ll see!
My cost base for AQN is just over $7. Here is some reference and context below.
https://www.myownadvisor.ca/weekend-reading-dividends-can-get-cut-edition/
In terms of moving on, what you buying?
Mark
The rough rule-of-thumb I use for selling is “would I deploy this money today in this stock with what I know now?”; so if you have $10k in AQN today, would you take $10k and open a position in AQN today (if you had no position in it at all)? The answer was No so I vaporized my position in my RRSP and in my non-reg. At the time, I moved the money into CIBC since I like to rebalance my 6 bank stocks with purchases. Utilities are usually fairly safe dividend stocks since they have captive customers but as we’ve seen, they are susceptible to interest rate variation since they have to constantly borrow or issue preferred shares to fund infrastructure. Chasing yield is also something I will watch from now on too, monitoring bank and telco stocks to ensure these previously well-run companies stay on track. I still like Telus with their diversification into tele-health but BCE is on my monitor list since their dividend seems like it will be cut if they are prudent financially.
Good points, Zack.
If I had $10k now, ready to spend, I would not buy AQN. I would buy XAW or some oil and gas stocks like TOU and others that have been beaten up.
Rightly or wrongly, I am tempted to hold my couple hundred shares of AQN for now in my taxable account to offset some existing future gains. I don’t have any AQN in my RRSP or TFSA or other accounts.
“Utilities are usually fairly safe dividend stocks since they have captive customers but as we’ve seen, they are susceptible to interest rate variation since they have to constantly borrow or issue preferred shares to fund infrastructure.”
Agreed. They are capital intensive companies.
AQN really isn’t chasing yield. I started buying it 10+ years ago under $7 per share and my cost base is just over that.
Things change. Companies that seem great to succeed at the time, do not turn out that way. There is no way of predicting how any company will accurately perform in 5 or 10 or 20 years. It is what it is. 🙂
I agree with BCE. They should likely cut their dividend. If they do, I will buy more after the dividend cut since the price will tank.
I appreciate your comments.
Mark
Hi,
I also hold a small amount of AQN in my portfolio – not enough to move the needle. I plan on keeping it for now to act as a reminder to me about how things can turn out.
CJ