Ten Year Review – 2019

  • 26 December 2019
  • Posted by admin

We still have a year to go to finish this decade, but we see quite a few reviews about investing in the last 10 years. Your results obviously will be varied depending how and what you invest in.
The Globe and Mail published a report on December 20th by Tim Shufelt “This just wasn’t your decade, Canadian stock market.” “The S&P/TSX Composite Index posted an average annual gain of 3.9 per cent for the 10 years to Dec. 20, a lacklustre result in a decade of steady, if slow, global economic growth.”
That got me thinking and reviewing how our portfolio performed. And how did you do?
The TSX in 2009 consisted of the following sectors and percentages of the total index. The second number is how it is currently:
Health Care 2.5%, / 1.5%
Real Estate 1.2% / 4.1%
Tech 3.4% / 5.4%
Cummun. Services 5.5% / 5.5%
Utilities 1.2% / 5.6%
Consumer 5.6% / 9.9%
Industrials 7% / 11.2%
Resources 45.5% / 26.1%
Financials 29.2% / 30.8%
For those who invest in TSX ETF’s this would be the return they would have had. Therefore, I believe that diversification just for the sake of diversification doesn’t accomplish much. The resource sector particularly is too volatile for buy and hold investors. Based on the above list, we see that Real Estate, Tech, Utilities, Consumer, and Industrial sectors had good runs. Financials were steady. There was also a list in the article of the top ten performers for the decade that had total returns of 600 to 3600 %. If we had crystal balls those are the ones we should have had in our portfolios. But for most of us we’re lucky to get one of those occasionally. (I have none)
But our investment strategy is first to create dividend income that at least keeps up with inflation. Secondly if you own good companies they will also rise over time. This creates a more stable, less volatile performance over time. When reaching the goal of living off dividends this is an important issue for us.
And so far, this strategy is working very well. Over the last 10 years, we have grown our dividends by 13.6% annually on average, and total portfolio growth was 15.5% annually. The dividend growth rate is certainly slowing down now as we no longer re-invest them. But we still had a 5% gain in our dividends this year.
I want to encourage everyone that has not done so yet, open a self-directed account and invest yourself. Stop paying fees to advisors for something you can do better yourself. There is so much information on the web to help you along the way. You just need to be able to discern what’s applicable.
Leave a comment please if you have something you agree or disagree with.

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3 thoughts on “Ten Year Review – 2019

  1. When starting a self directed account, how do you decide which stocks to invest in and what weight to give to various stocks?

  2. It depends on how you start with a self directed account. If you start with a small amount and intend to build it over time, I would buy a couple of banks, utilities like Fortis and Emera, and one of the Telcos. My favorite here is BCE. If building a large portfolio see my earlier post “A Balanced Portfolio for Volatile Times”. I have listed all our holdings there. (Would not recommend Laurentian Bank or Boston Pizza now)
    As to weightings I would suggest starting equally, say 20% of each company if starting with 5.
    But investing is different for each person depending on their circumstances. What is the goal? preserving capital requires a conservative approach, when investing for growth you may need to take more risk.

  3. Thanks David for your question.
    I should also say that my strategy is for growth, but mainly dividends. for other strategies you should consult a trusted adviser and other blogs.

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