Money is a tool. It's something that supports your life!

Happy New Year! We kick start 2022 with a look at the portfolio performance, and Stephen's technical comments - we believe a strong bull trading range is coming, and we explain why. The Millennial Minute this month follows Ashley's views on Blue Monday and ways you can avoid the post-holiday blues. And our Planning Topic for this month gives more insight on TFSAs - their benefits and uses and comparisons with RSPs. We also have a great article that gives extensive resources for seniors - from Service Canada to Senior Discounts, we've got the information you may be looking for!

Interesting Charts

1) Inflation is public enemy #1 - it reduces the value of bond holder's coupon payments. And the inflation rate in Canada and the US exceeded it's 1%-3% target in 2021. With the Federal Reserve still holding off on raising interest rates, your best bet could be to purhase high yield and real return bonds...

 

2) Season 2, Episode 3 of the Financial 15 covers how to protect yourself in the digital age. We touch on passwords and just how east it is to get into your password protected accounts. The below chart gives a good idea of just how safe your passwords might be. Is it time to update your passwords?



3)  Always be sure to diversify. EFTs that match the market may leave you scrambling to get out during a major drop.




4) An interesting look at the rise of certain sectors in the prime of their time, with Big Tech FAANG (Facebook, Amazon, Apple, Netflix, Google) continuing to rise.



5) Some great insights to start your 2022 off on the right foot!


 

Technical Comments

• The bull trend on the monthly chart has been very strong. Therefore, even if there is a sharp selloff down to the October low in the 1st half of this year, it should be minor. The best the bears will probably get on the monthly chart is a trading range for many months. A trading range in a bull trend is usually a bull flag. Therefore, traders should expect a bull breakout of the trading range later in the year.
• The bulls want a continuation higher to a measured move target (using the Aug-Oct trading range height) which will take them to 4930 near the top of the trend channel line. The 5000 big round number is a magnet above.
• Can this rally continue up throughout 2022 without a pullback? That is less likely. It is overextended and there is a likely micro wedge forming.
• Therefore, the bull trend will probably transition into a trading range for at least a couple of months.
• For example, if the market were to get down to the October low, then the trading range would have begun in August and there would be a six- or seven-month trading range on the monthly chart.
• At that point, the bulls will try to get a resumption up from a double bottom bull flag and the bears will try to get a bigger reversal down. 
• The bull trend from the pandemic crash has been in a very tight bull channel. The first reversal down will probably be minor even if it lasts a few months and not continue straight down into a bear trend. Even if it sells off for 10 to 20% correction, that would still only be a pullback on the monthly chart even though it could be a bear trend on the daily chart.
• Al also said that the gap up in April 2021 could lead to a measured move up to 5,801.5 before the bull trend finally ends.

Absolute Returns or Relative – There is a Difference

Lance Roberts in the above article says “If you are comparing absolute vs. relative returns, consider that comparison is the root cause of more unhappiness in the world than anything else” and “Changing your view from “relative performance” to an “absolute” investment strategy can greatly increase your long-term results. Such is because the behavioral biases get brought under control, leading to fewer emotionally-driven investment decisions.”

This is why we always talk to our client about goal-based investing and to insure they have clear goals.

The Portfolios

December was a busy month in the portfolio. As December progressed and inflation became a bigger issue began selling our growth stocks and moving the proceeds into dividend paying names. We sold Digital Ocean, Fastly, Big C Commerce and GFL.  We add new positions in Bank of Nova Scotia, Pfizer, and Compcast.
 

Returns on our 60/40, 70/30, and 80/20 portfolios before fees: As of January 12, 2022

And Finally...

The Millennial Minute this month follows Ashley's post holiday revelations. She also shares some tips to help with your Christmas budget for 2022. Click here to read more!

Educational Pieces 

Get a TFSA Working for You  covers contribution and withdrawals limits, investment options and even compares contribtuion growth between TFSAs and RSPs. Click here to read more!

Helpful Resources for Canadian Seniors  gives great links to many sites for seniors: from CMHC for seniors, to the Victorian Order of Nurses, and even links to discounts for seniors. Click here to read more!