Greg Newman, director and portfolio manager at Scotia Wealth Management

Focus: North American dividend stocks and protection strategies

MARKET OUTLOOK

Well it certainly feels like a bear market. Rallies were sold, endless volatility, crude oil has plummeted and buyers seem to be on strike. As well, many stocks are trading at ridiculously low valuations suggesting that earnings are about to drop.

While there is no shortage of what investors can worry about (rising rates, tariffs, economic and earnings slowdown, Brexit, Trump and yield curve inversion) there is still no recession on the horizon.

Historically when markets correct to this magnitude when there is no recession it has always been better to buy than sell.

So is this time different?   

Maybe a recession is around the corner and this is the market sniffing it out. Perhaps the market is pricing in high corporate debt that needs to rollover over the next few years. Or these are the effects of the quantitative tightening, draining liquidity where a lower tide lowers all boats.  

Since quantitative tightening and easing has never happened before it is understandable that we do not know all of the implications.  

As such, continue selling the rallies if you are overweight equity in your strategic allocation.  If you are underweight use the weakness to pick away.  

Either way owning dividend stocks are going to help cushion your portfolio by paying you to wait.    

TOP PICKS

BROOKFIELD INFRASTRUCTURE PARTNERS (BIP_u.TO)

Brookfield Infrastructure Partners offers investors high earnings growth with good growing distribution at an attractive price.

CP RAIL (CP.TO)

This company offers investors high earnings growth and is trading at an fair price.                                      

POWER FINANCIAL (PWF.TO)

Power Financial offers investors a high and safe dividend with growth. It has decent earnings and is sitting at an attractive price.

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
BIP_U Y Y Y
CP Y Y Y
PWF Y Y Y

PAST PICKS: JAN. 26, 2018

NATIONAL BANK (NA.TO)

  • Then: $64.51     
  • Now: $57.21      
  • Return: -11%     
  • Total return: -9%

STANTEC (STN.TO)

  • Then: $35.02     
  • Now: $29.46      
  • Return: -16%     
  • Total return: -15%

SHOPIFY (SHOP.TO)

  • Then: $159.07   
  • Now: $179.55    
  • Return: 13%      
  • Total return: 13%

Total return average: -4%

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
NA Y Y Y
STN Y Y Y
SHOP Y Y Y

 

WEBSITE: www.newmangroup.ca