The Bounce in Closing Out July, 2022

 

It's the end of July, 2022 and when I would like to fast forward to the cooler Fall amid high humidity hear waves here on the East Coast of Canada but it will come fast enough. 

What's happening in the Markets now? Reading the news, it's full of speculation and forecasting based on past history fluctuations but it looks like there is a sense that some investors feel we've bounced off the "Bottom" of the crash that started back in mid April. 

I'm seeing more "green" in indexes like the Canadian TSX, which is a good sign for now but it's anyone's guess if the Markets (depending on sectors) will continue to move up gradually and depends on a lot of factors as usual. 

One of the primary factors is the Feds and are they getting control of inflation with interest rate hikes and will these hikes slow down in the near future? No way of calling that yet. Some feel they are getting a grip on high inflation although I don't see it in the Shops where things cost even more this week.

Although I live in Canada, the commodity scene is influenced by international supply and demand. Oil and natural gas are up because of the Russian/Ukraine war. China with it's changing intake quota on imports from Canada, metals like iron, etc. and now tensions are up with China wanting to convert Taiwan to fall under communist rule while the US disagrees with that move. 

By staying invested through the bad and good times, the above doesn't matter much to me although I stay informed where the stocks I buy go on sale during down times.

In August, my interest is in adding to oil/pipelines and insurance with Enbridge (ENB) and Manulife (MFC) going ex-dividend and both being holdings in the BTSX strategy.

The highly volatile crypto scene made a recovery this month with some of the negative feedback/fear falling to the wayside as Bitcoin and Ether make gains in price so far. Stats show the number of folks holding less than 1 Bitcoin is growing once again.

Always something to watch for is what Miners are doing with their Bitcoin and their overall selling of BTC (they planned to hold for long term) to pay for expenses is slowing after Bitcoin began moving up from 18 grand USD to around the 24 grand level for now. Those that are big into stats, believe this is a positive thing and possibly generate more BTC buying. 

It's something like the oil business. Companies are into larger cash gains now as oil stays in the price price range it currently has these past months and can go down to $70 a barrel USD but falling below that, those that haven't planned for it tend to get into financial woes spending their excess cash and look to cutbacks/layoffs to pay for expenses.

Will the rest of 2022 show more positive numbers and gains in the Markets? It will be interesting to see what develops in August moving forward.

The Bitcoin in July, 2022

 

Since the carnage started in April of 2022 with the drop off in the stock and crypto markets, there's more of a positive outlook this week that things will turn around soon and the Markets are showing that but it's too early to say that this stormy season is over yet. 

Crypto and Bitcoin are highly risky and still in it's teenage years of growth compared to the moderate risk I'm involved with in dividend paying stocks/ETF's.

Bitcoin continues to rule over altcoins and there's always that theory in the background that it's price will skyrocket to new record highs with each cycle of major price ups and downs. It turns into a trap and akin to the big gamble for most but these record highs also made some filthy rich like in past cycles so that keeps it popular.

Now, there's a new theory about a new Token coming along some day that takes the crown from Bitcoin and BTC will fall in price and become an altcoin itself. Fast transactions like Visa and using more "Green" power. Some altcoins are working to achieve this but all a work in progress. Some say Ether/ETH could be that coin in the future but as I mentioned ... it's a work in progress in an impatient world.

Conceived on laptops and desktops, new coins and supporting structures are being developed on a steady basis. Too much to keep track of until one rivals Bitcoin some day and the masses take notice.

The crypto market thrives on speculation and the social media "pump and dump" chats. But I've learned to ignore all that and I've been there since it started so I take gains and move them to Stablecoins or cash when they present themselves and know how far it can fall in a hurry at times. Not betting the farm in other words and play with coins/funds I keep aside for the cryptos I don't need to pay the bills.

Vanguard and Blackrock

 

Nearing mid July, 2022 ... gas prices are easing from some from their highs as the price of oil flirts with the $100 USD range. That seems to be the only break in necessary expenses on my end as the price of groceries continue to inch up. Interest rates are expected to hike again this week hitting folks with mortgages the hardest no doubt, if they are on a variable interest rate term or nearing a "renew" of their terms

Central Banks, with their strategies to combat high inflation are not winning yet and when there is eventually some curbing of inflation ... will grocery prices drop in tandem? No

People grumble about it but carry on seeking the happier things in life and entertainment or too busy with family, around the house and work to have time to dwell on it all.

Most folks seek bargains, discounts or a good deal. Being involved in the dividend paying stock market ... I see stocks and ETF's that are rare bargains before the Markets rebound once again. It all looks like a rewind of the big drop of March, 2020 when the pandemic started here in Canada and the US.

Looking at the Vanguard and Blackrock ETF's, they have a long lineup and with some being very popular with folks seeking dividends and low management fees.

There a lot of articles, books and media comparing the companies products and strategies and how to benefit from them.

Most Bloggers I read that focus on dividends, have a portfolio of stocks but usually have one or a few ETF's from Vanguard and/or Blackrock as an addon.

XEI - iShares S&P/TSX Composite High Dividend Index ETF has a Holding of 75 popular stocks with a yield of 3.94% and pays monthly. XEI from Blackrock has some steady growth between the dips like March, 2020 and currently. 

With Vanguard, VDY - FTSE Canadian High Dividend Yield Index ETF also pays a monthly dividend and has a 3.46% yield with 47 popular yielding stocks in Canada. 

Both ETF's come with a low 0.22 MER or fees that management charges. A good savings off the "bottom line' compared to the high management fees out there.

I think the drawback with these ETF's is that the cash distributions fluctuate while some investors prefer to have the same amounts in dividends each month/quarter. Sector and company weighting in the Holdings may not be to the liking of some. But, overall they work and provide a dividend income if desired and there's growth looking at the 3 and 5 year charts.

Those are two personal picks I like while there are a variety of choices to choose from getting into the US, International markets and sectors allowing for risk tolerances.

Dale from Cut The Crap Investing has a great post here about XEI and VDY

Halftime 2022

 

We are into the 2nd half of 2022. Are things improving in the stock and crypto markets?

Unfortunately no, as fear continues to grip the Markets on a daily basis as rehashed news about inflation, corrections and interest rates circulate in the news. Predictions are, things will stabilize some by the end of the year but they are just that ... predictions, although I hope so.

Although the electric vehicle thing is getting more popular by the day, oil and natural gas continue to be one of the rulers of the economy. Demand and supply, plus shortages in areas like Europe due to Putin's war on Ukraine. has spiked prices quickly. That will eventually even out but takes time. 

Europe is looking to Canada now and other countries ... we need your natural gas. It is coming up in the news here now about how Canada can send over it's excess natural gas. Pipeline under the Atlantic Ocean or a fleet of supertankers has come up. Both expensive ventures being tossed around.

All that being out of the average citizen's control of course, forced to pay more for the essentials. Meanwhile, I continue to focus on building a dividend stock portfolio and ignore all the fear mongering out there.

BMO, I figure pays out some of the highest cash distributions with their line up of ETF's among the top banks in Canada, depending on sector and categories. 

In that lineup I scroll down to "Specialty Income" and focus on Bank and Utility related like ZWB, ZWU respectively and ZWC : BMO Canadian High Dividend Covered Call ETF with a selection of top companies and banks in it's Holdings.

In the "Canadian Sector", there's also a good selection of 'Equal Weight" ETF's there for folks who don't prefer "Covered Call" ETF's or seeking a mix of BMO management strategies.

I prefer reliable income producing ETF's that pay monthly and are reasonably cheap around the $20 range to buy on a consistent basis. Over time, a growing monthly cash dividend builds up.

In my next post, I'll touch on some popular ETF's with Vanguard and BlackRock Canada. They have some cheap management fees where they seem to be in competition to attract/retain more customers with these monster investment companies.

In the Bitcoin dominated world, it's like waiting for a snowstorm (Crypto Winter?) to pass by while Whale outfits like FTX and Binance help or buyout outfits in financial trouble. Until that clears and the sun shines once again, there won't be a lot of upward movement in coin prices for now.