# Investment Themes for 2013



## Belguy (May 24, 2010)

I watched two bank economists discuss their thoughts on investing for 2013 on BNN today.

They both felt that, given all of the debt out there, that growth would continue to be tepid and that the tentative recovery would continue.

They felt that, if you are holding equity investments at the current time, you must have confidence that the fiscal cliff will be resolved.

They predicted a rise in the TSX of between 5 and 10 per cent next year which might be slightly better than the S&P gain although I have heard others state that they like the U.S. prospects better than those for Canada.

Mid sized gold stocks might be another idea. Franco Nevada was named.

A return of between 5 and 7 per cent, all in, for the banks was predicted. Sun Life was suggested as a financial stock worth considering in the Lifeco segment.

Bombardier was also suggested.

Please post either your own themes for 2013 or some of those that you may have picked up from the media on this thread.

Merry Christmas to all and I hope that we will be hearing from you soon using your brand new tablet that you received for Christmas.


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## doctrine (Sep 30, 2011)

I'm holding the dividend paying stocks I already have.. I am pretty confident that I'll get all the dividends in the companies I'm holding, so there's my 5%. Since I've been loading up over the last 6 months, my plan is to hold tight until June and the classic "sell in May" drives stock prices down 10-20%. Then I will probably start picking away at high quality names that will still be giving me 5% dividend yields.


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## dogcom (May 23, 2009)

First year after the a presidential election is usually not that good.

Gold stocks should be good except when the overall market is being hit especially hard.

January stock market could be good if Fiscal Cliff is solved and then it will drop after that.


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## fatcat (Nov 11, 2009)

i hope the dow tanks in fiscal-cliff anxiety so i can buy a dow etf because the dow 30 has a great mix of companies

i think high-market cap industry leaders with cash that pay dividends is about the as good a place as any, stay away from bonds, utilities will still be a great place, i like ZUT a lot

i think reits and high-yield bonds will still be a good place to be

i think a lot of that "bond fear money" will be looking for a home in equities if we get anything like a whiff of hope and stability


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## newfoundlander61 (Feb 6, 2011)

My call is that the S&P will out perform the TSX, so an index fund that mirrors the S&P would be a good use of funds for the next 12 months.


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## Jungle (Feb 17, 2010)

I will be focusing on couch potato strategy, getting allocation 10% bonds and 90% equties with e-series funds. Other 3 major indexes split into three. Was at 98% equity for last couple of years and got burnt in 2011 with no fixed income. (the joys of learning  

I will stop buying stocks after some great picks in the past. (lucky) I wont sell the stocks because they will incur a capital gain.


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## marina628 (Dec 14, 2010)

For 2013 I am buying stocks for all my registered accounts.


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## Cal (Jun 17, 2009)

Sticking with the plan. 'Investing Themes' are just a distraction, and the media is not a great source for financial advice.


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## kcowan (Jul 1, 2010)

I plan to continue to acquire good dividend paying stocks on weakness. When will the crash finally get into high gear?


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## zylon (Oct 27, 2010)

*From Hanif Mamdani's November 2012 article:*









https://www.phn.com/portals/0/pdfs/Articles/High-Yields-Role-in-a-Zero-Interest-Rate-World.pdf
(slow loading - may take a minute)

~~~~~~~//~~~~~~~

I'm happy with my current allocations; have about 14% in cash.
Will be buying whatever gets hammered providing I'm convinced
it will recover in 3 to 5 years.


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## marina628 (Dec 14, 2010)

Dividend paying stocks have replaced my GICS as they renew ,hard to lock up money for 2%.


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## Belguy (May 24, 2010)

"The Toronto Stock Exchange, with its top-heavy weightings in resources and financials, was one of the worst performers in the developed world in 2012."

"As of the close of trading on December 17, the S&P/TSX Composite Index was up a meagre 2.7 per cent for the year. Compare that with the 13.7 per cent advance in New York's S&P 500 and it's clear that we've fallen way behind. Even European markets did much better than us despite all the troubles in the euro-zone. In Germany, the Frankfurt DAX Index gained almost 29 per cent this year while in London the FSTE 100 was up 22 per cent."

"Clearly, it is time we stopped being so myopic about where we put our money."

--Gordon Pape, Toronto Star, December 24, 2012

With this in mind, what percentage of your portfolio do you expect to have invested in Canadian Equities as we enter 2013?


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## hboy43 (May 10, 2009)

Belguy said:


> With this in mind, what percentage of your portfolio do you expect to have invested in Canadian Equities as we enter 2013?


Same as this year. I don't really pay much attention to time frames under 5 years, so what happens in any one year is immaterial. This year's dogs often make another year's stars.

hboy43


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## fatcat (Nov 11, 2009)

Belguy said:


> "The Toronto Stock Exchange, with its top-heavy weightings in resources and financials, was one of the worst performers in the developed world in 2012."
> 
> "As of the close of trading on December 17, the S&P/TSX Composite Index was up a meagre 2.7 per cent for the year. Compare that with the 13.7 per cent advance in New York's S&P 500 and it's clear that we've fallen way behind. Even European markets did much better than us despite all the troubles in the euro-zone. In Germany, the Frankfurt DAX Index gained almost 29 per cent this year while in London the FSTE 100 was up 22 per cent."
> 
> ...


belguy, i agree that international markets are a good place to be but be careful of "hindsight investing" the big winner for 2013 is out there but we have no idea what it will be based on past returns, i am sticking to north america mainly since i have so many good companies to choose from

as far as international stocks go, i thought this graphic from zero hedge was kind of interesting: http://www.zerohedge.com/news/2012-12-19/ultimate-valuation-matrix-global-stocks


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## Belguy (May 24, 2010)

Thanks for the interesting chart, fatcat!! Internationally it looks like Emerging Markets and South Korea would be interesting plays going forward based on that data.

My Vanguard Emerging Markets ETF is currently in the process of kicking South Korea out and moving it to it's International ETF. Since I hold both, I won't be making any switches aside from my rebalancing chore in January.


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## lonewolf (Jun 12, 2012)

I have back tested a lot of astrology from the bible for playing the market. Gann I think was on to something in regards to using the astrology from the bible to make money in the market. 2013 king salomon ring ?


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## 44545 (Feb 14, 2012)

Cal said:


> Sticking with the plan. 'Investing Themes' are just a distraction, and the media is not a great source for financial advice.


^^^ This! :encouragement:


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## Belguy (May 24, 2010)

What are you doing about your fixed income allocation going into the new year?

"Last January there was almost universal agreement (including on this forum!) that the bull market in bonds was finally over. I cannot recall reading a single analysis (including on this forum!) that concluded that bonds would outperform stocks in 2012. Well, they did--again. As of December 17, the DEX Universe Bond Index showed a year-to-date gain of 3.19 per cent. That's not spectacular but it beat the TSX. Corporate bonds did even better with the DEX All-Corporate Bond Index ahead a respectable 5.78 per cent for the year. Now, all of the experts are saying that 2013 will be the year the bond bull ends. Maybe they'll be right this time, but just don't bet on it."

--Gordon Pape, Toronto Star, December 24, 2012


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## 44545 (Feb 14, 2012)

Belguy said:


> What are you doing about your fixed income allocation going into the new year?
> 
> "Last January there was almost universal agreement (including on this forum!) that the bull market in bonds was finally over. I cannot recall reading a single analysis (including on this forum!) that concluded that bonds would outperform stocks in 2012. Well, they did--again. As of December 17, the DEX Universe Bond Index showed a year-to-date gain of 3.19 per cent. That's not spectacular but it beat the TSX. Corporate bonds did even better with the DEX All-Corporate Bond Index ahead a respectable 5.78 per cent for the year. Now, all of the experts are saying that 2013 will be the year the bond bull ends. Maybe they'll be right this time, but just don't bet on it."
> 
> --Gordon Pape, Toronto Star, December 24, 2012



I adjusted my the asset allocation in my IPS from 60/40 equity/fixed income to 75/25 this year.

I did this after a market dip, realizing I was gleefully enjoying equity "going on sale" and didn't think twice about the paper loss.

I stopped short of all equity, taking cues from Benjamin Graham and others who recommend no less than 25% of either fixed income or equity, even though I was comfortable with all equity.


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## Tornbysaber (Nov 25, 2012)

fatcat said:


> i hope the dow tanks in fiscal-cliff anxiety so i can buy a dow etf because the dow 30 has a great mix of companies
> 
> i think high-market cap industry leaders with cash that pay dividends is about the as good a place as any, stay away from bonds, utilities will still be a great place, i like ZUT a lot
> 
> ...


Quick question, this dow 30 ETF is it the "ProShares Ultra Dow 30 ETF"? I found that TD actually has a similiar product called TD e-Series Dow Jones Industrial Average Index Mutual Funds ($US). I understand there's a difference since one is ETF and the other being a mutual fund, but for a relatively small amount, say less than 10,000 USD, which product would be better? 

Personally I am leaning toward the mutual fund with cost averaging method over 6 months or so, but I am curious as to what you guys think. 

Thanks.


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## Belguy (May 24, 2010)

Here is another one to consider:

http://www.etfs.bmo.com/bmo-etfs/glance?fundId=72051

As a rule, I generally prefer the fund with the lowest fee.


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## 44545 (Feb 14, 2012)

You don't want ProShares Ultra Dow 30 ETF. It's not a simple index tracker. From the data I found:

"The Ultra Dow30 seeks investment results generally equivalent to twice (200%) the performance of the Dow Jones Industrial Average Index."

Sounds like some kind of swap or hedge fund. I'd stick with the e-series fund.


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## dogcom (May 23, 2009)

Here is a video you might enjoy Belguy. Gary Shilling figures S&P earnings will drop housing prices will decline again and bonds will do very well as the long bond drops from 2.8 - 2 percent in 2013. 

http://finance.yahoo.com/blogs/dail...hilling-backing-bonds-2013-121557287.html?l=1


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## dogcom (May 23, 2009)

I found another fun article to read. 

http://moneytalks.net/topics/stocks...-expect-global-markets-to-drop-nearly-20.html


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## fatcat (Nov 11, 2009)

Tornbysaber said:


> Quick question, this dow 30 ETF is it the "ProShares Ultra Dow 30 ETF"? I found that TD actually has a similiar product called TD e-Series Dow Jones Industrial Average Index Mutual Funds ($US). I understand there's a difference since one is ETF and the other being a mutual fund, but for a relatively small amount, say less than 10,000 USD, which product would be better?
> 
> Personally I am leaning toward the mutual fund with cost averaging method over 6 months or so, but I am curious as to what you guys think.
> 
> Thanks.


as belguy says, if you want canadian dollar hedged you can go with ZDJ for .23 ... if you want to go in american dollars you can buy SPDR DIA for .18

the td e-series at .33 allows you to easily reinvest your proceeds but you need to buy only at td which means opening an account there whereas the others are available at any broker

i think the dow 30 has a great set of companies that are diversified, pay a decent aggregate dividend and have good international exposure .. think it is a great choice for american exposure .. the other way would be ZUE for the full 500


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## Belguy (May 24, 2010)

At this point in time, it would be interesting to go over the predictions that some of these pundits made at this time last year about what might happen in 2012. How often do you hear any of them admit that they were off the mark in their predictions for the previous year when they are spouting off their new predictions for the coming year.

We should keep some of the predictions for next year in a file and have a look at them come next December. It should make interesting reading!!

There are no end of pundits who THINK they know, but how many of them really do and what has their track record been like?


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## Belguy (May 24, 2010)

Are you planning on taking on more risk for your portfolio in 2013 or are you planning on taking a more conservative approach? Are you a younger investor or approaching retirement or already retired? What is your target asset allocation for cash/fixed income/equities?


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## Tornbysaber (Nov 25, 2012)

Thanks guys, I think will go with the e-series fund from td.


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## Belguy (May 24, 2010)

For those who care to disclose, going into 2013, what is your fixed income allocation and what fixed income investments do you hold?

I am planning to concentrate on investment grade corporate bonds.

Interesting reading:

http://seekingalpha.com/article/1098431-4-best-etf-strategies-for-2013

Any thoughts?


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## fatcat (Nov 11, 2009)

as far as fixed income i am going to move funds from GIC's to corporate bonds and preferred share etfs and will stay around 50/50 bond/preferred to equity (i am categorizing high-yield in the equity column though i am not convinced that this is correct, i'm told it is, but i read that the risk assigned to high-yield seems to be steadily falling)

i definitely agree with this from your cited article:


> Dividend stocks and ETFs lagged the broader market last year, primarily due to concerns relating to potential tax hike this year. Now with a favorable agreement in place regarding tax rates on dividends, the demand for dividend-paying stocks and ETFs will go up again.
> 
> Dividend taxes for top-bracket taxpayers will rise from 15% to 20% (plus an additional 3.8% surcharge for Obamacare, to a total of 23.8%)—much less than 39.6%, if there was no deal. Dividend taxes for those in the lower tax brackets would remain at the current levels.
> 
> ...


 and will be putting money in XHD


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## Belguy (May 24, 2010)

Included in this link are the top Vanguard U.S. ETF's for 2013 as chosen by the editors of Money Magazine (the index and managed funds are not available to Canadian investors but the ETF's are):

https://personal.vanguard.com/us/insights/article/money-magazine-best-funds-012013


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## kcowan (Jul 1, 2010)

> Martin Roberge released his three "contrarian" investment themes for 2013. Roberge focuses on areas that have been shunned by investors over the past few years, but where he believes industry fundamentals are past their worst point. 2012 was a banner year for his contrarian calls as Canadian lumber stocks (114%), auto & parts (43%) and natural gas equities (23%) strongly outperformed the markets.
> 
> This year, Roberge believes that Canadian aerospace (Bombardier and CAE), U.S. semiconductors (Market Vectors Semis ETF (SMH)) and U.S.
> medical equipment stocks (iShares DJ Medical Devices ETF (IHI)) offer good risk/reward investments for investors.


From Canaccord daily investor letter. YMMV

(Not for belguy as he does not time the markets. Buy, hold and lose your shirt!)


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## Belguy (May 24, 2010)

kcowan said:


> From Canaccord daily investor letter. YMMV
> 
> (Not for belguy as he does not time the markets. Buy, hold and lose your shirt!)


Who's losing his shirt? Not me!! Buy, hold, and prosper.:encouragement:


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## kcowan (Jul 1, 2010)

Here is a sobering statistic for anyone who listens to the industry pundits



> CXO Advisory Group has been collecting data from market forecasters since 1998.
> 
> The firm has tracked and graded thousands of market forecasts made by dozens of popular gurus over the years. The overall results are not good. CXO has concluded that the market experts accurately predicted market direction only 48.0% of the time.
> 
> The best performing guru had a 68.2% grade while the worst performing one had a 21.7% grade. Among gurus with more than 100 observations, the best grade was 65.0% while the worst was 28.9%. As a matter of interest, popular “Mad Money” television host Jim Cramer had a 46.8% accuracy rating based on 62 market predictions. (Barron’s)


Do your own due diligence and ignore all the noise!


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## Belguy (May 24, 2010)

kcowan said:


> Here is a sobering statistic for anyone who listens to the industry pundits
> 
> Do your own due diligence and ignore all the noise!



So, what's the point in running a predictions contest?


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## dogcom (May 23, 2009)

I think kcowan likes to have a little fun like the rest of us, a prediction contest is just a game.


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## My Own Advisor (Sep 24, 2012)

Game on...should be fun. Thanks kcowan


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## kcowan (Jul 1, 2010)

dogcom said:


> I think kcowan likes to have a little fun like the rest of us, a prediction contest is just a game.


Also the winners tend to be people who ignore industry pundits like I do.


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## Belguy (May 24, 2010)

And so, in other words, just about anybody can outperform the pundits????


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## Toronto.gal (Jan 8, 2010)

kcowan said:


> Also the winners tend to be people who ignore industry pundits like I do.


Regardless of that, there is simply too much unpredictability for anyone to be able to do anything, other than simply take a very wild guess as to where we'll be at the end of the year. 

We are not simply dealing with bears/bulls & the predictable weakening global economy, but also with many erratic factors, such as reduced fundamental support/political histrionics, etc. On top of all that, who would have predicted other situations that greatly affected the markets, like the Arab Spring/Fukushima in 2011, for example? The former I never thought would take place in my lifetime, and I don't think I was alone in that. 

Although it's simply a fun game, it's for the reasons mentioned above that I no longer compete.


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## Spudd (Oct 11, 2011)

I just put guesses for fun.  Heck, this year I won the USD/CAD category and it was a total guess.


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## Belguy (May 24, 2010)

Toronto.gal and I are of the same mind---as usual!!:rolleyes2::tongue-new::encouragement::biggrin:


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## Toronto.gal (Jan 8, 2010)

Spudd said:


> I won the USD/CAD category and it was a *total guess.*


My point exactly. 

LOL Belguy. :biggrin-new::highly_amused:eaceful:


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## lonewolf (Jun 12, 2012)

T.Gal

Love your posts

Have you ever tried to find when an erratic factor or news event on an unlabeled chart of the S&p or dow took place ? Good luck with that.


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