Hey folks, loving the energy and increased frequency of responses on here, seems like more and more are building up the confidence to invest, which can be scary at first. It’s a habitual commitment that, like anything, takes some practice but eventually becomes second nature. Like a car—I have no clue where the parts from come or how the engine works (nor do I care!), but it takes me from (a) → (b) and I love to drive.

Anyway, hopefully the written interactions I sometimes share are as helpful for you as they are for me as they feed nicely into these journals by sharing varying investing experiences.

If you are enjoying the Journal, please forward to your friends to subscribe. 

Personal Finance

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Stock Markets

Hi Eddie.

Jimmy’s mom here.

You may have covered this in previous newsletters but I'm wondering if you recommend broad market ETFs. One for TSX, S&P 500, International or do you feel that, in addition to those, it is wise to have sector specific ETFs such as financials, consumer discretionary, etc?

Appreciate your thoughts.

My Response:

Good questions.

When I was managing money at Richardson we would utilize these ETFs (and others). I've linked websites so you can review the data/statistics.

XIC—iShares Canada ETF, own the entire Canadian stock market. 0.05% management fee, and a 2.7% dividend yield.

XSP—iShares S&P500 C$ Hedged ETF, own the top 500 companies in the United States. 0.09% management fee and a 0.93% dividend yield.

XUS—same product iShares S&P500, just unhedged. If you want exposure to CAD/USD fluctuations. Our thesis was that gaming currency was a zero sum game so we would put 50% of our clients S&P500 exposure into each of XSP and XUS so we could be as neutral as possible. They are both listed on the TSX so you don't need to worry about having US dollars to purchase them, you can simply buy them in Canadian dollars. 

XIN - iShares EAFE ETF (Europe Asia Far East), you get large cap stock exposure to global stock markets, excluding US and Canada. 0.50% management fee (higher because it costs more to get exposure to international stocks, plus multiple currencies to account for back to C$). Dividend yield 2.72%. Good diversifier that folds in sectors not necessarily well represented in Canada or the US, relatively speaking. We would also use some mutual funds with managers that we thought were worth their Management Fee, like Capital Group, but we used XIN for a large portion of International exposure because it's an efficient way to get access to global stocks.

Regarding sectors, we didn't really venture into that. Because each of these indices is made up of all the sectors, in all their glory and doom and our expertise for the most part wasn't to figure out whether we should be overweighting Oil instead of the Financial industry, or Tech, or now AI vs Crypto. Our position was, get exposure, cost efficiently, to broadly diversified capitalistic markets and let them do their Darwinian thing, while we focused on financial planning and taxes and ensuring portfolios would satisfy the financial needs of clients.  Sometimes did include a small position in Primevest Capital, a Canadian Energy & Mining Hedge Fund Manager based out of Vancouver, for a small portion of our small cap Canadian Equity exposure, but that's dialing up the risk curve. Not sure you could buy it directly anyway, likely required to go through an advisor unless you have a significant hundreds of thousands to invest with them directly....

There is also the option of XEQT which is the iShares Core Equity Portfolio. It is 43% US, 25% Canada, the balance in International stocks. This could be your all encompassing global ETF that is available for Canadians to buy. Management fee 0.20% and dividend yield 2.8%.

The unfortunate thing is there's almost too much information out there…especially given there are thousands upon thousands of ETFs in the world. Leads to confusion or mistakes. 

Recommend keeping it simple with some combination of XSP, XIC, and XIN for the "core" of your equity portfolio and then if you feel the need to make some sector or single stock bets, reserve a smaller portion for that. 

Hope this helps! And let me know if you have any more questions.

Real Estate

Very quiet in terms of new opportunities. Seems everyone is off on holiday. Except us of course.

↑↑↑

I wrote that two days ago.

Yesterday, something interesting came up.

Stay tuned.

1 Quote

"I'm gonna go get the papers, get the papers."

Jimmy Two Time, Goodfellas

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