I seldom look at the overall stock market to see how it is going. I read the daily headlines, but rarely take a look back since January to see what has happened on the stock market. I would rather look at my own portfolio to see how to improve it this year instead of looking at what others are doing.
Over the past few months, I noticed that the benchmarks were quite negative. On a regular basis, I use 2 dividend ETFs to see if I’m doing well on the stock market (XDV and VIG). Using benchmarks tells me if I’m doing a good job or if I should stop wasting my time reading financial statements! Hahaha! Here’s what has happened this year with the two benchmarks:
This chart gives you the return on the ETF price without dividend. However, since my portfolio is paying dividends, if I ignore both payouts, it almost comes down to the same thing. For the record, my portfolio is showing +2.08% dividends excluded. When I saw how both benchmarks were way down, I thought of looking at the S&P 500 and the TSX for the same period:
Then, I was even more surprised: The overall market did better than dividend stocks in a bearish market. Funny enough, this is not what financial theory told us about dividend investing. These companies should outperform the market with their stability when volatility kicks in. I’ve already covered this issue a month ago when I explained that dividend stocks do worse than the stock market. If you are considering quitting dividend investing as your main investing strategy, I think you should click on that article and take a look. It’s not that bad 😉
Will we Finish in the Red?
Do you think we will continue to post negative results on the stock market this year? To be honest, I’m a bit surprised that the stock market has done so bad. I don’t see the reason why people are selling right now.
Is it because we have been riding an incredible bull market for the past 6 years and people are scared?
Is it because we are one trade away from looking like the Chinese stock market?
Is it because the economy is not going that well and the Government is hiding stuff from us?
Is it because Governments are so indebted with their QEs that they will soon hit the wall?
This is probably what is you are going to read in many financial newspapers. Keep in mind that the media sells when they promote horror stories about how you will lose money. They rarely make a big hit telling you will make some… Funny enough, pain of loss is stronger than any type of pleasure for most human beings.
I don’t really mind if we are going to hit a negative year on the stock market. I actually think it’s a good thing for my portfolio as I will be able to buy cheaper stocks (if I ever sell my house! Hahaha!).
Still, I think we have an opportunity for a last minute bull market if quarterly results are stronger than expected. Third quarter results will be at the center of my attention as this is where I will see which company is a real deal.
How’s Your Portfolio?
I’m curious to know how many of you show positive results so far this year. How are you doing? Are you ahead of the market?
Thanks for the read.
My portfolio so car -2.5%
What do you think of kmi stock?
Yiels 7.3% after sharp decline.
Thanks
Hello Ami,
Thx for stopping by!
It’s not fun to be down, but you are doing better than the overall market, congrats!
KMI, as many oil & gas related stocks, is going through a tough period. The company has a solid business model and its dividend is definitely attractive. Management has a focus on dividend growth (expecting 10% per year until 2020). KMI infrastructure is nearly impossible to replicate. Therefore, if it can go through the current headwinds, this will be a strong investment.
Cheers,
Mike
It’s hard to say, as the House has just approved the budget, which would send stock higher. Christmas seasons generally drive the stock up due to increase consumer spending.
Now, if we are in the dividend pathway, as long as we continue to buy the companies with multi-years of dividend paying stock with a healthy cashflow and cash hoard, we should be fine.
Hello Vivianne,
I think you are right; we will hit a small bull market toward the end of the year. I’m confident next quarter results and Holidays sales will be positive. Right now, we are definitely in a great timing to invest money!
In the meantime, dividend payments make it smooth in our portfolios.
cheers,
Mike
The short answer… who knows. With this insane volatility we have been seeing the last couple of months the market may rally to all time highs before we see 2016 or it may plunge like a rock. The truth, either option is totally viable in this economic climate we are in. Love hearing/reading all the talking heads chime in with their predictions. No one knows a single thing. Beginning of 2014… who called for a total collapse/destruction of oil prices and oil drilling in the U.S. Not one person. Don’t really care where the market is currently or headed as long as my dividends continue to get paid.
Honestly, I don’t really understand why there is such high volatility at the moment. It doesn’t really matter as long as companies keeps selling and making profit, but I like to understand market phenomenon. It seems we live in a constant “we are one day before Lehman Brothers” each day!
Hey Mike. Thanks for the article. For myself, my portfolio is in the red because i’m so heavily invested in OIL. I couldn’t and didn’t predict the oil price declines. It was crazy fast and before I know it, I didn’t want to sell any of my holdings at a loss so I just averaged down my best quality oils such as Exxon and Chevron.
Up or Down, it’s all good. Whatever will happen will happen, we just gotta invest regularly and more often during the pullbacks. No fear. Stick to the plan and focus on Quality. Focus on the dividend stream.
Thanks for sharing and best of luck to us my friend. Cheers Mike.
Hello Tyler,
The oil industry created a big hole in many investors portfolio. I’m not worried about companies such as CXV and XOM for the next two years but let’s hope the situation change before that. If not, it could become ugly 😉
I wish I had more money to invest right now; everything is used for my RV project at the moment.