A Panasonic Corp's lithium-ion battery, which is part of Tesla Motor Inc's Model S and Model X battery packs, is pictured with Tesla Motors logo during a photo opportunity at the Panasonic Center in Tokyo, ahead of the 2013 Tokyo Motor Show, November 19, 2013.Reuters
One sign that an investing pitch is getting just a bit too popular comes when companies begin changing their names to feature the concept du jour. A fine example is unfolding right now in the mining industry, where companies are rushing to put "lithium" in their titles.
This week, Rostock Ventures announced it is becoming U.S. Lithium. Its announcement echoes similar moves by Menika Mining, which became American Lithium in April, and by Royce Resources, which changed its name to Lithium X Energy last November.
Maybe this rush to embrace the l-word stems from a sincere desire to inform investors of each company's core interest. But investors are advised to look beneath the label.
Three big numbers to note
21.11 Trading level of the Chicago Board Options Exchange Volatility Index Tuesday afternoon, a four-month high for the so-called fear index. The VIX is up about 50 per cent over the past three days.
-0.004% German 10-year government bond yield on Tuesday. It's the first time the benchmark European bond has fallen below zero.
14% Canada's household debt service ratio, which is exactly at its ten-year average.
Stock picks from the Street
Fortis Inc.
Given the more than 20 per cent gain in the S&P/TSX composite index since late January, it may be prudent to consider adding a defensive security to your portfolio. One such security to consider, recommends our equities analyst Jennifer Dowty, is Fortis - especially for those looking for reliable dividend growth and income.
SNC-Lavalin Group Inc.
The Canadian construction company that spent decades building roads, smelters and power plants from Alaska to Australia, has its sights on a piece of the $120 billion infrastructure spending boom planned in this country. Investors are clearly enthused over the prospects and willing to look past the company's recent legal woes: shares have climbed 25 per cent this year to nearly a two-year high. Scotiabank, among others, see more upside ahead.
The Rundown
A giant hiding in the TSX shadow
A recent deal deal has created the third-largest waste company in North America, and a giant new Canadian stock that offers investors in industrials something new, as opposed to the same old railways. At a market capitalization of more than $16-billion, Waste Connections Inc. trails only CP and CN and is nearly as large as SNC-Lavalin Group Inc., Ritchie Bros. Auctioneers Inc. and Bombardier combined. The stock has been rewarding shareholders big time of late. David Milstead looks at whether you should consider it as a core holding.
A bullish signal
Momentum investing has taken a beating in 2016, blamed for hedge fund losses in the first quarter and the S&P 500's worst start to a year ever. But a trading signal that's triggered by accelerating price trends over periods of a year or longer just turned bullish.
The risks of low-volatility funds
Low-volatility investing has proved to be one of the more consistent ways to beat the market in recent years. But their persistent outperformance and resulting popularity has a growing faction becoming more vocal about the risks of overcrowding in low-volatility funds, reports our Tim Shufelt.
This chart points to trouble ahead
The long-term closeness of the relationship between the S&P/TSX composite index and emerging markets equities is not only astounding, it may also be bad news for domestic investors, says our analyst Scott Barlow. To be bullish on Canadian equities, investors will have to resort to "it's different this time" arguments to explain the recent performance divergence between the S&P/TSX and emerging markets equities – even though the trend is 15 years old and firmly entrenched.
How nervous are investors? Very
Investors have amassed their largest cash pile since 2001 and cut equity holdings to a four-year low, rattled by worries over Brexit and policymakers' ability to bolster a fragile global economy, a Bank of America Merrill Lynch survey said on Tuesday.
Give bonds a chance
Entrenched low interest rates are causing a misguided re-think of bonds, argues our Rob Carrick. Bonds have never been more valuable than they are today by one key measure: correlation to the stock market.
Lofty targets for these TSX stocks
Wondering what stocks in the S&P/TSX composite index analysts are forecasting to post the biggest returns over the next year? Jennifer Dowty provides this interesting breakdown, and takes a close look at a materials stock that deserves some closer attention based on recent chart action.
The most bang for your RRSP contribution
Our John Heinzl answers a question many of us may have during our lifespan: when coming upon a big chunk of cash, should one use up all their RRSP room at once - or space it out. Some real tangible advice.
Cash descends on Southeast Asia
Southeast Asian stocks are winning fans again, with investors betting a rally that's driven equities from Bangkok to Manila to the highest levels since the middle of 2015 has room to run. Here's a great rundown of the key countries and what's attracting investors right now.
Ask Globe Investor
The Question: With interest rates as low as they are right now, do you recommend building a five-year GIC ladder?
The Answer: Normally, I'm a big fan of GIC ladders. The idea is to spread your money equally across guaranteed investment certificates maturing in one, two, three, four and five years. When the one-year GIC matures, you roll the proceeds into a new five-year GIC. A year later, when the original two-year GIC matures, you buy another five-year GIC, and so on. With a ladder, your cash gets reinvested at the highest available (i.e. five-year) rate, and if interest rates rise, you'll be earning a progressively higher yield on the funds you reinvest.
But here's the problem with building a ladder - at least a conventional five-year ladder - now: There just isn't a huge difference in yields, particularly among three-, four- and five-year GICs. I checked my discount broker's GIC offerings on Tuesday afternoon, and the top rates (all from the same financial institution) were 2.23 per cent for a five-year GIC, 2.22 per cent for a four-year GIC and 2.21 per cent for a three-year GIC. In other words, you're getting paid virtually no premium at all to lock in for a four- or five-year term compared with a three-year GIC, so why bother?
There is, however, a much bigger gap between the top three-year rate of 2.21 per cent, the two-year rate of 2 per cent and the one-year rate of 1.6 per cent. Given these rates, a three-year GIC ladder would make more sense than a five-year ladder.
You may be able to find higher GIC rates (use the GIC comparison tool under the "Personal Finance" tab on GlobeInvestor) but you'll likely find that rates are still clustered fairly close together for three- to five-year maturities, minimizing the benefit of locking in for the longest terms. If you're earning only, say, 10 or 20 basis points in extra yield by going out five years compared to three, you have to ask yourself if it's really worth it - particularly if you believe interest rates might start rising over the next couple of years. You can still build a ladder, of course, but a shorter ladder might be a better bet right now.
-John Heinzl
Do you have a question for Globe Investor? Send it our way via this form. Questions and answers will be edited for length.
Investing quote of the day
"The moment we knew would come has finally arrived, when everyone goes: 'Crap, they are going to leave the European Union.' There has been a big shift – it has been quite remarkable, that's undeniable." - Chris Beauchamp, a senior market analyst at IG Group in London, on yields plunging in Europe on the growing fears that Britain may soon leave the European Union.
What's up in the days ahead:
Investors hungry for income, but reluctant to load up on specific stocks and bonds, will want to check out a Gordon Pape column that recommends four funds to buy right now. They include a dividend ETF as well as a bond mutual fund. And they'll be more for income investors to ponder: David Milstead is digging deep into a Veritas analyst accounting alert concerning the Canadian real estate investment trust industry, while John Heinzl tells us about the five most common mistakes dividend investors make in this week's Yield Hog column.
Check out the Globe Investor calendar for more events.
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Compiled by Darcy Keith