ThongSam/iStockPhoto / Getty Images
Hello Trade Secrets readers!
This is our weekly newsletter tied to Trade Off, The Globe and Mail’s free stock-picking contest. Hopefully the new season has been a successful one for you so far! We’ve seen plenty of market volatility of late. But as we highlight below, the long-term trends still favour investors.
Was this newsletter forwarded to you? Be sure to sign up to receive the Trade Secrets newsletter in your inbox.
The Leaderboard
It’s still early and the roller-coaster ride in the markets has meant multiple shifts on the Trade Off leaderboard. Geopolitical headlines have led to a mix of up and down days for oil, gold, tech and everything in between, and Trade Off players who are seeing big gains have stock picks in energy and mining.
In the very short term, sometimes it’s just a game of luck based on news flow. For example, perhaps you held shares of Arm Holdings, prior to the company’s positive announcement to make its own chips. Or perhaps you bet on the Canadian renewable energy firm Boralex, prior to the news it would be acquired. On the other hand, you may have picked shares of market darling Dollarama, only to see the stock struggle after a soft sales outlook.
This Week in Markets
If Trade Off has helped introduce you to the benefits of investing, that’s a good thing! Much of what’s happening worldwide is out of your control. But as an investor, you can have some control over your financial future. And don’t just take my word for it: Recently, one of the most influential business leaders urged people to offset our uncertain future by becoming investors.
Larry Fink, CEO of the world’s largest asset manager BlackRock, urged people in his annual shareholder letter to focus on having a stake in AI’s upside, rather than just worrying about AI’s impact on jobs. Without broader participation in the markets, he believes AI could widen the gap between those who benefit from it and those who don’t.
In my humble opinion, we should embrace the idea of teaching our kids about the benefits of financial literacy. It’s something I wrote about last year.
Fink also made the case for staying invested over the long term, even if things seem dicey in the short term. “Over the past two decades, every dollar invested in the S&P 500 grew more than eightfold. Miss just the 10 best days, and you would have earned less than half. And some of the market’s strongest days came amid the most unsettling headlines,” Fink wrote.
On a related note, one top Wall Street firm actually boosted its outlook for the S&P this year, despite all the uncertainty. Strategists at Barclays believe that even with all the worries, there’s enough muscle behind the U.S. economy to power earnings for S&P companies higher by as much as 15 per cent this year. That profit lift, in Barclay’s opinion, justifies higher valuations for stocks.
Trade Secret Tips
There’s been lots of talk about how oil’s surge influences what you pay at the gas pump. But there are some investor considerations, which The Globe and Mail has been actively exploring. For active investors, here’s some analysis on what oil prices could mean for transportation stocks.
Meanwhile, if you want to set up your own watchlist of stocks, whether it’s energy names or stocks that could be impacted by the oil swings, you can do that here.
And finally, while some might feel the urge to save in these uncertain times, higher oil prices have raised inflationary concerns. Some new findings highlight how inflation can ultimately eat into the value of your cash.
Good luck with the trading week ahead!
Jon
Jon Erlichman is the founder of Ticker Take on YouTube and a contributor to BNN Bloomberg.