Looking for investing ideas? Here’s your weekly digest of the Globe’s latest insights and analysis from the pros, stock tips, portfolio strategies plus what investors need to know for the week ahead.
GameStop, Reddit and beyond: Frenzied retail trading, outrageous valuations, easy money drive market madness
Without a doubt, the major story in investing these days is the saga that has pitted retail investors on social media forums such as Reddit against hedge funds short-selling stocks. The spectacle surrounding such formerly beat-up stocks as GameStop, AMC and BlackBerry seemed to come out of nowhere, Tim Shufelt and Mark Rendell write. But the retail investing movement that set the whole episode in motion has actually been building for several months.
Miniscule interest rates have made the stock market the only game in town. Since markets bottomed last March, the S&P/TSX Composite Index, the Canadian benchmark, is up by 54 per cent. In the U.S., the S&P 500 Index has gained 66 per cent, while the tech-heavy Nasdaq Composite Index has climbed 91 per cent. It’s getting harder to ignore the signs that speculative excess has inflated the bubble in stocks. Read more here.
Explainer: How did the Reddit stock market rally happen and why did it start to fizzle?
Opinion: GameStop is a great David vs. Goliath story, but it’s no blueprint for investing success
Tax matters: Social media-driven trading frenzy has tax implications
Read more: BlackBerry executives sold shares as Reddit-driven rally started
High-flying stocks crash to earth as trading platforms hit the brakes
The unprecedented battle between small investors and big-money pros took a sharp turn this past Thursday, as Wall Street hit back, David Berman and Clare O’Hara write. A number of popular online trading platforms in the United States and Canada imposed strict limits on stock trades, ostensibly to save unsophisticated investors from making rash moves. As a result, a number of high-flying names – GameStop, AMC and BlackBerry included – came crashing downward.
Robinhood Markets, the popular trading platform that recently ushered in an era of free stock trading in the United States, limited trades on eight stocks. WeBull Financial said it would restrict its clients from taking new positions in some stocks, and allow only existing shareholders to liquidate (or sell) their current holdings. In Canada, Toronto-Dominion Bank followed suit. Read more here.
Rob Carrick: A sure sign of an overheated stock market – people are trading from the bathroom
David Rosenberg: Forget theme parks, restaurants and air travel. Here’s a post-pandemic investment idea with a better chance of success
Want a post-pandemic recovery trade that stands a much better chance of success than theme parks, restaurants and air travel? Try clothing, David Rosenberg writes. The apparel stocks, both on the retail and production side, are on a bona fide uptrend, and for good reason. We can debate the extent to which we all go back to work at the office full-time. We can debate whether we will travel by air or eat out as much as we did before. But there is no doubt that once we’re all vaccinated, we will be heading out and about.
And here is the issue: As we go back out and engage socially or professionally, we are going to need new clothes for two reasons. The first is that this is an area of spending that has been totally neglected. The second is that we can’t fit into our existing wardrobes. We ate too much during lockdown and exercised a lot less. Read more here.
The 2021 Globe and Mail online brokerage ranking: Who’s best for investing ... and answering the phone
Soaring stock markets always stoke demand for online investing, but what we’ve seen since the stock market crash of early 2020 is next-level intense, Rob Carrick writes. Trading volumes have surged in the online brokerage business, as have applications for new accounts and requests to upgrade existing accounts for margin trading. Amid this burst of activity comes the 22nd annual Globe and Mail online brokerage ranking. Use it to find a broker that will best set you up for long-term investing success rather than a joyride in a hot stock market.
More from Rob Carrick: An RRSP investing strategy for the scorching hot market of 2021
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The case for underappreciated dividend drivers such as Fortis
Markets are so, er, buoyant right now that stocks just poking along look like complete losers, Rob Carrick writes. Take the blue-chip, dividend-growth stalwart Fortis, for example. “Fortis stock has done absolutely terribly recently,” a reader recently told me via e-mail. “Have I missed something? What has changed?”
The answer is that Fortis is as Fortis ever was. A utility stock that delivers long-term value to investors. Over the past nine months, Fortis shares are down 2 per cent while the S&P/TSX Composite Index gained 24 per cent. But investors who held Fortis shares through the past five years have made a cumulative 44 per cent or so, pretty much even with the S&P/TSX Composite. Fortis crushed the index 58 per cent to 27 per cent over the previous 10 years.
What investors need to know for the week ahead
The week ahead will be another busy one for financial results. Companies reporting include BCE, Alphabet, Amazon, Alibaba, Pfizer, Imperial Oil, Exxon Mobil, UPS, Brookfield Property Partners, Brookfield Infrastructure Partners, Brookfield Renewable Partners, Ford, eBay, Suncor, Bristol-Myers Squibb, Gilead Sciences, Merck, Philip Morris, Saputo, Canada Goose and CAE.
Canada’s employment numbers for January will be released on Friday. Other economic data on tap include: U.S. construction spending for December (Monday); U.S. factory orders for December (Wednesday); Canada’s merchandise trade deficit and U.S. goods and services trade deficit for December (Friday).
Looking for more investing ideas and opinions?
- Insider Report: Bill Gates cashes out $370-million from this large-cap Canadian dividend stock
- Expected returns for the 26 financials stocks in the S&P/TSX composite index
- Book value bargains in the TSX to help power your portfolio
- This dividend stock is displaying a bullish ‘golden cross’
- The week’s most oversold and overbought stocks on the TSX
- A veteran’s guide to strategically picking dividends
- Gordon Pape’s mailbag: Surging gaming and pet-care ETFs, RRIF planning, and solving a Brookfield mystery