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Greetings, Trade Secrets readers!
This is our weekly newsletter for The Globe and Mail’s Trade Off stock trading competition.
Hopefully you enjoyed a restful weekend with family and friends. Perhaps you even sparked a few conversations about market turbulence. If you need a refresher on investor sentiment, we’ve got a full update below, along with tips that might help protect your portfolios over the long term.
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The leaderboard
We’re still in the early innings of our new season, so the leaderboard is just taking shape. Interestingly, some of the initial winners benefited from a group of stocks that were stars in our previous contest: gold companies.
Note that the new season of Trade Off began roughly a month after the Iran war started. And during that previous month, most TSX stocks slumped, including gold names. Some investors bought the dip, hence the early competition gains for our leaders, “Buylow” and “GougeAway.”
Will gold find its groove again? One bull says yes. Mark Haefele, chief investment officer of UBS Global Wealth Management, recently told investors he still believes bullion can reach US$6,200 by June, before pulling back.
Haefele argues that gold does not always shine during conflicts, especially in the early stages. He also expects the U.S. Federal Reserve will cut rates this year and believes central banks will pick up buying gold again.
The end of a chaotic quarter
U.S. stocks just had their worst quarter for performance in four years. Interestingly in Canada, while energy stocks soared in Q1, our tech sector equally had its worst quarterly stretch since 2022.
Here’s the reality: Traders generally don’t mind geopolitical conflicts. But they do worry about oil.
WTI futures, the benchmark for oil prices, closed above US$100 last week for the first time since 2022. In the past four instances when WTI settled above US$100 – 2008, 2011, 2013 and 2022 – the S&P 500 was, on average, 4 per cent lower three months later.
Bulls are banking on an end to the war. But shifting statements from the White House has led to what JPMorgan strategists have called “market paralysis.” For contest participants, one question to ask is whether investors will break out of that paralysis and return to the growth stocks that previously powered the market.
Take Shopify as an example. Its shares dropped by nearly a third in the first quarter. But according to a Bloomberg breakdown of average analyst estimates, Shopify remains on pace to post profit growth of more than 200 per cent in the next five years.
Trade Secret tips
We get many questions about spotting dividend standouts. There are several metrics to consider, but one of them is the dividend yield itself. Here’s some context on TSX stocks that have high yields right now. Always make sure to consider multiple factors with dividend investments, because sometimes high yields can be misleading.
Speaking of dividends, utilities can be a great sector for steady investor payouts. It’s also a sector Gordon Pape is monitoring right now. Here’s his advice on how investors can navigate market volatility.
Finally, if the recent roller-coaster ride for stocks has made you think about your retirement savings, it’s always helpful to cost out what retirement might look like. This calculator can help with that.
Wishing you the best over the next few trading days!
– Jon
Jon Erlichman is the founder of Ticker Take on YouTube and a contributor to BNN Bloomberg.