When investing, think like a landlord + MORE Feb 3rd

While 2022 was clearly a challenging year for almost everybody in the investment world, for robo-advisors it was also a test. How would these automated portfolio management services, whose primary selling point is low fees, perform in a sustained market downturn? A bear market is something that hadn’t occurred since they first appeared on the Canadian investment landscape in 2014.

They got clobbered just like everyone else. 

Typical portfolios lost between 8% and 15% of their value in 2022. But so did mutual funds and other higher-fee investing vehicles. The fact that both stock and bond holdings withered in tandem—an extremely rare occurrence historically—made one of robo-portfolios’ normally attractive attributes, transparency, a liability. Compared to the competition, they didn’t do that badly. 

Nonetheless, it behooves investors considering the switch to a robo-advisor to probe deeper into their options, asking tough questions around fees, performance, risk and the composition of portfolios…

Kyle Prevost, editor of Million Dollar Journey and founder of the Canadian Financial Summit, shares financial headlines and offers context for Canadian investors.

Mixed earnings results for Big Tech

The fourth-quarter tech earnings season has been difficult to paint with a single stroke… as with many things so far in 2023. Is the dominant story that Meta (META/NASDAQ) shares popped 27% on Thursday after CEO Mark Zuckerberg announced a “year of efficiency”? Or is it the fact that Apple (APPL/NASDAQ) had its first earnings miss in seven years?

Here are the Big Tech earning highlights:
Alphabet (GOOGL/NASDAQ): Earnings per share of $1.05 (versus $1.18 predicted) and revenues of $76.05 billion (versus $76.53 billion predicted).

Amazon (AMZN/NASDAQ): Earnings per share of $0.03 (versus $0.17 predicted) and revenues of $149.2 billion (versus $145.4 billion predicted). 

Apple (APPL/NASDAQ): Earnings per share of $1.88 (versus $1.94 predicted) and revenues of $117.15 billion (versus $121…

Markets never move in a straight line, yet if you look at a long-term chart of the S&P 500 you might argue otherwise.

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The annualized total returns for the TSX and S&P 500 (in Canadian dollars) were 9.6% and 11.7% as of December 31, 2021.

It is impressive, but the short-term volatility of the market can be quite extreme, and this year is a good example. The annual ups and downs of the market can lead investors to focus more on capital appreciation and depreciation. But stock returns come from both capital growth and dividend income, the latter being more predictable…