I seldom look at the overall stock market to see how it is going. I read the daily headlines, but rarely take a look back since January to see what has happened on the stock market. I would rather look at my own portfolio to see how to improve it this year instead of looking at what others are doing.
Over the past few months, I noticed that the benchmarks were quite negative. On a regular basis, I use 2 dividend ETFs to see if I’m doing well on the stock market (XDV and VIG). Using benchmarks tells me if I’m doing a good job or if I should stop wasting my time reading financial statements! Hahaha! Here’s what has happened this year with the two benchmarks:
This chart gives you the return on the ETF price without dividend. However, since my portfolio is paying dividends, if I ignore both payouts, it almost comes down to the same thing. For the record, my portfolio is showing +2.08% dividends excluded. When I saw how both benchmarks were way down, I thought of looking at the S&P 500 and the TSX for the same period:
Then, I was even more surprised: The overall market did better than dividend stocks in a bearish market. Funny enough, this is not what financial theory told us about dividend investing. These companies should outperform the market with their stability when volatility kicks in. I’ve already covered this issue a month ago when I explained that dividend stocks do worse than the stock market. If you are considering quitting dividend investing as your main investing strategy, I think you should click on that article and take a look. It’s not that bad.
Will we Finish in the Red?
Do you think we will continue to post negative results on the stock market this year? To be honest, I’m a bit surprised that the stock market has done so bad. I don’t see the reason why people are selling right now.
Is it because we have been riding an incredible bull market for the past 6 years and people are scared?Is it because we are one trade away from looking like the Chinese stock market?Is it because the economy is not going that well and the Government is hiding stuff from us?Is it because Governments are so indebted with their QEs that they will soon hit the wall?
This is probably what is you are going to read in many financial newspapers. Keep in mind that the media sells when they promote horror stories about how you will lose money. They rarely make a big hit telling you will make some… Funny enough, pain of loss is stronger than any type of pleasure for most human beings.
I don’t really mind if we are going to hit a negative year on the stock market. I actually think it’s a good thing for my portfolio as I will be able to buy cheaper stocks (if I ever sell my house! Hahaha!).
Still, I think we have an opportunity for a last minute bull market if quarterly results are stronger than expected. Third quarter results will be at the center of my attention as this is where I will see which company is a real deal.