Why Holding Stocks for The Long-Term is Important

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One of the key traits of successful investors is the ability to think from a long-term perspective. Unlike short-term traders and speculators, long-term investors avoid all the daily noise and volatility in the markets and hold equities for the long-term as measured in years or even decades. Being patient and having the courage to not to sell out during huge declines in markets is especially critical. Markets go through bull and bear markets. Just because markets have performed extremely well over the past few years it does not mean that will continue forever.

With that said, a recent article at Capital Group included the below showing average annual return over all the 10-year periods from 1937 to 2021 was a decent 10.57%:

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Source: How to handle market declines, Capital Group

The average annual return for the 10-year period ending 12/31/21 was even better at 16.55%. But it would be foolish to expect such great returns for the next 10-year period.

Related ETF:

  • SPDR S&P 500 ETF (SPY)

Disclosure: No positions

Railroad Stocks Are Following The Market So Far This Year

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Railroads are generally considered as a good barometer of the overall state of the economy. Hence it is wise to keep an eye on the direction of the stocks in this sector. The S&P 500 is flirting with the bear market so far this year with a decline of about 18%. Soaring inflation and rising interest rates are bound to cause further declines in the equity market. Railroads are also tracking the overall market. Since later March they have been on an overall downward trend as well as shown in the chart below:

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Source: Yahoo Finance

Canadian railroads have declined slightly less than their American peers. Norfolk Southern has been the worst performer with a loss of over 21% year-to-date.

Railroads are great for long-term investors. However in the current environment it is better to add them to the watchlist and monitor them for attractive entry points later. One way to grab them on the real cheap is to have buy orders in at much lower prices. So when there is dramatic declines in the market on a day it is easy to accumulate them at the best price possible.

Related Stocks:

  1. Canadian National Railway Co (CNI)
  2. Canadian Pacific Railway Ltd(CP)
  3. CSX Corp (CSX)
  4. Union Pacific(UNP)
  5. Norfolk Southern Corp(NSC)

Disclosure: Long CNI, CSX, NSC and UNP

Why Diversification of Assets in a Portfolio is the Key

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US equity markets have performed poorly so far this year to say the least and are the edge of tuning into a bear market. Last week was especially brutal as retail and consumer staples sector were also thrashed. Sectors such as utilities and energy have offered shelter from the carnage but it remains to be seem if their strength will continue to hold as volatility increases even more in the coming days and weeks.

With that said, I have written many times before that one way to reduce risk and cushion a portfolio from the market’s wild gyrations is to diversify one’s assets. Diversification is the simplest and easiest option available for retail investors to avoid huge losses. The following chart shows the importance of diversification over various asset classes in terms of returns from 2000 to 2020:

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Source: MFS

For example, though US large cap stocks have had excellent returns in the past few years, during the Global Financial Crisis (GFC) bear market of 2007-08 they were the second worst performers with a decline of over 38% in 2008.

Though we have many months to go in 2022, it remains to be seen how much growth stocks plunge by the end of the year should the equity markets end up in bear market.

Related ETFs:

  • Vanguard Mid-Cap Growth ETF (VOT)
  • iShares Russell Midcap Growth Index Fund (IWP)
  • SPDR S&P 500 ETF (SPY)
  • Vanguard Total Bond Market ETF (BND)
  • iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD)

Disclosure: No positions

The World’s Most and Least Corrupt Corrupt Countries: Charts

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Earlier this year, Transparency International released the 2021 Corruption Perception Index. According to the report, the least corrupt countries are Denmark, Finland and New Zealand. The most corrupt countries are South Sudan, Somalia and Syria.

The US was ranked 27th. Ukraine ranked 123 out of 180 countries and Russia came in at 136.

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Source: Where Corruption Is Rampant, Statista

Here is another take on the same data:

Source: Axios

Periodic Table of G-20 Countries Investment Returns 2000 to 2020: Chart

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The equity investment returns of the G-20 countries based on their benchmark index from 2000 to 2020 is shown in the chart below in the order of performance. The returns noted are in US dollars and do not include dividends and fees.

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Source: Quantalytica

Related EFTs:

  • PowerShares India (PIN)
  • SPDR S&P 500 ETF (SPY)
  • iShares MSCI Mexico Capped Investable Market (EWW)
  • iShares FTSE/Xinhua China 25 Index (FXI)
  • iShares MSCI South Korea ETF (EWY)
  • iShares MSCI Germany Index Fund (EWG)
  • iShares MSCI Canada Index Fund (EWC)
  • iShares MSCI Australia Index Fund (EWA)
  • iShares MSCI United Kingdom Index (EWU)

Disclosure: No positions