Copy

First Thing First

The Manager of the Century

Yes, it's the nickname of Jack Welch, chairman and CEO of General Electric (GE) between 1981 and 2001, a twenty-year tenure during which the company grew +4,000%. Not bad, right? Back in 2005, when I was an MBA student, I spent hours on case studies covering GE. And we would all come up with the same conclusion: GE was a jewel. Simply one of the best companies, if not the best. $100 invested in GE in April 1986 would become $1,231 in December 2001. In comparison, the same $100 invested in S&P500 and Apple (AAPL) would become $567 and $297 respectively. It's a no brainer, GE was the star and AAPL a complete underground company. Click on the chart below:
Fast forward to June 2018. The same $100 invested in April 1986 is now worth $775, compared to $2,025 and $32,552 for the S&P500 and Apple respectively. GE is in limbo and some of its shareholders saw their retirement savings divided by two or three. Click on the chart below:
So what happened? Did GE lose its magic touch? Were Welch's replacements not as good as their predecessors? All the above and many more.
My point here is that, beyond the folly of investing all your savings in one company, I now understand what happened while dissecting these case studies: I was exposed to survivorship bias. That's right. The tendency to only study winners (survivors) while discarding losers. Like in this very example. I could have picked Enron or Nortel instead of Apple to compare to GE. It's a rampant bias amongst human beings. We all do it. We love connecting the dots. The dots that we see while forgetting about the gazillions dots that we don't see. It's fascinating.
Now, what is the probability that current MBA students work on case studies about the decline of GE and why Apple will most likely be the first one-trillion company? Highly probable.

Mutual Funds Portfolio

No, this is not a typo, I am launching a mutual funds portfolio. Actually, it's an index mutual funds portfolio. Although I am advocating for low cost ETFs, there is room for index mutual funds despite their higher costs (MER). So what's the catch? Trading costs. If you start with $5,000 and that you pay $10 each time you trade ETFs, that's a problem. Why? Because of the extra cost of 0.2% ($10/$5000). Multiply that by 10 and you roughly need a +2% annual return to offset the trading costs for a year. That's a big hurdle.
The solution? Either you invest more to dilute the trading costs or you switch to index mutual funds that, at least at TD, are free to trade.

How It Works

Super simple: This new portfolio is available for TD, BMO, RBC, Scotia and CIBC customers. The subscription to this new index mutual funds portfolio is free if you invest less than $10,000, $10/month if more than $10,000. Either way, simply indicate which category you fall into when you subscribe here
Let's take a TD customer as an example: She needs a trading account to be able to trade. Trade what? TD e-funds. Which ones? The ones that show up in the following table, available here once you subscribe. It looks like this:
At the end of the month, she would simply invest 50% in Top1 and 50% in Top2. Check back in 30 days to see if there is a change. Do nothing in between. Trading costs? Zero. Make sure though that you hold the funds at least 30 days or you might be in for early redemption fee. Double check with your bank.
How did it perform in the past? Check the following charts.
Not too shabby, eh?
What? You're not banking with one of these five banks? No problem, email me.

Now Back to Our ETF Portfolios

Who said summer was quiet for the markets? There is always a party somewhere and the idea is that, by following these ETF Portfolios, you are always invited. You might miss the beginning of it or be the last to leave but at least you want to show up and have a bit of fun. That's the idea behind these ETF Portfolios. To participate in rallies, whether it's in oil, US equities or international bonds. And these ETF Portfolios help you get invitations.
The following tables should convince you to join the party as they show the three main hosts that entertained the most this year: Oil (USO) discretionary (XLY) and technology (XLK), returning +18.9%, +13.4% and +11.6% respectively. In case you wonder, the worst parties to attend this year, with lame music and virtually nobody showing up, are Gold (GLD) and gold Miners (GDX), returning -8.4% and -6.2% respectively. Did our ETF Portfolios invite us to these lousy parties? Absolutely not.
Overall, it's been a good year so far for all our ETF Portfolios (in blue on the chart above). We will keep enjoying the great music and company as long as it lasts.

Other Big Parties around the Globe

Where you want to get invited:
  1. Saudi Arabia
  2. Qatar
  3. Norway
 And where you would rather stay at home:
  1. Turkey
  2. Argentina
  3. Philippines

Free 30-day Trial

Whether your portfolio is managed by a 3-piece suit charging 2.5% a year or by a low-cost robo advisor, why not compare it with our ETF Portfolios? Even better, ask for a free 30-day trial and access the historical trades of all our portfolios. Then decide.
I want my Free 30-day Trial!

Direct Access to the Trades!

Login
CAD Trades
USD Trades
SPY4ALL Trades

Now Get Out There
&
Talk to You August 31st!

Copyright © 2018 ETF Kitchen, All rights reserved.

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.

Email Marketing Powered by Mailchimp