Thursday evening, I told a friend I thought Friday would be a good day for the markets because they had ended Wednesday with some upward momentum after bouncing up and down earlier in the week. Boy, was I wrong! Friday morning, I started getting direct message alerts that a number of the stocks in the various portfolios were down and a few had even reached 52-week lows. Not a good way to start the day. Let’s take a look and see what caused this drop and how it impacted the portfolios…
Market News
On Monday, a second term for US Federal Reserve Chair Jerome Powell led to fears of higher interest rates which would negatively impact technology stocks on both sides of the border. The Toronto Stock Exchange (TSX) ended lower for a fourth straight day and both the S&P 500 Index (S&P) and techology heavy Nasdaq Composite Index (Nasdaq) ended lower. The Dow Jones Industrial Average (DJIA) was the lone bright spot, ending the day higher.
Tuesday, the DJIA and S&P ended the day on positives notes, as did the TSX which got back on the winning side. The energy and financial sectors drove all three Indexes. Energy stocks were up in reaction to the US and other countries releasing oil from their respective strategic reserves to cool off high oil prices. Finacial sector stocks were up in expectation of interest rate hikes. Those same expectations caused the Nasdaq to end lower for a second straight day.
I’d like to think as go the Canadian techology stocks, the US technology stocks follow, but reality is the US companies set the pace and Canadian companies follow (Shopify perhaps being the exception). On Wednesday, the Nasdaq recovered from the previous days’ selloff to end in positive territory. The rise of technology stocks continued north of the 49th and with help from the cannabis sector, pushed the TSX into positive territory for a second consecutive day.
The US markets were closed for US Thanksgiving but the TSX was open for business. The TSX rose thanks to financial and technology stocks.
To end the week, worries about how the new coronavirus variant, Omicron, could hinder the global economic recovery caused all four of the major North American markets to fall hard on Friday. The TSX, S&P, DJIA (largest 1 day drop since October 2020) and Nasdaq all suffered at least 2% drop respectively. Stocks that looked to benefit from the economic reopening fell, while stay-at-home stocks were the main beneficiary of the the covid-19 news.
Looking at the chart of the four indexes below, one can see how they essentially drifted sideways until mid week. Nasdaq started its descent going into the Thanksgiving holiday and when the American markets reopened on Friday, all the Indexes fell.
Portfolio News
The Portfolios chart below is definitely not the type of chart I like to see – everything pointing downward like a bunch of bats hanging from a tree limb. However, based on the Index performance chart above, I am not surprised. Portfolio 3 took the dubious honour of having the biggest loss last week. I am not surprised as Portfolio 3 has the largest percentage of technology stocks and the technology heavy Nasdaq Index fell the most.
Last week I had the sense that while it was a mixed bag performance by the four Indexes in general, the gains seemed to be concentrated in a few of the big companies, especially in the technology sector with names like Apple and Microsoft leading the way. There was not much breadth to the upward moves. This reminded me of late February 2021 when the upward movement was generated by a few companies rather than a broad market move. The markets had a sharp sell off before resuming the upward trend a few weeks later. I cannot remember what precipitated that February sell off, but I was wondering if the present-day markets were looking for a reason to pullback and the latest covid-19 report provided one .
I certainly hope the markets rebound next week but I suspect they will be jittery for a while until there is a better understanding of the latest Covid-19 variation and how it will impact the economy.
Companies on the Radar
They were not any new companies that appeared on my radar this past week. American Tower (NYSE:AMT) is still on the radar and I was intrigued to find it was up a little over $2.00 for the week when almost every other company was down. Celsius Holdings has been beaten down fairly hard (nearly 50% since early November) thanks to supply chain issues so I have put them back on the radar. I would like to see them resolve their supply of aluminum cans before adding more shares, but the share price does look attractive. Otherwise, Roku (NASD:ROKU) has hit a 53 week low so I’ll have to see if its found a bottom or if it will continue to fall. Unity Software (NYSE:U) had a bit of a pull back last week. As with Roku, I will be watching next week to see if that is a new bottom or if it will retreat further.
Portfolio Update
Portfolio 1
Portfolio 1 for the week ended November 26, 2021: DOWN
Another week in positive territory for Rivian although the trend (downward) is currently not my friend. I knew the stock could not sustain the $170 share price, so I am not surprised it has fallen back. I think it will take a few quarterly earnings reports with increasing revenues for the share price to start a steady march upward. At this point in its public life, I am just happy if the price stays above $100 per share. I will be very happy if it can reach a share price like Tesla ($1000). I will be even happier if GM’s share price could reach half that. 😊
A lot of the technology stocks were hit hard on Friday presenting a possible buying opportunity. Depending on what the markets do next week it may be a good time to pick up a few shares in American Tower as well as acquire more shares in companies already in the portfolio.
Activity
No significant activity to report this week.
Dividends
Dividends Received this week for the following companies:
Companies followed by DRIP (Dividend Re-Investment Plan) indicate additional shares were purchased with the dividend. Any cash leftover was added to the cash balance.
Canadian $
Quinsam Capital Corp (CSE:QCA)
US $
No US$ dividends this past week.
Quarterly Reports
No quarterly reports this week.
Portfolio 2
Portfolio 2 for the week ended November 26, 2021: DOWN
Portfolio 2 had the best week of the three portfolios but still ended down over 2%. Considering what happened to the technology heavy Nasdaq, it surprised me to see MongoDB ended the week up eight dollars. A few other stocks ended a few cents in the black but, not enough to overcome the overall market decline.
Alimentation Couche-Tard (ATD.B) did not have a good second quarter as their earnings were down despite higher revenues. Credit to Alimentation Couche-Tard for calling this out in a bullet rather than burying it a paragraph like some companies. Labour shortages and supply chain issues caused by the Covid-19 pandemic continues to plague Alimentation Couche-Tard, as it does for the rest of the retail and convenience store environment.
Activity
No significant activity to report this week.
Dividends
Dividends Received this week for the following companies:
Companies followed by DRIP (Dividend Re-Investment Plan) indicate additional shares were purchased with the dividend. Any cash leftover was added to the cash balance.
Canadian $
Dream Industrial Real Estate Investment Trust (TSX:DIR.UN) DRIP
US $
No US$ dividends this past week.
Quarterly Reports
Alimentation Couche-Tard Inc (TSX:ATD.B)
Selected highlights from their second quarter 2022 financial results on November 23, 2021
- Net earnings were $694.8 million for the second quarter of fiscal 2022 compared with $757.0 million for the second quarter of fiscal 2021.
- Revenues increased 33.5 per cent to US$14.22 billion from US$10.66 billion in the prior-year quarter, mainly due to higher fuel prices
- The Company repurchased shares for a total of $587.7 million under its current share repurchase program.
- 7% increase of the quarterly dividend, from CA 8.75¢ to CA 11.00¢
Portfolio 3
Portfolio 3 for the week ended November 26, 2021: DOWN
A bad week for the technology sector is not a good sign for Portfolio 3. Sure enough, it was not a good week for Portfolio 3 with almost every company losing ground for the week. TD Bank, Real Matters (real estate appraisal services) and GDI Integrated Facility Services (cleaning and technical services) were the only companies to gain ground this past week.
Activity
No activity to report
Dividends
Dividends Received this week for the following companies:
Companies followed by DRIP (Dividend Re-Investment Plan) indicate additional shares were purchased with the dividend. Any cash leftover was added to the cash balance.
No dividends this week
Quarterly Reports
No quarterly reports this week.