The Grinch attempted to stop the Santa Claus Rally at the start of the week, but investors were having none of that. Not only did the Grinch fail to steal the Santa Claus Rally but as his heart swelled with Christmas spirit, he managed to quell fears of the Covid-19 Omicron variant and the potentially negative impact it could have on the economy. With renewed optimism, investors rushed back into the market, with thoughts of high returns dancing in their heads. Merry Christmas To All, And To All good investing!
Weekly Market Review
Monday: Omicron continued to weigh on the markets, sending all four major North American Indexes – Toronto Stock Exchange Composite Index (TSX), S&P 500 (S&P), Dow Jones Industrial Average (DJIA) and Nasdaq Composite Index (Nasdaq) – lower to start the week. Of the four Indexes, The TSX had the ‘best’ day as it was down only .97%, whereas the 3 American Indexes were down over 1%, respectively. Other factors weighing on the markets today include the setback to US President Biden’s ‘Build Back Better’ domestic investment bill, and the annual selling of poorly performing stocks to reduce capital gains taxes has begun.
Tuesday: Optimism returned to the markets today with all four Indexes moving strongly upward. For today, investors felt confident Omicron would not impact the economy as much as originally thought. Some strong earnings reports from the retail sector led investors to believe the supply chain issues were slowly starting to be resolved. We shall see what the markets think on Wednesday.
In Canada, the TSX had its biggest single day gain since February with all 11 sectors in the TSX higher, led by the technology and energy sectors. In the US, technology, energy, and travel stocks all rebounded strongly from Monday’s beat down, helping all three indexes advance.
There was a bit of good cheer for shareholders of Apple when Moody’s Investor Services raised their credit rating on Apple to AAA, their highest possible rating. Apple joined Microsoft and Johnson & Johnson as the only US corporations with this rating.
Wednesday: Reports from South Africa suggests Omicron is not as serious as the previous Delta variant of Covid – 19. As fears of Omicron began to dissipate, investors headed back into the markets to snap up stocks they had previously beaten down. Helping stocks rise was news US consumer confidence continued to rise, and Pfizer’s covid-19 pill has been authorized by the US government. All this good news caused all four Indexes to continue Tuesday’s broad-based rally.
Thursday: The Indexes continued to rise for a third straight day thanks to continued optimism that the Omicron variant wasn’t as severe as its predecessor, the Delta variant. In related news, Merck’s covid-19 pill received US government approval. The TSX briefly touched its highest closing level since late November. In the US, stocks ended a short week of trading on an upbeat note with all three American Indexes posting gains for the day and for the 4-day week.
Friday: It was a slow day in the market today as only the Toronto Exchange was open and even that was a shortened day, closing at 10:00 PT/1:00 ET for the Christmas holiday. The TSX was up slightly for the day, capping off the TSX’s strongest week since October. Healthcare stocks led the way up while the technology sector was one of only three sectors that fell on the day. The American exchanges were closed for the Christmas holiday.
The weekly Index chart, below, clearly shows the dip on Monday for all four Indexes followed by a resurgence throughout the week. The Nasdaq was the biggest gainer for the week, followed by the TSX, the S&P with the DJIA rounding out the pack. The American exchanges had a short four-day week for the Christmas break and return to regular hours on December 26. In Canada, the TSX was open on December 24 but will get their four-day week next week as it will be closed December 28.
Weekly Portfolio Review
When I saw the Nasdaq had a good week, I knew it would be a good week for the Portfolios since a rising tide lifts all boats. It definitely lifted all three Portfolios last week. Portfolio 1 and Portfolio 2 had good weeks. Ordinarily a 3% gain would be enough to lead the Portfolios and beat a few of the Indexes. However, Portfolio 3 gained over 4% for the week to easily beat the other two Portfolios as well as the four Indexes.
Companies on the Radar
This past week I removed Alphabet (NASD:GOOGL) from the radar list and into Portfolio 1, leaving American Tower (NYSE:AMT) and Matterport (NASD:MTTR) on the radar. I’m trying to decide between a steadily growing dividend payer in American Tower versus the higher growth potential, higher risk Matterport.
A new company on the radar is Stella Jones (TSX:SJ). They are a Canadian company that is a leader, if not the leader, in the production of pressure treated wood products for commercial use, such as utility poles and railways ties, as well as lumber for residential builders. They’ve grown revenue and net income for the last three years. They also have a small dividend (less than 2%) but they look to be a low risk, steady grower without a lot of competition. Definitely worth a closer look.
Portfolio Update
Portfolio 1
Portfolio 1 for the week ended December 24, 2021: UP 
This week Portfolio 1 dropped a disappointing healthcare company and replaced it with one of the biggest technology companies that has been on an upward trajectory for over a year (see the Activity section, below). With the addition of Alphabet, that brings to a total of four of the five largest companies (by market capitalization) in any of the Indexes. The other three are Apple (NASD:AAPL), Nvidia, (NASD:NVDA) and Tesla (NASD:TSLA). Portfolio 1 is now well positioned for broad rallies when share prices from companies from all sectors are rising, and for narrow rallies when investors tend to primarily invest in the bigger companies.
Activity
No significant activity to report this week.
Bought: Alphabet: In 2015, Google restructured, creating a new holding company called Alphabet, and making Google one of a collection of companies under the Alphabet umbrella. I’ve known of Google since the late 1990s when it emerged as the dominant search engine over alternatives like Yahoo!, AltaVista, and Bing. Now, Alphabet’s Google is the market leader in: online search with 95% of the market; streaming video (YouTube) with approximately 60% of the market; and mobile OS (Android) with 70% of the market. I don’t see them be knocked off any of those perches for a while. In addition, they have more than $1B in cash on their Balance Sheet. While most technology companies are not looking forward to rising interest rates, when the rates do go up Alphabet will earn even more on the cash they have in the bank. Finally, they have a number of irons in the fires with their Other Bets side of Alphabet. Other Bets are early-stage companies such as Waymo, the self driving car company. If/when any of these ‘Other Bets’ are successful it is very likely that Alphabet will benefit from their success.
Sold: Invitae Corp (NYSE:NVTA) I originally invested in this company as it was doing good work in the fight against cancer. After strong share price growth in 2020 it started to fall in 2021 and has been beneath its falling 200 day moving average since March 2021. I kept waiting for Invitae’s share price to resume the upward trajectory but the only thing that seemed to be going up was their cash burning rate. I’d been considering selling shares since early September and finally pulled the trigger.
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 $
No CAD$ dividends this past week.
US $
Nvidia Corp. (NASD:NVDA)
Quarterly Reports
No quarterly reports this past week.
Portfolio 2
Portfolio 2 for the week ended December 24, 2021: UP
Alimentation Couche-Tard acquired an additional 19 convenience stores in New Mexico as they continue to expand their presence in the US and grow their “mission of making our customers’ lives a little easier every day”. As far as what drove Portfolio 2 last week, once again Microsoft and MongoDB led the way but almost every stock ended up ahead for the week and the few that were down for the week were not down by much. Another solid week from Portfolio 2.
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 USD$ dividends this past week.
Quarterly Reports
No quarterly reports this past week.
Portfolio 3
Portfolio 3 for the week ended December 24, 2021: UP
Last week most of the technology stocks were down so naturally the portfolio was down. Thanks to this week’s Santa Claus Rally, almost all of the technology stocks are up. Shopify alone was up nearly 10%, and when Shopify has a good week, Portfolio 3 has a good week.
Crypto update: Ethereum bought at CAD $6,137.23 per coin. On December 24, it was trading at CAD $5,265.13.
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 $
TD Asset Management Inc. TDB661 DRIP
US $
No USD$ dividends this past week.
Quarterly Reports
No quarterly reports this past week.