Markets have continued a volatile ride upward out of the market low established last October. Market retreats along the way continue to be driven by U.S. central bank rhetoric about maintaining higher rates until inflation subsides. Alternatively, the market is optimistic, rallying higher with every hope that the central bankers might finally be done.
Market Update February -March 2023
2022 YTD 2023 (at February 22/2023)
Canada’s TSX <8.7%> +4.2%
U.S. S&P 500 <19.4%> +4%
U.S. Nasdaq <33.1%> +9.9%
Here in Canada, the central bank has given a pause and our Chief Economist believes that the Bank of Canada is indeed done. He says inflation is declining at a 6% annualized rate.
Meantime, employment is very strong and we are finishing up a reasonable quarter reported earnings.
We have been busy the last month dealing with a lengthy options maturity list. With the pullback last year, most call options expired, and we have been busy rewriting calls to bring in more income.
If you haven’t already, think about your TFSA and RSP contributions and remember that you can contribute cash or
securities. Think about growth securities that can grow tax-free and keep the dividend payors in your taxable accounts where in Canada, the dividend tax credit will apply.
I have included a piece about LIRAs as an attachment to this Market Update. If you have a LIRA, I hope you will find it an informative read.
An important sidenote on provincially registered LIRAs, is that several jurisdictions allow for a one-time, 50% unlocking of a LIRA.
By unlocking, I mean that you might be eligible to move half of your LIRA to an RSP where you would have complete control of the capital. You could invest it how you wish AND access as much of the capital as you wish – when you wish.
If a LIRA is unlocked, half of it can go to an RSP and half would have to go to a LIF and the LIRA would then no longer exist. The LIF would start paying out a minimum or maximum amount as taxable income which is sometimes argued as a negative as it creates more taxable income. However, unlocking part of your LIRA is about control and access to your LIRA capital versus additional taxable income when half of the LIRA goes to a LIF. The payout scale on a LIF is similar in nature to that of your RIF.
Please note that Federally registered locked-in pension plans have similar options for unlocking. Feel free to contact my office with any questions about your LIRA options.
My office is often attempting to review your portfolio three ways. This might occur on the phone, by Teams (video) or in person, typically in our offices. We have found some clients like the Teams video offering from the comfort of their homes, while others like to come into our offices. If a member of my team or I contact you to review your portfolio, simply mention your preference and we will gladly accommodate your preference.
Our office is now open for appointments – by appointment. Call us to arrange any visits to our office.
I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial.
National Bank Financial
Senior Wealth Advisor
Sources: Stockcharts.com, Reuters, Bloomberg, Globe & Mail,
National Bank Financial is an indirect wholly-owned subsidiary of National Bank of Canada. The National Bank of Canada is a public company listed on the Toronto Stock Exchange (NA: TSX).
This information was prepared by Rob Hunter, a Senior Wealth Advisor with National Bank Financial. The particulars contained herein were obtained from sources that we believe reliable but are not guaranteed by us and may be incomplete.
The opinions expressed are based on our analysis and interpretation of these particulars and are not to be construed as solicitation or offer to buy or sell the securities mentioned herein. National Bank Financial may act as financial advisor, fiscal agent or underwriter for certain of the companies mentioned herein and may receive remuneration for its services. Rob Hunter, National Bank Financial and/or its officers, directors, representatives, and associates may have a position in the securities mentioned herein and may make purchases and / or sales of these securities from time to time in the open market or otherwise.
The opinions expressed herein do not necessarily reflect those of National Bank Financial. Several of the securities mentioned in this article may not be followed by National Bank Financial’s Research department.
The securities mentioned (inclusive of option strategies) in this article are not necessarily suitable to all types of investors. Please consult your investment advisor to discuss investment risks. All prices and rates are subject to change without notice. Stocks typically fluctuate in value. Stock values can go to zero.
Selling calls against stock (Covered Writing): Shares may need to be sold at the strike price of the option at any time prior to expiration. If the calls are assigned, further opportunity for appreciation in the underlying security above the strike price is foregone.
Risk/Reward of the strategy = Strike price minus the purchase price of the underlying plus the premium received from the sale of the call. The maximum loss is the same as holding a long position less the premium received.
The investment advice given only applies to residents of the provinces of British Columbia, Alberta, Manitoba, Saskatchewan, Ontario and Quebec.
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