Equity Risk Premium Signals

The Equity Risk Premium (ERP) is defined as the return in excess of the risk-free rate that an investor requires as compensation for taking on the added risk of being exposed to the stock market. It is an important measure because it informs us of how optimistic (or not) the market is at various points in time.

Who’s Afraid of the Stock Market? – Revisited

In 2007, I wrote \"Who is Afraid of the Canadian Stock Market\" to suggest to investors that the then-current mania for non-domestic equity exposure was overdone. History suggested that during a sideways market, Canada was likely to be a relative outperformer. As history predicted, Canada has consistently performed in the top third of the 18 major markets every year since 2000.

More From Our Market Review

After our Financial Market Review on May 3, 2012, we had an opportunity to take questions from attendees and address a range of topics. There were a variety of questions brought up: below are three that caught our attention.

The Poetry of Dividends

Dividends are not typically the subject of poetry, but given how the current stock market is waxing eloquent about yield, we would not be surprised to see dividends surface in modern prose.

Cautious on High Yielders in Sideways Market (Financial Post)

Following major market mania conditions, stocks historically capitulate then move sideways in an incredibly volatile manner for at least 15 years. Kim Shannon, chief investment officer at Sionna Investment Managers, believes we are in year 12 of just such a market.

Energy Infrastructure – What a Great Year to be “Boring”

The energy infrastructure sector enjoyed a banner year in 2011 and significantly outperformed the broader market. These “boring” infrastructure businesses, which includes utilities, pipelines, and energy storage and processing, posted total returns of 20 to 40 per cent for the year.

A Tale of Two Selves

The natural question is: why do investors believe that their risk tolerance is higher than it is? We believe that this inconsistency is related to something that we have long argued at Sionna, which is that the markets reflects human nature as much as underlying fundamentals.

Caveat Emptor – Let the Buyer Beware

As our client, we want to share with you our concerns about aspects of market activity that suggest that exposure to securities lending may be imprudent for the next several months.

La revanche des titres à dividende (La Presse)

Quand ça joue dur à la Bourse, il vaut mieux miser sur une stratégie défensive, sur des sociétés robustes qui versent des dividendes élevés. Quels titres repêcher ? Trois gestionnaires nous présentent les joueurs étoiles au Canada, aux États-Unis et en Europe.

Is Buy and Hold Dead?

After a lost decade of stock market returns, investors may wonder whether the “buy and hold” approach to investing is dead. Of course, it is not uncommon for the investment community to question the merits of long-term investing during periods of high volatility.