Do you think the market recovery is for real, or is it a head fake?
I get this question – or variations of it – all the time. My answer is always the same: I have no idea where the market is going in the short run, and trying to time the ups and downs will just give you stomach acid. All I know is that the market tends to rise over the long run.
That said, the recent gains have been unusually strong. In the 20 trading days from Dec. 27 through Jan. 24, the S&P/TSX Composite Index rose 17 times – a remarkable 85-per-cent success rate – and posted a cumulative gain of 10.9 per cent.
Sounds impressive, right? But all that’s happened is that the index has regained the ground it lost in December (plus a little bit more). Is this a head fake? Anyone who tells you it is – or it isn’t – is just guessing. That includes forecasters at banks and brokerage houses who are constantly issuing predictions about the market’s direction.
Do yourself a favour and stop trying to guess where the market is going. Invest in strong, stable, dividend-paying companies – or in diversified exchange-traded funds – and vow to hold them through thick and thin. This is how you make money on the stock market – not by speculating on which way the market winds will blow next week or next month.
Where can I get reliable, detailed information on stock splits of TSX-listed companies since the 1980s? Some, such as the banks, have had several over the years.
Many third-party financial websites provide information on company stock splits, but the history is usually limited and you can’t be certain whether the information is reliable. That’s why I recommend that you go straight to the source and visit the investor relations section of the company’s website.
All of the big banks provide their stock split history. Do a Google search for “Royal Bank investor relations," for example, and then look under “share information and stock splits." With some banks, you’ll need to hunt around the website. Bank of Montreal, for instance, lists its stock splits history under “dividend information,” but you have to scroll all the way down to the bottom of the page to find it.
I checked a few other companies – Canadian Utilities Ltd., Fortis Inc. and Enbridge Inc. – and in all cases, information on stock splits was provided, along with the long-term dividend history.
I’m not sure why you’re interested in stock splits, but you should remember that splits, in and of themselves, do not create shareholder value. When a company splits its stock two-for-one, investors have twice as many shares, but each share is worth half as much as before the split. So, all else being equal, investors are no further ahead.
The main purpose of stock splits is to increase trading liquidity and, in theory, make the shares more accessible to small investors who want to buy a “board lot” of 100 shares. But with today’s trading systems, it’s just as easy to buy 10 shares, 50 shares or 150 shares. That may be one reason that stock splits are not as common as they used to be. The last Big Five bank to split its stock was Toronto-Dominion Bank, in 2014, and before that, Royal Bank, in 2006.
I made a $25,000 investment in my tax-free savings account and the securities are now worthless. Will that $25,000 in contribution room become available again?
No. TFSA contribution room is restored when you make a TFSA withdrawal – not when an investment in your TFSA loses value. For example, if you withdraw $10,000 of funds from your TFSA, you will get $10,000 of contribution room back – but not until Jan. 1 of the following year. Unfortunately, the $25,000 you lost on your investment does not create any contribution room. Nor can you use the capital loss for tax purposes; you can only claim a loss if you are investing in a non-registered account.
E-mail your questions to jheinzl@globeandmail.com.
John Heinzl