Boeing Co.’s stock has been hammered after the second crash of the company’s 737 Max 8 aircraft in five months. The details for the previous 737 tragedy, the Lion Air crash on Oct. 29, 2018 in Jakarta, are downright terrifying. According to the government report, the pilots of the plane were unable to override onboard software that kept pointing the nose lower, while different instruments in the cockpit were all showing different altitudes.
Boeing officials maintain the aircraft is safe to fly and over time, analysis of the more recent incident should either verify or disprove this claim. There is, however, the broader issue of our relationship with technology and whether the increased digitization of our lives is beneficial.
Historically, we’ve been accustomed to thinking that technology equals progress, and progress is both good and profitable for investors. This is no longer a universal belief.
Facebook Inc.’s apparent laissez faire attitude towards its users’ private data, numerous prominent network security hacks, job losses from automation, Amazon.com’s wide-reaching power over its retail partners, gene-edited babies using CRISPR technology… these are only a few issues focusing attention of the dangers of new technology.
Regarding the plane crash, the Financial Times’ Alphaville site (free with registration) features a guest column by Dr. Ashley Nunes, a transportation-related academic from M.I.T. Mr. Nunes writes, “The steeper a product’s learning curve, the less attractive it is to consumers. Imagine if using a smartphone meant spending hours reading the instruction manual? … That’s exactly what Boeing (and most tech developers) bet on. However, this experience comes at a cost: namely, a shallow understanding of how the technology actually works.”
This warning – the easier technology becomes to use, the less we understand what it does – is relevant today but it’s not new. Bill Joy, former chief scientist at Sun Microsystems, detailed the same theme for Wired magazine in 2000 in what arguably remains the most famous anti-technology column ever written, “Why The Future Doesn’t Need Us.”
This discussion sounds theoretical and not something investors need to be concerned about. That would be the case if Senator Elizabeth Warren wasn’t running to be the Democratic presidential nominee for the 2020 election.
Senator Warren has announced that if elected president, she would use anti-trust law to break up Facebook, Amazon.com, Alphabet Inc. (formerly Google), and Apple Inc. into smaller business entities that would wield less market power. Senator Warren’s platform will provide a fascinating measure of anti-technology sentiment and her success could result in a drastic reshaping of the technology-related investing landscape.
— Scott Barlow, Globe and Mail market strategist
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What this analyst from a market-beating value fund has been buying and selling
Amar Pandya understands why investors are so anxious right now. After the market meltdown in the fourth quarter of last year, it’s hard to trust the comeback seen so far in 2019. But instead of focusing on the market swings – and whether the upward trend will stick – Mr. Pandya and his team at Vancouver-based PenderFund Capital Management are watching smaller stocks that are largely out of the limelight. Brenda Bouw reports (for subscribers).
Why I’m overweight U.S. stocks (and likely to stay that way)
As the current U.S. economic cycle approaches the longest in history, the question MD Financial’s Marija Majdoub gets asked the most is: Will U.S. equities continue to deliver in 2019? The S&P 500 has outperformed all other major indexes since the bottom of the global financial crisis and, naturally, many expect the divergence between U.S. and international markets to begin to revert – but she’s not one of them. She remains overweight on U.S. stocks in the portfolios my team and I manage. Additionally, she prefers defensive sectors to cyclical given the current landscape. Ms. Majdoub explains.
If you judge by ETF sales trends, pessimism about the loonie is rampant
There are two big decisions to make when searching for an exchange-traded fund to track U.S. or international markets – which index do you choose, and should you go hedged or unhedged? The index call is a tough one, but sticking to the biggest, most widely followed indexes is usually a good move if you want to keep costs down. Hedging is a guess, though. If the Canadian dollar weakens, then unhedged funds do best. If the loonie takes off, then hedging will protect you from currency-inflicted damage. Curious what your fellow investors are doing about hedging? If you judge by ETF sales trends, they’re showing a strong preference for no hedging. Rob Carrick explains (for subscribers).
It’s time to stop pretending RRSPs are a universal retirement-savings vehicle
RRSPs are going grey. Owing to expensive real estate and the advent of tax-free savings accounts (TFSAs), adults in their 20s through 40s have less of a presence among contributors to registered retirement savings plans than they did a decade and a half ago. Meanwhile, people aged 55 and up are starting to dominate. It’s too soon to tell if this emphasis on TFSAs and real estate is harmful, neutral or even beneficial for younger adults. What we do know is that hyping RRSPs as a retirement savings vehicle for all is starting to look pointless. They’re much more a tool of people at the apex of their career – high-earning home owners who can easily handle their mortgage and can’t meet their savings and investing needs with TFSAs alone. Rob Carrick reports.
Others (for subscribers)
Others (for everyone)
Ask Globe Investor
Question: I recently sold my house in Arizona and accumulated some U.S. dollars in my savings account. I plan to become an active snowbird in the U.S. and want your opinion on where I should invest these funds to keep them relatively safe and still produce 4 to 5 per cent income yearly that is predictable.
Answer: Given your parameters, I suggest you consider some lower-risk, high-yield U.S. stocks. AT&T Inc. (T-N) is one possibility. It pays a quarterly dividend of 51 cents US per share (US$2.04 annually) to yield 6.6 per cent.
Another telecom to look at is Verizon Communications Inc. (VZ-N). It pays 60.25 cents US per quarter (US$2.41 annually) to yield 4.2 per cent.
Neither stock is bullet-proof in a market correction, but any losses should be minimal.
Do you have a question for Globe Investor? Send it our way via this form. Questions and answers will be edited for length.
What’s up in the days ahead
This Saturday is our next instalment of the ETF Buyer’s Guide. Rob Carrick will look at the best exchange-traded funds for getting international equity exposure.
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Compiled by Gillian Livingston