Wednesday, July 30, 2014

Ballard and Blackberry

When I was at a party in 2006 a lady there had invested in Ballard (TSX-BLD) in the same time frame I did, but she had made a profit. I was very interested to know how she did that. What she had done was when the stock surged more than 4 times her purchase price she sold half her stock to lock in a profit.

That is if you invest $1 and the stock is worth now $4 and if you sell half you lock in a profit of $2 which is a 100% profit. Whatever you sell the remaining stock for, it will just add to your profit. Say the stock once worth $2 after your sale declines and you sell the remaining at $0.50. That means you have earned $1.50 for on $1 or 150%.

Another reason it was interesting was that I had invested in BlackBerry (TSX-BB) which was then called Research in Motion (TSX-RIM). It had taken off. I sold some in 2006 and 2007 to lock in a profit and then sold the rest in 2010. By 2010 the stock was on it a decline. The result was that I made a return of just over 480% on RIM. I earned far more on this stock that I had lost on Ballard.

It sometimes pays to talk about your losses. You never know what you will gain from that. No investment is a real loss if you learn from it. Never ever beat yourself up over an investment loss. It happens to everyone. Try to learn from it, but whatever you do you need to move on.

On my other blog I am today writing about Lassonde Industries Inc. (TSX-LAS.A, OTC-LSDAF) ... continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Monday, July 28, 2014

There is Nothing Like a Negative Report

There is nothing like a negative report to generate comments. Unfortunately, most comments express anger about a negative report or a report that has some negative points about a stock. But you should read negative reports with a questioning mind. Look to see if the writer makes s any valid points.

A negative report might just bring up some aspect of the stock you have never considered before. If so, you have to figure out how important that negative aspect is to the long term profitability of a stock. If you are in a stock for the short term, that is a different thing altogether.

I think that to be a good investor you have to read not only favorable reports, but also negative reports on stocks you have invested in. This applies especially to your favorite stocks. There are always positive and negative aspects to any stock. Hopefully, the positive aspects of a stock outweigh the negative aspects of a stock.

On my other blog I am today writing about Inter Pipeline Ltd. (TSX-IPL, OTC-IPPLF) ... continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Wednesday, July 23, 2014

Dividend Portfolio 2

Below are some other questions that should probably be asked of Dividend portfolio investing:

Question: So, a dividend portfolio can give a steady dividend income, but is there any downside in such a portfolio?

Answer: The dividend income may be steady, but the value of such a portfolio can fluctuate is my experience.

Question: So, how volatile is a dividend portfolio?

Answer: In the last two bear markets my portfolio value fell 30% each time. It did recover in between the bear markets.

Question: How did you handle this?

Answer: I basically stopped looking at my portfolio (except monthly) until the bear markets stopped. (I think that this is called an avoidance method. I am quite serious here. I felt that there was no point in getting upset about my portfolio value. I concentrated on what my dividend income was doing.)

Question: What about a recovery from a bear market?

Answer: My dividend portfolio recovered quite well. The recovery of a portfolio of dividend stocks recovers quicker than Mutual Funds or ETFs. (However, this is a whole other story of why this should be.)

On my other blog I am today writing Canam Group Inc. (TSX-CAM, OTC- CNMGA) ... continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Monday, July 21, 2014

Dividend Portfolio

Below are my answers to questions I was recently asked:

Question: Do you have a fixed income component as well to 'cushion' equity crashes?

Answer: I have not had any fixed income components since I sold my last bond in 2007. (However since I live off my dividends and take money from my RRPS, RRIF, I have some 3.7% of my portfolio in cash and MMF.)

Question: How did you fare in the 2008-9 crash when more than half of companies paying dividends either reduced them or cut them completely? I know things recovered but how would you fare if the recovery had been very slow? I'm asking because I'm not sure whether to invest using total return and all cap equities or dividend stocks only in retirement as I don't have any pension except CCP & OAS.

Answer: I have been heavily into dividends since the early 1980's and I have never had a year of dividend income decline. Dividend increases slowdown in bear markets, but not right away. When there is a bear market, my overall dividend increases at a lower rate. This is because at such times, some companies stop dividend increases and some cut or cancel dividends. However, there are always some that continue to raise their dividends. For example, my dividends increased in 2008, 2009 and 2010 were 11%, 15% and 5.3%, respectively. In January of this year I wrote a blog entry on how I did in the last two bear markets of 2000 and 2008.

Question: It must be that you have a large capital cushion such that you could live off your capital for your life duration and don't need to live off of dividend income. That could not work for me or others who have no pension yet not enough savings to whether a black swan event.

Answer: I have had individual companies cut dividends, like TransAlta and companies discontinue dividends, like Bombardier and companies like Sun Life and the banks stop dividend increases. It is just the overall dividend income has not decreased. I have a variety of dividend stocks, some give low dividends, but increase them well like Saputo (but these dividend increases have slowed) and REITs which give good dividends but increase at the rate of inflation and others in between.

Question: There is risk of decreasing dividends and even companies suspending dividends given a black swan event which we in Canada have not seen since 1929. How do you plan to deal with that possible event?

Answer: I am of course betting that there will not be an event in Canada in the future that will destroy my dividend income to such an extent that I cannot live off my dividends.

Question: How many companies do you feel is optimal for a portfolio which will give good diversification yet easy to manage such a portfolio?

Answer: I have 32 stocks in my Trading Account which provides most of my income. However, of these I have little invested in a few stocks. For example I bought Barrick Gold Corp for fun because it crashed. I also like tech stocks and have small investments in TECSYS and Evertz Technologies because it is fun. So I really only have 29 stocks I am serious about getting dividends from.

Question: How many companies per sector do you believe is optimal?

Answer: I must admit I made most of my dividends in Utilities and Bank. However, I have branched out into other financials, industrials and REITs. I have focused on dividend growth stocks rather than different sector stocks. However, I have kept an eye on what sectors I have investments in to ensure I have some balance.

Question: Since many companies today are in fact international rather than domestic is it really necessary to add US dividend companies?

Answer: I have gone into Canadian companies doing business worldwide rather than into the US or European market. I tried American and European companies in the past, but did not make much money in them. There was also the complication of the currency exchange rate and getting financial information. I only have one foreign company left which is Barclays Bank.

I have probably broken all sorts of investment rules. I am too concentrated in Canadian Stocks and in Banks and Utilities. I am not evenly invested in the stock I hold with some investments around 10% of my portfolio and some under 1%.

On my other blog I am today writing about Artis REIT (TSX-AX.UN, OTC-ARESF) ... continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Wednesday, July 16, 2014

Big Returns

I guess because I have a blog and my email address is on it, I get all sorts of unwanted emails. The worse probably are the ones saying that they can make you 1000% for 2000% return by investing the way they will tell you to. Probably the only ones making money off such offers is the people who offer you products to tell you how to do this.

Here is one such offer I got. If you look at the end of the advertisement part, he is offering you his newsletter at half is regular price of $1,495 or for $697 for a subscription. He says it is risk-free. I think not. Even if it is true he will give you back your money if you are unsatisfied. You could end up shelling out thousands of dollars on a trade you lose on.

It is very hard to make big returns on stock, especially consistently. Going for big returns can be fun and I have indulged myself into this. You can make some good returns with momentum buying or bottom feeding. However, this is risky and you should never use money you cannot afford to lose in such endeavors.

I made quite a bit of money on RIM, now Blackberry. I used what is called momentum buying to do this. The theory is that a fast rising stock tends to continue to rise fast. However, once it is no longer a fast rising stock it is time to get out. I also sold half my shares once the price was up 4 times what I paid for it just to ensure I did make a profit. I also know a lot of people who lost money on this stock.

On my other blog I am today writing about Computer Modelling Group Ltd. (TSX-CMG, OTC-CMDXF) ... continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Monday, July 14, 2014

Kiva

What can I say? I am a capitalist. I believe in capitalism. It has dragged lots of people out of poverty and we in the Western World especially are living a very good life because of capitalism. We bitch and complain a lot, but the average person has never had it so good. We live well but talk about what more we want. However, if you look at history at all, you will see that we so much better off than our ancestors were.

I think that having the rest of the world catch up to what we have is a great idea. That is why I support Kiva. I put money into this organization and I never plan to take it out. I consider it one of my charities. In practice I loan money to people who pay me back and then I reloan the same money to someone else. Kiva also asks for money to keep their organization going.

I figure I am supporting capitalism and hopefully making life a bit easier for someone else.

It is also too bad we do not have a micro-loaning company in Canada. There are several Kiva field partners for the United States. We have failed our poor. We have welfare, but people do not seem to be able to get off welfare once on welfare. We have families where generations have been on welfare. Look at the bad shape our natives are in and they are by and large on welfare. I think that the main problem with welfare is that we still have poor schools in poor area.

On my other blog I am today writing about TMX Group Ltd. (TSX-X, OTC-TMXXF) ... continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Wednesday, July 9, 2014

Something to Buy July 2014

There is always something to buy in the stock market. On Monday, I put out a list of the stocks that I covered and showed what stock might be a good deal based on dividend yield. Now I am trying to categorize what sorts of stocks may be a good deal based on dividend yield.

Categorizing stocks is not as simple as it might seem. Every site you go to has categorized stocks a bit differently. I try to keep this as simple as possible. See my spreadsheet at here. As in other spreadsheets, you can highlight a line or a number of lines for better viewing.

Of the consumer discretionary stocks, Canadian Tire is still looking cheap. A number of Consumer Staple stocks seem to be cheap. Examples would be Dorel Industries (TSX-DII.B A) and Metro Inc. (TSX-MRU).

In Real Estate, only Granite Real Estate (TSX-GRT) looks to be at a good price. Brookfield Properties Corp (TSX-BPO) has been bought out.

Some of the banks still seem to be cheap. These would be National Bank (TSX-NA), Royal Bank (TSX-RY) and TD Bank (TSX-TD). There are some others in finance that deserves to be cheap, like AGF Management (TSX-AGF). However, CI Financial (TSX-CIX) and IGM Financial have good prices. Both Power Corp (TSX-POW) and Power Financial (TSX-PWF) are looking cheap.

There are a few cheap Industrial stocks like Finning International Inc. (TSX-TFF) and SNC-Lavalin (TSX-SNC). I just read a recent analysts report saying that now may be a good time to buy Bombardier Inc. (TSX-BBD.B) and the price looks cheap. However, the problem with this testing and Bombardier, is that Bombardier is not a dividend growth stock. Dividend are usually flat with this stock.

There are not many companies cheap in the Tech sector except for small companies like Calian Technologies Ltd (TSX-CTY) and Evertz Technologies (TSX-ET).

A number of energy stocks also seem cheap. Examples are Canadian Natural Resources (TSX-CNQ); Cenovus Energy Inc. (TSX-CVE) and Suncor Energy (TSX-SU). Both CNQ and SU is showing up as cheap on historical basis, whereas CVE is just cheaper than average.

The infrastructure type utility companies are not cheap. Of the utilities companies, only Just Energy is showing as cheaper than average, and it may be there for a good reason.

Of the Telecom Stocks BCE (TSX-BCE) and Shaw Communications Inc. (TSX-SJR.B) still seem on the cheap side. I think that Manitoba Telecom (TSX-MBT) is cheap for a good reason.

On my other blog I am today writing about Penn West Petroleum Ltd. (TSX-PWT, NYSE-PWE)...continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.