I have been sitting on the sidelines in mainly cash since April, but this past week where the Dow and TXS dropped 7-8% presented huge opportunity to buy - I smelt fear in the market this week and I jumped in head first. Could be a little pre-mature but there isn't much other investment alternative out there with governments printing cash and driving interest rates to near 0%.
With so much liquidity, inflation is inevitable if a recovery occurs - catch 22, as long as the economy stays lathergic, inflation stays tame, if the economy starts creating jobs, watch out for inflation.
The US Government needs to fix one fundamental flaw with their policies. The trickle down effect or thought process of enriching the rich and corporations with the hope that there will be a trickle down effect and job creation is completely false as seen in the last decade. More tax cuts, more corporate profits = more layoffs for the employees, more outsourcing and richer bonuses for the executives. There has been hardly a trickle.
If this does not change, the economy will become one of the rich (folks with assets, stocks and high paying jobs) and one of service - servicing the rich. Manufacturing where the wealth of the nation is created will be entirely in Asia and the gap between rich and poor will widen. This does not bode well for the long term economic growth for the US.
So, we have to play the game. Be part of the folks with real assets and stocks of corporations that make money every day. I loaded up on Barrick gold for the gold exposure, Suncor and Canadian oil sands for oil exposure, RIM for Tech, and the 3 banks that I like, Royal, Scotia and TD Bank.
Locked and loaded and let it ride.... hopefully the bottom is near and we continue on our path of asset inflation.
To fix the economic woes of north america and europe, we need to create jobs and stop corporations from outsourcing through creative fiscal and taxation policies. Most people want to work - that's what used to be the American dream. We cannot have corporations making record profits then announcing layoffs the day after reporting.
Aug 6, 2011
Apr 24, 2011
What a run for the market!
We had an amazing 2 year run and things look more positive every day ... commodity prices making new highs, optimism and complacency is back, job market is looking a little bit better, real estate is holding strong and stock market has been on a tear.
But wait, inflation is back!!! prices are starting to creep up - for me personally, it has been gas prices and property taxes. I am a pretty good shopper - sales, coupons, discount places etc, so I am able to continue to look for bargains to minimize price increase in food and goods, but gas prices are starting to sting. Soon, there will be price increases in everything as businesses catch up.
on Thursday last week, I had a minor bout of "panic", started to observe that some of my stocks were not following the commodities - i.e there was downward selling pressure on stocks while gold, copper, oil were all making new highs. Bad sign. I took profits and sold the bulk of my gold and copper holdings. Still have oil as a hedge, but drastically reduced my exposure (still about 40% invested but no where near the peak I was at).
Going to watch the market closely over the next little while and maybe even shift more funds into cash to wait.... yes my friends will say this is timing the market, but when I don't know where things are heading to, I like to stay on the sidelines and observe for now. problem is there are no other viables places to park cash - GIC's pay less than inflation, real estate is also getting ahead of itself with the low interest rates. if anyone has good suggestions, please post.
But wait, inflation is back!!! prices are starting to creep up - for me personally, it has been gas prices and property taxes. I am a pretty good shopper - sales, coupons, discount places etc, so I am able to continue to look for bargains to minimize price increase in food and goods, but gas prices are starting to sting. Soon, there will be price increases in everything as businesses catch up.
on Thursday last week, I had a minor bout of "panic", started to observe that some of my stocks were not following the commodities - i.e there was downward selling pressure on stocks while gold, copper, oil were all making new highs. Bad sign. I took profits and sold the bulk of my gold and copper holdings. Still have oil as a hedge, but drastically reduced my exposure (still about 40% invested but no where near the peak I was at).
Going to watch the market closely over the next little while and maybe even shift more funds into cash to wait.... yes my friends will say this is timing the market, but when I don't know where things are heading to, I like to stay on the sidelines and observe for now. problem is there are no other viables places to park cash - GIC's pay less than inflation, real estate is also getting ahead of itself with the low interest rates. if anyone has good suggestions, please post.
Mar 15, 2011
Opportunity or dead cat bounce
I was fortunate enough to sell into the recent rally and got down to 66% cash position. Started to accumulate last week again but it proved to be premature as today's crash at the open because of the worsening situation in Japan after the massive earthquake and tsunami. My thoughts and prayers with the people of Japan.
I re-filled my position in gold and base metals and watching closely to see if this is a dead cat bounce or a opportunity. Japan needs to re-build and the Asian economies will bounce back barring any other major catastrophe.
But again, play it safe, buy when people are panicing and sell when there is wide spread optimism.
Good luck to all.
My top picks are NDM, SGR, QUX, IVN, TCK-B, WIN, OYL
I re-filled my position in gold and base metals and watching closely to see if this is a dead cat bounce or a opportunity. Japan needs to re-build and the Asian economies will bounce back barring any other major catastrophe.
But again, play it safe, buy when people are panicing and sell when there is wide spread optimism.
Good luck to all.
My top picks are NDM, SGR, QUX, IVN, TCK-B, WIN, OYL
Feb 8, 2011
Buy and hold versus timing the market versus day trading
1. Day trading
This is purely based on short term technicals, emotions, psychology and news. Not recommended as there is no way we can react faster than then pros and we do not have access to insider news.
2. Buy and hold.
All mutual funds recommend buy and hold because they make money through their 2.6
Per cent MER. Plus the guys with the big money just want the little guys to provide stability in the market so that they can control it.
Few key pts about the 20 yr buy and hold strategy
After the great dep there was significant gains then followed by decades of slow growth between 1950 to 1980. Then the explosive tech growth from 1980 to 2000. If u bought and held in that period u would have done really well. From 2000 to 2010, depending on when you bought, you could have ended up basically flat with no return.
3. Timing the market - Macro timing not day trading
If you bought when others panic and sold when the market recovered - buy during the tech crash or the war or financial crisis and sold 1-2years later, during those 10 years, you would have made 2-3x.
We need a combo of buy and hold and timing to effectively invest. Buy and hold during industrial or tech revolutions, time during other periods. Example - currently food is going to be the next thing that's going to slowly appreciate over the next 10 years as the world craves more meat and better food in Asia. Other stories like metals and tech had really good runs but there is no major revolution in the near future like the internet boom or iPod iphone explosion. These are old stories.
We have to think Japan and the high debt loads of people govts and companies today. Debt is great for expanding and growing but it's using future money. Sooner or later it needs to get paid back.
So conclusion. Buy good companies during distressed times and hold long term. Take profit after a good run because nothing goes up forever. Patience is the key, no one is saying you have to time the market by going all in and then all out. Gradual buying, opportunistic buying and finding bargains where others are chasing something else hotter (buy gold and oil in 2000 when everyone was buying tech).....
Thinking that buy and hold works all the time even in 20 year horizons is wrong. If u bought in 1950 to 1970 or 2000 to 2007, you would have ended up no better of than a GIC.
Same with real estate..... Buy low sell high.
Food for thought ------
Mutual funds say buy and hold and give me MER - bull s
Ponzi says buy and I promise to give you 20percent returns - bull s
Day traders say I can beat the market every day - more bs
Buffet buys good companies at a bargain prices and holds - he never chases something he does not know or buy when the asset is expensive. By the way he sells too but he never tells anyone because it will lead to a stampede out of the stock, he just quietly and gradually unloads..... Sound familiar?
The debate continues..... And this is why we need to operate in the space of researching and discussing areas of macro changes positive or negative. Micro is too hard because we are not insiders or have privy to inside info. Macros examples include debt levels, japan syndrome, aging population, tech explosion and internet growth. Being able to recognize areas of growth and invest in it will bring buffet level type wealth to those that can figure it out.
This is purely based on short term technicals, emotions, psychology and news. Not recommended as there is no way we can react faster than then pros and we do not have access to insider news.
2. Buy and hold.
All mutual funds recommend buy and hold because they make money through their 2.6
Per cent MER. Plus the guys with the big money just want the little guys to provide stability in the market so that they can control it.
Few key pts about the 20 yr buy and hold strategy
After the great dep there was significant gains then followed by decades of slow growth between 1950 to 1980. Then the explosive tech growth from 1980 to 2000. If u bought and held in that period u would have done really well. From 2000 to 2010, depending on when you bought, you could have ended up basically flat with no return.
3. Timing the market - Macro timing not day trading
If you bought when others panic and sold when the market recovered - buy during the tech crash or the war or financial crisis and sold 1-2years later, during those 10 years, you would have made 2-3x.
We need a combo of buy and hold and timing to effectively invest. Buy and hold during industrial or tech revolutions, time during other periods. Example - currently food is going to be the next thing that's going to slowly appreciate over the next 10 years as the world craves more meat and better food in Asia. Other stories like metals and tech had really good runs but there is no major revolution in the near future like the internet boom or iPod iphone explosion. These are old stories.
We have to think Japan and the high debt loads of people govts and companies today. Debt is great for expanding and growing but it's using future money. Sooner or later it needs to get paid back.
So conclusion. Buy good companies during distressed times and hold long term. Take profit after a good run because nothing goes up forever. Patience is the key, no one is saying you have to time the market by going all in and then all out. Gradual buying, opportunistic buying and finding bargains where others are chasing something else hotter (buy gold and oil in 2000 when everyone was buying tech).....
Thinking that buy and hold works all the time even in 20 year horizons is wrong. If u bought in 1950 to 1970 or 2000 to 2007, you would have ended up no better of than a GIC.
Same with real estate..... Buy low sell high.
Food for thought ------
Mutual funds say buy and hold and give me MER - bull s
Ponzi says buy and I promise to give you 20percent returns - bull s
Day traders say I can beat the market every day - more bs
Buffet buys good companies at a bargain prices and holds - he never chases something he does not know or buy when the asset is expensive. By the way he sells too but he never tells anyone because it will lead to a stampede out of the stock, he just quietly and gradually unloads..... Sound familiar?
The debate continues..... And this is why we need to operate in the space of researching and discussing areas of macro changes positive or negative. Micro is too hard because we are not insiders or have privy to inside info. Macros examples include debt levels, japan syndrome, aging population, tech explosion and internet growth. Being able to recognize areas of growth and invest in it will bring buffet level type wealth to those that can figure it out.
Feb 2, 2011
Unloading
I started to unload my commodity stocks today. The market is getting very frothy. Could the market go up? Yes. A lot, perhaps but the commodity sector has done extremely well in the past 2 years, it is time to start taking profit. I will sell the remainder in chunks into any upcoming rally.
As I free up cash to invest, I will be looking for more defensive plays that pay good dividends or optionable stocks - writing puts or covered calls.
if the past sets patterns that the future follows, then commodities will follow the same cyclical pattern of the past and retreat significantly from the highs they have recently seen. Could this be different with the Chinese boom? they said the same thing about the internet in 2000.
Capital is hard to build up and it can be wiped out in a blink of an eye.
preservation to play another day is the message today. it's easy to make 10% back, it is very difficult to go from 1 to 10x.
Good luck to all investors and remember to stay diversified.
As I free up cash to invest, I will be looking for more defensive plays that pay good dividends or optionable stocks - writing puts or covered calls.
if the past sets patterns that the future follows, then commodities will follow the same cyclical pattern of the past and retreat significantly from the highs they have recently seen. Could this be different with the Chinese boom? they said the same thing about the internet in 2000.
Capital is hard to build up and it can be wiped out in a blink of an eye.
preservation to play another day is the message today. it's easy to make 10% back, it is very difficult to go from 1 to 10x.
Good luck to all investors and remember to stay diversified.
Jan 14, 2011
Bubble forming?
Is a bubble forming? 6 signs ....
1. CIC ($300B China sovereign fund just opened up shop in Toronto to invest in resource companies in Canada)
2. metal/oil/commodity prices and demand are staying strong
3. Venture exchange stock trading volumes increasing (more speculative demand/behavior).
4. recent merger and acq of mining companies
5. huge profits being reported by mining co's.
6. economy improving and optimism strengthening
this smells like the start of a stock market bubble esp in the mining / commodity sector ..... it's in the early stages of formation. Get in but know when to get out and be careful. Bubble will grow but no one knows when it will pop. Bigger it grows, the bigger the pop.
For the more conservative, there is an interesting strategy called Dogs of the Dow/TSX. it's basically picking the highest yielding stocks in the Dow each year and rotating the list each year- selling lowest yield and buying one of the new dogs.
http://financialuproar.com/2010/06/19/dogs-of-the-sp-500/
This is 2011's Dog of the Dow list
Symbol Company Price Yield Small Dog
NYSE / NASDAQ The Dow stocks ranked by yield on 12/31/10
T AT&T 29.38 5.85% Yes
VZ Verizon 35.78 5.46% Yes
PFE Pfizer 17.51 4.57% Yes
MRK Merck 36.04 4.22% No
KFT Kraft 31.51 3.68% Yes
JNJ Johnson & 61.85 3.49% No
INTC Intel 21.03 3.42% Yes
DD DuPont 49.88 3.29% No
MCD McDonald's 76.76 3.18% No
CVX Chevron 91.25 3.16% No
Below is the list is the Dogs of TSX but it's focused on just 3 sectors - financial, telecom and oils.
Company Name Ticker Price Yield
Cdn. Oil Sands COS 26.60 7.50%
Transalta Corp TA 21.21 5.50%
BCE Inc. BCE 35.30 5.20%
Bank of Montreal BMO 57.66 4.90%
Arc Energy Trust AET.UN 25.67 4.70%
IGM Financial IGM 43.38 4.70%
Sun Life Finan SLF 30.34 4.70%
Great West Life GWO 26.5 4.60%
Power Financial PWF 30.66 4.60%
Telus T 45.50 4.60%
Average Yield 5.10%
1. CIC ($300B China sovereign fund just opened up shop in Toronto to invest in resource companies in Canada)
2. metal/oil/commodity prices and demand are staying strong
3. Venture exchange stock trading volumes increasing (more speculative demand/behavior).
4. recent merger and acq of mining companies
5. huge profits being reported by mining co's.
6. economy improving and optimism strengthening
this smells like the start of a stock market bubble esp in the mining / commodity sector ..... it's in the early stages of formation. Get in but know when to get out and be careful. Bubble will grow but no one knows when it will pop. Bigger it grows, the bigger the pop.
For the more conservative, there is an interesting strategy called Dogs of the Dow/TSX. it's basically picking the highest yielding stocks in the Dow each year and rotating the list each year- selling lowest yield and buying one of the new dogs.
http://financialuproar.com/2010/06/19/dogs-of-the-sp-500/
This is 2011's Dog of the Dow list
Symbol Company Price Yield Small Dog
NYSE / NASDAQ The Dow stocks ranked by yield on 12/31/10
T AT&T 29.38 5.85% Yes
VZ Verizon 35.78 5.46% Yes
PFE Pfizer 17.51 4.57% Yes
MRK Merck 36.04 4.22% No
KFT Kraft 31.51 3.68% Yes
JNJ Johnson & 61.85 3.49% No
INTC Intel 21.03 3.42% Yes
DD DuPont 49.88 3.29% No
MCD McDonald's 76.76 3.18% No
CVX Chevron 91.25 3.16% No
Below is the list is the Dogs of TSX but it's focused on just 3 sectors - financial, telecom and oils.
Company Name Ticker Price Yield
Cdn. Oil Sands COS 26.60 7.50%
Transalta Corp TA 21.21 5.50%
BCE Inc. BCE 35.30 5.20%
Bank of Montreal BMO 57.66 4.90%
Arc Energy Trust AET.UN 25.67 4.70%
IGM Financial IGM 43.38 4.70%
Sun Life Finan SLF 30.34 4.70%
Great West Life GWO 26.5 4.60%
Power Financial PWF 30.66 4.60%
Telus T 45.50 4.60%
Average Yield 5.10%
Dec 18, 2010
Trading update Dec 18
Still holding everything that I purchased this year - oil, gold, metals and bank stocks. Recently I added Encana which is trading at a low along with natural gas prices. Encana is a gas play while it's sister company Cenovus is the oil play.
in the past few months, I made some decent money writing out of money covered calls and out of money uncovered put options. This works great in slowly recovering stocks like CSCO, ECA, MFC, COS and TD. I am doing 1 month options collecting between 2-3% return. I was thinking 3 month calls/puts and may do in February.
On the speculative side,I added MSQ, NOT and OPC as tax loss plays - noticed tax loss selling and took advantage of the situation. plan is to let it run up and then take profits and keep a portion and let it ride.
There are some folks that continue to say we are in for a lacklustre recovery, Europe is in debt trouble and China is going to raise rates to cool the economy off. Adding to that, the general population is still very tentative when it comes to investing, as many were burned during the last crash in 2008-2009.
Surprisingly, the market has climbed a wall of worry and many investors that held on recovered all their losses. As this happens, people start to get more confident and this could potentially cause a market bubble. I am watching sentiment very carefully to see if this bubble will form and which segment.
Have a Merry Christmas everyone and best of luck in the new year in your trading and investments. Hoping that Santa will come and give us a nice present this year in the form of a huge rally.
in the past few months, I made some decent money writing out of money covered calls and out of money uncovered put options. This works great in slowly recovering stocks like CSCO, ECA, MFC, COS and TD. I am doing 1 month options collecting between 2-3% return. I was thinking 3 month calls/puts and may do in February.
On the speculative side,I added MSQ, NOT and OPC as tax loss plays - noticed tax loss selling and took advantage of the situation. plan is to let it run up and then take profits and keep a portion and let it ride.
There are some folks that continue to say we are in for a lacklustre recovery, Europe is in debt trouble and China is going to raise rates to cool the economy off. Adding to that, the general population is still very tentative when it comes to investing, as many were burned during the last crash in 2008-2009.
Surprisingly, the market has climbed a wall of worry and many investors that held on recovered all their losses. As this happens, people start to get more confident and this could potentially cause a market bubble. I am watching sentiment very carefully to see if this bubble will form and which segment.
Have a Merry Christmas everyone and best of luck in the new year in your trading and investments. Hoping that Santa will come and give us a nice present this year in the form of a huge rally.
Nov 12, 2010
China's inflation problem
What a nice problem to have - inflation. Easily fixed with a little appreciation of the yuan but China's not going to give in the US and let the Yuan appreciated. This negates the efforts of the US with their QE2 and low interest rates.
now understanding what is driving the inflation is key - strong economic growth, expanding middle class, strong consumer demand. Even if China hikes interest rates by 1%, the growth momentum will continue.
All the calls I wrote last month will basically expire worthless - exactly what I wanted as I managed to collect quite a bit of premiums. I will do the following monday after they expire - write covered calls (on my longs) and uncovered puts (on stocks that were beaten down this week -metals, resource).
I am still bullish in the short term, and still confident of a global recovery albeit a rocky one. Still waiting to see if the masses start talking about stocks again and optimism return - that's when I sell.
now understanding what is driving the inflation is key - strong economic growth, expanding middle class, strong consumer demand. Even if China hikes interest rates by 1%, the growth momentum will continue.
All the calls I wrote last month will basically expire worthless - exactly what I wanted as I managed to collect quite a bit of premiums. I will do the following monday after they expire - write covered calls (on my longs) and uncovered puts (on stocks that were beaten down this week -metals, resource).
I am still bullish in the short term, and still confident of a global recovery albeit a rocky one. Still waiting to see if the masses start talking about stocks again and optimism return - that's when I sell.
Oct 23, 2010
Rally until April?
US Feds will start to announce the size of QE2 where they will inject more money into the economy through purchase of treasuries and bonds. This does nothing for creating jobs but it will provide more liquidity into the market, pushing up asset prices as people move to riskier assets. This will avert deflation and increase long term inflation.
Better use of money would have been investing in renewal energy like wind and solar, but that's my personal opinion.
So with interest rates at all time lows, we have inflationary pressures via monetary policies, negative sentiment amongst the regular population, large cash positions being held by corporations and high net worth individuals ........ all this points to a potential rally in the stock market.
We are also entering the period where historical Santa Claus rally occurs. There is also the saying of buy when it snows, sell when it goes. So if we believe that the herd will do that and some people in the herd will try to jump the gun, we expect to see a bullish market starting in November and going until March/April of 2011. Traditionally people sell in May and go away for the summer, but again, anticipating the herd to do that, you should get out in March/April just after RRSP season (which should be healthy as risk tolerance returns due to the abovementioned monetary policies).
my current strategy is
1. stay away from bonds, real estate
2. stay heavily invested in commodities (oil, gold, copper) - play the asset inflation, currency devaluation and economic boom in Asia
3. move into USD stocks as US dollar devalues - this will bode well for US stocks (multi-national)
4. writing both out of money puts (on stocks I like but do not want to pick up right now - RIM, MFC, G, RY) and out of money calls (on my holdings - TD, IVN, COS, SU) - this works real well for a gradually increasing market.
5. or just stay with ETF's or index funds and ride the market until April.
Oct 19, 2010
Investment strategy and planning for 2011
For followers of my blog since the recession started, I hope you did as well as I did trading around positions in gold, oil, metals and banks. As 2010 comes to an end, we should start looking at what we should do in 2011.
First things first, evaluate your own house, figure out where you are and where you want to be at the end of the year. Also figure out your investment horizon and risk tolerance.
If you have low risk tolerance, get stressed when the market drops 100 pts, have a large mortgage, not able to save after bills are paid...... then stop here, don't read on, and focus on coming up with ways to save money and pay down debt/accumulate savings - see my other posts on the $10K savings challenge.
if you want to take charge of your finances, read on.
Action plan 1: contribute to your TFSA and grow it - this is the best savings vehicle for everyone - any interest/gains/dividends received is tax free forever. If you want to focus on growing something, this is the vehicle to put some effort into. if you do well in the TFSA, all future dividends are tax free (forever). I recommend investing in dividend paying stocks and write covered calls (3 months out), collect both dividends and ~ 5% premium per 3 months.... (you will need a self-directed account for this).
Action plan 2: contribute to your RRSP and then use the tax refund to pay down your mortgage ..... your mortgage is not tax deductable and the interest is after tax..... 4% is ~ 8% of interest income.
Action plan 3: rebalance your investment portfolio - are you too heavily weighted in one sector/area?
Look at your investments to make sure you are diversified in a few sectors/areas - fixed income, real estate, cash, metals, stocks etc. it really depends on the individual so there is no "magic" formula that works for all. A long term balanced portfolio could have 5% cash, 20% dividend stocks like banks, 20% commodity stocks, 20% rental properties or REITS, 25% bonds or GIC and 10% high tech or smaller cap stocks for growth. If commodity stocks goes up significantly, then the other sectors will drop in % weighting. Rebalancing will force you to take some profits on the commodities and move the profits to other underweighted sectors.... it's a disciplined approach which makes sure that you do not get decimated in the event a particular sector collapses.
Strategy
1. look at the macro and micro economic factors - where is the economy heading to ..... we are cautiously exiting a recession and a long period of excessive borrowing. In a slow recovering environment, the best play is strong, solid companies with consistent dividend paying track record..... long term capital gains plus a decent 4% yield. for more sophisticated investors, take on writing covered calls or writing uncovered puts to pick up positions can add significantly to the annual return.
2. look at where the growth is - China, India and Asia ... participate in investing in global ETF's or foreign stocks or investing in commodities (metals, oil) ..... watch out for currency risks.
3. don't chase old stories and hot stocks that have been going for a while .... look for the next area - this is difficult but the internet is an amazing thing, it levels the playing field significantly for information mining. Trouble is determing what is real and what is not.
As I develop forward strategies, I will add to this blog, stay tuned.
First things first, evaluate your own house, figure out where you are and where you want to be at the end of the year. Also figure out your investment horizon and risk tolerance.
If you have low risk tolerance, get stressed when the market drops 100 pts, have a large mortgage, not able to save after bills are paid...... then stop here, don't read on, and focus on coming up with ways to save money and pay down debt/accumulate savings - see my other posts on the $10K savings challenge.
if you want to take charge of your finances, read on.
Action plan 1: contribute to your TFSA and grow it - this is the best savings vehicle for everyone - any interest/gains/dividends received is tax free forever. If you want to focus on growing something, this is the vehicle to put some effort into. if you do well in the TFSA, all future dividends are tax free (forever). I recommend investing in dividend paying stocks and write covered calls (3 months out), collect both dividends and ~ 5% premium per 3 months.... (you will need a self-directed account for this).
Action plan 2: contribute to your RRSP and then use the tax refund to pay down your mortgage ..... your mortgage is not tax deductable and the interest is after tax..... 4% is ~ 8% of interest income.
Action plan 3: rebalance your investment portfolio - are you too heavily weighted in one sector/area?
Look at your investments to make sure you are diversified in a few sectors/areas - fixed income, real estate, cash, metals, stocks etc. it really depends on the individual so there is no "magic" formula that works for all. A long term balanced portfolio could have 5% cash, 20% dividend stocks like banks, 20% commodity stocks, 20% rental properties or REITS, 25% bonds or GIC and 10% high tech or smaller cap stocks for growth. If commodity stocks goes up significantly, then the other sectors will drop in % weighting. Rebalancing will force you to take some profits on the commodities and move the profits to other underweighted sectors.... it's a disciplined approach which makes sure that you do not get decimated in the event a particular sector collapses.
Strategy
1. look at the macro and micro economic factors - where is the economy heading to ..... we are cautiously exiting a recession and a long period of excessive borrowing. In a slow recovering environment, the best play is strong, solid companies with consistent dividend paying track record..... long term capital gains plus a decent 4% yield. for more sophisticated investors, take on writing covered calls or writing uncovered puts to pick up positions can add significantly to the annual return.
2. look at where the growth is - China, India and Asia ... participate in investing in global ETF's or foreign stocks or investing in commodities (metals, oil) ..... watch out for currency risks.
3. don't chase old stories and hot stocks that have been going for a while .... look for the next area - this is difficult but the internet is an amazing thing, it levels the playing field significantly for information mining. Trouble is determing what is real and what is not.
As I develop forward strategies, I will add to this blog, stay tuned.
Oct 17, 2010
Economy is showing signs of recovering
There are several subtle signs that the recovery is here .....commute is taking longer, malls are busier, people are a little more content .... flip side is full time career jobs are not being created, businesses are starting to make money but hesistant to spend.
My prediction is a rocky but gradual economic recovery. to play this slow and gradual recovery, I am going to write uncovered puts on companies that have fallen out of favour but would participate in a recovery, and write calls on my holdings to make some money from premiums. I continue to hold my gold, oil, copper, metals and bank stocks through to Christmas. Hopefully Santa comes this year.... I think it will, there is optimism growing amidst all this negativity of double dip, high unemployment, foreclosures etc.
Here's a sample trade that I made recently to illustrate put writing. MFC (Manulife) put 20Nov10 $12. Received a small $0.33 premium. that's about 2.5% return for 1 month. if it drops below $12, I will be obligated to pick it up at $12, but I think MFC is one of those slow recovery stocks that has bottomed but will take a while to recover.... in the meantime, I am picking away at the premiums. Even if I end up picking it up, it's something I would have bought.
Same idea with Rim P 20Nov10 $48 or ABX P 20Nov10 $44 ..... basically picking exercise price close to target buy price and collect premium at the same time.
I figure by doing so, I could potentially make between 2%-4% per month in premiums while I let the volatility of the market play itself out .... almost like being a banker and letting the buyers of those puts and calls play the riskier side of the equation. I don't count on doing this every single month as I will not execute if I don't see a good trade; but say 8 months per year x 3%- that's pretty good in my opinion.
Let's see if I am right in the next 3 months .... small Santa rally.
My prediction is a rocky but gradual economic recovery. to play this slow and gradual recovery, I am going to write uncovered puts on companies that have fallen out of favour but would participate in a recovery, and write calls on my holdings to make some money from premiums. I continue to hold my gold, oil, copper, metals and bank stocks through to Christmas. Hopefully Santa comes this year.... I think it will, there is optimism growing amidst all this negativity of double dip, high unemployment, foreclosures etc.
Here's a sample trade that I made recently to illustrate put writing. MFC (Manulife) put 20Nov10 $12. Received a small $0.33 premium. that's about 2.5% return for 1 month. if it drops below $12, I will be obligated to pick it up at $12, but I think MFC is one of those slow recovery stocks that has bottomed but will take a while to recover.... in the meantime, I am picking away at the premiums. Even if I end up picking it up, it's something I would have bought.
Same idea with Rim P 20Nov10 $48 or ABX P 20Nov10 $44 ..... basically picking exercise price close to target buy price and collect premium at the same time.
I figure by doing so, I could potentially make between 2%-4% per month in premiums while I let the volatility of the market play itself out .... almost like being a banker and letting the buyers of those puts and calls play the riskier side of the equation. I don't count on doing this every single month as I will not execute if I don't see a good trade; but say 8 months per year x 3%- that's pretty good in my opinion.
Let's see if I am right in the next 3 months .... small Santa rally.
Sep 7, 2010
Poker and Investing - parallels
If someone told me that Texas Hold 'em (Poker) is a game of strategy and skill last year, I would have laughed and said that it was mostly luck.
Now I use both my investing experience/skills in my poker game and vice versa to some success. I will now attempt to draw some parallels.
1. There is no sure thing ..... unless you have a Royal flush, going all in is not a sure win. Same thing with stocks, there is no guarantees - as a result, always exercise caution.
2. Chip leaders dominate the game and bully the short stacks; in the stock market, money makes money and the large eat the small retail guys.
3. Stay cool, go in when you sense the opportunity, no need to play every hand and look for weakness in other players or strengths (use that to your advantage); with stocks, there is nothing wrong staying on cash and waiting, and buying when there is blood on the street/fear and selling when everyone is overly optimistic.
4. you have to see the flop to make money; same with stocks, you have to be invested to make money.
5. knowing when to fold in poker can save a lot of chips; same with investing - never catch a falling knife and know when to stop out.
6. watching your cards only is not a good idea, good players will take all your chips. Same with stocks, focusing on the stock's fundamentals/data alone is not sufficient as there are other macro and market forces out there can quickly sink a stock or cause it to go up. Smart investors do both, watch the "stock" but also pay close attention to trends, other investors, political and economic factors.
Several things that work well with both investing and poker - patience, discipline, playing the odds and watching what the other players are doing.
Good luck.
Now I use both my investing experience/skills in my poker game and vice versa to some success. I will now attempt to draw some parallels.
1. There is no sure thing ..... unless you have a Royal flush, going all in is not a sure win. Same thing with stocks, there is no guarantees - as a result, always exercise caution.
2. Chip leaders dominate the game and bully the short stacks; in the stock market, money makes money and the large eat the small retail guys.
3. Stay cool, go in when you sense the opportunity, no need to play every hand and look for weakness in other players or strengths (use that to your advantage); with stocks, there is nothing wrong staying on cash and waiting, and buying when there is blood on the street/fear and selling when everyone is overly optimistic.
4. you have to see the flop to make money; same with stocks, you have to be invested to make money.
5. knowing when to fold in poker can save a lot of chips; same with investing - never catch a falling knife and know when to stop out.
6. watching your cards only is not a good idea, good players will take all your chips. Same with stocks, focusing on the stock's fundamentals/data alone is not sufficient as there are other macro and market forces out there can quickly sink a stock or cause it to go up. Smart investors do both, watch the "stock" but also pay close attention to trends, other investors, political and economic factors.
Several things that work well with both investing and poker - patience, discipline, playing the odds and watching what the other players are doing.
Good luck.
Aug 31, 2010
Conflicting directions for the market
Not sure who to believe -
1. the naysayers that predict a further 10-15% drop in September and October (traditionally down months for the market).
2. the optimists that predict a rocky but slow recovery.
I think that there will be some rocky days ahead but
a. there is a lot of cash on the sidelines, b. corporations are rich in cash waiting for opportunities to do strategic acquisitions, c. modest growth globally and d. the large number of naysayers predicting a double dip and retail investors that have cashed out during the crash too afraid to return .......
I am currently mostly invested in banks, oil, gold, copper and real estate..... no tech or utilities. I am watching trends very closely to see if the market breaks down (doubtful with interest rates so low and so much pessimism in the general population and cash on sidelines).... I will stop out on some and go to partial cash if supports get taken out next week..... always good to have cash to pick up bargains if we have a black october.
1. the naysayers that predict a further 10-15% drop in September and October (traditionally down months for the market).
2. the optimists that predict a rocky but slow recovery.
I think that there will be some rocky days ahead but
a. there is a lot of cash on the sidelines, b. corporations are rich in cash waiting for opportunities to do strategic acquisitions, c. modest growth globally and d. the large number of naysayers predicting a double dip and retail investors that have cashed out during the crash too afraid to return .......
I am currently mostly invested in banks, oil, gold, copper and real estate..... no tech or utilities. I am watching trends very closely to see if the market breaks down (doubtful with interest rates so low and so much pessimism in the general population and cash on sidelines).... I will stop out on some and go to partial cash if supports get taken out next week..... always good to have cash to pick up bargains if we have a black october.
Jul 15, 2010
OK, I was wrong, no W
Boring last 6+ months, market became range bound, so I just ended up trading good companies when we came close to the low end of the range TSX11,000 and selling all the way up to the 12,000 mark, then buying HXD's and riding it down again.
Stuck with solid dividend co's, playing for the singles as the V shape recovery becomes more like a square root recovery. Cannot say that I am not happy with my singles; no home runs for me - strike out more often when that happens. I will happily take my 5-10% return on each trade than try for the 2X bagger.
Good luck to all, we will be in a range for a while with some possibly crazy swings - either stay long and collect dividends or trade the range with good stocks.
Stuck with solid dividend co's, playing for the singles as the V shape recovery becomes more like a square root recovery. Cannot say that I am not happy with my singles; no home runs for me - strike out more often when that happens. I will happily take my 5-10% return on each trade than try for the 2X bagger.
Good luck to all, we will be in a range for a while with some possibly crazy swings - either stay long and collect dividends or trade the range with good stocks.
Oct 31, 2009
W is coming
I predict (and betting on) a "W" ..... we are going to re-test the March lows in the next 6 months as the same problems on the commercial real estate side have not been resolved. Hundreds of billions of debt need to be refinanced. Massive govt stimulus is what's pulling the economy back into "growth", but underlying fundamentals are weak.
October saw two tops at 11,500 TSX and 10,000 Dow. When TSX broke below support at 11,000, the next support level is 10,000. US dollar also rallied this week - how can this be if the US govt is $12trillion in debt? USD should be devaluing not rallying.
These are signs that something is not right and contradicts logical thinking if the economy is truly on the mend. Of important note is more regional bank failures, increasing unemployment, increase in people saving and cutting back (really bad as we are a consumer based economy) .....
I don't plan to short the market unless I see a rapid deterioration in fundamentals. The second part of the W could be short - i.e. down 10 or 20% from here. Not worth the risk if it takes off after the drop. However, the key thing to keep an eye on is the USD and commodities, they are early indicators of what's to come. Strong USD means severe correction is anticipated.
last post, I was 75% cash, as of end of Oct, I am pretty much 99% cash. Sold all my trading positions in base metals, oil etc when my stop losses were triggered last week. Hoping for this "W" to happen.
Watch list:
precious metals: G, ABX, K, ELD, PAA,
Metals: LUN, IVN, S, DML, AVL, TCK.B
Oil: COS.UN, SU, ECA
Banks : TD, BMO, BNS
others: RIM, AGU, POT, MGM, LVS
If I am so fortunate to be correct in my prediction, this time when I load up I will be holding for the long haul. Strategy is to accumulate at target "discount" prices.
October saw two tops at 11,500 TSX and 10,000 Dow. When TSX broke below support at 11,000, the next support level is 10,000. US dollar also rallied this week - how can this be if the US govt is $12trillion in debt? USD should be devaluing not rallying.
These are signs that something is not right and contradicts logical thinking if the economy is truly on the mend. Of important note is more regional bank failures, increasing unemployment, increase in people saving and cutting back (really bad as we are a consumer based economy) .....
I don't plan to short the market unless I see a rapid deterioration in fundamentals. The second part of the W could be short - i.e. down 10 or 20% from here. Not worth the risk if it takes off after the drop. However, the key thing to keep an eye on is the USD and commodities, they are early indicators of what's to come. Strong USD means severe correction is anticipated.
last post, I was 75% cash, as of end of Oct, I am pretty much 99% cash. Sold all my trading positions in base metals, oil etc when my stop losses were triggered last week. Hoping for this "W" to happen.
Watch list:
precious metals: G, ABX, K, ELD, PAA,
Metals: LUN, IVN, S, DML, AVL, TCK.B
Oil: COS.UN, SU, ECA
Banks : TD, BMO, BNS
others: RIM, AGU, POT, MGM, LVS
If I am so fortunate to be correct in my prediction, this time when I load up I will be holding for the long haul. Strategy is to accumulate at target "discount" prices.
Aug 21, 2009
Market rally this week baffles me
We will have to wait for the big traders to come back from their summer vacations in September. Big moves usually happen in the Sept/oct months. Stock market is reflecting a strong recovery in the economy but I am not seeing that. Restaurants are not as packed, roads are not as busy, people are still worried about their jobs, companies are watching every cost ..... this does not reflect what the stock market is saying - everything is back to normal again.
My current portfolio is 75% cash, only a handful of stocks left. Going to wait for the correction, hoping that the market corrects back to TSX 9000. If it does not happen this year, I will just trade a little without taking significant positions. I am taking my chances that the market can go up another 10-20% on further optimism, but based on fundamentals and outlook, this recovery will be slow and there will be more down bumps along the way. I am lucky to make some good coin on this crash, but I am going to take the profits and wait and not risk it.
Let's see whether my prediction comes true.
My current portfolio is 75% cash, only a handful of stocks left. Going to wait for the correction, hoping that the market corrects back to TSX 9000. If it does not happen this year, I will just trade a little without taking significant positions. I am taking my chances that the market can go up another 10-20% on further optimism, but based on fundamentals and outlook, this recovery will be slow and there will be more down bumps along the way. I am lucky to make some good coin on this crash, but I am going to take the profits and wait and not risk it.
Let's see whether my prediction comes true.
Aug 8, 2009
Investment strategy update August
11,000 TSX and Dow almost at 10,000, who would have pictured this in March when we were hitting new lows everyday. Like Buffett said, be fearful when others are greedy, but greedy when others are fearful.
We made a nice run from the lows and optimism is returning. The real estate market is still incredibly strong (unheard of in a recession) in Toronto - up 6% year to date. Will this keep up with job losses unabating? we are close to 10% unemployment, plus most of the new jobs that are being created are service related. Credit card debt and delinquency is increasing. Bankruptcy rates are going up..... but recoveries are usually built on a wall of worry.
I agree that some confidence has returned to the market but until we see a return of value creation, we are not going to see a sustainable recovery. I look at Mfg as value creation. Investment banking, service industry, banking etc are NOT value creating industries - mfg, auto sector, high tech are and they have moved off-shore.
Govt's need to invest in Green technology and create value in new industries such as alternative energy.... I have not seen much of it yet. This will create wealth for the nation long term.
Back to my strategy, I am selling chunks of equity into the rally as the market moves up. Cash position is increasing every time the market moves up. Similarly on big down days or series of downs, I pick up a few that I like that have fallen disproportionately more and sell into the rally.
I also consolidated all my locked in accounts, RESP funds, RRSP (had little accounts everywhere at different institutions)... they are all in my TD Waterhouse account now. Centralized and under my full control.
Not sure if now is the time to short the market yet, but I believe that we are anticipating a recovery which will come, but the market has recovered too fast, too quickly while the fundamentals do not indicate long term sustainable changes that will create long term value.
As a result, it's moving into cash and leaving it there for opportunistic trades. one area that I am starting to get into is alternative energy - looking for solar Mfg and wind/hydro mfg and operating companies - if you know of good ones with good mgmt and business model (stand alone without grants), please let me know.
We made a nice run from the lows and optimism is returning. The real estate market is still incredibly strong (unheard of in a recession) in Toronto - up 6% year to date. Will this keep up with job losses unabating? we are close to 10% unemployment, plus most of the new jobs that are being created are service related. Credit card debt and delinquency is increasing. Bankruptcy rates are going up..... but recoveries are usually built on a wall of worry.
I agree that some confidence has returned to the market but until we see a return of value creation, we are not going to see a sustainable recovery. I look at Mfg as value creation. Investment banking, service industry, banking etc are NOT value creating industries - mfg, auto sector, high tech are and they have moved off-shore.
Govt's need to invest in Green technology and create value in new industries such as alternative energy.... I have not seen much of it yet. This will create wealth for the nation long term.
Back to my strategy, I am selling chunks of equity into the rally as the market moves up. Cash position is increasing every time the market moves up. Similarly on big down days or series of downs, I pick up a few that I like that have fallen disproportionately more and sell into the rally.
I also consolidated all my locked in accounts, RESP funds, RRSP (had little accounts everywhere at different institutions)... they are all in my TD Waterhouse account now. Centralized and under my full control.
Not sure if now is the time to short the market yet, but I believe that we are anticipating a recovery which will come, but the market has recovered too fast, too quickly while the fundamentals do not indicate long term sustainable changes that will create long term value.
As a result, it's moving into cash and leaving it there for opportunistic trades. one area that I am starting to get into is alternative energy - looking for solar Mfg and wind/hydro mfg and operating companies - if you know of good ones with good mgmt and business model (stand alone without grants), please let me know.
May 9, 2009
Market is very optimistic that recovery is on the way
What truly baffles me is GM is trading at $1.6 when the bondholders are getting 10-20 cents on the dollar? if GM and Chrysler goes, so will a lot of other small companies that depend on them as customers.
How about Citi and BAC? 4x from the March lows. Massive loan losses still to come, govt preferreds still need to be paid off...
Job losses have slowed to a loss rate of 500K per month (wait a second, we are still losing 1/2 million jobs a month) with no end in sight.
Watch out, oil prices are creeping back up and so are commodity prices. Low prices kept inflation down due to the slow down, however, if inflation comes back, Feds have no choice but to start raising rates.
What do we do from here? I am 100% invested in equity in my long term portfolio (pension, RESP, some RRSP). Large % cash in my trading account. If this rally continues (almost telling us that the recovery will happen in the 2nd half of the year now versus 2010 as previously predicted), I am going to go contra-herd and sell everything and hold cash. Herd mentality now is we cannot miss this new bull market so everyone is now charging back to buying.
Will this optimism actually start fueling a new spending and investing boom? Again it's all paper, no real jobs are being created, no real wealth is being created. The crash is starting to slow down (repeat, slow down, not recover yet).
But then again, I could be wrong. after 9/11, the market doubled in 3 years...... until we find some ways to create jobs for Americans again, the guys that will boom will be China and India and commodities......
At this time, I really do not know what is going to happen next.
How about Citi and BAC? 4x from the March lows. Massive loan losses still to come, govt preferreds still need to be paid off...
Job losses have slowed to a loss rate of 500K per month (wait a second, we are still losing 1/2 million jobs a month) with no end in sight.
Watch out, oil prices are creeping back up and so are commodity prices. Low prices kept inflation down due to the slow down, however, if inflation comes back, Feds have no choice but to start raising rates.
What do we do from here? I am 100% invested in equity in my long term portfolio (pension, RESP, some RRSP). Large % cash in my trading account. If this rally continues (almost telling us that the recovery will happen in the 2nd half of the year now versus 2010 as previously predicted), I am going to go contra-herd and sell everything and hold cash. Herd mentality now is we cannot miss this new bull market so everyone is now charging back to buying.
Will this optimism actually start fueling a new spending and investing boom? Again it's all paper, no real jobs are being created, no real wealth is being created. The crash is starting to slow down (repeat, slow down, not recover yet).
But then again, I could be wrong. after 9/11, the market doubled in 3 years...... until we find some ways to create jobs for Americans again, the guys that will boom will be China and India and commodities......
At this time, I really do not know what is going to happen next.
May 2, 2009
Economy improving
I had to get back into the market... bought some Nexen, Suncor and Ivanhoe mines this week. Also shifted all my long term RESP's and DCP's back into Canadian equity funds.
Still holding a large % of cash. Next week when the stress test comes out and shows that the banks need capital, there may be a short term correction for the bank stocks. I will take that as an opportunity to load up on financials.
Surveyed a lot of people and there is so much fear, a lot of folks have cash on the sidelines not wanting to "lose" it is this wall of fear that great bull markets are formed. Market has rallied 25-30% already so there will be some minor dips along the way. However, things are starting to look like it's stabilizing from a free fall.
Recovery might still be a full year away, but signs are indicating that a bottom will be reached in the summer.
Strategy:
+ participate in recovery in my long term portfolio's (RESP, RRSP, DCP)
+ hold strategic commodity stocks as hedge against inflation and inevitable return in demand (oil, gold, copper etc)
- wait for stress test and correction in bank stocks to pick up some financials
- wait for opportunity in watch list to pick up stocks that I like
- wait for trading opportunity - i.e. minor corrections to trade
Still holding a large % of cash. Next week when the stress test comes out and shows that the banks need capital, there may be a short term correction for the bank stocks. I will take that as an opportunity to load up on financials.
Surveyed a lot of people and there is so much fear, a lot of folks have cash on the sidelines not wanting to "lose" it is this wall of fear that great bull markets are formed. Market has rallied 25-30% already so there will be some minor dips along the way. However, things are starting to look like it's stabilizing from a free fall.
Recovery might still be a full year away, but signs are indicating that a bottom will be reached in the summer.
Strategy:
+ participate in recovery in my long term portfolio's (RESP, RRSP, DCP)
+ hold strategic commodity stocks as hedge against inflation and inevitable return in demand (oil, gold, copper etc)
- wait for stress test and correction in bank stocks to pick up some financials
- wait for opportunity in watch list to pick up stocks that I like
- wait for trading opportunity - i.e. minor corrections to trade
Mar 19, 2009
Nice bear market rally
8 straight up days in a row, time to take profits. over the last couple of days, I have been selling into the rally. Made a nice profit of 20+%. if this keeps up I will be completely in cash in the next few days.
This rally may last for a while but we are still in this bottoming process and we will come back down to re-test the lows set in early March. I will be waiting at the station to load up again.
Don't think we will be in for a sustained rally until the 2nd half of the year. I could be wrong but earnings season is coming up and I dont' think the news is going to be good.
..... but I could be wrong and this rally could turn into a new bull market, but I rather make my profit and wait for another opportunity.
This rally may last for a while but we are still in this bottoming process and we will come back down to re-test the lows set in early March. I will be waiting at the station to load up again.
Don't think we will be in for a sustained rally until the 2nd half of the year. I could be wrong but earnings season is coming up and I dont' think the news is going to be good.
..... but I could be wrong and this rally could turn into a new bull market, but I rather make my profit and wait for another opportunity.
Feb 28, 2009
Recovery at the end of the year
Signs are starting to point to a slow recovery starting in the second to late half of this year (2009). Watch for these signs and formation of trends.
1. topping out of the gold stocks and bullion
2. bottoming process of canadian banks - US banks are still messed up
3. massive stimulation by governments all over, low interest rates - this will take time but are starting to kick in.
4. consumer confidence dampened but not defeated - there is a lot of passive/latent demand waiting
5. Obama
6. lots of cash sitting on the sidelines.
Areas of risk still - real estate - will drop more this year, jobs - lots more losses coming.
over the next 3 months, watch to see whether gold, defensive plays like MCD, L, WMT break the current top, if not and the trend starts to go down, then we know that the new bull market is about to start. If it breaks above the old high, watch out, we could be in for a depression...... I personally don't think it will happen.
So, let's spend ourselves out of one. I personally bought a new car recently to help the economy and going out and cautiously looking for bargains to stock up. I know I sound crazy but it's all about confidence ..... with such low interest rates and govt intervention, all we need is for people to start lending, spending and shopping again.
1. topping out of the gold stocks and bullion
2. bottoming process of canadian banks - US banks are still messed up
3. massive stimulation by governments all over, low interest rates - this will take time but are starting to kick in.
4. consumer confidence dampened but not defeated - there is a lot of passive/latent demand waiting
5. Obama
6. lots of cash sitting on the sidelines.
Areas of risk still - real estate - will drop more this year, jobs - lots more losses coming.
over the next 3 months, watch to see whether gold, defensive plays like MCD, L, WMT break the current top, if not and the trend starts to go down, then we know that the new bull market is about to start. If it breaks above the old high, watch out, we could be in for a depression...... I personally don't think it will happen.
So, let's spend ourselves out of one. I personally bought a new car recently to help the economy and going out and cautiously looking for bargains to stock up. I know I sound crazy but it's all about confidence ..... with such low interest rates and govt intervention, all we need is for people to start lending, spending and shopping again.
Jan 20, 2009
Trading alert - Jan 20
Today was a brutal day, started off slowly and then the selling accelerated after Obama's inauguration. Funny the way people are, people were building up towards his inauguration expecting miracles to happen immediately and when nothing happened, "speculators" like sheep started selling... more selling triggers further panic.
A lot of stocks on my watch list (see prior post) have reached buy target prices -TD, Scotiabank, BMO, Suncor etc. By tomorrow, I should be fully invested .... after that I am just going to sit back and wait for the inevitable recovery (and collect dividends along the way)..... according to some experts I might be waiting until the end of the year, but I am a little more optimistic than that. Obama is going to move swiftly to stabilize the banking industry and then he's going to help slow down foreclosure rates by tackling the bad debts/liquidity situation, and he will start creating jobs by investing in infrastructure. This will take about 6 months, but this will bring back confidence into the people and hope for the future.... funny thing about the economy, it is hope for the future that drives growth.
Now is the time..... when everything looks bleak and everyone is saying that we are in a major recession ... it's usually around this time that we start turning a corner (we are still in a recession but the derivative/rate of decline is close to zero...)
A lot of stocks on my watch list (see prior post) have reached buy target prices -TD, Scotiabank, BMO, Suncor etc. By tomorrow, I should be fully invested .... after that I am just going to sit back and wait for the inevitable recovery (and collect dividends along the way)..... according to some experts I might be waiting until the end of the year, but I am a little more optimistic than that. Obama is going to move swiftly to stabilize the banking industry and then he's going to help slow down foreclosure rates by tackling the bad debts/liquidity situation, and he will start creating jobs by investing in infrastructure. This will take about 6 months, but this will bring back confidence into the people and hope for the future.... funny thing about the economy, it is hope for the future that drives growth.
Now is the time..... when everything looks bleak and everyone is saying that we are in a major recession ... it's usually around this time that we start turning a corner (we are still in a recession but the derivative/rate of decline is close to zero...)
Jan 15, 2009
Trading update Jan 15
Put in orders last night but then decided at lunch time to buy at market on some of the stocks that I like.
picked up Canadian oil sands at $19.50, Scotiabank at $29.70 and Hudbay minerals at $3.26 ... this covers what I want to hold from an oil and base metals perspective. Still underweight on banks, want to add a few more bank stocks, want to add gold but it's still not getting to my target buy range. Not planning on buying technology (except Apple on weakness) or pharma/biotech unless I see an opportunity.
Want to pick up some alternative energy company with the direction that Obama mama is heading towards, but the problem is unless credit loosens up or govt does something to spur investment, it's going to be stagnant for a while because oil and gas prices are so low, alternative energy becomes relatively more expensive.
Things that I am not touching - high debt companies, auto sector, non-dividend paying companies.
To clarify one thing, my trading portion is about 30% of my total investments - 50% funds, 20% real estate..... don't want people to think that I trade 100% of my portfolio.
In terms of funds, I am right now in resource fund and canadian equity fund. Will wait in these funds until the recovery happens even if it takes 3 years.
Good luck to all.
picked up Canadian oil sands at $19.50, Scotiabank at $29.70 and Hudbay minerals at $3.26 ... this covers what I want to hold from an oil and base metals perspective. Still underweight on banks, want to add a few more bank stocks, want to add gold but it's still not getting to my target buy range. Not planning on buying technology (except Apple on weakness) or pharma/biotech unless I see an opportunity.
Want to pick up some alternative energy company with the direction that Obama mama is heading towards, but the problem is unless credit loosens up or govt does something to spur investment, it's going to be stagnant for a while because oil and gas prices are so low, alternative energy becomes relatively more expensive.
Things that I am not touching - high debt companies, auto sector, non-dividend paying companies.
To clarify one thing, my trading portion is about 30% of my total investments - 50% funds, 20% real estate..... don't want people to think that I trade 100% of my portfolio.
In terms of funds, I am right now in resource fund and canadian equity fund. Will wait in these funds until the recovery happens even if it takes 3 years.
Good luck to all.
Jan 14, 2009
Trading alert Jan 15
posted last week that market was showing signs of pessimism and technical breakdown, lucky I got out of my trading positions. Going to place orders near the 52 week lows for the following stocks - we are going to re-test the lows again. Hopefully I get filled close to the 52 week low. I personally don't think we will go into a depression but the way the market is trading, it appears that the market is pricing in a long recession.
Here is my list and target buy price (a little above the 52 week low)
BNS $28.75
BMO $29.50
SU $20
COS.UN $18.50
HBM $2.80
TD $39
AAPL $75 (apple)
DIS $19 (Disney)
Here is my list and target buy price (a little above the 52 week low)
BNS $28.75
BMO $29.50
SU $20
COS.UN $18.50
HBM $2.80
TD $39
AAPL $75 (apple)
DIS $19 (Disney)
Jan 1, 2009
Downtown's $10,000 2009 challenge
I think we should all find ways to save even if we are not in a recession. I challenged my friends to save $10K in a year and then invest this money into the stock market or pay down their mortgage. Some have taken on the challenge, including one friend that bought a year's worth of wheaties when it went on sale (I hope he realizes that these things have an expiry date). The savings below are annualized projections for a family of four (might be more difficult for a single person to find ways to save $10K):
1. change your shopping habits -Metro/Loblaws to No Frills grocery stores; high end clothing stores to Winners/Bay; Department stores to Costco/Sam's club. Look for on-sale items and stock up instead of buying on demand- easily save 10-30% of your annual spend ~ $1-3K
2. use coupons, loyalty cards, credit cards with rewards - see previous blog for details - ~ $1K
3. try to refinance your mortgage at current low rates or go variable. if you have any equity in your mortgage - i.e. if you have been paying down the principle over a few years, you might be able to take out a line of credit secured against the house (lower interest) to pay down higher interest debt like car/student loans or credit card debt. ~ TBD
4. bring lunch to work - $5 per day x 50% 240 = $500
5. cut down on coffee and mocha lattes ~ $1.5 x 50% x 240 ~ $180
6. carpool, drive at the speed limit, reduce aggressive driving - cut fuel consumption by > 10% = savings of ~ $200
7. reduce entertainment, dining and alcohol expenses - reduce # of outings by 2 per month => $100 per month or $1200 per year
8. bring bottles of water out ($0.10) instead of buying drinks outside ~ $1K per year (you will be surprised at how much we spend each year buying pop and water)
9. modify vacation plans - instead of a cruise or a nice vacation in Florida, maybe something closer to home? ~ $2K
10. shop around before making a big purchase - TV, car, furniture etc. With the recession, there are a lot of motivated sellers out there.
So there you go, some suggestions on where you can find money that you thought that you did not have. $10K is just a target, even if you save $1 or $2K or $3K, it's money that you would have given someone else. Take this money and invest it wisely (no lottery tickets or Nortel stock -well at $0.32 .... )
If any one who reads this actually saves more than $10K in 2009, please let me know or post what you did and your results on the blog for others to share.
1. change your shopping habits -Metro/Loblaws to No Frills grocery stores; high end clothing stores to Winners/Bay; Department stores to Costco/Sam's club. Look for on-sale items and stock up instead of buying on demand- easily save 10-30% of your annual spend ~ $1-3K
2. use coupons, loyalty cards, credit cards with rewards - see previous blog for details - ~ $1K
3. try to refinance your mortgage at current low rates or go variable. if you have any equity in your mortgage - i.e. if you have been paying down the principle over a few years, you might be able to take out a line of credit secured against the house (lower interest) to pay down higher interest debt like car/student loans or credit card debt. ~ TBD
4. bring lunch to work - $5 per day x 50% 240 = $500
5. cut down on coffee and mocha lattes ~ $1.5 x 50% x 240 ~ $180
6. carpool, drive at the speed limit, reduce aggressive driving - cut fuel consumption by > 10% = savings of ~ $200
7. reduce entertainment, dining and alcohol expenses - reduce # of outings by 2 per month => $100 per month or $1200 per year
8. bring bottles of water out ($0.10) instead of buying drinks outside ~ $1K per year (you will be surprised at how much we spend each year buying pop and water)
9. modify vacation plans - instead of a cruise or a nice vacation in Florida, maybe something closer to home? ~ $2K
10. shop around before making a big purchase - TV, car, furniture etc. With the recession, there are a lot of motivated sellers out there.
So there you go, some suggestions on where you can find money that you thought that you did not have. $10K is just a target, even if you save $1 or $2K or $3K, it's money that you would have given someone else. Take this money and invest it wisely (no lottery tickets or Nortel stock -well at $0.32 .... )
If any one who reads this actually saves more than $10K in 2009, please let me know or post what you did and your results on the blog for others to share.
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