Tuesday, June 19, 2018

Beware of Financial Pornography

The heading on this white board should read;

'Your expenses will vary in retirement so you need a rising and growing cash flow.'

We are constantly being seduced by financial institutions to give them our money in exchange for some product they are selling. This sign is not new but it has appeared in the past and I'm sure is still affecting those people that fell for it. All the big banks sell these products, so buyer beware. Let's pop the hood and explore further.

$500 a month X 15 years = 500 X 180mo = $90,000

What happened to the other 10K?

Sucked up in fees just for the privilege of buying this product from the nice lady at the bank. Market linked GICs are mercilessly flogged by the bank as soon as they hear you like to invest yourself. They couldn't wait to pitch me this when I told them my house was paid off and that I was a DIY investor.

They didn't like the fact I mentioned that I don't leave money at the bank but only look at it as a place to get money.

Don't fall for this, it's a trap.

You are not protected and your money is not participating in growth. This is financial porn at it's finest.

If you invested 100K in just a 60/40 Balanced Portfolio and earned 7% which has been the average return of the last 15 years you would have;

100K X 15 @ 7% = $275,903.15

Why would you hand over that 100K to the bank? when you can generate that kind of return in a fairly low risk portfolio.

You are going to receive a lot less money and they guarantee it. It's all wrapped up in the sales propaganda of having a fixed income.

You don't want fixed income you want a growing income in retirement. This helps you stay ahead of inflation and if your expenses go up so does your income over time. You have to find ways to achieve that. This is not an investment that does that, the math is pretty simple. Invest the money and do not buy a market linked GIC from the bank. You can do so much better.

Don't fall for anything the bank is selling. Chances are they are the ones getting rich off of your money.

If that 100K is burning a hole in your pocket another option for you is to buy 100K worth of the bank's stock. Whatever bank you deal with just buy their stock. 

All you have to do is go online and open up a non-registered account with a discount broker. Every bank has a discount brokerage trading arm they use to appeal to DIY investors. If you don't know how to do this get someone to help you or ask the bank to help you open one (if they will).

Once you open the account, you fund it with the 100K. Purchase bank shares equivalent to your $100K.

Every quarter they will send you dividends into the account that are taxed a lot more favourably than the income from a GIC. The other positive behind buying the bank's common stock is the growth it provides. That 100K will continue to grow every year for 15 years. 

It's up to you, but you have more than one choice. On the one hand you can hand over 100K and give all control of your money to the bank OR invest in a balanced portfolio OR just buy bank stock. 

Let's look at an example of buying BNS which is where I hold all my investments. I use Scotia iTrade as my discount online broker.

The stock closed at $75.98 on Friday 15 June 2018. Using my 100K it would allow me to purchase 1,316 shares of the common stock. The stock is currently yielding 4.42%.

The calculation works out to 1,316/$82 per 100 share coupon rate = $1,079 every quarter.

Which breaks down to $359.70 monthly.

Yes that is less than the $500 a month the bank is giving you back BUT you have the following advantages;
  • total control over your money
  • spending or letting your dividends grow
  • participating in the growth of your money
  • a more tax efficient investment
  • yield + growth = a better return on your investment
  • zero cost on your invested dollars
  • you are way ahead by NOT giving the bank 10K in fees
  • it's your money, the bank is just giving it back to you over time
I think it's pretty clear what the best options are. I'm not suggesting that you dump 100K in any one stock, it's just an example to highlight just how much growth you give up when investing at the bank.

If you would have invested 10K in Royal Bank in 1999 today you would have 210K according to a recent article from Motley Fool Canada.

Do you own any market linked GICs?

Recommended Reading:

Friday, June 15, 2018

New Stock Purchases and Watchlist Update-Week of June 11-15

Monday 11 June 2018

I took the plunge and bought 300 shares of Aphria (APH) @ $11.75. I'm finally in the Cannabis space here in Canada. The stock opened lower so I set my bid price and it got hit around 10:00 a.m.

It's not sector investing and I'm not targeting weed stocks. It's just that it seems to be where the market action is day in and day out. I just keep watching and looking for opportunity. It is really hard to day trade these stocks and I hate sitting at my computer for any real length of time.

It's a small position in keeping with no more than 4K or less in each stock. I am now at my limit of 5 stocks. 

I have added Torex Gold to the watchist based on today's price and volume moves.

Stock Symbol: TXG
Current Price: $13.10
Purchase Price: $13.02
52 week high/low: $7.29/$26.23
Avg. Volume: 402K
Today's Volume:309K

The stock has the potential to double from here if it reaches it's 52 week high. With the world in chaos and so much nervousness, it is no wonder some of these slow to move gold stocks are starting to wake up.

I always look for a price that is starting to move up after sitting in the penalty box for a period of time. TXG and APH seem to be doing that. These kinds of stocks can turn on a dime and starting heading down in a hurry. You need to be vigilant every day.

Today I added Torex Gold to my holdings after just adding it to the watchlist yesterday. The buy signals for me were just too compelling to not take a punt at this low price.

Today's Closing Price: $13.09
Price Paid: $13.02
52 week High/Low: $7.29/$26.23
Shares Bought: 300
Cost of Transaction: $13.02 X 300 + $9.99 = $3,915 

Up $15 after purchase. Woot Woot!!

Just a small position which is what I like to take, This way my capital is spread around evenly.

TXG is down 41% in the past year
I love these kind of drops as they present great upside potential back up to $26 and reaching it's old high. 

What I have done differently with this purchase is extend my holdings to 6 stocks. I only like to hold 5 positions at a time for a total investment of 20K.

I am looking at trimming ELD as it is not really moving up the way I hoped after buying it. Market action is tepid at best so I might sell it for something else that is moving up. Time will tell and so will the market action. Having said that, it had a good day today and thee is just too much chaos to dump gold shares right now.

If you like fundamentals, here is the skinny on Torex Gold from Google;

"Torex Gold Resources Inc. engages in the exploration, development, and operation of mineral properties. The company explores for gold, silver, and copper deposits. It principally holds a 100% interest in the Morelos Gold property comprising the El Limón Guajes mine and the Media Luna project covering a total area of approximately 29,000 hectares located in the Guerrero Gold Belt in southern Mexico. The company was formerly known as Gleichen Resources Ltd. and changed its name to Torex Gold Resources Inc. in April 2010. Torex Gold Resources Inc. was founded in 1980 and is based in Toronto, Canada."

Technically the stock has just crossed it's 21DMA.

Current Holdings


Updated Watchlist

On Monday I start to track PNE, FF and MARI
they have been added to the watchlist still including;


Gambling Portfolio (as of 15 June)

Total Shares
Book Value
Market Price
Market Value
Gain/Loss %







Most of the stocks that seem to be rising in price and value are cannabis, gold and some oil stocks. The ones on my watchlist represent the best value based on past prices. Of course that does not mean they will continue to advance.

I also can't buy everything and 6 stocks is a more than I want to own at any one time.

Thursday 14 June 2018

I added a Gold Standard Ventures (GSV)and AcuityAds Holdings (AT.V) to the watchlist at the end of trading yesterday. 

I have been watching GSV for years actually but have never bought it. AT.V is more of a risk but it's in the tech space which has been leading the market higher for a few weeks now. I'll leave it up to you to do more due diligence. 

Watchlist now composed of the following;


You will always have regrets not timing the buy of a stock on your watchlist. The big winner from this list is KAT, which is now up 45% since I put it on the list. 
As of Friday's close 6/9 stocks are in the red. The total portfolio of watched stocks is still up 0.84%. As you can see you don't have to be right that often to make money.

This is why I do this in an open account and NOT a TFSA. I use a non-registered open trading account. Pick who you want it doesn't matter.

My gambling portfolio still holds TXG, APH, THO, EXN, WDO and ELD.
After you pick your horses let them run. Even though 4/6 of my positions are in the red, I am still up 2.8% overall.

Why and how does this happen? 

  • You pick no more than 5 stocks. 
  • You invest only 4K in each so risk is spread evenly. 
  • You only need to pick one winner to make money. 
  • WDO so far is the big winner up 15% which raises my gains into positive territory.

This is how you win the stock picking game. Picking stocks is a game and you must follow rules of entry and exit. Selling is where you make the money.

Dropped: NMX, LTV, FIRE and BXE from the watchlist at the end of trading Thursday. Stocks are down but volume is drying up. I see no reason to keep watching them until they start moving up. I need to pare down this list to better candidates.

Added: ERD to the watchlist - break out on strong volume and company specific news. Penny stocks like this tend to run hot very quickly and move away from speculators quickly. I have no interest in chasing stocks that behave like this and will watch for now.

Watchlist: ERD, GSV, AT, PNE, FF, MARI, ACB, MUX and KAT.

Portfolio: TXG, APH, THO, EXN, WDO and ELD

Friday 15 June 2018

Brutal day after the announcement of a new tariff tit for tat with China. Gambling Portfolio lost over 1K just on Friday alone. 4/6 stocks underwater. PF is barely in the green as most of the momentum gets sucked out of market. I don't day trade so I'm not very lucky at the moment with timing. What looks like a breakout on volume is most likely shorts coming in and playing with all the negative news.

Retirement Stocks I Hold


ETFs I Hold

VFV, TPE, XIC, XAW, ZPR, XQB held separately in 2 retirement accounts.

Mutual Funds

Mawer Balanced Fund (MAW104) in my wife's LIRA for simplicity.

Total Dividends Collected in the Month of May


Weekly Summary

I added CP and CNR to my RRSP after selling EMA and NA. I had enough utility and financial exposure and nothing in the industrial space. My RRSP will not be touched for the next 9 years until it is converted to a RRIF. I am happy with the above stocks.

I will leave my wife's portfolio in Couch Potato and Mawer Balanced ETFs/Mutual Funds.

Gambling Portfolio changes regularly.

If you need to find some money to invest you might want to check out this post on the Cashflow Cookbook. for ideas.

We all worry about money. If you struggle and need help organizing your finances in a revolutionary new way then read this.

Thursday, June 14, 2018

You Can Retire Sooner Than You Think - My Book Review

TITLE: You Can Retire Sooner Than You Think
AUTHOR CREDENTIALS: Radio Host, Financial Planner and Author
GENRE: Personal Financial Planning



"If you think you need to win the lottery or work until you’re 75 to retire with financial stability, Money Matters host Wes Moss has very good news for you. You Can Retire Sooner Than You Think reveals the secrets for ensuring a successful retirement—sooner rather than later.

After conducting an intensive study of happy retirees to learn the financial practices they hold in common, Moss discovered that it doesn't take financial genius, millions of dollars, or sophisticated investment skills to ensure a safe, solid retirement. All it takes is five best practices:
    • Determine what you want and need your retirement money for
    • Figure out how much you need to save
    • Create a plan to pay off your mortgage in as little as five years
    • Develop an income stream from multiple sources
    • Become an income investor
    Getting on the fast track to a great retirement is a lot simpler than the retirement professionals would have you believe. You Can Retire Sooner Than You Think provides the proven-effective, five-step formula for creating the retirement of your dreams." - Amazon

    He says we can all do this, no need for special skills or a degree in mathematics. Follow his five steps and you will achieve retirement success with his proven effective method. Let's pop the hood and check things out.

    $1000 a Month Rule

    The book is filled with a lot of formulas and financial jargon. He introduces us to a new rule of his called the 1,000 Bucks a Month Rule. Meaning if you want to have at least a thousand bucks a month to spend in retirement then you need to save up $240,000.

    In my own retirement case I would like to have $3000 bucks a month in retirement income. Moss is saying I would need to have saved up $720,000 for retirement.

    In the United States where Moss lives and works the generally accepted amount for retirees is $500,000 to have a happy retirement. Taking that amount into consideration then, most retirees only need to amass a total of $480,000 to generate that 2K per month in income.

    Keep in mind that all these totals would work in concert with any government pension income you may have coming in. Pensions like Social Security in the US and for Canadians we have our Canada Pension Plan and Old Age Security.
    What Moss's guideline goes on to suggest is that if you have a little more retirement income other than what the government gives you, let's say it's $400 per month, then you need to have saved up almost a million bucks. 

    240 X 4 = 96. That would be 960 bucks per month which is close to a million dollars to achieve that amount. Keep in mind the assets have to be liquid so you could sell them within 48 hours if you needed the cash.
    This is a rule designed by a famous financial planner named William Bengen. He states that retirees should be able to draw 4% a year from their portfolios for at least 30 years and not run out of money. I'm not going to include any inflation adjustments for simplicity of calculations.

    Where Moss differs from Bengen is that he bumps up this number to 5%. He thinks in today's environment you should be able to generate portfolio returns of 5% a year. The money would come from a combination of interest and dividends and other distributions giving you income from a diversified balanced portfolio. This is where Moss gets his 5% target.

    Let's say I have my $240,000 saved up and now I'm ready to draw income from that using Wes's 5% rule. The investments would spin off $12,000 a year for me. 12,000/12 = $1000 a month.

    Is it possible to get a 5% return? I wouldn't settle for anything less than that so I'm happy to see Moss suggest a higher number. I don't think it's even that risky considering today you would go broke very quickly leaving your money in savings accounts, buying bonds or worse yet GICs.

    He is a big fan of income investing and so am I. When you check out the investing landscape and start looking at where to put your money you can see that investing in high quality blue chip dividend paying companies like utilities, telcos and banks you can achieve at least a 4% return. Combine that with some higher yielding stocks and REITs (Real Estate Investment Trusts) and you'll get pretty close to your 5% target.

    I always keep a little of my savings in fixed income which today only yields 2-3%. I consider this my safety net should things go sideways.

    Some of Moss's other gains to get him to his desired 5% target come from growth. The assets appreciate in value so they generate capital gains which cam fluctuate either way. This is a long term plan so you should be able to safely ride this out during retirement.

    He further suggests that your nest egg if properly invested in these income generating investments will more than outlast Bengen's 30 year 4% withdrawal rule. You need to remember you can always sell one of your investments and generate more cash that way.

    The rest comes from growth or capital gains, which year by year will fluctuate or even be negative, but over the long haul can be another 1 to 3% on top of the more assured yield from income investing. At worst, it may involve cutting slowly into capital but as long as your income investments are generating by themselves 3 or 4%, Moss assesses that such a nest egg would easily outlast the average 30-year retirement time frame.

    I also love the fact Moss recommends you pay off your mortgage as soon as possible. My wife and I paid off our house in 11 years. It takes discipline and a bit of sacrifice but it will leave you with so much more cash flow in retirement. Another big concern Moss has is over annuities. He's not a big fan and suggest people not turn over their savings to an insurance company.

    There’s plenty of other stuff in the book but I’ll close with just two more points.  Moss believes retirees should have completely paid off their mortgage before retiring and he’s not a big fan of annuities to supplement retirement.

    I like his recommendations as an income investor because I've tried to steer my portfolio in this direction when I was planning my own retirement. This is a great book that should be on the shelves of everyone nearing retirement or planning their strategy very soon.

    Do you believe in becoming an income investor for retirement?

    Monday, June 11, 2018

    Weed Stocks-Are We Too Late to the Party?

    Weed, Pot, Smoke, Blunts, Bongs, Oils, Edibles are all terms affectionately used to describe the use and industry now known as medical marijuana and the soon to be legal Cannabis Industry in Canada.

    I don't really care about any of that stuff right now but only the question, "Is now a good time to invest or have I missed the boat?"

    Well, in keeping with certain criteria when buying for my Gambling Portfolio , I believe that some of these stocks are ripe for the picking.

    Let's look at Aphria (APH)

    Current Price: $12.09
    52 week high/low: $5.11/$24.75
    Avg. volume: 4.4mil
    Latest volume spike: 6mil (Friday 8 June/18

    About the Company (from Google);

    "Aphria Inc., one of Canada's lowest cost producers, produces, supplies and sells medical cannabis. Located in Leamington, Ontario, the greenhouse capital of Canada, Aphria is truly powered by sunlight allowing for the most natural growing conditions available. Aphria is committed to providing pharma-grade medical cannabis, superior patient care while balancing patient economics and returns to shareholders".

    Why I Like It Here

    It has been as high as $24.75 and is now trading at $12.09. That is a double from here. Can it get that high again? (pardon the pun) good question but why not?

    Ok, forget that possibility. Let's just say it reaches up to only within 50% of it's all time 52 week high. The stock would have to get to $18.

    On a 4K investment which right now is my purchase limit, that would work out to a profit of;

    Purchase: 330 shares @ $12.09 = $3,989.70 + $9.99 commission = $3.999.69 

    Sell limit price = $18

    Total Profit Potential= $18 X 330= $5,940 - $9.99 commission = $5930.01

    $5930.01 - $3999.69 = $1,930.32

    Can I really make almost 50% on just one stock purchase? Yes I believe so but you have to have patience. If you can't sleep at night then just sell once your stock goes into the green.

    I also strongly believe in buying stocks after they have traded awhile and are then beaten to a pulp. Once they sit there for a bit and start to rise from the bottom I pounce.

    Is Aphria a good candidate for that?

    This is the essence of speculating and gambling in the stock market. This is what I do with money I can afford to lose and what I always scan the stock tables for. 

    It really does take guts to buy stocks when they have lost so much value and significantly off their 52 week highs. This is not for the faint hearted.

    Would you rather buy what some newsletter is recommending or some TV talking head is buying? Go ahead but I prefer to just watch what the market is telling me and act accordingly based on price, volume and the stock's position based on it's 52 week high/low.

    Now that APH is moving back up in price and volume it is worth a look. This also indicates to me that the market is interested and behaviour is changing.

    Does this mean that APH is getting poised to rocket higher or setting us up for a false head fake type move down? 

    The market will tell you if you're willing to listen.

    Remember the 'Loss Rule' and sell if the stock loses 10% after you buy it. If the stock dropped to $10.85 after I bought it I would have to sell so I don't get too burnt by the market. Preserve your capital and don't get too greedy. If it continues to show strength on Monday, I'll be a buyer.

    Watch List


    What's on your watchlist?

    Happy Trading!

    Sunday, June 10, 2018

    Is Leonovus a Buy?

    Blockchain Technology is an area of the market currently hot with investors looking for opportunity. One stock I have added to the Watchlist as of yesterday is Leonovus (LTV.V) Inc.

    From Google;

    "LeoNovus Inc., a cloud solutions software company, provides software defined object storage solutions; and governance, risk management, and compliance solutions for enterprises. Its software-defined storage and intelligent network enables secure and high-speed on-premise, hybrid or public cloud computing. LeoNovus Inc. is based in Ottawa, Canada."

    I don't get into fundamentals when looking for short term trades because I don't plan on holding it for very long. Let's look at what's happening to this stock and market reaction.

    LTV jumped up 23.3% to close @ 0.185 as of Friday 8 June 2018.
    Volume was 1.2 mil, that's significantly higher than the average daily volume of 850K.

    The 52 week high/low is .05/0.70
    If the stock doubled from here it would still be almost 50% below it's 52 week high. This could be a tremendous opportunity on a purely volume and price breakout.

    This is the kind of stock I look for when searching the tape;

    • trading below 50% of it's 52 week high
    • price rising and volume breaking out
    • after a long downtrend stock is rising
    • insiders buying (could be why it's up)
    I believe all the risk in LTV is to the downside.

    It is also in a sector that is trending up as companies look for cloud based solutions. I have no idea what caused the stock to fall in price so dramatically. I'm only interested in a short term punt to make some money. I believe the odds have now turned up in our favour.

    If the stock opens higher on Monday I will be a buyer. If it gives up all of Friday's gains I'll wait.

    If it matters to you and you love to consult the charts for trading opportunities then LTV just broke through it's 50DMA on Friday also.

    My Current Gambling Portfolio

    Eldorado Gold (ELD) down 3.9%
    Excellon Resources (EXN) up 7%
    Tahoe Resources (THO) up 2.2%
    Wesdome Gold Mines (WDO) up 6.1%

    Total Gains on $17,249.46 = $430.54 or 2.5%

    Stocks were only purchased on 31 May and 7 June. You can see if your timing is right spectacular gains over the course of a year are possible. If ELD continues to under-perform the gold sector I will sell and buy something else.

    Happy Trading!

    Saturday, June 9, 2018

    My Watchlist of Gambling Stocks

    As promised in my last post I will show you a list of stocks I'm considering buying for future purchase. If the stock retreats for a few days in a row, I will have no further interest.

    My current gambling portfolio has 4 positions. I like to hold 5 at all times to spread out my risk. Current sectors of interest and value seem to be in the weed, lithium, uranium, gold and silver sector.

    There are others that have been beaten down but you have to judge on your own where the trends are. Just because a stock has shot up, doesn't mean you should step in and buy.

    I have never had any success buying a Canadian healthcare stock. They are all beaten down but I rarely buy anymore.

    I have also sold stocks after a loss and then they started to move higher. Two stocks that come to mind are BDI and NAL. You would never hear of them being recommended taht's why you have your own list and lsten t what the market is giving you. I have to work on my patience because both these stocks are up 33 and 21% respectively since I sold them.

    I love that oil services sector because you aren't exposed to the commodity risk from oil itself. I was in the right space, just sold too early.

    Stocks I'm Watching

    Katanga Mining (KAT) 
    Current Price $1.02, 52 week high $2.83, volume 917K. Stock is liquid, in the copper sector and has moved up from .93 cents since I put it on my watchlist.

    Nemaska Lithium (NMX)
    Current Price $0.98, 52 week high $2.44, volume 3.1mil. Stock trades a lot, in the hot lithium space and well below it's 52 week high.

    Bellatrix Exploration (BXE)
    Current Price $1.35, 52 week high $4.35,volume 434K. Oil and Gas sector and beaten down. This was a $50 stock 5 years ago.

    Aurora Cannabis (ACB)
    Current Price $9.64, 52 week high $15.20, volume 23mil. In the hot Cannabis sector and down significantly. Trading above my 50% threshold but just watching it closely. It can still represent good value at this level and may not drop further. It has been steadily rising for weeks, I regret not buying earlier.

    This list changes daily for me. Many opportunities are missed due to lack of funds and having bought my allotment of 5 stocks. never be afraid to add stocks and delete them if they don't move up. This is also great practice and gauge your stomach for spending money on gambling.

    This is no different than buying lottery tickets and you can lose everything. You can eliminate that risk by selling once your stock goes down 10%. Never more than 15%. Protect what's left of your capital at all costs and buy something else. Try not to sell too soon.

    Notable Mentions

    Aphria (APH)
    The Supreme Cannabis Company (FIRE)
    Pengrowth Energy (PGF)

    If this is not for you and you want a Worry Free life then you have other options. Happy Trading. 

    Beware of Financial Pornography

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