Buying and Selling Stocks on a Weird Wednesday

My patience got the best of me again and I ended up selling my whole position in Painted Pony and buying Advantage Oil & Gas (AAV.TO).

BOUGHT PONY @ $2.78 SOLD @ $2.80 PROFIT=$30

BOUGHT 1000 shares AAV.TO @ $4.59

What makes it a weird Wednesday? The major markets barely move while in Canada we have a good day for gold and oil because that's what the TSX is mainly made up of. Yet the stocks are NOT doing much of anything. What further makes it weird for me is that I couldn't stick to my one stock policy and hold PONY until Friday.

This is definitely the summer doldrums in full swing. Why did I dump PONY for AAV? PONY popped up into green territory on my short term trade so I decided to lock in the 30 bucks.

AAV seemed like another candidate to move up with a $9.03 52 week high. The stock closed at $4.62 today. That means I was able to make another $30 in the last half hour of trading. I am going to attempt to hold AAV until the end of trading on 3 August. No promises though.

You have to watch the volume and your upside potential to make money on these trades. I don't sit in front of my computer all day. Basically just the first hour and the last hour. I don't own any special equipment but a laptop X 1.

Gold Watchlist

Up 3.7% on the day = $950

Total Change in percentage terms

AKG 4.1

NVO 9.6

GSV 11.5

MUX 12.4

OSK 2.2

PVG 2.6

Looking back on my previous buy of ELD which is down and lagging since I bought and sold it, most of the stocks I was watching would have been a better buy. I did pick some nice winners here.

Trevali Mining (TV.TO)

Closed today at .82

52 week high/low=$0.73-$1.75

As you can see it has a 100% upside to it's yearly high. These are the stocks I look for and put on watchlists so that you don't have to get burnt by the market.

It has more potential to get back to where it's been than any stock that is making a 52 week high. I have no idea where that stock could go from there. I never ever buy a stock making a new 52 week high. I much prefer to buy beaten down stocks that are picking themselves back up and attempting to get back to where they once were.

How about you? What are you buying and selling if anything?

I will update all stocks and my DG portfolio on Friday after trading. Good Luck and Happy Trading!

Trading Painted Pony Energy (PONY.TO)

I bought 1500 shares of PONY at the open today. It seemed like a good time to buy as this was once a $5 stock during the last year. I paid $2.78 a share and then it proceeded to lose 2.5% at the close.

I'm only buying small $4K positions in any stock I buy on a Monday. It is very seldom I buy a stock and it goes up. Matter of fact it is probably a great contra indicator for anyone else buying any stock I do. When I sell, it goes up like ELD did today after I sold it Friday.

This is what happens timing the market.

With all the Iran threats, on top of trade wars and a rise in the price of oil did absolutely nothing to move the price of a lot of energy stocks. Maybe the run is over I don't know. I may have to sell this stock before Friday and reload. We'll see what Tuesday brings. 

Novo Resources (NVO.TO) is starting to perk up and had a great 11% pop today. It has only been on my Gold Watchlist since 16 July. I may have to buy into the volume tomorrow if it continues moving up. It is definitely one to watch as it has been as high as $8.83 and closed today at only $4.30.

Gold had a terrible day but most Weed stocks did well. I've added APH.TO back to the Watchlist. APH is still $13 off of it's 52 week high so lots of room to run and ACB had a nice pop up 4.6% today. They could all reverse course and we could get whip sawed in the process.

I have never seen sectors so up and down on a daily basis as Pot and Gold stocks are right now. It feels like physical gold is going to fall a lot further because it doesn't seem to like the unrest and threats in the Middle East.

You have to be nimble or commit to a stock and just hold on if you bought it at a good price. APH, ACB and NVO are giving us that after today's trading action.

Good Luck and Happy Trading!

Stock Trading and Watchlist Update

I trade in and out of speculative positions and hold for the long term lots of Canadian DG Stocks in our retirement accounts.

The core of all of our portfolios are comprised of the 5 banks, ENB, TRP, CNR, CP, BCE, T, Shaw and FTS. Nothing too complicated. With dividend income I hope to build up sizable RRIF accounts when they need to be converted in 9 and 14 years. Until then the money will not be touched or needed.

We also hold MAW104 in my wife's LIRA and XAW and VFV ETFs for some Int'l exposure. Low cost easy to understand what you own companies and fund/ ETFs.

To generate some capital gains I also run a gambling portfolio where I buy a stock on Monday and sell it on Friday. Once again a simple strategy. The stock that was put in play this week was ELD.

BOUGHT 3000 ELD @ $1.43 SOLD @ $1.47 = PROFIT $120.00

This relieves trading stress that might carry over into the weekend and affect your sleep. This is just something that I'm trying and may or may not continue to implement because ELD had a volume breakout to the upside so I locked in those gains. It may continue higher and the first hour of trading on Monday will confirm if my decision to sell was right. I documented it here last week.

There is never a bad time to take a profit no matter how small. Continue to hit singles and the runs will eventually add up.

All Gold Watchlist Update

ALO 1%

AKG .6%

NVO .5%

GSV 9.4%

MUX 10.6%

OSK 4.9%.

PVG .18%

Only up 2% overall but it looks like MUX has broken out already and PVG is experiencing lots of insider selling.

Other Notable Stocks to Watch and Research for Trades

IVN, PONY and TV.

No Further Interest

I've dropped ACB, APH and ALO from my watchlist. These stocks are now SELLS however, they may reverse trend, who really knows. I just try and discern what the market is telling me. Right now I have no interest in buying them.

What to BUY on Monday?

PONY to me looks like the strongest candidate for a weekly trade but again it's very volatile to the price of oil which is hard to predict. I may buy at at the open as long as it continues it's upward trend. I will use the proceeds from my sale of ELD to look to buy 1500 shares.

I also may buy back into ELD if it marches higher. This kind of whip saw action is what all traders will experience from time to time. DO NOT engage in this type of trading activity if you can't afford to lose everything.

I am experiencing pangs of impatience which is normal for me. If I lost $5K tomorrow short term it would not materially impact my life that is why I buy on Monday and sell on Friday and never put at risk more than $5K. It's just what I do and this trading scenario and these watchlists are provided for entertainment purposes only and NOT to be used as investment advice.

What stocks are you buying and watching?

Be careful out there and Happy Trading!

Investing Regrets

We have all bought stocks and then sold them. Nothing earth shattering there. What is different is the reasons we sold them. Today's post I will attempt my own mea culpa on a lot of stocks I have sold and why I now regret those decisions. We can't change the past but only learn from our mistakes and not repeat them in the future.

I don't actually consider selling the following stocks mistakes it's just that I wanted to hold more dividend paying stocks instead of growth stocks that don't pay you anything until you sell them.

The problem with holding on to growth stocks is you have to sell the paper before you have money to retire and or live on. I decided to make the change to income stocks but man did I leave a lot of money on the table. It is fun to look back and see how things would have worked out and just how much money I left on the table.

BYD-UN 40%
EMP.A 33%
MTY 43%
OTEX 24%
QSR 11%
TOY 50%
GIB-A 41%
GSY 24%
HCG 115%

This represents in dollar terms a total of $20,400.

I do regret leaving so much money on the table. In hindsight I should have waited before dumping these stocks. I didn't need the money and the dividend paying stocks I bought will take a lot longer to surpass the gains I could have made.

However, now that it's over I am happy to have established positions in dividend growth stocks. They will continue to pay me through retirement and I will never have to be concerned about selling anything to help pay for expenses.

I believe having some low yielding growth stocks in your portfolio for younger people is a great strategy to follow. As a retiree, income is now king so I no longer bother.

What are your investing regrets?

Gold Drops Watchlist Pops

Gold dropped $13 today but a lot of stocks moved higher. Proving once gain that you shouldn't trade on anything else than, on what the market is telling you and not the commodity. Lots of stocks go down when the price of oil goes up and a lot of stocks move higher when the price of gold drops like today. Each commodity is different but unless you're buying the commodity in it's physical form, just ignore it.

This is about timing the market and watching the price and volume action of individual stocks. This is stock picking and gambling on buying stocks. Investing this is not and also it's not day trading. I have never ever bought and sold a stock during the same session.

Let's see what some of the stocks I talked about yesterday did today. Let's assume you established a position in any number of the stocks I mentioned and in only one day how you would have made out. These are some of the trading opportunities I'm betting on at the moment.

The biggest winner is GSV up today 6.8%. A clear winner on my list. If you would have bought GSV when I first put it on the watchlist 11 July, you would be up a total of 12.7% on 2500 shares purchased at $1.87. The stock closed today @ $2.03. This is a nice bump in only 5 trading days.

Let's look at the Gold Stock Watchlist compiled yesterday;

ALO .5%
AKG flat
NVO flat
GSV 6.8%
MUX 1.3%
OSK 5.4%
PVG flat

It's pretty impossible to be right 100% of the time, that's why I only commit $4K to any one position and never buy more than 5 stocks at a time. This is for entertainment purposes only.

My one position that I did buy and still hold is ELD and I'm down 2%. We'll see where it's at Friday. It's easy to look back and say I should have bet on the GSV horse yesterday but I didn't, I bought ELD instead. I still think it's ready to breakout but I need more volume to come in soon and confirm the uptrend after breaking it's 50DMA. I still rate it as a buy for a speculative gold stock.

Do you have a gambling portfolio you use for fun?

The One Stock Gamble

As mentioned in yesterday's post I thought that ELD was poised to breakout. It broke through it's 50 DMA on 11 July so I decided on strong volume to buy some today. Even with gold trading lower ELD is moving up.

Now I have lost money with ELD before. I have bought it higher and even sold for a loss at $1.52 a few months ago. I'm hoping that this is not a case of getting whip sawed once again with this stock.

If I do then I can put this stock in the category of never working out for me. It can sit in the penalty box along with all the Canadian health care stocks that have cost me a small fortune.

I'm calling this post the one stock gamble because depending on the trading action for ELD, I plan on selling it on Friday. Yes, I'm timing the market. This is NOT investing. This is GAMBLING.

It is what I do to help generate some capital gains for my account. I'm not going to get rich quick doing this one stock at a time, I'm just looking for a few percentage points.

Bought 3000 ELD @ $1.43

Cost of the trade = $4,299.99

Cash in account = $710.00

I might play this like that guy from the little red paper clip. In other words just keep buying and selling with my $5K starter position and see where it ends up at the end of the year. 

Using a one stock at a time, buy on Monday and sell on Friday strategy. This will allow me to plan out on the weekend for the trading week ahead.

Other Gold Stock Trades Worth a Punt

PVG, OSK, MUX, GSV, NVO and AKG

I will be closely watching and waiting to switch in and out of positions as market conditions and investor sentiment changes. Put simply just following the money. It's not more complicated than that.

If you have more capital to put to work I believe you could start building a gold stock portfolio with any of these names.

Other Stocks on the Watchlist

IVN, ALO, PONY and ACB

Related Post: Trades and Portfolio Updates

Trading Opportunities in the Gold Sector

Some of the best trading opportunities come from the mining sector. This is mainly due to the cyclical nature of the business. I always keep a small watchlist of beaten down stocks waiting for them to rise up from their bottoms and show me a breakout.

One of my main criteria before I commit to the trade is it must be trading at least 50% below it's previous 52 week high. Volume must be above 50,000 and the stock trades on the big board. I also never buy more than 10% of the trading volume. That has never been a problem in the past.

So far this cycle I have successfully traded WDO for a 30% gain. Take what you can get but 30% is still substantial. Looking back on my April trades I sold FR, EDR and FVI way way too early. All those positions are now approaching 50% gains from where I sold them.

We all have our coulda, woulda, shoulda stories so those are mine. There are always trading opportunities but you have to be patient and live through a few ups and downs. Just keep watching for volume and if interest is drying up. This is usually a signal to sell your position. 

Osisko Mining closed @ $2.14 Friday, 52 week high/low = $1.61/$5.07

Eldorado Gold closed @ $1.42 Friday, 52 week high/low = $1.04/$3.22

I believe both these gold stocks are worth a look and in the days ahead a buy. Look at the risk profile they represent. Just slightly off their lows and a long way from their 52 week highs. They could double from here and still not hit highs for the year.

These are the type of stocks I look for with tremendous upside potential and low risk to the downside. 

Could an investment in either one lose money? Absolutely. How low might it go if I'm wrong? NEVER allow yourself to lose more than 15-20% max is my loss rule.

When should I sell if it goes up and I'm making money? As long as volume and price are both rising proving that there is strong relative strength, then hold.

I would be happy with a 20-25% gain in either position and would then look to exit.

SELL ELD if it drops to $1.20 and if it rises to $1.70

SELL OSK if it drops to $1.81 and if it rises to $2.56

Other Notable Gold Stocks to Watch

AKG, AGI, DGC and TXG

They don't represent as much upside potential but are worth adding to on further weakness in the sector. I think September could be, might be a breakout month for some of these stocks.

I hope you have some trading ideas after reading this and if nothing else some more stocks to research and hopefully make money on.

Related Post: My Watchlist of Gambling Stocks

Recommended Reading:

Trades and Portfolio Updates

It was another volatile week with interest rates rising in Canada and Trump once again threatening tariffs and new trade wars with Britain and China. Who knows where this all ends but it is a tough environment to pick stocks for my gambling portfolio and to even make adjustments on where to deploy new money.

The biggest decision I made this week was to sell most of my wife's ETFs and buy dividend growth stocks. She now holds SJR, T, CP, CNR, BMO, BIP, CM, TRP, TD, FTS, RY, ENB, BNS, CU, BCE and XAW. Gone are her positions in XQB, ZPR, XIC and half her position in XAW.

I am hoping that this will provide a growing and reliable income for her retirement. The problem with ETFs in retirement is selling units to meet minimum withdrawal rates. I really don't want to sell any stocks, only collect the income it spits out. That is mainly why I decided to make the switch.

Further to this in another month I may bring her LIRA to this type of allocation. That would require selling MAW104 and using the proceeds to buy dividend growth stocks. She still holds small positions in FTS and RY in this account.

My Gambling Portfolio

I also decided to liquidate all positions Friday.

SOLD - GSV, APH and THO.

Total loss was $8 so basically flat for a holding period of 3 weeks. Not a very good record and I'm not happy about the lack of volume and action on the stocks I decided to buy. The good news is money lost was kept to a minimum, I just have run out of patience.

On Monday I am going to implement my 1 stock strategy at 5K investment and sell it on Friday. This will relieve some of my anxiety of waiting so long to make a profit. To be clear once again this is done with money that you can afford to lose and kept separately from any money you have set aside for retirement.

I am much better at compiling a watchlist and doing just that with it.

Updated Watchlist 

Added OSK @ $2.14 on Thursday up 5%

Added IVN @ $2.61 on 10 July down 5%

ALO up 2%

PONY up 31.4%

ACB down 3.3%

MUX up 4.2%

Dropped HIKU after buyout Total Return = 17.5%

Total Watchlist up 5.8%

I will pick a stock on Monday probably from this list. It looks like PONY has run away from me. Closed friday @ $2.84 and has a 52 week high price of $5.03. It has room to run but I like that ratio to be a little better in our favour. IOW a 52 week high of around $6 so we would have a runway of at least 100%.

Did you buy any stocks this week?

Related Post: My Gambling Portfolio

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Build Your Own DIY Portfolio

If you listen to the main stream business news here in Canada then you have plenty of exposure to stock recommendations and advice from investing professionals. Most of it consists of MPT or Modern Portfolio Theory. It is a lot of complicated gobbly gook that only will add to your confusion on what strategy to pursue. They spew on about asset allocation, diversification and risk management. Don't get fooled by professionals and their double speak.

Their primary concern is trading and charging fees. While most are great people they are after all trying to make a living. That's why you just need to stay away.

TV ads in Canada currently show consumers confronting their mutual fund advisers about high fees. They have decided to move their money so they can keep more for themselves. Good move. Learn to do this yourself and become a DIY investor. Pick your stocks, collect dividends, buy more with the proceeds and then forget them.

Let's say, for the sake of a round number, there are 200 trading days in a year. BNN experts provide you with 6 new stock picks every day. How can everyone be right? They're not is the correct answer. How can approximately 1,200 picks a year possibly be right.? It's just entertainment and more financial pornography for you to consume.

Just like buying ETFs their stock picks contain a lot of junk and high yield or growth stocks that don't pay dividends. I don't touch any of them. These are just provided because newbie investors need new investing ideas and stock picks to keep coming back and feel satiated. Many become clients of these portfolio mangers, imagine that. I really can't understand why.

Why it Doesn't Work

• pros track performance using benchmarks, we don't need them
• active trading of your stocks is calamitous to your long term finances
• pros focus on short term performance and then trade to extract fees
• we focus on long term performance.
• they build big portfolios which retailers can't and shouldn't
• pros buy at the wrong time, where we can wait for better opportunities
• we focus on cash flow, they focus on price
• we concentrate on the best companies and not stress over weighting of securities

...and finally, the majority of professional portfolio managers DO NOT beat the market.

Never act on any advice provided to you by the mainstream financial media.

"I DO NOT buy the stock market, only individual stocks" - Stephen Jarislowsky, The Investment Zoo.

Professionals pay NO price when they are wrong. Matter of fact you can be sure they will continue to charge you fees and even raise them when you give them more of your money and your account grows. They have no skin in your game. Remember that.

Lastly, don't think of stocks as something you buy with the intention to sell later at a profit. This is what pros suggest and do, so they again can justify performance fees. 

I concentrate on banks, telecomms, utilities and pipeline/railway/infrastructure stocks. I also avoid high yield stocks = NO growth. Yield + Dividend Growth = Total Return. Hold these long term and avoid the temptation of financial pornography.

I just finished listening to Stephen Groff on BNN. He is a senior portfolio manager with Cambridge Investments. He doesn't own any Canadian Banks and said that "in the short term, we believe there are better investment opportunities."

This is a guy running and managing a portfolio of dividend stocks. This is another example of short term thinking and an excuse for trading. I would never hand over a cent of my money to a so called investing pro like this guy. At the present time ALL Canadian banks are a great buy and represent great value. This is another reason why we all must build our own portfolios and become a DIY dividend growth investor.

Are you a DIY investor or do you use an advisor?

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Recommended Reading:

These TSX Dogs are Still Howling

Warren Buffett says that "if you want to buy stocks, why would you want them to go up?"

Every year a list of the top ten TSX stocks that under performed are published. It is always a good place to start looking for stocks you can buy at good value. I never really like to sell a dividend growth stock once I buy so use this list for buying and not to sell a stock to replace it with something else.

One stock that is perenially on the list is Power Corp (POW). It is one stock I have owned in the past but did sell because I don't feel there is much growth in the stock or the dividend.

If you just want yield then Power will provide you with 5.2%. It has a 10 year DG record of 4.4% which is pretty low and it has zero growth in the last 5 years. It is just not for me but you could do worse.

Dividends power portfolio returns.

Five out of the ten 'Dogs of the TSX' are still down since February when the list was published. They are;

Royal Bank (RY) 2.87%
Scotiabank (BNS) 6.3%
CIBC (CM) 2.8%
Power Corp (POW) 4.8%
Bell (BCE) 2%

Two other 'Dogs' that have just manged a slight gain and still represent good value are;

Bank of Montreal (BMO) 2.28%
National Bank (NA) 1.2%

Notice all the banks that still represent good value and provide a history dividend increases and double digit total returns. I hold all 5 banks and would be looking to add NA at these levels if I had more money to invest.

During yesterday's market sell off utilities were up significantly.All we ever hear from the business news is how utilities will suffer when interest rates rise. That didn't happen yesterday when the BOC jacked rates another quarter point.

I was out buying more of FTS and CU for my retirement accounts X 2.

Buy stocks when they're down and if you hold for 10 years they will definitely be higher than when you purchased them today. They will also be safer than bonds or any preferred shares you have bought to diversify yield.

I am only interested in companies that have a consistent history of raising dividends to help supplement my retirement income.

How do you select stocks for your retirement?

Related Post: Dividend Stocks-The Gift That Keeps on Giving

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Trading Tuesday

I took another opportunity to buy some stocks after selling a portion of another ETF yesterday. My wife's RRSP is now set and will not add to any positions until more money flows in from dividends.

SOLD  

800 XAW @ $26.15

BOUGHT

110 T @ $47.11
50 BMO @ $103
20 CP @ $245.17
200 SJR.B @ $27.20

Her RRSP also holds positions in BNS, BCE, BIP-UN, CM, CNR, CU, ENB, FTS, RY, TD, TRP and XAW.

I trimmed some of my Int'l exposure through the ETF and purchased more domestic Canadian stocks. You can see the account is now flush with TULF stocks. Telecomms, Utilities, Low-Yielders (CP / CNR) and Financials. Over time this portfolio should be safer than having bonds and pref shares which I dumped on Monday.

Gambling Portfolio

Still hanging on to my play money positions for now. They still are;

2200 GSV up 7%

300 APH up 2.3%

600 THO down 3.25%

New Watchlist

DELETED - LAM & KAT

HIKU was just bought out by WEED so dropped from the list as it no longer exists. No bump in the stock was realized. It does explain the massive rise in volume a couple weeks ago.

ADDED - IVN

HOLDING - IVN, ALO, PONY, ACB and MUX. This watchlist is up 5.5% should you have established a 4K position in each gambling portfolio stock.

SUMMARY

It looks like today would have been a much better day to buy stocks as I think we'll see a sell off which would have presented a better opportunity to buy new dividend paying stocks.

My wife is only 57 so she has another 14 years before we have to convert her RSP to a RRIF. That is a good amount of time to build an income stream and prepare for her retirement. She also has a DB pension that she continues to contribute some of her part-time income.

Recommended Reading:

Major Portfolio Changes and Updates

This is not a personal finance blog but from time to time I do book reviews that I think can help you find money to invest and pay down debt. In light of the recent depressing news today that 28% of Canadians think that they would have to declare bankruptcy because they can't keep up with monthly payments when interest rates start to rise. it is again worthy to mention some past reminders.

A further 44% said they are only $200 away from becoming totally broke, and 27% have no money left for savings or investments. Most, like 42% live in fear of their financial well being. This is troubling as families teeter on the edge of financial ruin because rates are going up.

If you need to find cash then read this book NOW.

Maybe you struggle with how best to construct your financial life. Read this book and maybe it will help you to stop worrying about money. Either way you need to get educated and stop becoming part of the above statistics.

I have recently made the following changes and adjustments to these portfolios. This is just what I'm doing and by no means what I think you should do with your financial life.

My Wife's RRSP

Sold - XQB, ZPR and XIC

Bought - BCE, BNS, BIP.UN, CU, CM, CNR, ENB, FTS, RY, TD and TRP.

The only ETF still in the portfolio is XAW which is being used for equity exposure to US and World markets. I don't know how to pick Int'l stocks so I use XAW as a cheap proxy. It is up 21% since purchase so I will continue to hold it.

I wanted to return my wife's portfolio to a dividend generating income stream for retirement and dump all bonds and preferred shares as my guru Tom Connolly and Stephen Jarislowsky suggest doing. 

The dividend yield on this portfolio is a respectable 4% which is where I like it. Banks, Telecomm, Utilities, Infrastructure/Pipelines and Railways. Nothing exciting just big boring stable companies with a history of dividend growth and making money.

My RRSP

I continue to hold onto; BMO, BNS, BCE, CM, CNR, CP, ENB, FTS, RY, TD, TRP and VFV. I will hold VFV for access to the S&P 500 universe of stocks. This portfolio generates a yield of 3.85%.

I am having my doubts about continuing to hang in with telecomm stocks. I need to dedicate a blog post to this a little later I think. I don't like all the promotion wars for customers and the ongoing giving away of services and products on the cheap. All you ever hear about is cable cord cutting and people looking to switch providers looking for deals.

When they can't find one they look for cheaper android boxes, phones and data packages. This industry is constantly under attack just like the mutual fund industry has been and they are now terrible investments. I have found that BCE was selling for cheap but maybe it is cheap for a reason and this is it. Nobody it seems likes to pay for things like parking and cable TV. Humans will go to great lengths to avoid or reduce charges for these things.

Everyone wants a FREE phone but don't consider who pays for it. These companies may become poor investments I don't know what the future holds. I'll be watching the financials very closely in the future and decide then on whether this sector deserves more investment dollars or not.

LIRA Holdings

I'm trying to just preserve my wife's pension here. That's why I bought MAW104 for this account. She also holds minor positions in RY and FTS for some extra yield which will be used to buy more units of her balanced mutual fund.

This is just a way for me to keep my hands off of her pension money. I don't worry about it and just let it sit and grow. I have elected to have the distributions reinvested every month into more units instead of taking it in cash.

This fund has an MER of 0.92% and it has only been owned for 2 months now. Up 3% since purchase and yields 1.1%. So far the capital is growing nicely and in case of a major market correction she is somewhat protected.

TFSAs

Just cash in both accounts as the amounts are too small to invest in anything meaningful. I was late to the party starting these accounts as I was focused on paying down debt. We are debt free and have been for at least 3 years now.

Related Post: Own The Best Stocks Not The Most

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Theory vs. Reality

If you try and build a portfolio using MPT or Modern Portfolio Theory would you know how to do it? MPT was invented by Harry Markowitz in 1952 and he won a pulitzer prize for it. It's complicated, not only for investors to understand but to also implement.

As Warren Buffett likes to say "portfolio theory is just that - theory."

Investopedia reminds us that "at the end of the day, a portfolio's success rests on the investor's skills and the time he or she devotes to it. Sometimes it is better to pick a small number of out of favor investments and wait for the market to turn in your favor than to rely on market averages alone."

This is exactly what I try to do and keep practicing doing. That is to identify good quality dividend growth stocks that provide superior value.

You only need to look as far as Enbridge to realize how buying a stock on sale can produce superior long term results if you buy them at the right time. The stock was trading at $37.36 near the end of April and closed Friday 6 July at $46.69. That is a return of 25% in 2 months.

IOW the risk to Enbridge in April was to the upside. The stock had been beaten to a blood spot and it was being thrown away. I hung on to my shares because I believe that Canada needs pipelines and ENB was not going anywhere so the stock was a buy and NOT a sell.

If you subscribe to MPT you would never buy Enbridge or any stock like it. That is why I like to pick and choose individual stocks on sale. The gains can be spectacular for your long term financial health.

I'm a retired income investor so I always look for opportunities like this to come along. 

Let's look at my gambling watchlist which is a totally separate area of investing for me and see how the last trading week summed up.

Total portfolio is up 3.8% or $835.96

ALO 10%
PONY 8.%
LAM 5.7%
HIKU 2.8%
ACB 3.7%
MUX 4.2%
KAT 2.1%

Not bad picking 6/7 winners. I will delete LAM if it closes lower on Monday on higher volume. Momentum seems to have left the stock for now.

Gambling Portfolio

Not going as well as the watchlist but I'm only holding 3 positions for now and they are;

GSV 7.2%

APH .85%

THO 4.1%

Stock picks are basically flat. I am thinking of employing a buy on Monday and sell on Friday type of strategy for my gambling stock picks. I've never tried this so I may start with only one stock at a time. We'll see but as we all know, things work a lot different in practice than they do in theory.

I totally reject MPT in all it's forms and truly believe as an income investor you need to purchase DG stocks that pay you a rising and growing dividend to meet your current needs and in the future.

You need to be patient and NOT panic in the face of a downturn in the markets. These are buying opportunities NOT a time to sell. Matter of fact I never sell any of my DG stocks after purchase. This is left to my gambling portfolio and my play money.

My guru as mentioned before is Tom Connolly and he has this to say to subscribers, "To win we have to up end the false notions that have

developed with modern portfolio theory and return to the investing 

methods of the old masters, tried and true."

Tried and true because they have seen the results and not applied some mundane theory most pros use to charge fees and construct complicated portfolios. You can do this on your own and do it simply. My opinion.

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Buying Value

Today I want to look at three blue chip dividend growth stocks that are solid names currently on sale here in Canada. I am going to be buying them sometime this month while they continue to wallow around during the dog days of summer. Since February of this year they are all down significantly.

They are; BNS down 7%, BCE down 5% and RY down 4%. If you have any new investment dollars, I would start here for a long term holds. This is what I recommended when a poster asked for any new summer buying opportunities.

These are all high quality companies and you can now pick them up on the cheap. Keep in mind, these are the kind of stocks that are perfect for retirement accounts and income investors, like me. This is what I look for and opportunities I look for.

Let's look at some other numbers and what they have done for the last 5 years.

Scotiabank (BNS)

Yield: 4.3%

Dividends 2012 =$2.19

Dividends 2017= $3.04

5 year DG rate = 6.8%

BCE

Yield: 5.5%

Dividends 2012 =$2.17

Dividends 2017= $2.84

5 year DG rate = 5.5%

Royal Bank (RY)

Yield: 3.7%

Dividends 2012 =$2.28

Dividends 2017= $3.48

5 year DG rate = 8.8%

You can see the double digit dividend growth records of all of these blue chip solid companies just in the last 5 years. No ETF wil  give you that type of growth. They just can't deliver those types of returns. You now have the chance to pick them up while thEy are on sale.

Are they the only ones on sale this summer?

There are others so let's try and tick some more of the boxes. Now that we have banks and telco's covered let's look for some utilities and other notable mentions.

On the utility side both CU and FTS are strong candidates and on my buy list to add to existing holdings.

Canadian Utilities (CU)

Yield: 5%

Dividends 2012 =$.89

Dividends 2017= $1.43

5 year DG rate = 9.9%

Fortis (FTS)

Yield: 4.19%

Dividends 2012 =$1.20

Dividends 2017= $1.62

5 year DG rate = 6.3%

Stable steady and growing and this out of boring utility stocks. FTS is down significantly off it's high of the last 52 weeks.

Transcanada (TRP)

Whatever the noise of the day contains, here in Canada we need pipelines to deliver our oil and gas. As long as we have winter these companies are essential to our economy and everyone in my opinion should own at least one pipeline.

Yield: 5%

Dividends 2012 =$1.76

Dividends 2017= $2.44

5 year DG rate = 6.8%

I also like infrastructure and governments everywhere do nothing but talk about repairing and replacing their roads and bridges to move people and goods faster and more efficiently. My pick is;

Brookfield Infrastructure (BIP.UN)

Yield: 4.76%

Dividends 2012 =$.88

Dividends 2017= $1.54

5 year DG rate = 11.8%

This to me would be a great starter portfolio and all these companies provide good value here. BIP has bumped up on news that it is buying some assets from Enbridge. That is a signal that ENB is getting smaller and BIP is set to become a bigger company. I like that news unless you hold ENB. I do in some accounts and would buy more if it gets cheaper or at least stabilizes in price.

Banks, utilities, pipelines and telcos. All on sale and value plays based on history and growing yields and dividend increases. I'm a retiree so I like income stocks that grow over time. As you can see from the stats above these 5 year growth records are impressive. You don't need exciting, boring will do just fine for your portfolio.

This is how I buy value and what I look at. How about you? What metrics do you use before you commit to a stock? Do you think these stocks represent good value?

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