Stock and Market Speculation 31 August

Just a short post on the last trading day of the month. Markets will be closed Monday for the Labour Day holiday.

Gold up, Oil down and Cannabis stocks rebound again.

NO trade deal so markets pulled back and my LNR that was up ever so slightly is now in the red 0.57%.

No worries as I think I'll stand pat unless it loses 8% and then it will trigger a SELL for me. I continue to believe in spite of all the threats coming are way that a deal will get done. It's just going to take time.

Nervous times ahead as the calendar turns to September which historically is the most rocky month for equity markets.

My gambling portfolio is up a total $109 and 0.7%.

Trevali was the winner on the day up 4%. The stock gained back a healthy 50% of what it lost yesterday, so on a down day it was great to see. CGX still ahead by 6.4% and I believe that company's worst day's are behind it.

OTEX still up a healthy 0.65% so I'm 2/4 winners on the week. You only have to be right one time to stay in the money when you construct stocks to buy and sell for capital gains.

I like all the stocks I bought and believe they all eventually have a chance to explode higher by year's end.

Recent August Purchase Updates

Constellation Software (CSU) purchased 7 August @ $926.95 as the stock had continued to fall after reaching new highs. It finished today @ $995.09. Up $3 on the day and up 7.3% on the trade. I like this stock long term and I'm super glad I bought a tech stock at a great price. I have no doubt this stock will get to it's highs and beyond.

Other Random Thoughts

I did think my rail stocks would have had a better bump up today, when in fact CNR was down. CP was up a couple bucks but both stocks have been on a tear lately. The pipeline news did not have the desired effect on these companies but still crude by rail seems to be the way of the future.

In the pipeline space I only hold ENB and TRP. Both down 1.3% today and have been reversing trend and moving down since the news broke Thursday on the court's decision to cancel the Transmountain pipeline. The feds are looking to appeal the decision to higher courts. These companies are not going away as they already own substantial pipeline capacity.

Weed Stocks

I'm really suffering from FOMO here. I may need to buy a pot stock next week. I really want to ride this wave into the October legalization date. I'm going to do some homework from the watchlist of stocks I've set up and make a decision on Monday on what to buy Tuesday.

For a short term trade I like ACB $8.80/52 week high of $15.20

This to me represents the best ratio at present of all the stocks out there. Yes most have pulled back from their highs but ACB still has a lot of room to grow. It's not making any money yet, no earnings to report so this is a short term shot at a speculation.

I can't very well call myself a speculator and not buy and sell a weed stock in the coming months.

I NEVER USE MY RETIREMENT MONEY TO TRADE IN AND OUT OF 

STOCKS!

Looking for Saving Ideas so You Can Invest? 

If you are looking at ways to save money this new book The Cashflow Cookbook can help you find some savings to then use to invest.

If you are having trouble getting your financial house in order and organized then you need to read Worry Free Money. 

If you are further looking for portfolio ideas then you might find my review of The 6-Pack Portfolio a way for you to get started on your investing journey. All of our retirement money is invested in this manner. We just hold more than 6 positions.

If you want to read more about the theory and methodology of some of Canada's professional investment/portfolio managers then you need to pick up a copy of the book 'Market Masters'. Robin Speziale conducts interviews based on a set of pre-arranged questions. This will give you a real insight into how others invest money and how they think. A must read!

Have a great day on the markets. What stocks did you buy or sell today?

Stock and Market Speculation 30 August

Short post today on what news and some stocks that are moving in Canada.

Nothing like getting kicked in the nuts by the courts. That seems to be where we go to get our oil to market. Winter might be coming but we can't seem to get out product to market without pipelines. Yup, today was all about the pipes and how and when we'll get some new ones built.

The vote is in and Transmountain has been nixed for now. More consultation needed. I guess 42 First Nation thumbs up just wasn't enough. You can be sure more fighting ahead for the Feds and the provinces of BC and Alberta.

BC happy, Alberta sad, rest of Canada held hostage. Expect more small oil companies in the patch to pack it in. Too many bottlenecks. 

This is why I own CP and CNR as you can expect more crude by rail to be shipped. How else will we get our oil to market? Both stocks have been on a steady climb and I am a happy shareholder.

At the other end of the spectrum TRP has been beaten down in the last two trading sessions. This is a long fight.

The other major boil on Canada's ass waiting to be lanced is the trade talks between Trump and Trudeau. Friday's deadline looms large before Labour Day. Will we get a deal? The auto sector can't afford tariffs and the feds need those jobs to stay here. The markets hate all this uncertainty and are tanking today and will now make it two days in a row with a shortened trading day tomorrow ahead of the long weekend.

Canadians need investors to step in and invest in our resources. These companies are being strangled by high taxes and more regulation. All we seem to be relying on is real estate. People are borrowing money and pouring it into a house. Say hello, to the one trick pony.

As far as investing in the stocks of Canadian companies in the oil patch, I pass. Just look at any chart of any ETF invested in oil and gas stocks. It's FUGLY! These are good for short term trades only. I am lousy at it, I've tried but can't keep up with the whipsawing day to day. Even with a rising oil price the stocks cant seem to join the party without pipelines to help get their product to market. Meanwhile, the price of gas at the pump just can't stop going up here in Ontario in spite of the boasts of the new Preem to bring down the price of a litre of benzin by 10 cents. How ya makin' out Doug?

Until these two major issues are sorted out the TSX will lag. I will continue to hold ENB and TRP in our retirement accounts and keep clipping the coupon. I fully expect TRP to be on the 'Dogs of the TSX' next year and for ENB to still be there.

I talked about Pot Stocks yesterday and how they rise big and fall big from day to day. Canopy Growth was up $4 yesterday and today it's giving back $3.50. I mean when is a good time to get in and hold? Cronos Group (CRON) so far the biggest loser of the day down 25%. One day of bad news and these things just plunge. It seems that a US short seller is accusing the company of not being honest disclosing the size of it's distribution agreements with some of the provinces. Result - stock sheds over $4 in value. Really? whose truth telling here?

"We keep buying as long as we find companies that look attractive" 

- Warren Buffet, today on Bloomberg

If you trade stocks for capital gains this statement means nothing to you. I do some of that to generate capital gains. It seems my gamble on Trevali Mining has turned to shit. It has fallen through support at 78 cents and sits currently at 74 cents. Down 8% which is my SELL target where I might dump it tomorrow before the weekend sets in and implement Rule #1. 

Recent Stock Purchases

OTEX, 1% CGX, 7% LNR, 1.7% CSU 6.8%. All made within the last couple weeks. Nice to see my stock picks of recent days go green. CGX especially bought as a value play and if I can squeeze a few more bucks out of it I'll be happy to kiss it goodbye. Maybe by then weed stocks will have some value after posting earnings. I'm watching closely.

I NEVER USE MY RETIREMENT MONEY TO TRADE IN AND OUT OF 

STOCKS!

Looking for Saving Ideas so You Can Invest? 

If you are looking at ways to save money this new book The Cashflow Cookbook can help you find some savings to then use to invest.

If you are having trouble getting your financial house in order and organized then you need to read Worry Free Money. 

If you are further looking for portfolio ideas then you might find my review of The 6-Pack Portfolio a way for you to get started on your investing journey. All of our retirement money is invested in this manner. We just hold more than 6 positions.

If you want to read more about the theory and methodology of some of Canada's professional investment/portfolio managers then you need to pick up a copy of the book 'Market Masters'. Robin Speziale conducts interviews based on a set of pre-arranged questions. This will give you a real insight into how others invest money and how they think. A must read!

Have a great day on the markets. What stocks did you buy or sell today?

Stock and Market Speculation 29 August

Just a short post on what happened on the markets today and how it affected my portfolio and gambling stocks.

Gambling Portfolio

I bought 5000 shares of Trevali Mining today @ 0.81. The stock has been as high as $1.75 and is rising out of a nice cup and handle pattern. I'm looking to exit @ $1.12. The profit on the trade has the potential to be $1,550 if that would happen.

I also bought Linamar Corp (LNR) 70 shares @ $57.71. This is a purchase made as a play on the Canada/US trade negotiations. I'm really gambling here that they get something signed. Linamar has traded as high as $80.58 in the last 52 weeks. I would look to exit at around $75. This would represent a profit potential of $1,210.

I am also holding CGX and OTEX as reported in an update posted here.

CGX is up 6.6% and OTEX is flat.

Other Worries

When my PF starts to approach all time highs, I know a pullback is coming and I get nervous. How severe will it be?

I own nothing but good quality DG companies here in Canada. No high yield junk, no bonds, no preferred shares and very small positions in total market ETFs in my wife's and my RRSP. Holding all cash in small TFSAs. So, why worry?

Well if you've never been through a major market correction then you think you're immune. I went through 2008/09 and it sucked. Will you know when to sell and should you sell?

I only sell stocks that I use for short term trading, like I mentioned above. I will know exactly when to sell them. When they lose 7-8% or when they gain 20-25%.

That's what you call an exit strategy and I stick to it.

Pot Stocks

These are not investments but instead pure speculations. I have no idea why I don't own any as the name of my blog would suggest I should. These would be great stocks to flip and make some short term capital gains.

I was dumb and sold my 300 shares of Aphria for $11.66 on June 14. I lost $47 on the trade. Instead of booking a loss I would be up $1400 on that trade alone. It was a great buy and a really poor decision to sell. This is why I write a blog, so I can document my wins and learn from some of the bad decisions I've made. This is how I learn.

I am determined to hold my stocks until they reach that loss percentage or turn into a BIG win!

Nobody gets rich investing for income. That's better left in my retirement account where I hold all our income stocks.

I NEVER USE MY RETIREMENT MONEY TO TRADE IN AND OUT OF 

STOCKS!

Looking for Saving Ideas so You Can Invest? 

If you are looking at ways to save money this new book The Cashflow Cookbook can help you find some savings to then use to invest.

If you are having trouble getting your financial house in order and organized then you need to read Worry Free Money. 

If you are further looking for portfolio ideas then you might find my review of The 6-Pack Portfolio a way for you to get started on your investing journey. All of our retirement money is invested in this manner. We just hold more than 6 positions.

If you want to read more about the theory and methodology of some of Canada's professional investment/portfolio managers then you need to pick up a copy of the book 'Market Masters'. Robin Speziale conducts interviews based on a set of pre-arranged questions. This will give you a real insight into how others invest money and how they think. A must read!

Have a great day on the markets. What stocks did you buy or sell today?

Two Cheap Stocks on The Buy List

Just a short post one what transpired on the markets and how I saw the day.

Yesterday markets all made new highs. Did you sell out? Why would you, right? Pot stocks, silver, gold, most junior metals and crypto all roared higher.

Eaanings from some of the banks were good, earning more, revenues up, dividend increases at Royal and BNS and probably more to come on Thursday. The big banks are all doing well, along with the railroads. I own them all for retirement income.

The US/Mexico trade deal got done and now we wait here to see if Canada can get on board and get one signed. It sure would help steady the markets and relieve some stress before the next crisis begins. 

Things got a little weird Tuesday with most everything selling off again. Investors fave Pot stock, Canopy Growth (WEED) lost $4. Yesterday was a good time to treat yourself and sell the stock. I would expect more extreme volatility in the pot space in the months to come.

Blockchain stocks held there ground as the price of BTC seems to have stabilized. Everything that exploded higher yesterday, pulled back today. It's enough to make you nuts if you trade these things.

You just have to look for stocks well off their highs for the year, look at the chart and jump in if you want. This is how I construct my gambling portfolio.

Gambling Portfolio

Two stocks that fit that mould are Trevali Mining (TV) and Linamar (LNR).
I like TV because it closed today at 80 cents but has been as high as $1.75 and trades at 9 times forward cash flow and it's starting to rise off the bottom. I believe this represents a great entry point.

LNR closed today at $57.66 and has been as high as $80.58. Great upside potential and trades at a ridiculously cheap 6 times p/e. ROE of 18% Cheap and makes money. Why so cheap? Market thinks all the growth has been sucked out of the auto sector since all this NAFTA talk blew up.

I'm betting it's all going to be fine and LNR should benefit from all the uncertainty. These two stocks represent great short to medium trading opportunities and most of the risk is to the upside. The charts are looking good.

So there you have it. Two completely different stocks. One is a junior zinc stock and the other a mid cap auto parts manufacturer. Is this what they call diversification?

Now holding CGX, OTEX, TV and LNR in this account.

That's what I found on the markets today. We'll see what happens tomorrow.

I NEVER USE MY RETIREMENT MONEY TO TRADE IN AND OUT OF 

STOCKS!

Looking for Saving Ideas so You Can Invest? 

If you are looking at ways to save money this new book The Cashflow Cookbook can help you find some savings to then use to invest.

If you are having trouble getting your financial house in order and organized then you need to read Worry Free Money. 

If you are further looking for portfolio ideas then you might find my review of The 6-Pack Portfolio a way for you to get started on your investing journey. All of our retirement money is invested in this manner. We just hold more than 6 positions.

If you want to read more about the theory and methodology of some of Canada's professional investment/portfolio managers then you need to pick up a copy of the book 'Market Masters'. Robin Speziale conducts interviews based on a set of pre-arranged questions. This will give you a real insight into how others invest money and how they think. A must read!

Growing Your Portfolio with Low Yield High Growth Stocks

Just a short and random post on some growth stocks I own and others you may want to consider for your portfolio. I'm always keeping my ears open and eyes on the volume and charts looking for bargain growth stocks with a history.

What companies products are you using, what are your kids using? Not just on a day to day basis but also when you leave the house or go on vacation.

This is a good place to look for ways to grow your money and cash in on products and services you and your family are using.

The internet, data plans, credit on plastic are just some examples. It still amazes me that people line up for movie, theatre, concert or museum tickets when you can buy these online. I mean what a waste of your time lining up is.

We just booked a flight with a rental car online to go out West to visit our grandchildren. Everyone who is moderately tech savy books online using some sort of search like Trivago, Expedia, Hotels.com, Tripadvisor, Booking.com and Cheap-O-Air. Well, we do and I'm retired so age is no excuse. I just love the ease and speed of making these reservations in the modern world of the internet.

I use Google Maps like every week so why don't I own Google the stock? Is it going away anytime soon? Why don't I own Apple? I own an iphone so why don't I support my purchase and buy the stock? I have no clue. Slow to react and scared to commit is all I can come up with.

I do own Bell, Telus and Shaw to grab some of the data companies that are not going away and only raising prices as we use more data. It is predicted that each person will use 1G of data a day in the not to distant future. My wife and I share 3G a month. This is a space you have to be in to grow your money in my opinion. Just ignore all the talk of cable cord cutting. It's not the future of these companies. I may swap my Shaw for Rogers shares going forward. Shaw is too small to build the infrastructure the future will demand.

I love tech stocks and own OTEX and CSU in the space. All Canadian and continue to grow by acquisition and leaders in the cloud space and also finding efficiencies in data management and software solutions.

I keep a watchlist of growth stocks I would like to buy with new money and when the time is right. What makes a good growth stock that will help you grow money in your portfolio? Understand what you are buying would be first and foremost. 

Next I look for a company that is growing it's earnings, revenue and sales. Growing and moving up from the previous year. I don't bother with quarter to quarter short term results. I focus on year over year growth. I also want to see a return on equity 5 year average of at least 20%. This also tells me the company is making good capital allocation decisions with shareholder's money.

If the company stops growing and is making poor decisions then dump it.

Based on the above mertics a few stocks in Canada jump out when you screen them for quality. They are;

Constellation Software (CSU) - develops, installs and customizes software

Tucows (TC)- Network Access and Domain Services

Spinmaster (TOY) - creates, designs, manufactures children's toys and entertainment products

Dollarama (DOL) - operates a chain of 1,170 dollar stores

My Other Growth Picks

Just some other random stocks that I like and would consider owning when they pullback or we get the all expected correction that most are calling for. Their ROE is slightly off the 20% 5 year average but very close. They would be;

MTY Food Group (MTY)

CGI Group (GIB.A)

Waste Connections (WCN)

TFI International (TFII)

CCL Industries (CCL.B)

Ritchie Bros. (RBA)

Park Lawn Corporation (PLC)

Descartes Systems (DSG)

Stocks I own and believe they should be in every portfolio include CNR and TRP. A railroad and a pipeline. Canada would shut down without them and right now I think these are the 2 you should own.

Garbage collection, trucking, funeral homes/crematoriums, auction houses, software developers and food. Are these growth industries? You decide.

In a recent Manpower survey, drivers was the third most listed job vacancy. Something to think about as our world loves to order online and then needs someone to deliver the goods. Apparently people are not as broke as they admit but they are more indebted and love charging on plastic.

Before I commit to buying a stock I always consult the one year chart and see where it is compared to it's 52 week high. I look for any entry point off of that high. If it has run away and going straight up, I look for other opportunites.

This is a totally different strategy than when I am adding dividend growth stocks to our retirement accounts.

Dividends and Growth

Back when I used to hand my money over to a mutual fund salesman, they always used to ask what you wanted to invest in. It always came back to a 50/50 split of growth and income. In the 90's this is how they did it.

What about now? Well it depends on age. On the income side of the equation, there are some big stable companies with some great sales, revenue and ROE stats + a nice yield that are worth buying and holding as investments. They are;

Bank of Nova Scotia (BNS) 4.3%

Metro (MRU) 1.7%

National Bank (NA) 3.8%

Saputo (SAP) 1.7%

Great West Life (GWO) 4.7%

Royal Bank (RY) 3.8%

Telus (T) 4.4%

Canadian Tire (CTC.A) 2.1%

Banks, Food, Telecoms and Canadian Tire. Not a bad selection of companies that continue to provide growth and income to your PF.

This is how I try and make purchases of companies when I have some new money in my accounts.

I also believe it is a myth that you can only make money on either growth or income stocks by buying small companies. It is simply not true and entails more risk.

I don't own any Weed, Gold or Energy stocks. Hot right now and having an amazing run but as a retiree I don't gamble with this money.

I NEVER USE MY RETIREMENT MONEY TO TRADE IN AND OUT OF 

STOCKS!

Looking for Saving Ideas so You Can Invest? 

If you are looking at ways to save money this new book The Cashflow Cookbook can help you find some savings to then use to invest.

If you are having trouble getting your financial house in order and organized then you need to read Worry Free Money. 

If you are further looking for portfolio ideas then you might find my review of The 6-Pack Portfolio a way for you to get started on your investing journey. All of our retirement money is invested in this manner. We just hold more than 6 positions.

If you want to read more about the theory and methodology of some of Canada's professional investment/portfolio managers then you need to pick up a copy of the book 'Market Masters'. Robin Speziale conducts interviews based on a set of pre-arranged questions. This will give you a real insight into how others invest money and how they think. A must read!

What growth stocks are on your BUY list?

Related Posts:

How to Win at Stock Picking When You're Wrong
Never Fall in Love With Stocks
Portfolio Construction 101

Dogs of the TSX Update

As a subscriber to the 'Canadian Moneysaver' magazine I have access to an ongoing article series titled 'Beat The TSX'. It was started by David Stanley and now currently monitored and commented on by Ross Grant.

I use this as a guide to buy dividend paying stocks that I don't already own if I have the money. The stocks are focused on the top ten highest yielding that have finished lower in price from the year before. A committee is used for initial stock selection.

The list is modeled after the grandfather of this index, Michael O'Higgins who started the 'Dogs of the Dow'.

The stocks are purchased in equal dollar amounts and stocks are dropped from the list and replaced by new ones every year as they gain in price and value. Depending on what guru you follow different screens are used. I just wait for the new January/February issue to come out.

If you want to read more about the theory and methodology of Ross Grant, there is an interview contained in the book 'Market Masters'. He details his investing journey and how he became enamored to follow in the footsteps of David Stanley and takeover trying to beat the TSX.

This is a simple strategy and does come with risks and should be used as a guideline and not as a substitute for your entire portfolio. I use it as a stock picking tool and NOT for my entire holdings. I very rarely sell a stock unless it has cut the dividend.

It also DOES NOT beat the TSX every year just MOST years. I think it is a helpful index to help you grow your money. Let's see how the index is doing so far this year.

If you subscribe to the Globe and Mail there is another article by Norm Rothery about beating the TSX and divided yields.


It is well worth the money to have access to this insight.

Dogs of the TSX

as of February 2, 2018 this is where the list was published and these are the constituent 10 stocks and what the gains/losses have been.

Enbridge (ENB) 7.4%
Bell (BCE) 5.1%
Power Corp. (POW) 5.7%
Transcanada (TRP) 4.9%
Shaw (SJR.B) 1.6%
CIBC (CM) 3%
Bank of Nova Scotia (BNS) 2.7%
National Bank (NA) 3.6%
Bank of Montreal (BMO) 5.8%
Royal Bank (RY) .09%

This is a very bank heavy index as you can see. What else do you hold in you portfolio? What stocks would you buy today if you had new money to put to work. If I didn't own any BNS or BCE for income I would definitely be looking to add them here. They yield 4.2% and 5.5% respectively and have great 10 year dividend growth records.

What lists do you use to pick stocks?

I NEVER USE MY RETIREMENT MONEY TO TRADE IN AND OUT OF 

STOCKS!

Looking for Saving Ideas so You Can Invest? 

If you are looking at ways to save money this new book The Cashflow Cookbook can help you find some savings to then use to invest.

If you are having trouble getting your financial house in order and organized then you need to read Worry Free Money. 


If you are further looking for portfolio ideas then you might find my review of The 6-Pack Portfolio a way for you to get started on your investing journey. All of our retirement money is invested in this manner. We just hold more than 6 positions.

Related Posts

Dividend Growth and Why it Matters
Build Your Own DIY Portfolio
High Yield Stocks - Where's The Growth?

Total Return and Why it Matters

Just a short post on why we need to focus on our total return for a stock and not just the income generated from dividends.

We are in a real 'wall of worry' period in the world of stock market investing as on Wednesday the Dow hit an all time high. Up an astonishing 350% since the financial crisis of 2008. Have your returns been that much since then?

I have been my own worst enemy. I sold a lot of holdings (not all) at the lows. I didn't invest in many dividend paying stocks but rather more speculative junior resource stocks. Even some gurus of dividend investing sold and liquidated a lot of stocks like this guy.

Now all the talk is about another recession in the face of dizzying stock market returns so what can and should we do?

The first thing to remember is the stock market is just a giant marketplace where you go to buy a stock at a certain price. It is NOT meant to be your focus on a daily basis. You are buying businesses that will thrive long term because they are solid companies to invest in during any and all economic climates.

Try and focus on the historical growth record of the stock plus it's dividend yield. This is your total return. If you focus on that and not the day to day gyrations of your business you will be better prepared mentally to NOT sell out at the first sign of trouble.

YIELD + GROWTH = TOTAL RETURN

Bloomberg or Morningstar will allow you to plug in any screens you want for all stocks. A premium subscription will give you full access after the free trial is done. Focus on 5 and 10 year dividend growth records and a yield between 3-5% for safety.

A lot of our dividend growth stocks have 10 year DG records of at least 12 %. Would you take that type of long term return over investing in ETFs or Mutual Funds?

Let's look at the returns of some of Canada's blue chip dividend payers.

Royal Bank (RY) 3.6 + 6.7 = 10.3%

Canadian Utilities (CU) 4.6 + 8.6 = 13.2%

Bell (BCE) 5.4 + 7.1 = 12.5%

CNR 1.6 + 14.7 = 16.3%

That's just 4 stocks that fit with our TULF acronym. Telecom, Utility, Low Yield and a Financial. What is the verdict and Total Return average of just 4 stocks?

Total Return = 13%

That's a pretty good average when you consider the TSX average return over the same time frame has been 4.7%. The 5 year average is a littlebetter at 8.7%. Why do people index their portfolio with ETFs? You are losing a lot because they contain so many bad stocks. Invest in quality businesses and hold even during a recession. The best way to do that is STOP looking at prices every day.

Every year once a year is enough. When stocks go down in price when the panic sets in, that's a great time to buy. That same market is putting out the SALE sign for you.

So much fear out there right now but there will always be something out there to try and scare you out of your stocks. I don't fret and worry about my retirement money because of this philosophy. Focus on total return, that's where you see the real gains in your portfolio.

Dividends are your safety net over the tightrope. When you receive a dividend increase this boosts your initial yield. Eventually it will contribute to a rising stock price.

"Current Yield plus Dividend Growth indicates a stock's future total return prospects"- Josh Peters, The Ultimate Dividend Playbook.

Other Related Posts

Buy For The Dividends
How I Built My Own Dividend Stock Portfolio
Dividends Power Portfolio Returns

What is the Perfect Starter Investment Portfolio?

Just a short post on starting an investment portfolio and how you should go about it.

I hear and personally get a lot of questions about where to start my investment journey. We all wish we could go back in time and tell ourselves what to do with what we know now. So, what would change?

I got involved with mutual funds in the 80's because that was the thing to do. Everybody I knew anyway was invested that way. Ranga Chand, Gordon Pape, David Chilton and Brian Costello were all touting the merits of this type of investing. So, I put all my money in high fee mutual funds. I never gave a thought to how much they were costing me to hold. I just blindly believed and followed what the investing gurus of the day were selling.

Canadians pay some of the highest fees to manage money in the WORLD!

Needless to say I don't do that anymore.

This is not going to be a long blog post on specifically what you should do but more of a new way of thinking and looking at where to invest your hard earned savings and what I've learned and done. I don't tell people what to eat, how to exercise or where to invest. I just give you my experience and what I'm doing.

This is what I would now try and impart to my spawn about how to invest their money. If only they would listen.

Say NO to ETFs, Mutual Funds, Bonds and Preferreds

This is just plain investment dogma. What I mean is everyone does and invests this way. Worse yet, you get tied up with an advisor who is just a mutual fund salesperson in disguise. They just sell ideas and stuff you don't need. Learn to start small, simple and do it yourself. This is what I would teach my kids and anybody else that cares to listen.

I don't own any of these products in any great amount other than to supplement my portfolio with some stocks from around the world. All my Canadian stocks, I buy individually.

I don't own bonds or preferred shares as I believe they are not safe and are a drag on your total return. They are sold on the guise of safety and worst of all DIVERSIFICATION!

You don't need to diversify with bonds or preferreds or stocks from around the world you know nothing about. Buy a US stock ETF or an Int'l one for that. It's what I do too.

Invest Today for Retirement Tomorrow

This is really why you are putting money into an investment account. So you and the family can enjoy what is hopefully a better life after work. Even at 62 years old I still set aside 20% of our income a month for investment purposes. I think 20% should be a number one should aim for at a minimum.

What Should I Invest In?

It's a well worn sales pitch but the simple answer is; Invest in what you know. Well, what do you know? Where you bank, pay your bills, where you shop and in general invest where you spend your money.

Starting today I would tell my kids to buy a bank, a utility, a telecom, a railroad company and lastly a food retailer or grocery store.

Why these areas specifically? because we use them, need them and give our money to them. Railroads deliver them all and the economy just can't run without them. 

Why not just buy everything like the whole market so we can leave those decisions to professionals? There are a lot of bad stocks in funds and ETFs that I would never buy on their own. They are in there so traders can make money trading in and out of stocks to generate fees. Stay away and learn to pick your own stocks.

How Do I Do This?

Every bank has a wealth management arm. I am with Bank of Nova Scotia. I opened a self-directed investment account and started to buy my own stocks online. It's called Scotia iTrade. Go to your bank website and open one of these accounts NOW. So much cheaper than paying someone else and a lot more fun.

Investing is not rocket science so stop believing it's too hard for you to do.

What Next?

You've picked your first five stocks now go back to the top and pick 5 more in the same order. You will then have 10 stocks all concentrated in big stable dividend paying Canadian companies.

As a quick example I started with TD, RY, FTS, CP, CNR, TRP, ENB, BCE, EMA and Telus.

I then added BNS, BMO, CM, SJR.B and BIP-UN as time went on and more money became available. Keep to this core and then buy other companies as your knowledge base expands and you get more confident.

Here is an updated view of our portfolios and what I do with our money.

This is not investment advice but only what and how I would teach my kids to do. My wife still brings income into the house on a part time basis. This allows me to invest our money this way. It may not be suitable for you. I invest for income an the future cash flow these companies will provide us in the future. You hold these companies forever and just collect the money they spin off in dividends. They will continue to grow and raise that dividend every year. That is our GOAL!

I Don't Have a Lot of Money

Wait until you have a thousand dollars and buy one bank stock with whatever amount of shares that will buy. Keep building slowly until you have your 5 positions. Building a PF takes time so no need to rush. 

The Dogs of The TSX

Every year a list of 10 of the highest yielding worst performing stocks of the TSX comes out. I subscribe to 'Canadian Moneysaver' magazine who publishes the list courtesy of Ross Grant.

The 2018 list is comprised of ENB, BCE, POW, TRP, SJR.b, CM, BNS, NA, BMO, and RY.

5 banks, 2 pipes, 2 telecoms and 1 diversified financial. I never sell any stock on the dogs list. I simply add to ones I don't own. I own all these stocks in various portfolios except for POW which I did but sold last year. The growth was slow so I replaced it with another railroad.

Are all these dogs a buy right now? NO. Some are way up since January so I would buy the ones that are still trading down in price and represent good value. Right now they are; RY, BNS, BCE and POW. You can do no worse by starting with these stocks. Keep watching the list for an entry point. Use it as a guideline and not investment advice. 

I NEVER USE MY RETIREMENT MONEY TO TRADE IN AND OUT OF 

STOCKS!

Looking for Saving Ideas so You Can Invest? 

If you are looking at ways to save money this new book The Cashflow Cookbook can help you find some savings to then use to invest.

If you are having trouble getting your financial house in order and organized then you need to read Worry Free Money. 


If you are further looking for portfolio ideas then you might find my review of The 6-Pack Portfolio a way for you to get started on your investing journey. All of our retirement money is invested in this manner. We just hold more than 6 positions.

In Sum

• keep a list of companies you know, like and use for investment when they get cheap and you have more money
• read and educate yourself to gain confidence
• take your time, it should take a good 5 months to build a portfolio
• ignore all talk on asset allocation and diversification
• we diversify within quality dividend paying growth companies
• no gold, bitcoin or junk you know nothing about
• our holding period is forever 
• read everything you can on Warren Buffett, my greatest influence 

You have lots of ideas, what will you do now? 

Dividend Growth and Why it Matters

“Stocks go up because dividends go up” - Daniel Peris, The Strategic Dividend 

Here is another great stat about what dividend growth and hanging on for the long term can do;

Over the last 42 years the dividend from Canadian Utilities (CU) has grown 7.4% annually and it's price has gained 7.9%. That's a 15.3% annual growth rate from this one stock. Who do you know on the financial news that recommends stocks like this?

"The crux of your success will be selecting leading companies stocks and holding on to them for many years" - Stephen Jarislowsky, The Investment Zoo pg.98

I invest mine and my wife's retirement money for the FUTURE cash flow it will bring. To do this we hold and hold and hold. By the time these retirement accounts have to be converted into RRIFs they should be generating capital growth and a good steady stream of dividend income.

Our Retirement Holdings Can Be Viewed Here


You have to think and act differently than all the investment noise out there to win at the long term investing game. What does that mean? You invest so that one day all the stocks will return to you in dividends what you initially paid for the stock. This is the crux of long term thinking. Embrace it and ignore the SELL people on TV. You and I ignore the market. Buy quality companies and don't worry about what your friends and co-workers are saying.

Buffett Buffet Tidbits

I use what the master has tried to teach us when it comes to being successful at investing;

• acquire a business at a sensible price with excellent, able and honest management
• never invest on the beta value of a stock. It is a useless measure
• think of your holding period for a company as indefinitely. The ROE should be at least 20-25% is what I shoot for and the market does not overvalue the business
• if you buy into the market as it is overheated (like today) then realize it might take longer to catch up to the price you paid

It is impossible to beat everybody else if you think the same way as everybody else. We win at this game if you commit and stick to long term thinking and avoid all who believe in Modern Portfolio Theory. It proposes that BETA can be diversified away. We don't believe in diversification. We believe in a concentrated portfolio of DG stocks bought at a reasonable price and held indefinitely.

MPT is also code for efficient markets. That the market return is what you receive less cost if you invest in the whole market. Why would I want to? There are so many bad businesses in the market I don't want to own. This is what id used by financial planners and advisors to sell you funds, ETFs and to charge fees. Why bother when 80% can't beat that same market they are telling you your return will be. Stop lapping up this insane mainstream garbage. You and I can and will do better buying quality companies and knowing what you're invested in and holding.

"As an investor's time horizon lengthens, a diversified portfolio of equities become progressively less risky than bonds, assuming that the stocks are purchased at a sensible multiple of earnings to then prevailing interest rates."
- Warren Buffett, May 2018 letter to shareholders

I don't own any bonds or preferred shares in any portfolio. Sold all of them when I adopted the DG strategy of investing.

Buffett goes on to say in his letter that "it would be a terrible mistake for long term investor's to measure risk by the ratio of bonds to stocks in their portfolio."
"The return is almost exclusively driven by dividends. Growth + Yield = Total Return" - James Montier

The fact is the market is NOT always efficient. This allows us to just go ahead and do our simple stuff like buy a bank, utility, telecom, railroad and maybe some food retailer = TULF . Most now have bought a pharmacy. These will be great long term companies to hold. I use TULF as taught by Tom @ dividendgrowth.ca and who I follow.

This is how we are slowly growing retirement income from the cash flow of big stable companies and with it WEALTH!

I will continue to monitor that cash flow in retirement even though I will treat the portfolio with benign neglect.

Do you believe in MPT or an all equity portfolio invested for the growing cash flow?

Looking for Saving Ideas so You Can Invest? 

If you are looking at ways to save money this new book The Cashflow Cookbook can help you find some savings to then use to invest.

If you are having trouble getting your financial house in order and organized then you need to read Worry Free Money. 

If you are further looking for portfolio ideas then you might find my review of The 6-Pack Portfolio a way for you to get started on your investing journey. All of our retirement money is invested in this manner. We just hold more than 6 positions.


All 3 of these books written for Canadians by Canadians.