Predicting 2019-Can You?

I used to gamble a lot with stocks in my retirement portfolio. Nowadays I don't do that even with my open account. Since I retired I've found even that is too stressful on me so I just focus my attention on income producing companies. Hold and let everything ruminate.

I bought and sold a lot of stocks in 2018. Too many actually. I dumped all ETFs, funds and bonds in all accounts. I hold a combination of US stocks and Canadian dividend growth stocks in 3 separate accounts for my wife and I.

Our US positions include FB, COST, AMZN, BRK.B

All good companies that I bought too soon and will wait and hope for them to recover.

In my haste to redistribute my portfolio holdings I ended up buying long before the October/November blood letting correction. We had so many dips with the whole financial world screaming out another buying opportunity it was ridiculous.

My whole investment philosophy is built around the teachings of Tom Connolly, Stephen Jarislowsky and Warren Buffett. My portfolio is now built around the Canadian Essentials Portfolio designed by retired political science professor Mike Henderson. I wrote about it earlier on this blog here.

The core of our retirement holdings consist of;

TD, RY, BNS, CNR, CP, CU, EMA, FTS, ENB and TRP.

You have banks, utilities, railroads and pipelines. These are the industries that are absolutely essential for the Canadian economy to function and would grind to a halt without them. All you have to do is read about all the angst in the oil sector and how the government is involved getting the product to market. This makes existing pipelines so important along with the railroads because there is no other way to get oil out of Alberta without CNR and CP. Pipeline companies like TRP and ENB have nowhere to go but up and as long as we rely on natural gas we need them for our survival.

I have also bought and spread out some of the telecomm stocks; BCE, Telus and Shaw as these also provide a data pipeline that we all need and use. Ignore all the cord cutting talk. It's all about the data usage and the future of wireless.

Pretty boring stuff you might say and I agree. To supplement these great essential income stocks I have also added MTY, CSU, TFII and BIP-UN. This should help grow the portfolio and I believe are great companies in the Food, Tech, Trucking and Infrastructure space. This is just what I'm doing and not advice for you to go out and buy these companies.

I lost 5% in total portfolio value in 2018. I won't be selling much if any stocks in 2019 but rather add to existing positions with the dividend income the portfolio will generate. The average yield is a very safe 4% and should grow yearly.

A lot of people follow the Dogs of the TSX portfolio which comes out at the beginning of the year for ideas on what to buy. They take the top ten highest yielding stocks that have performed the worst. They are bought in equal dollar amounts. The strategy was designed by Michael O'Higgins and called the Dogs of the Dow. It was adapted in Canada by David Stanley and he called it 'Beating the TSX'.

In 2018 the Canadian Dogs lost 11% if purchased on 2 Feb 2018 when I started to track the holdings. The TSX lost 12% so you would have lost less just going with these 10 stocks. They were BCE, BMO, BNS, CM, ENB, NA, POW, RY, SJR.B, and TRP.

The S&P 500 was down 6.5% and the Dow plopped 5.6%. Their biggest declines since 2008. There really was nowhere to hide.

POW lost 20%. It is a real darling among the dividend crowd but I believe the growth has been squeezed out and there is no future in mutual fund/insurance only companies. To each his own but I'd rather buy a bank or pipeline with a future. 

If you like to use Bond ETFs to consider yourself a balanced investor and feel safe go ahead but it's not something I do. Ten year gov't bonds yield 2.5% with zero growth. Is this where you want to invest your retirement money?

I also sold my wife's MAW104 mutual fund. It was no safe haven during a market pullback. You see, this is how these products are packaged and sold to us. The logic is mainly that a balanced and professionally managed investment product will save you. The fact is they all lose money and you pay a fee to allow them to do it for you.

My portfolio is balanced by essential industries to the economy. I focus on total return and not just monthly dividend income. This means nothing if you are losing capital appreciation but gaining in dividend income. This is what John Heinzl likes to boast about. " I lost money but look my income is rising" Ya OK champ, however you want to spoon it out to make you feel successful.

This is why I don't play well with other financial bloggers, writers and experts. We all know nothing but claim it works. Do what you feel comfortable doing. I don't buy the market anymore. I don't believe in the efficient market theory. Buy great quality dividend growth companies and hold for the long term. This is in my opinion how to best plan for retirement. Save as much as you can and don't pay fees to anyone. You can do this yourself. Who do you bank with? Start there and buy some stock. Why not? You already use the service so invest in your bank and not just use them. NEVER buy what the bank is trying to sell you. NO bank funds or ETFs, too expensive. Just buy the stock and never sell it.

MY 2019 Investment Focus

• hold good dividend growth stocks
• ensure you hold outstanding companies NOT just good stocks
• ignore market fluctuations
• focus on companies that raise dividends year after year
• avoid cyclicals
• NO gold, oil or commodity stocks
• NO crypto or weed

Start looking for what's cheap. When a stock is way off it's 52 week high it doesn't mean it's going to ever get back there. All you have to do is look at Husky for an example. HSE was trading at $48.82 in June 2008 and now it's $14. It will never ever reach it's peak again. This is why I don't buy cyclicals.

I have no idea how to predict 2019 and anyone that can tell you what will happen in the short term is just a salesperson and a liar. The short term is 1 year, focus on 10 year increments and study that company specific info.

All the best of investment success in 2019. Reading and studying will help. Have a plan and stick to it.

Never follow the market!

NEVER GAMBLE WITH MONEY YOU HAVE SAVED FOR RETIREMENT!

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 with top money mangers in Canada using 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!

Recommended Reading

This is the second edition of Robin Speziale's book 'Capital Compounders'. I have just received a review e-book version that I am currently reading and will have a review posted here and on Amazon in the coming weeks.

Robin invests in growth stocks and is the best selling author of 'Market Masters'

Robin has been saving, investing, and building his portfolio since the age of 18. Now, 10 years later, at the age of 28, he’s amassed a $225,000 stock portfolio. He lives in Toronto.

Besides following his blog he has a Capital Compounders Facebook Page well worth joining for learning where to better invest your capital.