The $tock Market $peculator

Thursday, December 20, 2018

Stock Picks for 2019

Just a short post on my stock picks for 2019.

Everything is just getting hammered in the last couple months of 2018 so it would be very easy to choose a lot of companies that have been beaten down mercilessly. Everything is on sale.

As a retiree I look for income stocks to supplement my pension income. As long as you stick with big stable companies that have at least a 10 year record of double digit total returns then long term you will do great. I could pick a lot more stocks from the bank, telecomm, utility and pipeline sector but I would have no problem starting with these in 2019. I own them all and in fact have been increasing my positions in the last couple of months.

I don't buy high yield junk that risks cutting dividends. Hello IPL fans. 9% yields are a warning sign and NOT a buying signal. Do your own research but I stick with around 4-5 % yields. Boring is great for income.

Income Stocks

BNS - Bank of Nova Scotia, down 12.5%, Yield = 4.7%
RY - Royal Bank, down 10.5%, Yield = 4%

TRP -Transcanada, down 5%, Yield = 5%

BCE - Bell, down 2%, Yield = 5.3%

FTS - Fortis, up 4% Yield = 4%

Growth Stocks

GIB-A CGI Group
MTY MTY Food Group
COST Costco
BRK.B Berkshire Hathaway
MSFT Microsoft

All of these growth stocks have held up fairly well in the latest purge of stocks on all the exchanges. I own MTY, COST and Berkshire.

"If you want to buy stocks why do you want them to go up in price" - Warren Buffett.

"The stock market just gets in the way of investing" - John Bogle

Stick with buying great businesses in 2019. I like big stable companies that make money and should be around for a long time. Just my take.

A lot of retirees believe in diversification and holding bonds or bond ETFs. I don't and have sold all mine. The yield on a 10 year government bond is 2%. The 10 year capital appreciation growth rate of Royal Bank is 8%. That's 4X the return of bonds. I don't rebalance or buy bonds. I'd rather own the bank and collect the dividends.

My only regret right now is I have run out of money and would have to sell something to buy something. I like my holdings so will have no choice but to sit tight.

The longer you hold great businesses the safer they become.

No crypto or weed.

All the best of investing success in 2019.

Tuesday, December 18, 2018

How to Save Your Portfolio

I no longer trade stocks in the short term or buy bonds, mutual funds or ETFs. I basically stay away from anything in the investing marketplace that has an ongoing cost of ownership.

I like and prefer dividend growth stocks that pay me to own them. Focus on total return that is Yield + Growth = Total Return. I'm retired so I want and lust after stable and safe income combined with some modest growth of my money.

It has been a brutal 2018 investing year and a lot of what I own has been punished and taken out behind the wood shed and beaten to death.

I visit a lot of investing forums and FB investing groups and the sentiment is dark and the questions so many. Sell everything, go to cash, short the market. What the fuck should I do? Then the constant bickering and arguing.

You see, investors don't know what to do but they enjoy venting to anonymous people on the internet.

I listen to Buffett. Study the work of David Stanley and Mike Henderson. Beat the TSX portfolios or Canadian Essentials stock components and my value guru Tom Connolly. This is my circle of influence and how I now invest.

STOP jumping in and out of stocks and believing in the myth that a balanced and diversified portfolio will save you. I used to think this way too. I have since sold all my bonds, prefs share ETFs and anything indexed to the market. I pay no fees.

Just about every model portfolio you look at out there has dropped in value in 2018.

The Dogs of the TSX Portfolio is down so far 9.5% and Rob Carrick's Low Fee ETF Portfolio is down 4%.

Why pay someone to lose money for you?

Check this out for ideas. You CAN beat the market if you hold through the swoons and storms of the market.

My wife's portfolio is all invested in just these 10 stocks. My RRSP is very similar with some telecomm positions added in. I just believe we all depend on data so Telus, Bell, Rogers and Shaw are pretty much essential to the economy too. Who knows but they have a shared monopoly in the space.

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!

Friday, December 14, 2018

Why I'm My Own Financial Advisor

Just a short post on why you really need to manage your own money and if you don't you really should.

I have always found when I was involved with a mutual fund salesperson that you have the privilege of paying someone else to lose money for you.

So why not DIY?

If you lack discipline and panic easy then wait until you can control your emotions. Then dive in. Nobody will care more about your money more than you do.

Why Professional Management Sucks

they love the efficient market theory. The concept is flawed having you believe the best you can do is what the market gives you.
pros are too active and trade in and out of stocks at a dizzying pace.
they tell you to focus on the long term when in reality they are fixated on short term performance.
buy stocks at the wrong time.
always under pressure from clients on portfolio performance.
instead of buying the best companies they use an equal weight formula.
they try to beat a benchmark with so many bad companies in them
most NEVER beat the market.

To Win Focus Instead on This

hold your stocks and never trade in and out.
focus on the cash flow your stocks will give you.
ignore missing out on the next Apple or Netflix stocks.
invest for income and not capital gains.
you are building for retirement so cash flow matters.
own the BEST and not the most stocks.

Where to Start

To get that cash flow and grow that income you just need to own a bank, utility, telecomm and a rail stock like CNR. That's 4 stocks. Start there and then add 4 more. My choices are CN, CP, TD, RY, BCE, FTS, ENB and TRP.

Nothing wrong with other financial stocks, utilities or pipelines just have a safe mix and concentrate your money there.

I believe this is the best buying opportunity to come along in the last 10 years. When markets are down 20-25% consider it a sale. If you don't buy now when would you?

My Final Take

Professional money mangers don't have to pay the price when they're wrong. They're NOT invested where they put your money. Go ahead and ask if they are invested in the high fee fund they have put you in.

Too many conflicts for me.

I don't use low cost ETFs as there are too many really bad companies in them. Check out TSX index ETFs. Lots of resource companies that drag the index down. I don't invest in them or own them.

Never invest in high yield stocks. You risk the cash flow being cut and the dividend never growing. You invest for the future cash flow the stock will give you in retirement. This is what I've learned as a DIY investor. Make 2019 your year and buy quality companies that have a history of growing their dividend.

You can beat the professionals hands down.

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.

Wednesday, December 12, 2018

Baby It's Hot Inside

Just a short post on my general feelings about what's been happening on the markets and inside my own portfolio.

It's been a crazy month and a half on the markets. Portfolios are melting everywhere and no matter where and what you're invested in.

So what to do? Forget focusing on the markets. Huh? But I like to look every day for deals and then buy stocks when they go on sale. Yes but just focus on quality big stable dividend growth companies and buy them when you can afford to.

Just simply watching what the markets are doing sucks you into believing in efficient market theory. When you do that you'll sell your stocks and buy bonds or worse yet prefered shares. Maybe you'll just believe the new hype that CASH is an investment and sit there. Maybe you'll believe in balance and diversification and load up on ETFs and or MFs.

The longer you hold stocks in stable companies the SAFER they become!

Bonds and cash won't save you from anything. The goal is to grow your money and not get scared out of your positions.

What's really been pissing me off lately on all the discussion forums and financial blogs is the day to day calling of bottoms. You constantly are subjected to "this is a great buying opportunity, OR "I believe it's safe to jump in here".

Nobody knows anything definitive and NEVER take advice from ghosts on the internet including me. I'm just telling you what I'm doing and how I'm living.

I have a different perspective because I'm retired and use dividend income to supplement my retirement. I'm actually doing it NOT just writing about it or even worse yet posting endless useless content about monthly dividend income. Why post that without total portfolio growth? I have better things to do.

Are you Selling?

Bad idea if you ask me. You should only sell if you need the money or sell on up days to rid yourself of some bad mistakes. Lately all the days have been down. You can thank Brexit, Trump, China and Central Bankers. There's always something s f*ck IT! Never act on it.

Own quality companies and hold long term. My Costco shares are thriving even while the markets are tanking. Why? Because Costco doesn't give two fucks about what the markets are doing and neither should you. People will continue to shop and spend because of the experience. I will die holding my Costco shares. There are many companies out there that fit this criteria.

The odds are always in the favour of those who invest for the long term. The market goes up 78% of the time decade after decade.

There have been some great buys in 2018 and NOT a time to panic.

My Final Take

No crypto and NO weed. Stay the course and stay invested. Ignore the fear mongers, they're everywhere. Just wait it out. If in doubt then don't even get started just sit there.

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.

I never invest in the stock market, I like to buy quality companies and hold for the long term. Stocks become safer the longer you hold them. I believe Costco is one of those companies you should buy and hold. My opinion and not advice for you to do the same.

New Book and Recommended Reading

Saturday, November 24, 2018

Sticking with My Core Portfolio in Tough Times

Just a short post on what I have been doing with my portfolio during the latest carnage in the markets. I've made lots of changes.

Everyone has an opinion on what you should have or own in your portfolio. I'm no different and I'm no investing guru.

What I am is retired now so trying to protect money invested is at the core of my investment thesis. Also with that comes income generating investments. I firmly believe as a retiree you need to be invested in income producing stocks.

This has to be the goal. The core of our retirement portfolio is invested in dividend growth stocks that produce this income.

I did a lot of buying and selling during the October pullback only to see markets retreat a further 1000 points on Monday and Tuesday this week. Here we are on American Thanksgiving and wondering if all that buying and selling is actually going to turn into a Santa Claus rally.

I'm out of cash and shot my load last week adding to existing positions.,s I'm done for the year.

What I Sold to Buy Stocks

My Wife's LIRA

I dumped her MAW104. When I heard the news it was looking for a buyer, I decided to sell all units. This mutual fund was being held in my wife's LIRA. I decided to turn those MF units into holdings of CP, CNR, TD, BNS, RY, FTS, CU, EMA, TRP and ENB.

As you can see her core is now banks, utilities, pipelines and rail stocks. Her Mawer fund was costing 1% so we are now free of that monthly cost. It was not performing that well during these daily pullbacks as the bond funds were of no protection. Bonds are not safe, it's all jargon and bullshit. You don't need them. They lose value in a rising interest rate environment and the monthly distributions will never keep up with capital erosion. How is that safe? It's just spin to get you to buy into the balanced, diversified portfolio theory. Build your own portfolio and let it work it's long term magic.

Her RRSP

We still had a small position in XAW so I sold it and divided it up the cash and bought Royal Bank and BNS. We are in the process of moving her LIRA (in kind) to her RRSP. We'll see how and at what cost that works out to. Fortunately her LIRA is small enough that she has the RRSP room to make this tax efficient. She also owns all the same stocks in both accounts so this should super charge those existing stocks.

My RRSP

I sold my VFV which is a low cost S&P 500 ETF. I used the money to buy FTS and BNS. Yes boring stocks but dividend payers to supplement my dividend income.

All of these accounts now have a very safe and respectable 4% yield.

Growth Stocks

Now for the sexy stuff. FB, AMZN, BRK.B all down significantly since purchase. I would never sell them because I believe in their long term future to provide a little torque to our dividend stocks.

Our holdings in MTY and COST are still in the green even after triple digit losses on Monday and Tuesday of this week. I like food stocks and Costco is just one of the best food/retailers on the planet. I hear it all the time, "I love shopping at Costco but it's too expensive an investment". I just don't look at it like a trader. You pay up and then hold. It becomes cheaper the longer you hold this company.They just generate tons of free cash and make money.

The only tech stock I hold is CSU. Another great Canadian success story in the tech space. I'm basically flat since purchasing this stock a few months ago. Growth stocks have been hammered in the last month. I believe if you have any cash at all there are a lot of great companies now on sale. Some are 25% cheaper than they were at the beginning of October. This is a Black Friday stock sale going on right now.

Final Thoughts

The core of all portfolios is very concentrated in the 5 sectors of banks, utilities, pipelines, rails and telecomms. I own no bonds, preferred shares, mutual funds or ETFs. We are 100% stocks. Not recommended for everyone it's just what I do and doing what I do means being different.

You have to swim upstream and rid your cluttered mind of all modern portfolio theory. Fuck diversification, buy quality companies. Bonds are and have been a shitty investment. Funds cost money and you save a lot doing it yourself. Take a look at any chart on pref share funds/etfs. They have fallen of a cliff and barely grow your money at all. Why do people buy this shit?

Advisors just come at you with jargon and BS financial terms to justify taking your money while they rub your balls. If you don't know what to do go sit in the library and study. This will save your wealth over time and in retirement.

Investing within the confines of modern portfolio theory just means you love the comfort of what the industry is selling. I question every expert and everything investing. To make your own money grow you have to invest in quality companies. Individual stocks are safer than the whole fucken industry with their complex products.

I buy stocks for their future cash flow because if you buy quality stocks that cash flow only increases over time. Is TD bank going to lose money or go under? No I highly doubt it and think of the increasing dividend payments you'll receive over the next 10 years. That should be why you invest in stocks.

The goal is to have a growing income in retirement and NOT turn into a coupon clipping, penny pinching pensioner.

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.

New Book and Recommended Reading

Thursday, November 1, 2018

An October to Forget

Worst month for the S&P since 2011. $2T was shed alone in October. Both the TSX and S&P 500 lost 7% and 6.5% respectively.

Lots of money was wiped out but on the bright side we did close the month with consecutive days of triple digit gains.

Here's the thing, you probably were more likely to panic if you've never lived through this before. "In the last 10 years the S&P 500 has dropped at least 5% 23 times. That's an average of twice a year." So says Barry Schwarz of Baskin Financial.

If you are going to invest in equities then you have to expect and embrace months like we just had. I'm 100% stocks. US and Canada. No bonds, prefs and just a small amount of ETFs. That's just me and not a suggestion for you to do the same.

Even my wife's balanced fund lost money so there was nowhere to hide in October. I am looking to unwind that fund and buy some bargain based stocks during the tax loss selling season. I may wait until the new year, I haven't made a firm decision yet. It did tell me that the 40% bond allocation did nothing to save money during this past month. The fund shed almost $1K.

I did sell some stocks during the first week of the correction as I was holding them with borrowed money. I had used my HELOC for purchases. It turned out to be a good decision as my rate rose to 4.2% and the dip was followed by an even greater pullback last week.

I punted DOL, ATD.B, TOY, QSR, LNR and OTEX

The only stocks that I would consider buying back are ATD.B and TOY

QSR is mired in debt OTEX has been over hyped and is down 13% since I bought it. It is still digesting acquisitions and too many people like this stock. Probably why it's tanked. DOL is a disaster. Nothing sells for a dollar and now it's being heavily shorted by a US hedge fund. They claim it's overvalued. Why be there? LNR is suffering from the tariff war and my play on that did not even come close to working out.

I did not sell anything in my retirement accounts. As it turns out I bought Costco at a good time but Facebook, Amazon, Berkshire are all below my purchase price. I like them even more after the pullback.

Be Different

You only win this game by thinking long term and holding. The only reason I sold the stocks mentioned is because of leverage. With interest rates continuing to rise this is not a good strategy to continue. The dividend payments and or growth of the stock does not keep up with interest payments. It's just too hard to make some short term capital gains so I'm out for now.

Hunting for Value

Where to look? All the recommendations for the 'Dogs of the TSE' made in February are down a combined 7%. The worst performers and if I was looking to put money to work, look at BNS 11.7%, BCE 9.6% and TRP 10%.

Will this list get cheaper? I have no idea but after the sell off we just experienced, now is the time to start looking. If not now when?

Hunting for Growth

I like to stick to what's been working so far and how can you argue with old giants like CNR and CP. Low dividend sure but they continue to make money, beat earnings and rise in price. I just keep buying more when I have the money. I believe all portfolios should hold at least one of these rail stocks.

CP has an ROE of 37% and CNR 35%. These guys know how to allocate capital and in this era of crude by rail it should continue for years.

I also like food stocks just like Buffett does. I love and own MTY with it's 21% ROE. During this correction it has actually ended up higher than where it was 2 weeks ago. This is what's working and where I want to be. ATD.b should also be on your radar with it's 24% ROE.

Dividends and Income

I use a combination of growth and dividend growth stocks to build wealth in my retirement accounts. It all depends on age and what your comfortable with. For me I love this combination. My core holdings include banks, telcos, utilities, food and pipelines that pay dividends. I have only sold ETFs this year and then bought stocks for our retirement accounts. I continue to add to positions as dividend income builds up.

Growth stocks I hold in these accounts include; FB, COST, AMZN, BRK.B, TFII, CSU and MTY.

Buy businesses you understand and use. I'm looking at Netflix. Everyone I know uses it and has to have it. Don't you want to own something like that? It will always be expensive so who knows where it's going.

New Book and Recommended Reading

Wednesday, October 17, 2018

Why I Just Bought Costco

Just a short post on a recent stock purchase of Costco shares I made for my retirement account.

I only took a small position in this giant American based retailer but very happy I found the guts to do it as I've watched this stock run away from me for the last couple of years. It's already up 42% YTD.

During a recent visit to Kelowna we decided to do a Costco run. First problem was circling the parking lot for a spot as the place was rammed with cars and people after only being opened for an hour.

Once we went inside the foyer there was not a shopping cart to be found. Seriously? It's only just opened and all the carts are taken? Yup, more waiting. The checkout lines were the worst I've seen in any Costco I've shopped at.

We kept jostling ourselves through the massive crowd and tried to enjoy the experience but all I could think of and ask myself is "Why don't I own stock in this company?" I've thought of it many times in the past but always thought it was too expensive and or I didn't have the money.

Within 10 minutes of getting back home to unload the groceries I bought Costco. I also got lucky as the stock had just sold off on an earnings miss so to me it was on SALE!

A couple criteria I always use before I buy a company are; do I understand the business and do I use what they sell?

Yes, on both counts. Costco only marks up their products 15% and keeps it there so it's affordable. It only gives you one choice to ponder. You want mustard? no problem. It comes in a double pack of bottles and only one brand to choose from. Most supermarkets give you multiple choices so you linger in the aisle longer. NOT Costco - one choice take it or move on.

Their biggest income generator is selling memberships to shop at their stores. It's just a brilliant marketing plan and where Costco makes all their money. They also have the ability to raise these prices anytime they want.

Let's take a look at some of the numbers;

Market Cap: $99.7B
Beta: 1.1

ROE: 26%

Forward P/E: 33.4

EPS Growth: 13.5%

Revenue: $144.5B, growth per share 5%

Debt: $6.5B
Forward Dividend: 1%
Payout Ratio 30%

Price Paid: $217.88

52 week high: $245.16

Earnings and revenue are growing, low debt, low payout ratio and great return on equity. They do have a high p/e but it's always been expensive. I plan on holding Costco for the next 9 years when I have to collapse my RRSP and convert it to a RRIF. They operate 741 warehouse stores and growing.

This is a great company in the consumer staples space and more importantly I am a member and shop there regularly so why not own some shares as a hedge on my monthly fees?

How about that $1.50 hotdog?

The members just can't get enough of those cheap dogs. The CEO has said they make no money on the special of a hotdog and pop for a $1.50. In fact he said he's trying to find ways to sell it cheaper. Now, this is a man who takes care of and treats his members like owners.

Just don't visit Costco on pension payday unless you've packed a lot of patience. The store is more packed than usual. This day usually falls two banking days before the end of the month.

Do you own shares in Costco and if not would you buy it?

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.