(Photo courtesy of Pexels) In my first column on Long Term Successes, I shared examples from my Canadian portfolio. The Canadian market is just three percent of the world market and isn’t very well diversified, with financial and resource companies dominating. This makes international diversification […]
(Photo courtesy of Pexels) I am always delighted to get emails from readers and reviews on Amazon or Chapters. I thought I would share a few recent comments as they mirror my objectives with the book and newsletter. The first is on Amazon.com. Most reviews […]
(Photo courtesy of Pexels)
Success through simplicity entails buying the right companies and holding them a long time. This significantly reduces stress and workload managing investments, and leads to better outcomes. But do I follow my own advice?
My first decade of stock investing had been unsuccessful so when I transferred my RRSP into a stock account in 1993, I began a new approach. I would like to illustrate this approach with examples, both good and bad. I used my records and dividend details on the brokerage website, to portray the examples as accurately as possible.
My longest holding is Bank of Nova Scotia (BNS), held since early 1993 valued at $5.59 per share. Its dividend was 5.0% at the time. Over the 26 years I have received about $39.00 per share in dividends, almost seven times my original investment. I added to the position in 2016 at $55.33. BNS is currently worth about $70.00, and yielding the same 5.0%. Its dividend has increased similarly to the share price.
Shares in three other companies were purchased at the same time: Noranda, London Life, and BCE Inc. I added to the Noranda position in 1995 and 1997. Noranda spun off stakes in two smaller companies and merged with Falconbridge, with the combined company being acquired by Xstrata in 2006. I sold at this time, parlaying about $7,000 into $37,000, also collecting dividends for 13 years.
I purchased London Life for $10.06 and sold in 1997 for $34.00, when they were acquired by Power Financial. BCE was purchased at $41.87 and sold in 2000 for $168.05. BCE owned a large stake in Nortel, which was exploding upwards during the tech speculation of the late 1990’s. While my M.O. is to buy value and rarely sell, that doesn’t mean never sell. Nortel carried BCE to a ridiculous valuation so I sold. It subsequently spun off Nortel, separating itself from the debacle to come.
I repurchased BCE in 2001 for $34.69, yielding 3.5% at the time and paying out $32.00 per share of dividends to-date. I added to the position in 2013 at $42.62 and in 2017 at $60.68. They are currently about $61.00 with 5.2% yield. Thus I have held BCE for all but one year of those 26 years.
Three other companies were purchased almost 20 years ago, including Power Corp bought for $12.75 in 1999, yielding 1.9%. The dividend has increased to the current rate of 5.6%, paying me a total of $19.00 per share or one and a half times my original investment. I added to the position in 2015 at $29.05. They are currently about $28.50.
I added Royal Bank in 2000 at $16.01 per share, yielding 3.6% and have collected over $38.50 in dividends to-date, almost two and a half times my purchase price. I added it to my wife’s RRSP in 2004 at $30.51 and in 2008 during the financial crisis, at $35.25. It is now about $103.00, yielding 4.0%.
To round out the long-term success examples, I added TransCanada Corp in 2000 at $10.95, yielding 7.3%. I have collected over $30.00 per share of dividends, almost three times my original investment. I added to my position in 2011 at $37.17 and in 2015 at $41.84. It is currently about $65.00, yielding 4.6%.
Stock investing isn’t possible without incurring a few blemishes. I originally purchased Barrick Gold in 1999 and Placer Dome in 2001. Barrick bought Placer in 2006, making my average cost $19.15. I sold part of the stake in 2017 for a measly $20.83 and still own part currently valued at about $16.00. It has paid a small dividend adding up to about $6.00. In 1999 gold was about $400 per ounce and today it is $1,300. I hit the bottom of the gold market when I bought these gold companies, but haven’t made money on them. That’s what bad management can do.
In 2000 I purchased a small technology company called Kasten Chase. It was a highly touted software security company with supposed lucrative government contracts. What’s not to like, tech, government, security? It went broke taking all $1,600 invested, more appropriately speculated. Fortunately I didn’t speculate in a big way.
There have been other successes and blemishes contributing to the 11% annual returns. Adding to the position especially after a price decline also contributed to the long-term success. In the future, I will discuss the US side of the RRSPs.
During a 35+ year career in agriculture, Herman VanGenderen became an active investor in stocks and real estate. He writes a monthly newsletter and his book “Stocks for Fun and Profit: Adventures of an Amateur Investor” is available at internet book sites. Visit his website at www.you1stenterprises.com, or email him at firstname.lastname@example.org.
(Photo courtesy of Pexels) There has recently been a lot of negativity directed towards the mutual fund and financial advisory industries around performance and fees, partly because of the emergence of Exchange Traded Funds (ETFs) with lower fees. Advisors however rely on mutual fund fees. […]
(photo courtesy of Pexels) I have been a Grainews columnist for a year with my first article having appeared on March 13th, 2018. The articles are generally coordinated with my blogs but not always. This series of articles will catch up blog readers with my […]
In the column, “Re-Think What You Thought,” I mentioned less than half of predictions are accurate. This phenomenon has been well documented, yet market predictions continue to abound. I began making market predictions in my newsletter in January of 2016, mostly to poke fun at the whole prediction process, but also to test myself against the experts. How have I done over the years?
The back-drop to my first year making predictions came on the heels of a volatile and difficult 2015. The US experienced a major correction, while Canada was in the grips of a resource driven bear market. Pundits often base predictions on recent trends, and thus had very modest expectations for 2016. My predictions on the other hand, were bold. Firstly, I predicted that most predictions would be wrong. This is my standard first prediction. I also predicted that the markets would return 20-25% in 2016 and that the Canadian market would out-perform the US. This was an un-heard of forecast at the time, with oil and the Canadian market plummeting simultaneously.
By year-end my predictions had proven prescient, with the Canadian market up 20.2% and the US up 12.0%. Those who believed the experts might have sat out this great year. The beginning of 2017 saw the experts once again expressing low expectations of 0-5% gains for the year. Once again my predictions were bold reiterating that most predictions would be wrong, and calling for gains of 15-20%. From a longer-term perspective I also predicted that market returns would revert to their long-term trend of delivering about 10% average annual gains. Between 2000 and 2015 market performance was only half the historical norm, leading many to suggest that 10% returns were no longer achievable.
The 2017 market returns were an awesome 21.8% in the US and a more modest but still respectable 8.3% in Canada. While these gains fell outside my predicted range, they were vastly superior to the expert’s tepid forecasts.
The great market performance of 2017 then drove the pundits towards a more bullish 2018 stance, predicting gains in the range of 7-10% for the US, and 4-5% in Canada. My crystal ball became very cloudy. I once again predicted that most predictions would be wrong but failed to provide a guideline of how I thought the market would perform, writing “I don’t have a clue,” with the exception of ruling out a dramatic collapse of greater than 12.5%. This was clearly my most cautious prediction of the three years. I also forecast significantly more volatility in 2018 than in 2017.
My synopsis turned out reasonably well, certainly better than pundits and their bullish stance. The US market ended 2018 down 4.4%, somewhat better than the Canadian decline of 8.9%. Day-to-day volatility was high throughout the year and especially high in December.
What about 2019? In my January 3rd newsletter I wrote that I had trouble getting a read on expert predictions because they were all over the map. Generally the experts tend to flock together giving me a pretty good sense of where they are at. I think the root cause of the “all over the map” predictions was the pre-Christmas market plunge. One quote I recorded was, “The S&P 500 will drop to 2900 (in 2019) from 3000 at the end of this year.” While appearing in an article around New Year’s the prediction must have been made sometime before Christmas, when the writer was positive about the end to 2018 but negative on 2019. The S&P 500 closed 2018 at 2500. There was a 500 point difference between where this expert expected the S&P 500 to close 2018 and where it ended, clearly demonstrating my main point around the folly of market predictions.
My 2019 predictions were again bold. It’s a broken record but I predicted most predictions will be wrong, for the markets to be up in excess of 12.5% and for the Canadian market to beat the US. It is far too early to claim victory on these but as of the date of writing, we are off to a good start.
The rationale for my prediction process is outlined in the book, which would also be pertinent to commodity marketing. Those who subscribe to my newsletter will receive back issues where you can fact check this brief summary. Does my record mean that I can confidently make accurate predictions going forward? Absolutely not! I have a reasonable process but short term market direction is unpredictable. Think long-term, and avoid making bold moves based on bold predictions!
During a 35+ year career in agriculture, Herman VanGenderen became an active investor in stocks and real estate. His book “Stocks for Fun and Profit: Adventures of an Amateur Investor is available at internet book sites. Visit his website at www.you1stenterprises.com, or email comments and questions to email@example.com.
(Photo courtesy of Pexels) We are approaching the Registered Retirement Savings Plan (RRSP) deadline but deadline or not, I suspect most readers will have contribution room available, which can be found on your annual income tax “Notice of Assessment.” Many Canadians have tossed the RRSP […]
(Photo courtesy of Pexels)
2018 has been a challenging year for stock and bond investors around the world. Virtually every asset class, in every country is down year-to-date. Perhaps things will change in the last two weeks of the year, but at time of writing it has been a pretty miserable year.
Following is a sampling of stock market declines (not including dividends) around the world year-to-date: China is down 22%, Germany 16%, Emerging Markets 15%, Hong Kong 13%, The UK 11%, Canada 10%, France 9%, Japan 6% and the US is best with a decline of just 3%. Losses are even more pronounced if compared to market peaks which generally occurred in late January.
Bonds, which are considered safer, also declined in value around the world as interest rates increased. I consider bonds riskier than a well selected stock portfolio because they get ravaged by taxes and inflation. While they are less volatile than stocks, long-term they are riskier. Thus, I don’t spend any time studying the bond market, but have read about their general decline in 2018. While I consider cash as a waste of money, this past year it proved to be the best investment, although this wasn’t predictable at the start of the year. Interestingly, expert consensus predictions at the beginning of the year were for the US market to go up 7-10% and the Canadian market to be up 4-5%. This lends credence to my first prediction every year, that most predictions will be wrong.
If this has you depressed, you’re not alone. The majority of investors are now more bearish than at any time since February of 2016, when the S&P 500 also had plunged 11% in a two-month period. To me, this is a very optimistic sign. For more on how market sentiment impacts future returns, please read a chapter in my book titled, “’Everybody’ Is Often Wrong.” This chapter is very pertinent to commodities, as well as stocks.
As previously written, short term market direction is very unpredictable, but long-term the market returns about 10% a year. The difficult year creates a great back-drop for setting clear investment goals for 2019. I am a big believer in the SMART goal process, with my own twist. S=Simple, the goal should be very simply stated. M=Measurable, the goal should be specific so progress can be measured. A=Agreed upon, with others impacted by the goals. R=Reasonable, so they are attainable with reasonable additional effort, although having a “stretch” component can also be productive. T=Time-based, so there is a sense of urgency to achieving the goal.
The number of goals should be limited to provide focused direction, and would suggest that even ONE goal is acceptable, whereas THREE goals should be the maximum. If we set too many goals, the likelihood of achieving any is lessened. Everyone’s situation is unique, so it is important to individualize, but here are a few examples of pertinent goals regarding TFSA investing:
- Read the book “STOCKS for FUN and PROFIT ~ Adventures of an Amateur Investor,” by March 31st, 2019.
- Take better control of my own destiny by amalgamating all my TFSA accounts into one at an internet brokerage site, by Feb 28th, 2019. (Many Canadians have multiple accounts, making management more difficult)
- Maximize my 2019 TFSA contribution by adding $500 into the account on the 15th day of each month. (The 2019 contribution room is $6,000)
- Begin investing in stocks by following the, “Titanium Strength TFSA Portfolio.” Make six stock decisions during the year, by purchasing one company on the 15th day of every second month, beginning in February.
- Make up for my past lapses by adding $1,000 on the 15th day of each month until such a time as my total contribution room is used. (The cumulative total maximum will be $63,500)
These are simply examples of potential goals. Of greatest importance is setting goals you want to accomplish.
If you have enjoyed my articles in 2018, please give me a wonderful Christmas present, the gift of a book review on Amazon.ca, or Chapters. Thanks for reading my material this past year. I hope it has helped your financial success. Wishing you all a terrific Holiday Season, and all the best in 2019.
(Photo courtesy of Pexels) With the excitement of having articles in the Globe and Mail and MoneySense, I have fallen behind communicating recent articles written for Grainews, one of Canada’s leading agricultural publications. Following are links to three recent articles, all including a key investing […]