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Friday, June 3, 2011

My strong stock holdings make it possible: margin account management for dummies

My non registered investment portfolio is down to 117 000$, which hurt of course. But at this point, I still have 68% of my margin account money available once I transfer the 5 000$ amount of my TD credit line to my margin account. I just complete one of those transfers as for now, from my TD credit line to my broker margin account. Following the market closing session, I will transfer again the money from my margin to my credit line, in order to avoid the close to 9% interest rate of the credit line...

I could go through a rough market day without doing such transfer. Never say never, but I don’t think I will ever get a margin call, for the good reason that my non registered portfolio is too complex for that, in the sense that it’s quite diversify. I own very strong holding that’s able to support easily the margin account.

Here are the companies that figure among my very strong investment holding. In this illustration, I am using the data collected on May 20, 2011:

Bank of Nova Scotia (BNS): 6 258.43$
Methanex Corporation (MX): 3 077.64$
Fortis (FTS): 3 560.96$
Pembina Pipeline Corporation (PPL): 10 447.29$
Just Energy Group Inc. (JE): 9 655$
Pengrowth Energy Corporation (PGF): 2 812.20$
Enbridge Income Fund Holdings Inc. (ENF): 6 093.75$
Corby Distilleries Limited (CDL.A): 1 720.10$
Davis + Henderson Corporation (DH): 4 149.36$
Premium Brands Holdings Corporation (PBH): 6 972$
EnCana Corporation (ECA): 6 585.20$
iShares S&P/TSX Capped REIT Index (XRE): 2 320.78$
Canfor Pulp Products Inc. (CFX): 1 874.76$
Capital Power Income L.P. (CPA.UN): 1 919$
Exchange Income Corporation (EIF): 7 157.40$
Student Transportation (STB): 1 373.60$
TMX Group Inc. (X): 4 450.06$
Data Group Income Fund (DGI.UN): 3 991$
K-Bro Linen Inc. (KBL): 2 235$
Westshore Terminals Invest Corp (WTE.UN): 5 020$
WesternOne Equity Income Fund (WEQ.UN): 2 280$
Atlantic Power Corp (ATP): 1 473$

TOTAL: 95 426.53$

In a perfect world (or in a perfect portfolio :)))), all of the stocks that I hold would be strong holder, but it’s not the case. My Sprott Inc. (SII) investment does not appear among my strong holding. I had invested in Sprott Inc. (SII) since 2008. I had experimented SII volatility and for that reason, they don’t appear in my strong holding. In the last couple years, the SII stock value went from 10$ to less than 5$, and then to 9.96$ it’s highest for the last 52 weeks to the current less than 9$... That’s what I call extreme volatility but I cannot help it, I like Sprott Inc. (SII), their special dividend for 2010 had been awesome and SII is a box full of surprises...

On May 20, 2011, the 100% of my non registered portfolio worth 119 724.08$. More than 79% of my portfolio is invested in what I consider as being my strong holders. That’s how I had been able to manage my margin account usage. If my margin account exists, it’s partly because of those strong holding. No matter how bad the stock market can be, my strong holdings are able to support to volatility without too much trouble. Of course, I realize that 79% of strong holding is not 100%. For that reason, I monitor my portfolio on a daily basis. Also, I plan to sell my stocks of TMX Group Inc. (X) as soon as their situation will be stabilized. A sell and profit made on X will help to significantly decrease the margin usage.

It’s unfortunate, but the situation in Europe is what made things a bit more complicated for small investors using margin account. The insecurity in Europe brings volatility to the stock market and it’s not the ideal situation for margin account users. Despite the difficulties, I am confident I will be able to survive to another stock market crash. But this involve from my part a couple of things: the discipline of not trading for a little while, looking forward to sell at profit Horizons BetaPro NYMEX Crude Oil Bear Plus ETF (HOD) and Horizons BetaPro COMEX Silver Bear Plus ETF (HZD) in the immediate and later on, to sell TMX Group Inc. (X) and First Majestic Silver Corp (FR). Following the payment of all my living expenses for the month of June, I have a 930$ left available and the payment will go on my margin. This will bring the section of my margin account money that is not in use to 69%. Not too bad.

Also, another thing I forgot to add to this is that I may be looking forward to sell part of my investment hold in Sprott Inc. (SII) – about half of it – and reinvested the same money in something strong, like TransCanada Corporation (TRP) and something else. At this time, I don’t think it will be anytime soon that I will be able to sell at profit some of my Sprott Inc. (SII) stocks. However, no drama, Sprott Inc. (SII) has announced lately a 3 cents dividend that will be paid by the end of June. Nice! This is of course part of Sprott regular quarterly dividend (like 30$, yeah!).

I am amaze by my ability to save money. Lately has been even better because I really ground myself on not buying food outside. I eat before going out and bring my lunch to work and a snack. The only thing I buy is a Second Cup coffee on my way to work. I cheat a couple of times of course outside the Second Cup coffee, but the money spend was quite low. And despite everything, I am satisfied with my investment portfolio.

I said I regret my day trading activities previously – that’s how I got stuck with Horizons BetaPro NYMEX Crude Oil Bear Plus ETF (HOD) and Horizons BetaPro COMEX Silver Bear Plus ETF (HZD). Some commentators had been obsessed by it (or by me? lol), saying I should sell HOD and HZD like right now, without cashing any profit. Well, those commentators can simply GO TO HELL.... lol... It’s not a good advice to say ok, you have this and this in your portfolio, you mess up young lady with your day trading, now pay, sell and lose money. Yeah yeah yeah. So far for 2011, the only elements I sell and loss on it was Superior Propane Corp (SPB) (the title was way too volatile for me despite being hold by the mountain lion hero) and Yellow Media Inc. (YLO). When it come to Yellow Media Inc. (YLO), I did not lose the original money coming out of my pocket, just around 300$ from what got reinvested in a DRIP. And when it come to SPB, I lost around 300$ in real f money. Those lost are nothing considering who my strong holdings are. A 600$ lost over a 160 000$ portfolio is nothing at all. I decided to bring in HOD and HZD in my portfolio, and I am the one who will decide when to sell and I will see those 2 at profit ONLY. That might be hard to accept for some readers, but that’s how it works around here on the Dividend Girl Blog.

Get to know what you want. I want money. I think that part is clear, at least.

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