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Wednesday, December 28, 2011

In 2012, back to basic: buy-and-hold portfolio strategy

The TSX may have lost close to 200 points today, it doesn’t matter, my non-registered portfolio closed today session at a bit more than 113k. I consider this as being quite good knowing the circumstances.

I will remember 2011 for the years to come. With all of my trading experiences made in 2011, I didn’t make money, but I didn’t lose any either. And this is quite extraordinary. I am not a professional, I am not a specialist. I simply try to do my best for my money.

The fact that I didn’t lose money on the stock market is just so spectacular because in 2011, the TSX past 52 weeks highest was 14 329.49 and lowest, 10 848.19 points (so far, at least). We are talking here of a difference of 3 481.30 points! In those market conditions, I consider myself very extremely lucky to be able to breathe without having to deal with capital losses. This show off the power of the TSX and we need to appreciate the quality of the Canadian stock market. With all the risks I took, I didn’t lost money. This is absolutely HUGE.

In 2011, I certainly over-trade, over-invested but I think that if I hold what I have in my non-registered portfolio at this time, chances are that I could gain in capital value. In 2011, I learned that it doesn’t worth it to go on a buy-and-sell, buy-and-sell over and over again. Its way better to simply hold, appreciate the capital gain and cash in the dividend. Simple things are sometimes too easy to follow. By buying-and-selling on and on and on, I exhausted myself and I could have used that time to do better things rather than being too active on the market and gambling my money.

However, I love the experiencing of trading. At the end, I feel it’s just something that isn’t made for me. It’s even easier to just stick-and-hold and cash in the dividend.


James said...

Here's an idea, why don't you set out how many trades you think is reasonable now and see if you go over it by the end of the year.

I would say 6-12 trades would be more than enough for a full year. Think you will go over this?

Sunny said...

Hi James,

I could exceed the 6 to 12 trades per year depending on how much I buy.

I usually invest once every month, sometimes 2 times per month. Those are "buy" activities.

I plan to sell if I feel the stock is in trouble (like the kind of thing that happen for YLO this year) or if I don't like the investment anymore.

So I don't want to put a number of trades I have to respect for those reasons. It will only put more stress to an already stressful situation kind of.

I could say a maximum of 20 trades, big big max. And I don't count in those trades the DRIP reinvestment.

Anonymous said...

Sunny, your calculation don't add up. You lost money on too many stocks to say you didn't lose any money this year. If you have 113k, it's only because you invested more of your money. Stocks that you bought this year or owned before the year started are down quite a bit (EX. K, PHS.U, PSLV, DGI.UN, NFI.UN, STB, SII, CFX, JE, DH, FR), while only a few have gained. You need to find yourself another way to calculate your gains or should I say losses.

Sunny said...

I show how I calculated my gain and loses in a very detail previous post.

What I analyze is the overall situation. Overall, I didn't loose or make that much either.

If you take a specific stock, like PHS.U, yes I definitively experience a capital loss on that one. But that's not what interest me.

What I want to know is related to the overall.

PHS.U has not performed well, but stuff like PPL, ENF, FTS performed very well. My best stock picks help to equilibrate the losses and that's exactly what I am looking forward to know.

I see all of those multiple investments as one. That's why I am only interested in the overall.

You should considered yourself lucky to have access for free to such valuable information.

Anonymous said...

I'm not sure if I'm understanding your correctly Sunny. For example, if your stocks were down $10,000 but you invested another $10,000 of your money so that the overall portfolio value remained the same, by your accounting does that mean your portfolio isn't down on the year?

Sunny said...

I will try to explain to you later on. In the meantime, if anyone want to comment on this, please go ahead.

For now, I am actively searching for a new investment to make for tomorrow.

My 2011 investment year is not over yet!

Interesting isn't?

Anonymous said...

You are done for 2011. If you place a stock on Dec 29 or Dec 30, it will not settle for 3 business days. Which will mean 2012.

I hope you find an investment you like at an attractive yield.

Anonymous said...

SII 8.06 SOLD 8.94= +479
SII 9.36 TO 5.68= -$1,840 -39%
SII 9.95 TO 5.68= -2135 -45%
TIM -40$
BNT -32$
BNS 57.10 TO 50.39= -$718 -11%
HE -106.80
MX 30.25 TO 22.50 = -$798 -25%
FTS -110
PPL 21.6 TO 30.08 = +3655 +39%
JE 14.97 TO 11.28= -$1225 -24%
JE 15.69 TO 11.28= -$1323
YLO 6.2 TO SOLD @4.60= -$752 -25%
BA +502.50
PGF.UN 12.78 TO 10.82= -$417
ENF25.99 TO 28.49= $752
CDL.A -87
DH 19.83 TO 16.74= -$621 -15%
PBH +$567
ECA 29.09 TO 18.74= -$2080 -35%
XRE +$105 + $182
HGY.UN -$220
CFX 14.8 TO 12.09 = -$271
NFI 118.6 TO 63.40= -$1104 -46%
EIF +$559
RSI -$123
GCL -$242
STB +$22
X -$64
DGI.UN 6.67 TO 3.68- -$1797 -45%
WTE.UN -$62
KBL +$190
WEQ.UN +$439
PSLV 21.82 TO 13.50-$832 -38%
EIF 22+$319
FR 19.44 TO 17.12= -$232
ATP -$58
PSLV 16.03 TO 13.50= -164.45
TRP +$87
K 16.68 TO 11.54 = -514 -30%
CNR 65.75 TO 78.91= +236.88 +20%
CNR 80.00 TO 78.91= - $13
FC +$14
ENB +$59
AGU +$7
HZD -$1,248

Now you have other small trade some in the plus, others in the minus that pretty much cancel nce themselves out. Add your dividend, substract your interest and you will see, there's too many losers to break even this year.

Remember your HZD you sold at a 1,200+ loss and then bought K, well K is now down 30% also.

Anonymous said...

On January 1, 2011 you had a portfolio of 136,786 minus debt of $58,300 for a net worth of $78,486.

In November 2011, you had a portfolio of $156,233 and debt of $87,123 for a net worth of $69,110. And your dividend are included in this amount, just like your interest is deducted.

That's a loss of 9,376 plus all the money you invested during the year (your money from your pay, not from margin). I think your loss is closer to $20,000.

The number don't lie. If you start with a net worth of 78,000, you invest 10,000 and finish with 69,000; that means you lost 19,000 in the year.

Anonymous said...

Hi Sunny-Do you consider yourself an investor or a trader?


PS-Happy investing tomorrow!

Anonymous said...

On april 16, you had a net worth of $85,604. Portfolio of $160,575 minus debt of $74,971 Are you still pretending you didn't lose any money this year.

Ruth said...

this is the most interesting figures on any page, i do my math by what i paid for the stock, dividend and then where it is now..subtract is my anonymous is doing..profits are what is left after losses. i am so intent on the capital, that is why i like BCE and Enbridge as it seems everyone else does...i am getting rid of little laggers before Europe breaks up.

Ruth said...

Sunny, you still no matter what are doing so much more than many people your age , however, i still think you should invest in a duplex , rent the other half to pay will want your own roof over your head and why not start now with low interest rates.

Anonymous said...

You can calculate returns any way you want, but you'll notice that mutual funds will give you a yearly returns 3 years, etc.. The same is for the TSX; it's down 11% this year; while the Dow Jones is up 6%.
Fact is most balanced funds are down less than 5% and some funds are even up like the mawer cnd balanced rsp. Even the Mawer cnd equity is up 2% this year while being invested 100% in canadian stocks even though the tsx is down 11%. Now Sunny, can't even tell you how much she's down, because she doesn't keep track of it. I went through her stocks and she posted it here. Too many of her stocks are down 35%, 40%, 45%, even 80% to not have lost money. Her net worth at the start and at the end of the year also proves she lost money. The fact is, she would've made more money being invested in balanced ETF, (25% cnd, 25% us, 25% int and 25% bonds) and a lot less stress about stock picking.

In the next few years, when she's bragging ECA is at 24$, or 27$, she'll only be making money that was hers already. The same can be said for her silver investments and most other stocks she bought this year (just go through the list, you'll see the losers out numbers the winners 2 to 1).

The start price listed is either the price at the beginning of the year (if she held the stock) or the price she paid when she bought (including commission). The close price is either the price at the end of year (if she still held the stock) or the price of the stock (including commission) when she sold. You will see that the figures are pretty accurate.

Ruth said...

HI Anonymous...interesting stuff you have written. i have mutual funds in my rsp's which have not made back what i had in 2007. i have my house money at51/4% GIC for 5 years,,,up this Sept. another GIC up in two years at 4/and a half%. I am MUCH older than Sunny and just entered the markets two years for fun but i do not want to lose. i also keep cash going to use more for enbridge. getting rid of JE when it is close to what i paid and pengrowth ,,,i do not like the mer on my mutual funds......

Sunny said...

I think I put enough efforts at trying to provide an overview for the financial year 2011 and that's more than enough. It was quite some hard work to come with the numbers and calculate the way I did. I am certainly not an accountant (LOL), but what was important in that post was to see that well overall, the situation is stable, that you like it or not.

I am an adventurous investor which mean that I don't hesitate to invest my money and I get it invested all over the place. Yes, K is down of maybe 30%, same thing with PHS.U. That's the volatility of the time and investors just like me have to deal with that.

I have winner picks, and I have so-so stock picks and I have stocks that are not performing well at all. The winner win big enough to stabilize the situation for the ones that have lost in capital. I know it must be very hard to accept but fact is, I am doing quite yell. I am not loosing 11% or something like the TSX index did for 2011. I am actually better than the index, actually.

2012 will bring in some new challenges and we'll see if I can bring in some valuable capital gains in.

Hi Ruth,

You are giving me a nice advice Ruth but see, I would be too stressed about having to give some big payments every month on a mortgage. Owning a home is too much of responsibilities, I couldn't handle it.

Also, not owning allow me a lot of flexibility. I had been able to move from Quebec province to NB very quickly in September. That's because I wasn't owning. I am now in NB, but who knows what could happen in 2012. I could lose my job, I am not protected more than anyone to a layoff.

If it happen, I will have to move quickly and I won't be able to leave if I own a duplex or a house. That's a real big problem for me, and to that lack of flexibility you need to add the responsibilities that I am really not willing to take on my back at this time.

No thank you! :0)

You need to be a millionaire these days to be a home owner.

While waiting to be a millionaire, I prefer to simply invest, enjoy the trading, the market and everything else.

Anonymous said...

Sunny, you're definitely not an accountant, but I am. Let's keep it simple.

If you invest new money during the year, your net worth should increase not decrease.

If you only answer 1 question, answer this one:
How do you explain that your net worth at the end of 2011 is down to $69,000 compared to 78,485 at the end of 2010. Where do you suppose that $9,000 went.

Calculating your loss is easy, you're down 9,000 + the money you deposited in your TD Waterhouse account during the year. That's why it's easy to see you're down more than 11% this year. Now if you find that situation being stable, fine, but you still suffered a loss.

As for your calculation, I already pointed out an error in JE and the same is for YLO. You say you lost 305$, but that's since 2009 as you pointed it out. Your loss for YLO for this year is double that. Nowhere in your calculation do you show the 2,000 loss on Encana, the 1,000 loss on NFI, over 3,000 loss on SII and loss on lots of other of your holdings. Regardless whether the stock is sold or not, that's still a loss.

So you see, you lost more than 11%. You have an creative accounting that company like Sino Forest would love.

I am sure Ruth you would agree that she lost money on MFC and JE this year. These stocks might recover in the future but if your calculating your return for the year, they have to be included as a loss; just like mutual funds do.
Ruth, one suggestion for you would be is get rid of the high MER mutual funds and buy a low fee like the mawer balanced or ph&n balanced with MER under 1%.

Ruth, you also say you have funds that hasn't made what they where worth in 2007. That can be said for lots of stocks that you, Sunny and lots of other investors own. (ECA, MFC, SII, JE, and the list is endless). You have to realize that mutual fund managers can't beat the market with all the resources they have. How do you think people like us or Sunny that take her picks from whoever can outperform the market.

If you look at the stocks that Sunny holds that are down 30 to 80% this year, that's hard to make that money back. Just like MFC tha't down 38% this year. All you'll be doing in the years ahead is making your own money back.

Sunny said...

I explain everything very clearly.

If you don't agree, that's your own problem, not mine.

Anonymous said...

Someone doesn't understand, but it's not me. The question was why did your net worth decrease during the year when it should have increased because you invested more money.

Anonymous said...

I got to tell you, you're very ignorant. No wonder you got fired from BMO. I have a feeling you'll be audited more than once from Revenue Canada also.

It doesn't require intelligence to live at your parents and save money or buy stocks. Knowing the performance of your stocks does require some intelligence which you lack.

Since you didn't lose any money on ECA or SII last year, I guess that means you didn't make any on these stocks today.

I like the way you shut down when you don't have an answer to a question. Can't blame you for having limited financial skills. Keep on depending on your readers for help; you'll need it.

Sunny said...

"Someone doesn't understand, but it's not me. The question was why did your net worth decrease during the year when it should have increased because you invested more money."

My net worth could have increased in a good market condition. 2011 had been even worst than 2008 because in 2011, we had multiple crashes. In 2008, we had one major crash. Following what, the stock market gain in value. I had good result in 2009 and 2010, but not in 2011. If you invest in stocks, don't ever imagine that you can win all the way each years. There's good year, and bad year.

I injected a lot of money in my portfolio in 2011, that's true. In those market condition, knowing how much I buy, I much I trade, I just couldn't make my gain exceed my capital loss. I kind of stayed at the 0%, -1%. Its the over-trading effect and also a bad economic situation effect as well.

I am just very amazed that I had been able to keep the situation stable. Imagine, in 2011, the TSX loss something like 11%.

I invested in a lot of good stuff in 2011, like EIF, TRP, X, AGU, CNR, FC, FR and other. I pretty sure I will be able to hit the 200k in no time and 2012 could be the year. It could not happen as well.

Fact is, you need to be flexible and to be able to survive to the market volatility.

Fact is, I rock the TSX.

As for the second anonymous, well, you know, giving me shit is the way BMO did to make me fail.

I am not a failure, I am not a mediocre Quebecker. I am not full of shit.

Seriously, I am a New Brunswicker, Virgo sign, Acadian girl.

Taught you could lock me down?

You'll have to learn who I am before thinking you can reduce me to your level.

My way to calculate my 2011 non-registered portfolio is absolutely perfect.

Small investors should always do what I do: invest for the long term, not panicking in front of the craziness of the market, hold and always focus on the overall result instead of focusing on the result of a few stocks turning ugly.

BMO fired me because they are a bunch of crackheads and seriously, I deserved much more in life than being just a teller for a Quebec bank full of shit. I deserved more than working for some retarded Quebeckers.

I am the dividend girl, just get that in your so perfectly stupid brain.

Anonymous said...

Over 10k decrease (probably between 15k to 20k); and mostly in your non registered portfolio. That portfolio had a value of 88k on dec 31, 2010. So a 10 or 15k decline on a portfolio of 88,000$ is more than 1% as you pretend and actually double digit loss.

You would think you would like to know the real amount of your loss. Actually the reason I don't pick stocks and just buy ETF or low fee mutual funds is because most professional can't even beat the index. So to think that you can just pick stocks out of a hat without research and beat the index is absurd. Trust me Sunny, you didn't beat the index return this year. I doubt you have beaten it in any of the last 4 years. Whether the market conditions where difficult is not an excuse, they where difficult for everyone.
The fact is, all the money you own is yours. You haven't made 1 penny on the market since you started investing, actually the opposite is true.

The only people that made money this year where the one that concentrated on safe stocks like pipelines, utilities, bce, etc. You had too many high risk stock to even break even.

Sunny said...

My goal is not to beat the index, it's to build a nice capital for the future.

I am not -30% for 2011. I am at 0% return, not -30%.

I did beat the index return for 2011 actually. I certainly beat the index in 2011 :)

I calculated everything in a previous post. Just find it, read it and enjoy the calculation because it involved a bit too much work.

2011 is now behind me, I am now straight ahead. Just keep reading, you might learn something.

Anonymous said...

I never said down 30% I said double digit. More precisely between 10 to 15% loss. Sorry to burst your bubble but your net worth can't go down if your return was 0.

Let's play kindergarden
You have an allowance of 100$ saved up on january 01 2010. your mommy gives you 50 dollars during the year. Your net worth at the end of the year if you didn't spend any (in your case lose on stocks as you pretend) is higher at 150$. If it's lower, it means you spent some (in your case lost on stocks). It's that's simple.

I suggest you go do some upgrading on your math...

I am starting to think that you're a blonde...

HighonDividends said...

Hi Sunny,

You are calculating in a way that is not standard!

to explain to the other are only acknowledging loose or gains WHEN you sell. Wrong.

You should compare the value of your portfolio at year start plus 2011 new money minus year end portfolio value for 2011. A negative resulting number is a gain, positive number a loss.

Tell us the number.

The net result is your gain or loss for 2011.

Anonymous said...

High On Dividend,
I have been trying to tell her that for the last week. It's obvious she lost more than 10,000 has her networth was down 10k as her portfolio update of november 11 and this despite all her money she invested during the year. I figure she invested close to 10k of her money in 2011 and she probably gained 3k from nov 11 to the end of dec which would put her loss at about 17k. If she wouldn't had loss any money as she claims and invested 10k of her money during the year, her net worth should have increased 10k not decrease.

Ruth said...

have to say that i really enjoy the banter in here about finances and Anonymous, your right about some of the JE and that damn Manulife i bought...i am down $1500 on that sucker, JE..down $900 and if it were not for the 5 grand with Pembina and my enbridge, bell aliant i would be behind..good dividends made up for JE losses but hey, they just paid me with my own money. i cashed in a mutual fund today CI ,had a MER of 2.43%,,,where have i been??? i am not sure what to is RSP. i do have etf..i have bmo global infractstucture. i also have rim in my tax free...what a sap i was on that one...holding it for perhaps a chance it might go up...again..have pembina in there to compensate that loss plus dividends...but no money is made. through trial and error , i am finally getting ahead of the game...i dont know all the percentages like sunny but i do know that i want my capital saved.

Ruth said...

am still laughing over the blonde comment. Anonymous, are you an accountant by any chance? i am a blonde and that.

i think it might be best to just have maybe 6 solid stocks, i would hate to give up the market because like Sunny, i am addicted but careful. i have bell aliant..95$ quartly dividend, BCE $50 quarterly Pembina $13 monthly, ENbridge 200 $50 quartly Sea drill american $75 quartly bought it when the exchange was $107 so cheaper stock..100 rogers sugar...just a little fun stock..nice dividend , never grows much. inter pipeline...not doing much but no loss. did Twin Butte oil stock , long shot for me...they merged with emerge oil and gas..i would never do this but owning another house with a house sold and GIC's from it , makes for safe play. bank lady has nearly all her stocks in the loss column.

Ruth said...

sorry are an accountant , i missed that and i am reading the whole page over as it is some pretty darn interesting facts. i heard on business news that enbridge in the 1950's if bought then , paid an average of 10% over the time. i cant see how one can lose with oil stocks such as enbridge, pembina although pembina might be best kept for dividends. i am up over the year as i keep track of all my trades and losses..manulife will be a gift to my son as he will profit when the interest rates go i hate that stock. I dont think my research on JE was enough or i would have sold it at a profit , a nice one too but held for dividends...which have paid for the losses 0$

Anonymous said...

Hi Ruth, good on you for selling your CI Mutual funds. If you want security with some growth, you can't go wrong with the Mawer Cnd Balanced fund (mer only about 1%). It's about 60% stocks, 40% fixed which would be appropriate for you. If you want an etf that's 100% stocks (more risky), look up Ishare World Index (XWD). If you're looking at canadian dividend look up CDZ. These are just 2 of lots of choice out there, but remember capital protection is important. In good years, lots of other funds or individual stock picking will beat a fund like the Mawer Cnd Balanced, but when we are in a crash like 2008, you'll be glad you own a fund like that.

As for pipeline stocks, they are conservative and investors have done right by them in the past. The only thing you have to be careful is the price you pay for them. Right now, investors are afraid, and are turning to safer stocks, but that won't always be the case In 1998, Coca Cola was trading at 90$. Today despite being much more profitable and having had steady growth for the last 13 years, it's still only trading at $70. Fact is, if you bought at the high in 1998, you would still be at a capital loss despite the company having increased their earnings in the last decade.

Now as far as calculating your return (% of gain or loss), I feel if you're going to go through all the trouble of picking stocks you have to at least beat the index these stocks represents. If you don't beat the index, why go through all the trouble of picking stocks, debating whether to sell or keep (EX, JE, Rim, etc) if you could get a better return by just investing in an ETF that represents the index.

You see it right here, you want to sell JE, MFC, RIM if you can get close to what you paid. Sunny wants to reduce RSI, GCL (I wouldn't had bought a lot of other stocks she owns like NFI, STB, DGI,), and I would be doubting lots of her other small stocks. Ask yourself, if you would've bought JE at 9$ or MFC at 11$ in the last month, would you still feel the same about wanting to sell or would you want to keep it for a long time. That's where investors emotion gets the better of them and affect their performance. Following the market every day makes you doubt your decision and hinder your perfomance.

Now if you have most of your money invested in safe place and you want to play (or gamble) a little, I'd rather do it here than at a Casino. But if you'r going to invest here, you need a plan, you need to have an asset allocation and respect it.

As for your TFSA, if I look long term 5 to 10 years from now, I would rather have a stock like MFC or TCK.B in my TFSA than a stock like RIM. Will RIM still be selling phones in 10 years from now. Maybe, but I like the odds better that MFC will still be selling mutual funds an insurance and Tck.b selling copper and coal. And both should be more profitable in a better environment. Just my 2 cents worth, and I could be wrong.

PS: I have all the transaction Sunny did on a spread sheet and I showed her loss or her stocks. It was a lot of work, but the numbers don't lie. Lots of investors with safer portfolio still loss money last year. That's why when Sunny was saying she didn't lose any money despite owning quite a few stocks that where down 30 to 50%, I had to do it. Of course, just going by her net worth was also telling me that she lost quite a bit of money.

If you want to have your return, you should create an portfolio in globe investor. Every time you buy or sell a stock, you enter the transaction. You then get your performance updated automatically. I would be glad to help if you need help, but it's relatively easy. It evens automatically enter your dividends.

The accountant

Ruth said...

Thank you thing for sure is i will not be asking my banker lady..she is under water with 90% of her stocks..i was thinking , i cashed $13,000 roughly, well, BCE earns $51 quartly, it is solid as the teachers' had it and i can sell it quickly too. i have ahead by $600 plus Bell $400 and pembina $4,000 plus and the losers are je, manulife and rim , je has paid me most of it back through dividends though. really O gains. i can remember every stock in my head what i paid for it. ask me the neighbours name , i would forget but stock are imprinted. i am addicted like Sunny but i want to retain capital at any costs..i like to do a long shot once in awhile and i have one now doing great (so far) have u read the Wealthy is interesting and thanks for your advice...i will check on this on the weekend.

Ruth said...

Accountant...u see what happpens with mutual funds is i was caught in the web of having to stay in the fund for so many years or penalty. boy..what i have been taken for over the years, i couldn't count high enough...the best thing i did was all my house money sale is in a GIC over 5 %. it willl always be a GIC no matter son will get manulife as i left him all my stocks...lucky him.

Ruth said... my head is thinking about what you said Coke selling for $90 in 98 and now it is worth $70...that is food for thought as no money is made on that...popular drink...i thought about Pepsico but i have sea drill is at a profit now. my problem is learning to sell at the right time.

Anonymous said...

Ruth, the mawer funds, you are only tied in for 3 months with is very good for a mutual funds. Mutual funds are not made for trading in and out. When you're tied in for 6 years, someone's making money and most of the time it's not you.

As for my example for Coke, it was trading at a P/E of 40 in 1997, today it's trading at a P/E of 17. That's what makes investments complicated, you don't only have to worry about specific of a company, but also the valuation that market is willing to pay at any given time. In 2007, oil companies where given valuation of 20x earnings and more and today, hardly 10x earnings for these same companies.

The accountant

Anonymous said...

Lets face it stocks did crappy in the last tens years. Gold is where the money was being made. A historic return for market index is less than 10%. Mutual funds have a hard time beating indexes because of their MER.
According to Revenue Canada a loss or gain is only made when the stock is sold. So technically Sunny has not loss any money unless she sold.
Just bought some MFC at 10.41. All stock have risk. If you can't handle it go back to GIC's. This is a game for real men/women.
Fear? That's the other guy's problem.
The confused


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