Sexy margin account 911: what to do to protect your asset

The TSX is facing close to the 13 000 points. Can it go any lower? Maybe. I don’t know. But what I do know for sure is that my portfolio is strong enough to go through this. I of course transfer the 5 000$ available of my credit line to my margin account. That bring my margin account usage to 36 000$. Currently, my non-registered portfolio is down to 112 875$.

My portfolio is strong enough to support what’s going on right now, but if the TSX go through another 100-300 points loss, I may at a time received a margin call or – even worst, TD Waterhouse could eventually sell part of my asset without me knowing. Anyhow, I am the one who wanted this and now, my margin is sexier than ever... Sexy like hell.

Some of my assets like BNS, X, PPL, ENF, EIF, SII and a couple other are still doing well. SII is exceeding the 8$ per unit, which is very good. NFI.UN, DGI.UN and a few others are not doing that well. However, I do not regret any of this. What’s going on at this time is a phase in which the market realize what’s going on in Greece and once pass, it will get better. In any way I want to sell my precious asset.

If the situation gets really bad, I could eventually transfer the holding of my TFSA into my non registered account in order to add to the portfolio. But even there, we are only talking of 4 000$. Still, that’s money, and a 4 000$ could add to the value of my margin account.

Transferring asset from the TFSA to the non-registered margin account is an extreme solution. But still, it’s a solution. I don’t plan to precede with the transfer of my TFSA holdings to my margin account unless the situation gets desperate. That meaning a TMX loosing another 200-300 points.

Another option would be to sell what I hold in my US account and transfer the money to the Canadian margin account. At the current time, I only hold Sprott Physical Silver Trust ET (PSLV) in my US broker account. The investment currently worth more than 2 600$ US. I could eventually sell my PSLV units and transfer the US money into my Canadian margin account. This could be another extreme solution. But I wish it won’t go through that point.

The best thing to do at this time is to hold and see what’s going to happen on Monday.

Strong morning opening for Horizons BetaPro NYMEX Crude Oil Bear Plus ETF (HOD) and Horizons BetaPro COMEX Silver Bear Plus ETF (HZD)

Those who tell me I should sell and cash in a capital loss were totally wrong! There will be no capital loss on those 2. The market being so volatile, it’s basically possible to make money out of ETF whose value increase when the stock market value decreases.

Horizons BetaPro NYMEX Crude Oil Bear Plus ETF (HOD) kick in the morning at +3% and Horizons BetaPro COMEX Silver Bear Plus ETF (HZD) at +4%. Currently, HZD is among the top TMX gainers.

But will the gains will be enough to sell at profit? That’s what we are going to see, I am staying in front of my laptop in this beautiful Friday just for that reason. In order to make a profit, I need to sell HOD at +6.65$ per unit and HZD at +7.79$... Crazy. But I will certainly not gamble with my money ever again. My punishment for day trading? Having to stay inside while the day is absolutely beautiful... Seek for yourself... Absolutely perfect summer day.

These days, the stock market is not good at all. My value had decreased of several thousands of dollars. But once the market rebound, I will be doing a lot better. I can handle a non official capital loss as long as my asset remains there in the market, I am safe (more or less). Selling now will be catastrophic and it’s truly not an option. The only 2 things I want to get rid of ASAP are Horizons BetaPro NYMEX Crude Oil Bear Plus ETF (HOD) and Horizons BetaPro COMEX Silver Bear Plus ETF (HZD). If it’s not good for today, I can still wait to sell those 2 at profit. And at profit only.

I had received some hot dividend distribution payment recently: Fortis Inc. (FTS): 31.03$, Group TMX Inc. (X): 40.40$ and Horizons Gold Yield Fund (HGY.UN): 10.84$. No DRIP for those little ones, so for once I was able to “cash the dividend”! The precious cash is greatly needed to pay off the interest own on the margin account money, among other. Extra cash is always welcome.

High quality investment is the key, keep following Derek Foster

Finally, New Flyer Industries Inc. (NFI.UN) closed today session at -5.90%, which is better than the 10% anticipated. I am still holding NFI.UN as well as everything else in my portfolio. I was happy to see First Majestic Silver Corp (FR) going up again. For a little while, FR was around 17$ per stock again and I taught oh no... I can handle the market volatility, but I prefer when things go my way. I cannot command the stock market, but at least, at the end, I know I can get what I want. First Majestic Silver Corp (FR) closed June 9, 2011 session at 18.21$. Not bad at all. I plan to hold this one until I can sell at a very high price.

My silver investment went up again. My Sprott silver investment is absolutely terrific. Both Sprott Physical Silver Trust UTS (PHS.U) and Sprott Physical Silver Trust ET (PSLV) are doing great. My investment in the Sprott Physical Silver Trust UTS (PHS.U) in inside my TFSA. I had invested in some units when the price was at something like 15$. So as long PHS.U do not go below 15$, I will be all good. 

As for my investment in Sprott Physical Silver Trust ET (PSLV), I had made my first investment in it when the unit’s price was at its highest, 22$ US. I invest again in Sprott Physical Silver Trust ET (PSLV) when the units were just a bit more than 16$. So now, a mix of units at 22$ and 16$ equilibrate the whole thing and I don’t regret my last investment in PSLV. It’s actually pretty cool to see my investment growing like that. Silver will gain value again, but at a much slower pace as before.

I had been thinking about it and I find that selling my stocks of Yellow Media Inc. (YLO) was the right thing to do. I reinvested the money in a highly profitable company: Exchange Income Corporation (EIF). Just like YLO, EIF paid a monthly dividend and its chance to grow is better than what it is for YLO. I had been happy with YLO for a while but at a point, YLO was no longer a good fit. A similar situation happens to me with Superior Plus Corp. (SPB). At a point, I could no longer stand the investment in my portfolio. What I had learned from the experience is something I will try to improve myself on: focus on quality holding instead of dividend yield.

Quality holding will grow in value over time and on top of that, quality holding increase their dividend overtime. Despite reading Derek Foster books over and over again, as well as his newsletters, I really needed to experience all this by myself and wake up. Problem being that following Derek Foster strategy is just too easy. The stocks had been picked, everything had been explained. Very very well explains. So there’s no doubt and no failure possible. But that’s it? I mean come on! Well, dividend investment is very easy and keeping it simple is what can become difficult for the long run.

In my case, I did not fail, not yet. It’s just I have a taste for adventure. When your First Majestic Silver Corp (FR) stocks will be kicking the 25$, you’ll thanks me. When you’ll be selling TMX Group Inc. (X) at more than 45$, you’ll thanks me even more. Making money online is difficult, but making money on the stock market can be quite easy and losing money on bad investment like Yellow Media Inc. (YLO) is even easier.

New Flyer Industries Inc. (NFI.UN) is taking a deep plunge on June 9, 2011: -10%

This is not a surprise. New Flyer Industries Inc. (NFI.UN) previously said that 2011 was going to be a challenging year... and I guess their CEO knew what he was talking about. A company like New Flyer Industries Inc. (NFI.UN) is super sensible to the market economy. Their dividend yield has not been yet compromise. While the US experiencing a real slow economic progression, our New Flyer is left with just a few contracts.

Despite it all, I decided to hold New Flyer Industries Inc. (NFI.UN). If our US friends are smart enough to give Barack Obama a second term, we may be able to get out of hell a little bit faster than anticipated. Once the economy will be better, New Flyer Industries Inc. (NFI.UN) business will get better. New Flyer Industries Inc. (NFI.UN) is far of being like one of my previous holding Yellow Media Inc. (YLO) or even Superior Plus Corp (SPB). NFI.UN is a leader in its field and buses are needed for public transportation. It’s a necessity. NFI.UN might be difficult to hold at this time, but it worth the holding, especially now.

When the stock market crash in 2008, it was difficult to imagine the market will ever go up again. Despite everything, the stock market will go up to the 15 000 points (one day) and one day, the worldwide economy will get better. Investing in stocks is ONLY for the long term, and so is New Flyer Industries Inc. (NFI.UN). I will be aside NFI.UN in those difficult time and I will be in the game when the glorious will hit its old 12$ value per stock. It’s all about a matter of having faith or not and I do have faith in New Flyer Industries Inc. (NFI.UN), I trust its executive team.

One day, I will hit the 200k and when it happens, NFI.UN will still be of my portfolio. I am a proud shareholder of New Flyer Industries Inc. (NFI.UN).

No the merger of equals for the Toronto Stock Exchange

Many things on the way. My vacations had been approved, which mean I will be going home for the last 2 weeks of July. This also means I won’t be job searching for a day time job! Yeah! I really didn’t want to begin a job search for various reasons. I am currently busy at monitoring the stock market.

I just received TMX Group Inc. (X) voting package for the merger of equals with the London Stock Exchange Group... I received the big document in French. I will do my best to go through the reading of the documentation. I still have time ahead. But even following the reading of the heavy document, I know I will vote against the merger of equals. I don’t want the Toronto Exchange to be control by foreign authorities. Think about it for a second: Xavier Rolet, a poor French man, will be in control of MY exchange? No way!

TD big boss is against the merger of equals too, by the way. If the merger of equals project succeed, on the first run, Xavier Rolet will be in control of the Toronto exchange, but what about after? What if someone as diabolic as Dominique Strauss-Kahn became the next CEO of the merger of equals? Those are things that Canadians need to have in mind while voting and for those reasons, I will vote against the merger of equals project. Because once the project will be on, Canadians won’t have any power on their exchange. Is it what we want? By their poor leadership, French already ruined the International Monetary Fund (IMF). Is it what we want for our exchange? To become as f up as France is? NO WAY.

NO TO THE MERGER OF EQUALS, NO TO XAVIER ROLET, NO TO FRANCE, NO TO THE LONDON STOCK EXCHANGE GROUP.

I am a shareholder of the TMX Group Inc. (X) and I will be voting NO to absolutely everything proposed in the convocation.

Canfor Pulp Products Inc. (CFX) can be a good replacement to the chaotic Sino-Forest Corp. (TRE)

This has absolutely nothing to do with Sino-Forest Corp. (TRE), but I will always remember what a financial planner working for Manulife Financial once told me about business located in China. That was in 2007, when I invested in segregated funds for my RRSP. Back at the time, I didn’t want to handle any investment risks and despite my young age (I was 27 back than), I decided to invest like a senior, I invested in some Manulife Financial segregates funds, in the following: Maritime Life International Equity Fund (Templeton), Manulife Simplicity Growth Portfolio, Maritime Life CI Harbour Seg Fund, Maritime Life Fidelity True North Seg Fund and Manulife GIF MLIA B World Invest.

We had that conversation after I mention to her that mutual funds invested in Chinese companies that were performing well. At the time, I was closely following a BMO Bank of Montreal mutual fund: the BMO Greater China Class. The fund was performing extremely well and I was impressed by the BMO Greater China Class.

Following what, the financial planner told me that it was because in China, the regulations were not the same when it comes to financial statements and that there was a lot of business fraud in China. Also, all investments made in Chinese companies needed to be handle with a lot of care. Those words never leave me because I was absolutely fascinated by China economy of the time. I still have the same fascination. But I do not invest in anything related to China for the reason that the regulation is not the same. It’s already risky enough to invest, why should you add another risk by investing overseas? That’s why I am mostly Canadian oriented when it come to investment.

Anyhow, today, a very sad story came out about a company that I never really notice before: Sino-Forest Corp. (TRE). Despite investing in stocks, I am in a way very conservative in my investments. I am not very attract to the big shinny names who are extremely well-rank by analysts. Personally, the only analysts I trust are Derek Foster (the guy who stop working) and SP Brunner (a well established blogger). I never lost anything by following those 2. Brunner is quite modest, saying in her stock reviews that they are not stock recommendations but hey, when you read her hot stuff about K-Bro Linen Inc. (KBL), per example, is that really anything else that would do than just invest in the company after reading her review? :0)

Anyhow, until recently, Sino-Forest Corp. (TRE) was performing extremely well, its value had gone from a 5$ to a 20$+ very quickly. It was the darling of everyone... Until someone of the name of Carson Block arrived in the show. Carson Block is a good looking 35 years, gangsters rap fan and a trained lawyer (got the portrait?) who declared that Sino-Forest Corp. (TRE) does not have real trees and that the company is not operating a real business. That might be true, but investors will have to do a trip in China to see for themselves if Carson Block declarations are true of false, because Sino-Forest Corp. (TRE) operates in China only... That Sino-Forest Corp. (TRE) operates a real business or not has any incident for me. I am not an investor of Sino-Forest Corp. (TRE). So why do I care?

Well, this incident surrounding Sino-Forest Corp. (TRE) shows the importance of diversification inside a portfolio. On the stock market, everything and anything can happen. I received bad comments in different occasions, saying that my portfolio is too complex, too bizarre, too diversify. Investing is not necessarily easy and in the investment game, diversification is your best friend.

I once got a French comment post here in this blog saying that investing in 10 companies should be enough. I never respond to the comment, but my way to see investment is this: enough is never enough. My investment portfolio will never be perfect; it will never be diversified enough. I always have in mind another guy, also good looking lol, Jean-François Tardif, ex hedge fund manager who, while being on top of his game, was managing more than 50 companies inside his hedge fund.

Ok, a hedge fund is a fund of millions of dollars, but it doesn’t change the fact that to be successful, diversification is needed. And I think that for a small portfolio like mine, the more it’s diversify, the better my chances are to increase my net worth. That’s personally the way I think.

Now, why should investors risk their hard earned money in companies like Sino-Forest Corp. (TRE) when they can get something so much better in Canfor Pulp Products Inc. (CFX), a BC based company?

I had been holding CFX for a little while. My investment grow of more than 400$ in just a couple of months. Canfor Pulp Products Inc. (CFX) is in the same sector as of Sino-Forest Corp. (TRE). Both companies have interest in engineered-wood products. Sino-Forest Corp. (TRE) does not pay any dividend. On May 20, 2011, I celebrated Canfor Pulp Products Inc. (CFX) first dividend distribution as a corporation.

Not that I want to say here that Sino-Forest Corp. (TRE) is not a good investment, but there always a way to get the best for your bucks right here in Canada. Inside my investment portfolio, Canfor Pulp Products Inc. (CFX) had been among my top performers. Investors need to get to know CFX the way I did to appreciate the power of the stock.