# Argonaut's 5-pack for TFSAs & other starter accounts



## humble_pie

a couple years ago forum member Argonaut posted his concept of 5 leading canadian stocks as being suitable for tfsa accounts.

he had selected the 5 winners from a field of stocks widely held by equity etfs on a choose-the-winners-&-avoid-the-losers basis.

soon, the handy ready-to-go prepack came to be known as argo's 5-pack. Although the individual stocks were to change from time to time, the basic takeout kit would nearly always include a bank, a pipeline, a telco, a railroad & a real estate trust unit. Occasionally, it seemed, a utility would replace the railroad.

the problem has always been that updates for argo's 5-pack would appear here & there on a random basis. Sometimes in tfsa discussions, sometimes in What are You Buying thread, etc.

what i'm proposing is that the 5-pack, which argo uses for his tfsa account, have its own thread so that forum members can find its current version plus comments easily.

i'd like to make clear that other people would comment on the proposed thread, it should not be just the responsibility of Argonaut as that might be a wearisome burden for him. Recipe Monday, which was so great a success that it became a sticky, had one master chef - Brad - but other cooks tossed in amazing recipes whenever they felt like it.

here is the latest iteration of argo's 5-pack. For the first time, td bank has disappeared, to be replaced by bns.



Argonaut said:


> Bought 88 shares of BNS today, was about that much cash available in TFSA. Argonaut 5-pack finally has its new 5th leg. Current iteration, yield of 4%:
> 
> Inter Pipeline
> RioCan REIT
> CN Rail
> Telus
> Bank of Nova Scotia
> 
> The replaced Fortis is down from where I sold it in April, and Scotia is down since then too so it worked out okay. BNS might shed a couple bucks but I think downside is minimal.
> 
> Their recent moves are a stroke of genius. Selling a high value asset in their Toronto tower that doesn't produce meaningful revenue, and then buying ING Canada which increases their assets under management and earnings potential in one fell swoop. Add in all the growth potential in their international business, and I like it a lot. Buy buy buy.


----------



## Toronto.gal

humble_pie said:


> Although the individual stocks were to change from time to time....


He knows well what to buy/what to ignore, and more importantly, the reasons why [not much luck involved]. Argo focuses on what's really important rather than on short-term market noise. New [and not so new] investors can surely learn a lot from some of his basic & intelligent approach!

Good idea to start this thread.


----------



## Lephturn

Thanks humble_pie, I was just searching Argo's posts looking for this very thing!

Hopefully Argonaut will stop by and update us from time to time.


----------



## Jungle

I like the idea but I would add a few more stocks to make sure I was more diversified.


----------



## Argonaut

Hey guys, nice thread!

It's not something often updated, because the ideas and companies behind them tend to stay the same long term. Something new in 2013 with the extra contribution room might be the addition of covered calls. 100 shares of BNS and Telus, 200 RioCan, and 300 Inter Pipeline. I don't know if the latter two have much or any options though, I'll have to check.

Also, after my buys in 2013 I'll be transferring out from Questrade to RBC because I now qualify for cheaper trades. A bonus of this is the ability to put all dividends into the RBC investment savings fund until the next round of purchases. I'll open an RRSP with them too, with the easy gambitting. Perhaps I'll post an American version of the 5-pack at that time.


----------



## humble_pie

argo, why roybank ?

one hears they're not option-friendly


----------



## Argonaut

USD RRSP, aforementioned investment savings account, plus their regular deposit accounts are good for someone who doesn't want to keep any money in chequing account without fees. Non-registered account will be with Interactive Brokers, where most options trading will happen. I'm sure Royal can handle a few calls sold in a TFSA if I decide to do that.


----------



## Lephturn

Argonaut said:


> Hey guys, nice thread!
> 
> It's not something often updated, because the ideas and companies behind them tend to stay the same long term. Something new in 2013 with the extra contribution room might be the addition of covered calls. 100 shares of BNS and Telus, 200 RioCan, and 300 Inter Pipeline. I don't know if the latter two have much or any options though, I'll have to check.


REI.UN has options listed, but almost no open interest or volume. If you trade these you need to know your price, be patient, and wait for somebody to pay you enough. You also need to trade them to expiration - with no open interest or volume to speak of, you won't be able to roll these easily.

Inter Pipeline is similar - extremely thin.

For both of these you need to price the options carefully and make sure you are getting paid enough for the risk of assignment. humble_pie is the expert when it comes to fishing in shallow waters like this.

Agonaut you can use the TMX site to check on the options easily. It's better than relying on RBC-DI!


----------



## Argonaut

I've checked option chains for all four stocks and none interest me for covered calls. $10+ commission is too prohibitive in TFSA. Selling spreads in margin account still the best strategy for me.

Back on topic, what say the forum for a preliminary USA made in America 5-pack? I'm thinking something like:

CAT/DE
MCD/KO
IBM/AAPL
CVX/XOM
PG/JNJ

No overlap with the Canadian version, each a complimentary new sector. I'm least excited about PG/JNJ, perhaps that could be the missing utility spot with an ED or something.


----------



## humble_pie

no, i'd never fish here. These options are scrawny minnows. Some time ago i looked at montreal options for all the major canadian reits & decided against all of them. Bad options markets are the reason i don't hold any reits at present, although in the past i've had dundee & a penny reit named btb.un, which at the time was fine.

where i prefer to fish for options are deep US pools with big fish that are difficult to catch.


----------



## humble_pie

Argonaut said:


> I've checked option chains for all four stocks and none interest me for covered calls.


rail, telus & bns ought to have calls worth selling. A low-volume exchange like montreal, you have to go out at least to january to find decent premium ... in bns, you could take in 190.00 for one single jan 58, or 180.00 after commish ... what's wrong with that ?? do that twice a year & one would be earning more than the dividend.

btw there's something funny about the jan 58, open interest is well over 5000 contracts, sometimes this indicates that an institution has shorted stock but bought large number of calls as a hedge ...


----------



## GOB

humble, I think you might have misread the quote for the BNS Jan 58 call. I'm seeing 0.18, or $18 per contract...

Edit: never mind, I see you're talking about the Jan 2014 contract. Not too bad, but that's quite a wait.


----------



## gibor365

Argonaut said:


> Back on topic, what say the forum for a preliminary USA made in America 5-pack? I'm thinking something like:
> 
> CAT/DE
> MCD/KO
> IBM/AAPL
> CVX/XOM
> PG/JNJ
> 
> No overlap with the Canadian version, each a complimentary new sector. I'm least excited about PG/JNJ, perhaps that could be the missing utility spot with an ED or something.


Instead CVX/XOM, I personally prefer COP


----------



## donald

What about a more pure play on health instead of the consumers(ie:jnj/pg)-----ABT/mdt(mdt just had some insider buying and looks good Imo amateur opinion)
I'm with gibor i I like tobbacco-Pm?MO...even deo(liquor)
I like that list,so many combo's selections in
-industrials.
-consumers
-tech
-oil
-consumer defensive.Could add in the tele co's----T/vz(maybe if you had the canadians already you would be ok,still they are nice yield/income stocks)


----------



## Argonaut

Agree with GOB that 2014 is a bit long of a wait. I also think that BNS will be higher than 58 by that point, otherwise I wouldn't have bought it. May be somewhat interested in selling some Telus @70 strike but the bid/ask on most of their options is a canyon. Could fish for a while, I suppose. 100 shares of CNR is out of reach by way of equal weight, of course. Don't have a $45000 TFSA yet.


----------



## humble_pie

gob is right, i read the 2014 while the jan 2013 58 is only .18 bid. Going out to 2014 as an opening trade would be foolish, as argo says.

a possibility is april 56 (1.13-1.23) or 58 (.64-.72) but one has to juggle this against possibility of assignment if one is bullish over this winter & does not want to be assigned.

however looking at montreal quotes at the tail end of a 3-day holiday weekend, left over from friday as these were, is not going to tell us much about the working tuesday that will open up in a few hours. Usually i see that the options specialists go to ultra-wide spreads in the last 30-40 minutes of trading each day; before a long holiday this gets even worse.

one can see this effect in the telus 2014s. The BAs are impossible. They might persist even after trading commences this am. There's a lot of similar presentations in montreal. When i see pages of quotes like this i go away, don't bother trying anything. Plus it seemed to me that nearer-term telus options had no money in em except for some 64s, which argo probably wants to avoid.


----------



## humble_pie

actually it's pitiful lo volume in illiquid telus options in montreal which caused me to buy bce in the 1st place.

there are US telus options that look good at first glance but watch out, the underlying is the non-voting shares, the CUSIP number is different. US TU is T.A.


----------



## gibor365

donald said:


> What about a more pure play on health instead of the consumers(ie:jnj/pg)-----ABT/mdt(mdt just had some insider buying and looks good Imo amateur opinion)
> I'm with gibor i I like tobbacco-Pm?MO...even deo(liquor)
> I like that list,so many combo's selections in
> -industrials.
> -consumers
> -tech
> -oil
> -consumer defensive.Could add in the tele co's----T/vz(maybe if you had the canadians already you would be ok,still they are nice yield/income stocks)


I wanted also to add ABT in my post, but imho all of them ABT/PG/JNJ are good long term holdings


----------



## Lephturn

humble_pie said:


> actually it's pitiful lo volume in illiquid telus options in montreal which caused me to buy bce in the 1st place.
> 
> there are US telus options that look good at first glance but watch out, the underlying is the non-voting shares, the CUSIP number is different. US TU is T.A.


Telus was an exception I made as it didn't pass my initial screen. It had decent open interest though:
TELUS Corporation*(T) 63.540 T 5,393 

It also had over 1k in volume on the day I took the snapshot Aug. 23rd. Given the low volume period, that's not too shabby.

That said I'm in BCE instead as well. It had roughly twice the volume and three times the open interest on the same day.


----------



## Argonaut

Can one theorize that if Telus gets their share merger through the clutches of this crappy hedge fund, that both options markets will improve? US traders being able to journal their shares and-all-that.

Abbott is a decent choice, though I can't say I know much about health and drugs.


----------



## Homerhomer

Argonaut said:


> Abbott is a decent choice, though I can't say I know much about health and drugs.


ABT is a fantastic run company, however the stock has run up 40% in the recent year and half or so hence the entry point my not be the best right now. Humira, their biggest drug is coming off patent in the next 3 or 4 years so I am not sure if this is the company one can simply buy and forget about.

I like many of the companies in your US 5 pack, CAT and DE are leaders of the industry and I think with both we can get a buying opportunity in the next couple of weeks since they are showing a weakness right now, MCD is one of the very few stocks one can buy and not worry about for a long time, and IMO under 90 it's a good buy, KO another leader but hasn't done much over the last ten years, the entry point may be more crucial here than with MCD which would have been my preference, not sure I would view technology as a long term hold, but the two companies you have picked are cream of the crop, wish I had bought PG couple of months ago when it was below 60, however I would take Colgate in this sector if if corrected a bit.


----------



## Barwelle

For the heck of it, I created a Google Finance 5-pack portfolio. 

Deposited $10,000 into it and divided it up roughly equally between IPL.UN, REI, CN, T, and BNS, on the share prices that GF has on Jan 3, 2012.

Then, I created a portfolio, also with $10,000, and bought XIC with it.

The 5-pack return, YTD: 17.3%. The XIC portfolio: 3.5%. (Both include dividends.)

Nice.


----------



## humble_pie

Barwelle said:


> For the heck of it, I created a Google Finance 5-pack portfolio ... Nice.



exactly
you got it
moral of the story: pay attention to argo


----------



## Argonaut

Yes, I have similar results and was going to post a recap at year end. I've only made one trade in this TFSA portfolio in 2012, swapping Fortis for Scotia which turned out well. In a way you could say it's even sleepier than a couch potato, with half the worry and tenfold the returns of a Belguy-under-the-bed-special.

Signed,
Argo in the Edmonchuck airport enroute to Hawaii


----------



## Barwelle

Wow, have fun Argo. I thought you were from BC for some reason.

As long as these kinds of returns are sustainable. This IS just a one year comparison.

I was reading a personal finance blog (can't remember which one). The writer was predicting that "steady" stocks (which I'd say the 5-pack is composed of) will take a hit once the world gets out of this rut, as people will feel more comfortable investing in riskier stocks, so companies like this will see their share prices lag as they are less in demand relative to the market.

Comments?


----------



## Toronto.gal

Barwelle said:


> The 5-pack return, YTD: 17.3%. The XIC portfolio: 3.5%. (Both include dividends.)
> 
> Nice.


Nice indeed!

And no, no one is bragging, just comparing results & the reason is not to show off or argue, but to encourage investors.

*Aloha Argonaut:* have a wonderful holiday!


----------



## Argonaut

I am from BC, been working in Alberta for a bit. Not the easy money it's made out to be; drilling industry completely crapped the bed this year.

The portfolio drastically outperformed last year as well, so that is two years practical results. Really ten years theoretical results if you backtest the charts. If things change we can always adapt. I don't like to be caught flat footed.


----------



## humble_pie

Barwelle said:


> I was reading a personal finance blog (can't remember which one). The writer was predicting that "steady" stocks (which I'd say the 5-pack is composed of) will take a hit once the world gets out of this rut, as people will feel more comfortable investing in riskier stocks, so companies like this will see their share prices lag as they are less in demand relative to the market.


alas there are pf blogs out there that are too daft & dim-witted to mention.

markets in canada are institution-driven. Argo's picks are huge, stable, enduring companies. Their share prices will be oblivious to a few sales by mister-&-missus-wannabe-gold-miner.


----------



## Barwelle

Argonaut said:


> I am from BC, been working in Alberta for a bit. Not the easy money it's made out to be; drilling industry completely crapped the bed this year.


I work in construction... Everyone seems to be gearing up for a big 2013. Might want to stick around if you can have a piece of that pie. (The work, that is... not our friend humble...)

Looking forward to the year-end re-cap (sorry if I stole your thunder) and more updates to the 5-pack.



humble_pie said:


> markets in canada are institution-driven. Argo's picks are huge, stable, enduring companies. Their share prices will be oblivious to a few sales by mister-&-missus-wannabe-gold-miner.


Good to know.


----------



## Toronto.gal

Barwelle said:


> The writer was predicting that "steady" stocks (which I'd say the 5-pack is composed of) will take a hit once the world gets out of this rut, as people will feel more comfortable investing in riskier stocks, so companies like this will see their share prices lag as they are less in demand relative to the market.


That's no rocket science & it depends on the definition of 'steady', but 'steady' or not, all stocks take a hit, even AAPL. 

'Steady stocks' have an important role in any portfolio, not only for 'steady' income, but also serve as hedges, and not only during volatile periods.

If you are a DIY investor, you will adjust/monitor your holdings as required.

Don't be a conformist.


----------



## cash

Barwelle said:


> The 5-pack return, YTD: 17.3%. The XIC portfolio: 3.5%. (Both include dividends.)


You're gonna need more than 12 months of return history to prove a trend. This merely shows that the 5-pack had a better year, not that it's better long term.


----------



## humble_pie

cash there's much more to the 5-Pack story than a one-year return.

argo has 2 years of excellent returns that outstripped most canadian equity index funds, plus he says he's backdated positively for 10 years.

there's still more. From what i can observe, most of the successful investors in this forum do own the Argo 5-Pack type of stocks & have owned these as core holdings for many years. These are all bedrock canadian quality stocks that typically pay sound dividends. There can, of course, be more than 5.

the same names - banks, telcos, a few reits, big energy, pipelines, a few cyclical stocks in big ag or precious mining, sometimes a railroad - these same names keep ricocheting around this forum like a chorus. Investors have owned these stocks much longer than the 10 years you are mentioning.

one feature that divides a chosen 5-Pack type of account from a generic index fund is that losers can more easily be avoided in the former. Argo has pointed this out several times.


----------



## doctrine

It's hard to disagree with his approach; I only 2 of the 5 in his list but my methodology is similar. These solid Cdn stocks have been working for decades, not years, so there is no reason to not expect solid results. Perhaps not 17% every year, my personal target is 10% - 5% capital gains and 5% dividends, which seems to be generally very achievable.


----------



## GoldStone

humble_pie said:


> the same names - banks, telcos, a few reits, big energy, pipelines, a few cyclical stocks in big ag or precious mining, sometimes a railroad - these same names keep ricocheting around this forum like a chorus.


You mentioned energy and mining. It just happens that Argo's 5-Pack (in it's current incarnation) contains 0% energy and 0% mining.

TSX Composite, on the other hand, has 25% weighting in energy and 18% in materials.

Sector performance YTD:

TSX Energy: -5%
TSX Materials: -6%

Kudos to Argo for staying clear of the two losing sectors in 2012.

*Argo:* what does your crystal ball say about energy and materials in 2013? Yay or nay?


----------



## cash

This idea has some merit, but as a devoted Couch Potato, I cannot jump on the bandwagon. I recently read an article featuring the work of a top Russian fund manager, and this 5-pack seems to have similar results with a comparable strategy. The article is below:

******************************** 
www.dailymail.co.uk/news/article-12...s-94-Russia-bankers-investment-portfolio.html

LUSHA THE CHIMPANZEE OUTPERFORMS 94% OF RUSSIA BANKERS WITH HER INVESTMENT PORTFOLIO

They are paid a fortune for their ability to make complex decisions about where to invest millions of pounds every single day.

But perhaps the job of an investment banker is not quite as difficult as it might seem.

A chimpanzee in Russia has out-performed 94 per cent of the country's investment funds with her portfolio growing by three times in the last year.

Moscow TV reported how circus chimp Lusha chose eight companies from a possible 30 to invest her one million roubles - around £21,000.

'She bought successfully and her portfolio grew almost three times. She did better than almost the whole of the rest of the market,' said editor of Russian Finance magazine Oleg Anisimov.

He questioned why so-called financial whizz-kids are still receiving hefty perks for their expertise .

'Everyone is shocked. What are they getting their bonuses for? Maybe it's worth sending them all to the circus.' 

The money-wise mape was given cubes representing different companies and asked: 'Lusha where would you like to invest your money this year?'

Pausing briefing to think, she then picked out her eight cubes.

Lusha's top picks included banks where shares soon rose a stunning 600 per cent after large-scale support from the Kremlin to weather the crisis. 

She missed out on telecommunications which scored a 240 per cent profit, but went for mining companies, up 150 per cent. 

The Russian media heaped more scorn on the investment experts saying: 'Lusha made all serious analysts look like clowns.' 

One broker hit back: 'If the experiment had taken place a year earlier, the monkey would not have had enough money to pay for her bananas.' 

And her trainer Svetlana Maksimova admitted: 'Money questions should be decided by financiers and politicians. If monkeys get into it, our economy will collapse at once.' 


********************************


----------



## doctrine

I don't like any mining stocks, because few of them pay out enough dividends, which is more or less stemming from the rising costs and perhaps highly/fair valued shares (certainly not a discount). 1-2% dividends? Possibly no or negative cash flow over the last 5-10 years because of expansion and cost pressures? No thanks.

Energy stocks are much more interesting, at least there are lots of candidates with 5%+ yields that aren't beyond 100% DPR - some security in case oil doesn't rise 25%. Of course a 25%+ rise in oil would be like magic/free money for many oil companies - and I'm not certain that's the case at all for the mining sector.


----------



## humble_pie

goldstone i did mention energy & mining but strictly in the context of stocks named & owned by successful investors in this forum. Stocks mentioned repeatedly in this forum. Stocks whose names ricochet like a chorus in this forum. Those 2 paragraphs in my post did not apply to argo's 5-pack but to these constellations of out-performing canadian stocks that have been owned by wealthy investors for many years.

by now, all forum members should know who these investors are. All should have valuable, insightful information about their stock picks. There is no need to repeat their usernames. Any person can construct some of the basics of a successful portfolio with some of the hints they have generously offered. Most of the stories are eerily similar. Buy-quality-stocks-in-sectors-undergoing-fire-sales-plus-sell-occasionally-it's-a-lifetime-discipline.

i admit that i did range a nanometre or 2 off the strict topic of argo's 5-pack to include a wider group of core canadian stocks owned by a larger population of cmf members. But i'm the founder of this thread - in fact i am the person who baptized argo's original selections with the brand name Argo's 5-Pack - so perhaps some could say i have that right.

turning now to mining & energy, they are the bedrock components of the canadian economy. The sectors are highly cyclical. Sensible investors know this & adjust accordingly. Argo may happen to be entirely out at present. However i for one believe the energy sector is presenting numerous long-term opportunities both in canada & in certain overseas regions, so a useful question is the very one you are asking: What is the outlook for these beaten-down sectors at the present time ?


----------



## Toronto.gal

humble_pie said:


> 1. Those 2 paragraphs in my post did not apply to argo's 5-pack but to these constellations of out-performing canadian stocks....
> 2. But i'm the founder of this thread - in fact i am the person who baptized argo's original selections with the brand name Argo's 5-Pack.
> 3. However i for one believe the energy sector is presenting numerous long-term opportunities both in canada & in certain overseas regions, so a useful question is the very one you are asking: What is the outlook for these beaten-down sectors at the present time ?


*1.* I had understood perfectly well that the energy/mining comments had been in general.
*2.* Indeed, and I believe Argo's fame rose as a result. :biggrin: I'm pretty sure many found this thread useful.
*3.* Key words: beaten down[present]/long term. 

Canada is the 2nd largest country by land mass; sparsely populated & with vast natural resources, hence a large exporter in energy & other resources. Energy prices are indeed low as noted above, but it won't stay low forever and demand will also increase.

The courageous/sensible investor will understand the implications of what is happening in other emerging economies and how it will directly impact us.

Those interested might want to read 'The Global Competitiveness Report -2012–2013'.


----------



## Argonaut

Hey guys, just a quick note that I do own miners - Silver Wheaton and Argonaut Gold right now. Both bought at good prices, $27 and $4.75. But I wouldn't include them in this TFSA type account. I try to keep a yield around 4% in the 5-pack just because. Different sort of aims for different parts of one's portfolio. I did own Spartan Oil in the energy space but have since sold out of that. They are undergoing some weird merger or possible hostile buyout. I would have to dig around to find another energy play that I like as much. No time right now. Personally I don't really like any large cap gold miners or Canadian oil stocks. These sectors are more growth oriented and it's easier to grow when you're small.

Humble Pie summed up the aims of his dubbed 5-pack quite well. The idea is that quality will outperform non-quality over the medium and long term. So pick the quality stocks and discard the rest. How to differentiate these takes some time and research, and maybe a little instinct.

Found a little time to post this while I'm cooking food. Talk to you guys in the New Year.


----------



## Jungle

I selected top quality US stocks on a google portfolio. They've all underperformed the S&P 500. I almost sold my index funds for that.

KO
MCD
MSFT
CVX
PM


----------



## Spudd

Jungle, MCD twice?


----------



## Jungle

Spudd said:


> Jungle, MCD twice?


Sorry, correct now. Replaced with CVX.


----------



## humble_pie

what do these 4 US stocks have to do with the 5-pack, which presents 5 carefully-selected companies from another country & another currency.

3 out of these US 4 are tired outdated product stocks from yesteryear. They might have good dividends - it doesn't sound as if dividends were included in your calculations - but growth prospects in ko, pm & msft are thought to be limited, although ko & pm are said to fly in 3rd world countries.

the big challenge is stock selection. A 5-pack investor needs a good eye & a nimble wrist, otherwise he could just follow argo.


----------



## Jungle

This was my american 5 pack- but I never bought. 
The stocks returned 2.74% without dividends so far, underperforming s&p500 by a lot.

This is to show that there is a risk you can underperform the benchmarks- even with great stocks.


----------



## humble_pie

these are not great stocks. These are, as already mentioned, tired outdated stocks purveying yesterday's products. There's no growth in sight. Talking about the original 4 in the first list, when macD was repeated.

it's always easy to jiffy up a list of 4 underperforming stocks. Let's not waste time doing this. 

btw if you add dividends & adjust for chevron's performance which has suddenly been thrown in, you'll get a better figure from your list ... but it still won't match the canadian 5-Pack .


----------



## Barwelle

Humble, I remember Argo made a preliminary list for a US 5-Pack... went back and took a look at it. I'm far from venturing into US stocks myself but I thought it was worth bringing up for discussion how you have now labeled two of his picks as tired and outdated.

From post#9:



> Back on topic, what say the forum for a preliminary USA made in America 5-pack? I'm thinking something like:
> 
> CAT/DE
> MCD/KO
> IBM/AAPL
> CVX/XOM
> PG/JNJ


----------



## donald

I'm not sure why anyone would bag pm.....I bought 100 shares in mid 11 and granted its come down im still about +2200.00 or so cap appr.and nearly 144 or something like that(roughly,off the top of my head)a quarter with the div

I love pm for a core.........I don't buy that smoking is going away anytime soon.

Im also in the green about 700.00 on 5o shs of mcd(bought mid 11)Like that one long-term also......Im also in the green on ko

Coke.phillip morris,mcdonalds.....nothing wrong with these.

Why do you dislike humble?Im making abit of green with them thus-far(and im not alone)


----------



## Jungle

All of those us stocks can be back tested too.. we all know there's some amazing returns in the past. Will they continue to beat the benchmark going forward? They did not this year. 

Will the argo 5 pack do the same thing?


----------



## humble_pie

actually i said 3 out of the original 4 were tired old product vendors. As it happens, i do believe this, so these stocks are not for me; but at the same time i'm happy to see that one or more of them might be just the ticket for some investors.

i'd like to take em up one at a time, but 1st to say, if i may, that no one here ever did develop a handy 5-pack list for the US of A. I believe this would be a great deal more difficult to do, given the size of the economy. Perhaps that's why argo never pressed forward with this project.

barwelle you can see argo's signature touch in the picks he made in his tentative US list. There we have aapl & pg. What was aapl at the beginning of 2012, something like 400? so here we have a magnificent appreciation of 30%. Meanwhile pg was doddering in the 50s but it's now north of 70, ie up more than 32%. We can see today that an argo-picked US 5-pack probably would have had a good chance of shining bright, unlike the tired old list of has-beens, which have not been "great stocks" for many years imho. They're OK for dividends & there'll always be consumer demand for their products, but future strong growth & good gains in share price i just don't see.

taking up the has-beens one at a time:

- msft stock has gone nowhere for years now. It is not a radical idea to say it was a once-upon-a-time fairytale great company but now it's been left in the dust. I'm mindful of those who say the world is moving towards smaller, localized & unfortunately more disparate networks ... farewell microsoft farewell dell farewell intel hello apple quaalcom & FFIV ...

- i can't see growth for ko in industrialized countries, not with the powerful moves against unhealthy soft drinks & against plastic-bottled waters that we're seeing everywhere these days. Bottled pop sales are growing in 3rd world countries but i for one am repelled by a company that would take this route, with no regard for the health of the local people especially their youth nor for their environment after the tossed plastic bottles pile up.

- 'baccy stocks won't see any growth in prosperous industrialized nations either, imho, but can expand in 3rd world regions. Same story as for bottled soft drinks. Just the huge growth in the youth population in many of these countries will swell consumption of tobacco & soft drink products; on top of that it's easy to market a sleek & prosperous image to youth in order to addict or quasi-addict them to the products. Pretty repulsive story imho.

- this leaves macDonald which alone appears to have gotten the memo in north America that they should be delivering healthy foods. At least the macD's i see now have some decent menu choices & are careful to offer salty, greasy, sugary foods on the side, not mixed into the main menu.


----------



## donald

I like PM because of your last 2 sentences on baccy stocks.....The world by and large aint getting prosperous(baccy has always been a product used by the poor/working poor)a group that is growing fast.Don't forget the billions there partners make(ie:taxes)the gov's of all countries love there tax $.Not something im betting against.Mo-Long for the long haul on morris and co.


----------



## humble_pie

definitely do not stop w philip morris there's plenty money waiting in brothels, poppies, street drugs, online casinos & smuggled guns.


----------



## donald

No doubt humble........one has to not look further than Mr grand daddy aka-chapo Guzman---Think he is giving the koch brothers a run on the forbes 400.


----------



## brad

This is now moving into the realm of social screening for investments, which is a topic I've long grappled with.

On one level, buying stock in these companies has little effect on them and you're not really "supporting" their evil actions because in most cases when you buy shares on the market you're buying them from some other investor who's selling them. The money goes in the investor's pocket, not the evil company's. You are helping the evil company in an indirect way by helping to maintain demand for their shares (and thus propping up the price, in no matter how small a way), but it seems like a very indirect connection to me. It would be interesting to look back at the investment boycotts during Apartheid, for example, to see the extent to which share prices were affected directly by the boycotts versus indirectly by the publicity surrounding the boycotts. I'm sure someone has done that kind of analysis, although I'd be hesitant to trust socially responsible investment firms that tout it as evidence that social screens have an impact on the share price of avoided companies.

Anyway, there are companies in the ETFs I own that I am not thrilled to own shares in, but I rationalize it by my argument that they're not really benefiting very much from my ownership, because the money I paid for those shares didn't actually go to them directly. I doubt this rationalization would hold up to much scrutiny, though ;-)


----------



## donald

Ill admit,owning pm doesnt give me the warm and fuzzies but-in this world we live in---im going to go with what works.
I realize they are a dangerous company but it is what it is.....the world is a cold place---can be....

Mcdonalds is prob more dangerous than pm(the epidemic in obesity,type 2 diabetes)Number 1 cause of death now.

But where does it end,some say enbridge is evil(they have a hate page in social media ect)....the list can go on forever.


----------



## brad

My preferred "screen" is a positive one: supporting companies that are doing things I want to support, but again I don't feel like I have much impact on that when buying stocks on the market. Eventually I will be switching a good chunk of my portfolio over to impact investing, which involves directly investing in companies working in areas I support (not via the stock market), but that's basically venture capitalism with all its attendant risks (and potential for reward). 

I'm not a big fan of negative screening because it's too black and white. Many companies do reprehensible things but also do incredibly helpful useful things. But people like to paint corporations in black and white, as purely good or purely evil, because it's easier to oversimplify and treat the world as a fairy tale.


----------



## Jungle

Let's see if we can beat the S&P500 with those stocks. We'll even put two of the best stocks in the same portfolio to boost returns. (hind sight investing can be fun!) 
YTD S&P500 +16.85% (includes dividends)


Apple
JNJ
CVX
KO
CAT

15.76%, includes dividends 

DE
MCD
IBM
XOM
PG

+6.07% YTD, includes dividends.

Nope, can't beat it YTD. Maybe if apple returns to what it lost, it might beat s&p 500. 

How do we know which one to pick next year?


----------



## Argonaut

Jungle: The US 5-pack is irrelevant, because neither I nor anyone else invested in it. It doesn't matter unless real money is on the line. Only a one-post musing by myself, but something I wouldn't mind employing given the right prices at the right time. I think the US market is more price-based when buying compared to the Canadian market; i.e. buy CAT at $80 and sell at $110.

Let's take a look at the Canadian version this year. In 2012 my TFSA returned an even 18% after commissions and dividends. This is with holding Inter Pipeline, RioCan REIT, CN Rail, and Telus through the whole year. I sold Fortis in April and used that money (and more from dividends) to buy Bank of Nova Scotia in August. In comparison the benchmark as represented by XIC returned 4.25% without commissions or dividends. The yield on it is about 2%? So let's say 6.5% for the year.

Of course, the peanut gallery will always say that one year does not matter for performance sake. So we'll look at the 5-pack since inception, when I dumped the full amount in my TFSA on March 1, 2011. Since then, it has returned an annualized 18.1%. So the performance was exactly the same in 2011. As we know, the TSX had a woeful 2011. Including commissions and dividends, a portfolio constructed with XIC since March 1, 2011 has returned an abysmal -3.3% annualized.

Now, thoughts for 2013. RioCan is the dog of the pack, and I wouldn't mind selling it. The problem is finding a replacement. Inter Pipeline has been the star since inception, and is starting to become somewhat overweight. I do not think the portfolio will return 18% again, based on the momentum of these stocks likely slowing down as their yield gets lower from higher prices. I'll have to figure something out to maintain performance. Perhaps there will be more than one trade this year.


----------



## saad1253

Hi Argo... so which stocks did you decide to go with to replace Interpipeline and Riocan


----------



## blin10

imo I wouldn't replace ipl, it might easily double in the next 5 years, track it vs tsx, it's holding strong when tsx dropping, must be very good value there for it to stay like that...


----------



## PatInTheHat

saad1253 said:


> Hi Argo... so which stocks did you decide to go with to replace Interpipeline and Riocan


Quite interested in this as well


----------



## Jungle

not a good year for this, portfolio is down -0.73 YTD no divs.. 
In defense, tsx is 0.87 no divs..
all equity couch potato is up 13.5% but includes us and int.. maybe diversification is better long term?
I know this portfolio had a great run post 2013 but the reit and telecom are killing it now.


----------



## Argonaut

Howdy, folks. I took a break from trading in 2013, and just topped up and held what I had which was essentially this portfolio. Definitely love a look back at the year and planning for the next year ahead.

XIRR on my own TFSA in 2013 was 15.4%, and from a quick calculation it looks like the benchmark XIC was 13.1% including dividends. I use this as my benchmark because it's an all Canadian stock component. Obviously the S&P500 was gangbusters this year but I'll only use that separately if and when I start picking a set of US stocks. Since the portfolio inception in March 2011, the XIRR on the 5-pack is still running at a 17% annual clip. XIC is down 3% nominally without dividends in that timeframe, so I still feel comfortable holding this in all market conditions.

Unfortunately I was underweight CNR because I never found opportunity to top it up, too much thinking there, but it was the big winner of the five this year. RioCan was the big loser at -10% (the pain halved by distributions), and has the dubious distinction of being the first stock in this portfolio to post an annual decline. All sentiment on REITs is negative, but I think there's still a place for one in the 5-pack. The distributions are steady and relatively high, and real estate is a simple, long-lasting business - the kind that I like. The current list:

Inter Pipeline
RioCan REIT
CN Rail
Telus
Bank of Nova Scotia

It has an aggregate yield of around 4%, with all companies growing their dividends this year. RioCan is still my least favourite name, if only because the other four are such high quality. Like I said, I don't really have anything to replace it with though. Will probably top up these five again with the contribution room in 2014. The cool thing with Questrade now is that I can start dumping the dividend money into something like XSB throughout the year due to free ETF purchases.


----------



## humble_pie

oh good. Argo is back. Happy new year!

argonaut it remains to chin up & start preparing for that CFA. It's a long, long grind. But you'll need it in order to become the $1 million buy-side analyst that you deserve to be.

btw you're still holding everything common stock in the 5-pack? planning to invest only dividends into bond holdings? we are on the heights m'boy, the heights

(signed)
the momma maremma


----------



## fatcat

Argonaut said:


> Inter Pipeline
> RioCan REIT
> CN Rail
> Telus
> Bank of Nova Scotia


good to see you again argo

why did you choose BNS over the other banks ? 
why IPL over ENB and TRP ? and why T over RCI.B and BCE ? ... 
i doubled my holding in TD and also CNR, kept my T the same and don't own the rest ....


----------



## Argonaut

Yes, good thinking. I plan on going back to school for the MBA this year, and then likely taking the CFA after. It'll all be a hit to the networth but I imagine pay for itself in short order. Time to stop playing around in the oilfields before I get hurt or something.

Signed,
Frostbitten Fingers (hard to type)


----------



## Argonaut

fatcat said:


> why did you choose BNS over the other banks ?


BNS has the most international exposure and therefore the most potential for growth. This hasn't fully played out yet either.



> why IPL over ENB and TRP ?


ENB and TRP are caught in red tape conundrums and are larger more mature companies. IPL is the younger company, and again, has more potential for growth. They are turning into the biggest pipeline in the oil sands. It's done fantastically well for me since 2010.



> and why T over RCI.B and BCE ? ...


I have Telus products so it makes me happy to pay my phone bill every month. Also, they have a bigger presence out west and that's the higher growth area of Canada. From what I've seen I like their quality of service better than the others too.

There's a growth theme in all three reasonings here. It's not my first consideration when picking stocks, but it's often my next.


----------



## londoncalling

Happy New Year Argo. Thanks for the 5 pack update! I haven't finalized the XIRR on my energy overweighted 20 stock portfolio yet but I am sure it won't be near the 5 pack (thanks to my purchase of Potash corp just before the Belarus announcement). Probably end up around 8.5-9% which meets my goal of exceeding inflation by 3-4%. I missed my chance on Telus this summer and do not hold any Canadian telcos (got some European exposure instead at a great price). For banks I hold BMO and RY and would like to have all 5(6) someday. For railroads I would have loved to got CN or CP (before Hunter took over) but I found them a little too steep in price then so opted for CSX which has treated me ok(nowhere near the Canadian Rails) and given me a little diversification. As you mentioned REITS are taking a pounding. I haven't heard of anyone that did well with REITs this year. If there is I wish they'd share their secret to success. I still hold IPL which as you know is poised for further growth IMO and has none of the hangups mentioned above. I hope for another div increase from them this year. I hope to pick up another Canadian bank this year and a Canadian Telco with new funds to bring down over exposure to commodities. For the time being I will stockpile some dry powder in hopes of a pullback.


Stay warm and invest those oily bucks wisely:encouragement:

Cheers


----------



## Eder

Hi Argonaut...glad you are doing well. My youngest boy is up in Fort Mac making his fortune as well. Good luck with the MBA....I doubt you will need luck though.

I hold a lot of IPL due to yours & others postings here and want to thank you for that...it has been a sweet stock...especially when it flash crashed.

I sold my CNR at about $72 awhile ago and was properly chastised by TGal & others and have been unable to find another entry level for a railroad so I have opted on some trucking stocks as a proxy. So far it hasn't worked out well.

Banks & telecoms in Canada are great and I look forward to an easy 10% + divys in the coming year. I like BNS as well but also hold RY, BMO, CIBC and Western for various reasons other than greed.

I don't think I will commit more money till the probable upcoming "June Swoon" and will focus on quality REIT's and miners providing tapering continues without a corresponding face plant in the TSX.

Good Luck to all here in 2014...dont buy any BreX's!


----------



## Argonaut

Hey london, are you not feeling a bit too heavy with 20 stocks? Surely you like your #1 stock much more than your #20? If it's split evenly between Canadian and American listings then maybe, but even then I'd feel better with 10-15 stocks.

Eder: Yeah, it's easiest to just hold onto the high quality names and not worry about them too much, topping up as necessary.


----------



## Dave

Hi Argo,

Happy New Year and welcome back 

I also own those stocks and had a nice run, although I only have a small position in IPL because its high dividend payout ratio makes me nervous. Not sure if I will be adding more for this reason.

Dave


----------



## Argonaut

Dividend payout ratio for IPL was 70% in the last quarter, down from 76% in the previous quarter. They're also increasing the dividend, and at a continuously higher rate. No concerns from me there. They've been nothing but shareholder-friendly to me since I bought them at 13.76 and they announced a distribution increase the next day!


----------



## gibor365

Argonaut said:


> Hey london, are you not feeling a bit too heavy with 20 stocks? Surely you like your #1 stock much more than your #20? If it's split evenly between Canadian and American listings then maybe, but even then I'd feel better with 10-15 stocks.


It depends  I have more than 20 stocks and I like my number 1 stock BCE and my last number stock - LMT or XLNX equally  , same way like I like equally Holland cheese and German beer


----------



## londoncalling

gibor said:


> It depends  I have more than 20 stocks and I like my number 1 stock BCE and my last number stock - LMT or XLNX equally  , same way like I like equally Holland cheese and German beer


Too funny Gibor

@ Argo

20 is definitely a lot more work to monitor. At any time I have about 30-40 on my watch list. May seem like work but oddly enough I enjoy researching companies. (Just wish I was as good at it as some others here :tongue-new With a portfolio of 70% equity and 30% fixed, my top 5 positions currently make up 34% of the total portfolio(including fixed) wheras my bottom 5 barely make up 5%.
Although the number of positions may be large they are not equally weighted by any means. I have about 5 or so small or micro caps that I consider to be more speculative and volatile and as a part of my risk management I own them in a small % of total allocation My initial IPS was set to hold 15-30 stocks in an attempt at being further diversified(by sector,country, cap size etc). Unfortunately, I am heavily weighted to energy at the current time. Over the next year I hope to bring my energy exposure down by adding new funds to other sectors. 

As always I appreciate the words of wisdom shared by members of this forum. It often makes me step back and take a closer look at what I am doing.

Be Well!


----------



## Toronto.gal

Eder said:


> 1. Good luck with the MBA....I doubt you will need luck though.
> 2. I sold my CNR at about $72 awhile ago and was properly chastised by TGal & others...
> 3. dont buy any BreX's!


*1.* Ditto! And nice to see you Argo.

*2.* I don't remember that.  I do have a big regret, that of not having backed-up the truck with CP when it fell below $50 in late 2011. :stupid: :stupid: Btw, wasn't it you who said duopolies are no brainers?. Whoever it was, I wish that comment had been written at that time, and/or that I would have remembered it from my earlier readings.

*3.* Taking a small gamble [with winnings] with a stock under $1 [hopefully won't have the Bre-X ending].


----------



## Argonaut

T.gal, you've got horse-sense. Maybe a similar opportunity to back up the truck on Potash Corp now? I know gold stocks are silly cheap, but we could be in the second year of a fifteen year bear market for gold and silver. Which I wouldn't mind, good for accumulating.


----------



## fatcat

on POT, i think there is a feeling that russians and ukrainians are playing patty cake and exchanging phone numbers
POT has almost come back to my buy price and it seems to want to go higher


----------



## gibor365

fatcat said:


> on POT, i think there is a feeling that russians and ukrainians are playing patty cake and exchanging phone numbers
> POT has almost come back to my buy price and it seems to want to go higher


I bought a little bit POT for $30.17 on last big pullback, but even with cuurent price with P/E below 15, 4.3% yeild, 61% payout, it looks pretty attractive.... may increase position...


----------



## HaroldCrump

That P/E can change significantly over the next year or so, depending on what happens to the cartel situation.
Also, they had been increasing the dividend very aggressively in the last 3 years, but that will probably not be the case in the next little while.

In other words, backward looking metrics like P/E, yield, payout ratio, etc. are not a good way to value this stock right now.
You can still buy if you like, of course, but be careful of these backward looking metrics.


----------



## fatcat

HaroldCrump said:


> That P/E can change significantly over the next year or so, depending on what happens to the cartel situation.
> Also, they had been increasing the dividend very aggressively in the last 3 years, but that will probably not be the case in the next little while.
> 
> In other words, backward looking metrics like P/E, yield, payout ratio, etc. are not a good way to value this stock right now.
> You can still buy if you like, of course, but be careful of these backward looking metrics.


good points harold ... i would be happy if they moved back into the green for me (they are very close) and at least kept the nice dividend, in other words treaded water for a bit because i think they will be a good stock to own in a few years


----------



## Toronto.gal

Argonaut said:


> 1. T.gal, you've got horse-sense..... Maybe a similar opportunity to back up the truck on Potash Corp now?
> 2. I know gold stocks are silly cheap...wouldn't mind, good for accumulating.


*1.* Too much horse-sense I'm afraid, however, I wasted no time adding [under USD$30 & $29]. Now the shares are accummulating by themselves & just trade them.
*2. *'Silly cheap' is right, so I have had no fear accumulating, especially since I do so with trading profits of same.


----------



## Killer Z

I love the stocks in your 5-pack Argo, but how is one to bite into any of them at their current prices? RioCan is the only one not snuggled up to its 52week high, but as you mentioned, it is your least favorite of the 5 ........I have been eyeing IPL and CNR for a long time but just cannot find a good time to move in. Maybe one needs to just take a small position to begin with and add to it when the opportunities present?


----------



## fatcat

Killer Z said:


> I love the stocks in your 5-pack Argo, but how is one to bite into any of them at their current prices? RioCan is the only one not snuggled up to its 52week high, but as you mentioned, it is your least favorite of the 5 ........I have been eyeing IPL and CNR for a long time but just cannot find a good time to move in. Maybe one needs to just take a small position to begin with and add to it when the opportunities present?


just dca over the year


----------



## doctrine

BNS isn't at its 52 week high and looks pretty good with a 4.1% yield and a P/E of 12.


----------



## marina628

Been DCA into this for almost as long as the thread except I didn't but the REIT as we own lots of real estate.I look at BNS fall this month as a good buying opportunity .Would be interested to hear from Argo if he ever sorted out a US 5 pack .


----------



## Argonaut

You can DCA, but these are the sorts of companies that are best bought in the past, and if not, right now is good too. Not looking to trade here. It also thrives in a market like this, actually being positive year to date amidst the sea of red. My favourite kind of market. BNS has tanked (good buy under $60 for sure) but IPL and Telus are holding up.


----------



## My Own Advisor

I like your thinking Argonaut.


----------



## gocanada

With a yield of 1.39%, is CN Rail still a good option as something to have in a small (4-5 stock) dividend portfolio? I'm new to dividend stock investing (have following the Couch Potato index strategy to this point and looking to diversify), so I apologise if I am missing something about CNR.


----------



## My Own Advisor

@gocanada,

Check the chart 
https://www.cn.ca/en/investors/stock-information

Don't always focus on current yield.


----------



## gocanada

@MyOwnAdvisor,

Is it the increase in stock value you are pointing at? ie. With CN Rail, the benefit is there both in capital gains, and in dividend distribution?


----------



## fatcat

bill gates owns 2% of cnr which makes him the 9th largest shareholder
it represents 4% of his portfolio
thomson reuters rates it a 10
it's a great holding for your industrial sector
it has been minting money for me lately (despite the recent pullback)
i plan to hold for a long long time

as you know buffet owns burlington
they both bought a long time ago and clearly had excellent instincts and data


----------



## My Own Advisor

@gocanada,

Based on your question, it seems you questioned the low yield of CN, within a (small) dividend portfolio. I think CN is a stud.
The link was to the dividend chart, showing how consistently the increases have been. 

All this to say don't focus on higher yields, it's total returns that matter with or without dividends.

Like fatcat, I plan to hold it for a long time. I'd like to see a small market crash to get some stocks cheaper, including CN.


----------



## gibor365

gocanada said:


> With a yield of 1.39%, is CN Rail still a good option as something to have in a small (4-5 stock) dividend portfolio? I'm new to dividend stock investing (have following the Couch Potato index strategy to this point and looking to diversify), so I apologise if I am missing something about CNR.


imho, CNR is too expensive right now with 21+ P/E ... maybe NSC is better railroads play now....


----------



## humble_pie

gocanada you have got the right idea about holding the dividend payors in non-registered in order to benefit from the tax credit.

a problem though is that the best dividend stocks are nosebleed high right now. CNR may look reasonable at $72 but it split 2/1 last year; me i'm still thinking Old CNR which puts the stock north of $140 these days ... because i bought it at $30, which means $15 pre-split ...

yielding 1% plus change these days, one wouldn't class CNR among the go-to dividend stocks right now.

as a transport titan, CN is always going to reflect the state of the economy. It's a US railco for all intents & purposes. Most of its track & most of its freight are south of the border. I believe it even has a spur that delivers freight down the length of south america, all the way to argentina.

to buy or not to buy this particular train is a difficult call to make. Upthread gibor is questioning the PE of 21; however i've read that among big north american railcos at present, the average PE is 27.

i think if i were committed to buying, i'd purchase some now & some later.

wishing you every success with all your investments. I think i will send Argo a pmm & ask him to update us with his 5-Pack holdings for TFSA. Later, when he's settled down - you might have read that argo is starting graduate school this month, so august & september are going to be busy times for him.


----------



## My Own Advisor

Agreed Humble....stocks remain pricey.

@humble - how many stocks do you own? You seem to own a few...

Also, thanks for the update to Argo, I've been curious on his 5-pack. No doubt with a bank and IPL I recall, he's done very well.


----------



## fatcat

humble_pie said:


> as a transport titan, CN is always going to reflect the state of the economy. It's a US railco for all intents & purposes. Most of its track & most of its freight are south of the border. I believe it even has a spur that delivers freight down the length of south america, all the way to argentina.


one of the reasons i like it also is that i think we are in for a protracted fight over pipelines in all directions and cn is upping its game to move oil ... as you say it also essentially a bet on the american economic rebound

http://www.nationalpost.com/opinion/columnists/story.html?id=4b02fa05-4d2a-4f6b-b66c-730f0249e943


----------



## gibor365

_to buy or not to buy this particular train is a difficult call to make. Upthread gibor is questioning the PE of 21; however i've read that among big north american railcos at present, the average PE is 27.
_ NSC is about 16


----------



## gibor365

Just run some numbers on spreadsheet.... CNR yield 1.38% 5 y DGR 13.9%, NSC 2.27% and 10.8%. Thus, only in 19 years CNR yield on cost will be the same like NSC (without reinvesting dividends)


----------



## fisher14

If you were to add an energy company to the 5pack, which one would you add? I'm following both husky and suncor and am having a hard time choosing one.

Also, in terms of REITs is riocan still the go to...I really like hr.un myself, lower P/E ratio and higher yield. 

Love his choices though, and great thread!


----------



## Nemo2

fisher14 said:


> If you were to add an energy company to the 5pack, which one would you add? I'm following both husky and suncor and am having a hard time choosing one.


Me, I'd go with Suncor....YMMV.


----------



## gibor365

fisher14 said:


> If you were to add an energy company to the 5pack, which one would you add? I'm following both husky and suncor and am having a hard time choosing one.


I hold and like both HSE and SU, but I think CVX or COP are little cheaper


----------



## humble_pie

i took a screenshot of CNR insider trading & will post it in a bit ... just have to get it from my machine to an intermediary public photo website ...

what it shows is a truly awesome amount of insider selling in CN rail throughout the past year. Very little insider buying. Net selling north of $15.1 million.


----------



## Argonaut

As I'm sending $12,250 to my TFSA tomorrow, I figure now is a good time to update and examine the strategy. Didn't contribute last year and took some dividend money out, so that's why the large number. Returns on the 5-pack in 2014 were 24% including dividends and with no trades. At this point I'm fairly certain that it's a viable lifelong strategy, unless the facts change. But it's a good idea to stay vigilant and I think I'll make a change this year.

Had the first year over year loss, as Bank of Nova Scotia dropped a whopping $13 in market value in my account. I'm not happy that it was flat and underperformed the other banks, and furthermore they have started to sell off some of their international interests and let some employees go. Not good news. Therefore I am likely replacing it with TD, who I've owned in the past and is the more solid option. Tried to get too fancy, but I can admit a mistake.

Inter Pipeline has generally been the best investment of my short career but is maybe the one I am worried about most in the coming year. With low oil prices, things may start to slow down in Alberta. Pipelines are much safer than oil companies in that respect, but still something to keep an eye on. CN Rail was the best performer in 2014, and still remains my idea of the greatest stock on planet earth.

Monetary numbers are starting to get quite high, so I may be expanding the list to six instead of five in order to spread the risk a bit. At this point I think Canada is tapped out as far as sectors go. Oil stocks suck, mining stocks suck, food stocks suck, and utilities are way too slow. So I think I'll be looking south of the border. Preliminary brainstorming has the best fit into my portfolio being good old 3M. It gives me access into areas I'm not in, and fits my general criteria: strong and steady chart with rising dividends. I have a Social Security Number so the annoying withholding taxes won't apply.

Possible 2015 edition:

Inter Pipeline
RioCan REIT
CN Rail
Telus
TD Bank
3M

Let me know what you think.


----------



## leeder

Interesting that you picked 3M, as there are quite a number of stocks that would fit your criteria that trade in the New York exchanges. Is it because of the diversity in business streams that the company operates? Have you considered a name like JNJ, where dividend growth has been about 7% every year, though it's probably not as great as 3M. JNJ's EPS growth has also been impressive. Current valuation ratios look slightly cheaper than 3M as well. Not to mention, good steady companies in the health industry is not something Canada has.


----------



## fatcat

Argonaut said:


> As I'm sending $12,250 to my TFSA tomorrow, I figure now is a good time to update and examine the strategy. Didn't contribute last year and took some dividend money out, so that's why the large number. Returns on the 5-pack in 2014 were 24% including dividends and with no trades. At this point I'm fairly certain that it's a viable lifelong strategy, unless the facts change. But it's a good idea to stay vigilant and I think I'll make a change this year.
> 
> Had the first year over year loss, as Bank of Nova Scotia dropped a whopping $13 in market value in my account. I'm not happy that it was flat and underperformed the other banks, and furthermore they have started to sell off some of their international interests and let some employees go. Not good news. Therefore I am likely replacing it with TD, who I've owned in the past and is the more solid option. Tried to get too fancy, but I can admit a mistake.
> 
> Inter Pipeline has generally been the best investment of my short career but is maybe the one I am worried about most in the coming year. With low oil prices, things may start to slow down in Alberta. Pipelines are much safer than oil companies in that respect, but still something to keep an eye on. CN Rail was the best performer in 2014, and still remains my idea of the greatest stock on planet earth.
> 
> Monetary numbers are starting to get quite high, so I may be expanding the list to six instead of five in order to spread the risk a bit. At this point I think Canada is tapped out as far as sectors go. Oil stocks suck, mining stocks suck, food stocks suck, and utilities are way too slow. So I think I'll be looking south of the border. Preliminary brainstorming has the best fit into my portfolio being good old 3M. It gives me access into areas I'm not in, and fits my general criteria: strong and steady chart with rising dividends. I have a Social Security Number so the annoying withholding taxes won't apply.
> 
> Possible 2015 edition:
> 
> Inter Pipeline
> RioCan REIT
> CN Rail
> Telus
> TD Bank
> 3M
> 
> Let me know what you think.


i own cnr, telus and td ... have pembina instead of ipl ... i am passing on reits and no interest in 3m

why 2 industrials and no consumer discretionary or health care ?

i have disney and jnj


----------



## Argonaut

3M is totally different than CNR so I'm not worried about that. JNJ is another one I considered, I owned it in 2010 as one of my first stocks. I sold it as it had its problems with a terrible CEO, but they have a better one now and have done well. Both of them are yielding 2.5% which is a bit of a disappointing entry point, I'd like to buy these sorts of stocks yielding 4%. I'm not too interested in consumer discretionary. The other option is that I could just buy the SPY for my sixth slot. The S&P 500 is notoriously hard to beat when buying American stocks, whereas the TSX is incredibly easy to beat.


----------



## leeder

In the initial post, the 5-pack was to pick the winners and avoid the losers. Indexing would mean you're buying the losers as well, no? Might be a bummer for those Argo's 5-pack fans.


----------



## fatcat

Argonaut said:


> 3M is totally different than CNR so I'm not worried about that. JNJ is another one I considered, I owned it in 2010 as one of my first stocks. I sold it as it had its problems with a terrible CEO, but they have a better one now and have done well. Both of them are yielding 2.5% which is a bit of a disappointing entry point, I'd like to buy these sorts of stocks yielding 4%. I'm not too interested in consumer discretionary. The other option is that I could just buy the SPY for my sixth slot. The S&P 500 is notoriously hard to beat when buying American stocks, whereas the TSX is incredibly easy to beat.


if you are after 4% with jnj that will require considerable patience in this market ... 

if we see continued improvement in the states i think a discretionary will do well .. dis or sbux would fill that bill but neither pay much a dividend ... 

you could always get berkshire instead spy but you forgo the divvy ... i was looking at it seriously at 115 lately and passed :-(


----------



## Argonaut

leeder said:


> In the initial post, the 5-pack was to pick the winners and avoid the losers. Indexing would mean you're buying the losers as well, no? Might be a bummer for those Argo's 5-pack fans.


Still alive and well in Canada and will continue to be. The problem with my trying to beat the US market is that it is much more efficient and obviously more extensive and widely covered. I also do not have the advantage of living in the United States, where just day-to-day experiences and conversations can shape one's investing outlook. It certainly has shaped mine in Canada. I'm also terrible with tech and health care, a large portion of the US indexes that Canada doesn't really have.

Right now leaning towards SPY, but BRK.B isn't a bad shout. I can't look past it as buying Buffett rather than his holdings, though. SPY also is likely the most active options markets so there is that.


----------



## leeder

That's a fair assessment. My own portfolio mostly individual Canadian stocks, in which I go through a fair bit of research. My US and international holdings are mainly invested through index. Are you holding US dollars in your TFSA? If you do go for US index, I'm interested to know why you wouldn't go for the Vanguard products like VTI or VOO, which have slightly lower MER.


----------



## My Own Advisor

Hey Argo,

I like your 2015 picks. 

Would you put 3M in your USD $$ TFSA?

The reason I ask, I might eventually keep some US stocks in my TFSA. Ya, 15% withholding taxes but then again tax-free dividends in USD $$. Travel money!

You could consider EMR for the U.S. stock.


----------



## humble_pie

My Own Advisor said:


> Would you put 3M in your USD $$ TFSA?
> 
> The reason I ask, I might eventually keep some US stocks in my TFSA. Ya, 15% withholding taxes but then again tax-free dividends in USD $$. Travel money!



british ADRs, haven't we gone over this in the forum? the idea came from liquidfinance originally i believe

brit ADRs trade stateside in USD but no british withholding, no US withholding ... nice

here's the list, it's a long list
some decent choices
watch out for that royal dutch shell, though, it has to be RDS dot B, the other one (dot A) gets taxed by the dutch

another way to hold USD in TFSA is to buy stocks with no dividends, therefore no withholding
good luck in the new year

http://topforeignstocks.com/foreign-adrs-list/the-full-list-of-british-adrs/


----------



## humble_pie

postscript: just asking after all these years, why would one hold telus if one were any kind of option seller? 

it is the worst worst worst underlying in the world. I swear that T specialist in montreal must be some ISIL hacker out of syria. Argo have u ever looked at those spreads in T? you could drive a tank between. 

sometimes i go to the US & sell TU options (CUSIP number is the same) but lately US options in TU have been hacked by the same ISIL tank driver so the spreads have widened unbearably.

perhaps one could argue that capital gain in T plus accrued dividends have been so spectacular the last few years that it doesn't matter whether an options market exists or not? one could say that but i don't think i'd agree. BCE options are not interesting either so the sorry scene keeps suggesting to me that the telco sector in a 5-pack is foutu ...


----------



## My Own Advisor

Yes, we've gone over this HP 

I just don't own any ADRs, yet.

Yes, I recall something odd about RDS, only buy the B shares!

Thanks for the wishes in the New Year, same to you HP - happy investing!


----------



## Eder

I like your 5 pack for 2015. I don't think you need to add 3M at this point. Don't forget you are getting US exposure thru Rio Can, TD and CN. You also get some USD exposure with IPL.


----------



## Argonaut

Yes, I've talked myself out of 3M at this point. I like the SPY buy. Why SPY instead of Vanguard; because the SPDR product is the liquidity, options, and prestige king. The small difference in MER won't affect me much as a humble little TFSA investor. I looked briefly at Telus and BCE options, and they've never interested me as with pretty much everything at Montreal. I've never sold options in the TFSA because the commission and spread is far too much. That could change with SPY which is of course the king of the options market.


----------



## fatcat

humble_pie said:


> another way to hold USD in TFSA is to buy stocks with no dividends, therefore no withholding
> good luck in the new year


i try to hold a mix of usa growth and divvy for that reason ... thats why brk.b is such a nice fit ... i also love qqq 60% tech 20% discretionary and the rest mostly healthcare ... divvy of about 1% ... it's a growth index mostly


----------



## My Own Advisor

@fatcat, you put BRK.B in your USD $$ TFSA? No withholding taxes to worry about right?


----------



## cash

Can we get an update to the end of 2015 on how this is going?


----------



## humble_pie

cash said:


> Can we get an update to the end of 2015 on how this is going?



probably not from the original Argonaut, although some have embraced his idea of owning a very few carefully selected stocks. 

the tiniest proponent i ever did see was one cmffer who'd reduced the 5-pack to 3 stocks only, BCE, RY & i believe a railroad. Can you imagine how well that portfolio has done since, say, 2009 or 2010? even now, imho it's a fine position going forward.

ps original Argo was so successful with his TFSA that he parlayed this into admission to graduate school at an early age, to pursue an MBA & a CFA for a career in finance. Is why he doesn't have time to post here any more.


----------



## fatcat

My Own Advisor said:


> @fatcat, you put BRK.B in your USD $$ TFSA? No withholding taxes to worry about right?


missed this a year ago i guess ... i don't have a tfsa ... the tax reporting is too big a burden and nothing is tax sheltered in the usa


----------



## Jungle

IPL -34.07%
REI.UN -5.03%
CNR -1.77%
T -4.66%
TD +1.32%

-8.84% total return
-8.62 XIC total return

Used morningstar total return (includes dividends)

Not bad considering IPL took a huge hit


----------



## fatcat

Jungle said:


> IPL -34.07%
> REI.UN -5.03%
> CNR -1.77%
> T -4.66%
> TD +1.32%
> 
> -8.84% total return
> -8.62 XIC total return
> 
> Used morningstar total return (includes dividends)
> 
> Not bad considering IPL took a huge hit


how would this be "not bad" considering the no-worry no thought index outperformed ? ... the 5-pack essentially lost the footrace ... i am assuming that XIC is after fees, correct ?

it is an argument for indexing and against stock picking it seems to me


----------



## londoncalling

fatcat said:


> it is an argument for indexing and against stock picking it seems to me


how so? 1 year of data is not enough evidence. If next year the 5 pack outperforms the index does that mean it is an argument for stock picking and against indexing?

That being said there is lots of research indicating indexing will beat most stock pickers returns over time. I would agree that to be true myself. However, cherry picking 1 year of returns does not create a convincing argument.

I myself think the 5 pack is a great low effort model as is indexing. I belong to the stock picking camp. If I could do it over the 5 pack model would have been a great fit. Simple enough that it could be put on auto pilot yet not so hands off that I would never give any interest at all.

Cheers


----------



## Jungle

My opinion is that holding just five stocks is way to risky..too much weight on each stock. That's why I was surprised it held up to the index. One upset and it could greatly underperform. 
For my tolerance and goals, I don't believe the extra risk would be worth the reward. I see more downside risk than upside, because there is only five stocks.


----------



## fatcat

well, we are pushing into almost 3.5 years since that particular 5-pack was assembled
i don't know what if any changes were made i am commenting based on those 5

i have posted an article a few times about a guy who held 7 stocks for a long time and did well with it: *The ‘blazingly simple,' must-have portfolio by *ROB CARRICK
he used TD, RY, TRP, ENB, CNR, CP, FTS .... 2 banks 2 pipelines, 2 railroads and 1 utility

agree with jungle, i would still want more stocks in more sectors or just buy an index


----------



## humble_pie

fatcat said:


> i have posted an article a few times about a guy who held 7 stocks for a long time and did well with it: *The ‘blazingly simple,' must-have portfolio by *ROB CARRICK
> he used TD, RY, TRP, ENB, CNR, CP, FTS .... 2 banks 2 pipelines, 2 railroads and 1 utility



leaving out the 2 pipelines, each of the other 4 stocks - TD, RY, CNR & CP - is a multi-sectorial international investment fund without any MER.

equity in TD, RY, CNR or CP is greater than some funds. Plus the 2 banks & the 2 railroads are more diversified than many funds.

it's true that an apple is not an orange. But when you slice them in the other direction, they all have exposure to numerous industries in different locales.


----------



## doctrine

All five of those stocks look decent to me here. Much better value than many points over the last two years. Of course, the TSX index itself also looks good at 12000ish, so you probably wouldn't go wrong with either those five or XIU.


----------



## My Own Advisor

Nothing wrong with the top holdings in XIU or XIU itself. Long-term the returns have been there


----------



## fatcat

humble_pie said:


> leaving out the 2 pipelines, each of the other 4 stocks - TD, RY, CNR & CP - is a multi-sectorial international investment fund without any MER.
> 
> equity in TD, RY, CNR or CP is greater than some funds. Plus the 2 banks & the 2 railroads are more diversified than many funds.
> 
> it's true that an apple is not an orange. But when you slice them in the other direction, they all have exposure to numerous industries in different locales.


indeed though i think you are more sanguine about the future than i am pie ... i think we are only seeing the beginning of disruption in the financials and i think both td and ry will need to be quick on their feet ... i own both and will for a long time, i think they will pivot and adjust but ??

railroads are very efficient ways to move goods and cnr is one of the my top 3 holdings (along with td)

there are no cyclicals or heath care or telecom or food

though yes, i had to look back and this is a "starter" pack and for that purpose yes, it's probably a pretty good one

not sure it's a great "finish" pack though


----------



## My Own Advisor

Hard to know what the "finish" pack might be for us in 30 to 40 years. 

I still like the long-term view with:
-5-6 Big CDN banks,
-2-3 major pipelines,
-2-3 major utilities, 
-2-3 major telcos, and 
-CP and CNR for railroads.

Add in some REITs and you're done and look to the U.S. for food, healthcare, consumer staples.

Again, think Monopoly.


----------



## fatcat

My Own Advisor said:


> Hard to know what the "finish" pack might be for us in 30 to 40 years.
> 
> I still like the long-term view with:
> -5-6 Big CDN banks,
> -2-3 major pipelines,
> -2-3 major utilities,
> -2-3 major telcos, and
> -CP and CNR for railroads.
> 
> Add in some REITs and you're done and look to the U.S. for food, healthcare, consumer staples.
> 
> Again, think Monopoly.


thats exactly what i have done ...though i have dumped my pipelines ... you also need to get your tech and consumer cyclicals down south as well


----------



## Eoink15

i have some stocks in my TFSA, im Eoin im 25! i have about 10 k only started last year!
i got Fm and hvi 
also a canadian pipeline
and two quebec medical companys!
Fm is down wana sell soon as it comes back up and hvi is a risky one!!
what is a good long term hold ? i hear alot of talk about xiu.
should i just sell all and put it into that?


----------



## Argonaut

Made the first change to this portfolio in years. It now looks like:

Inter Pipeline (IPL)
CN Rail (CNR)
Telus (T)
TD Bank (TD)
CAP REIT (CAR.UN)

Same basic outline the same, but swapping RioCan REIT for CAP REIT. The reasoning is so simple, it's a wonder I didn't act on it sooner. Shopping malls are on their way out in the future with the move to online retailers (Amazon, etc.). But apartments will always be in demand. Especially in places like Toronto and Vancouver where housing is completely unaffordable for the next generation. People always need a place to live. Hope that they will increase their British Columbia exposure in the future. I like that RioCan's run up this year has given me a chance to unload it.

The portfolio has done well, including dividends it has nearly doubled in the last 5 years. Great in comparison to the flat TSX. The comeback in Inter Pipeline has given me an opportunity to think about its place long term. I still like the business model, but is oil itself a dying business? Maybe a switch back to the utility idea, FTS and EMA have done really well lately. Though they may have stretched themselves into being overvalued.


----------



## james4beach

Amazing stuff ... Argonaut you are truly a legendary CMF'er demonstrating a consistently great portfolio. You are proof that it can be done! Do you have some multi-year performance figures you can share?


----------



## Argonaut

The Excel file I used to track everything was lost with my previous computer. My TFSA is showing a 12% annualized return with XIRR, but that includes some things like dead cash sitting around, stock commissions, me changing my mind on things, and me not having cash to reinvest in recent times. A "pure" look at this portfolio over the last five years would have higher returns. But perhaps that is less realistic. The benchmark for this one is always the TSX, which is flat (without dividends) in the same time period.

So I know the original thesis is true, that the TSX is very easy to beat with a simple portfolio like this. The S&P 500 is very hard to beat with a selection of US stocks. So I think indexing is the best option for most people when it comes to US equity.


----------



## james4beach

Argonaut, over the years I have found the TSX to be far more "tradeable" than the US market. Including when I engage in speculation... my success rate on the TSX is much higher than in the US, to the point that I've virtually stopped dabbling in the US market. It's full of quants and algos and bots and HFTs and every PhD on earth is throwing their analysis at it.

My sense is that the TSX has more opportunities.

A little bit of a bear market would be good for our country, actually, as it will ward off the hedge funds and other professionals from crowding into the TSX. If we get too many of them setting up shop and establishing quant funds, they will do the same thing they did to US markets. A good bear market should flush them out and send them back home.


----------



## londoncalling

Argonaut said:


> Made the first change to this portfolio in years. It now looks like:
> 
> Inter Pipeline (IPL)
> CN Rail (CNR)
> Telus (T)
> TD Bank (TD)
> CAP REIT (CAR.UN)
> 
> Same basic outline the same, but swapping RioCan REIT for CAP REIT. The reasoning is so simple, it's a wonder I didn't act on it sooner. Shopping malls are on their way out in the future with the move to online retailers (Amazon, etc.). But apartments will always be in demand. Especially in places like Toronto and Vancouver where housing is completely unaffordable for the next generation. People always need a place to live. Hope that they will increase their British Columbia exposure in the future. I like that RioCan's run up this year has given me a chance to unload it.
> 
> The portfolio has done well, including dividends it has nearly doubled in the last 5 years. Great in comparison to the flat TSX. The comeback in Inter Pipeline has given me an opportunity to think about its place long term. I still like the business model, but is oil itself a dying business? Maybe a switch back to the utility idea, FTS and EMA have done really well lately. Though they may have stretched themselves into being overvalued.


Thanks for the update. Your 5 pack is truly inspirational. I hold 2(T and IPL) of the 5 in my 30+ stock portfolio. Had I found this thread when I first started I am certain I would have followed suit. What I have done instead is tried to incorporate the same philosophy in a dirty dozen of Can stocks with some sprinklings of spec plays (to keep the active side of me satiated). I also hold some ADRs and some internationally exposed Canadian large caps. I know what you offer up is simple and effective. I am looking at adding a REIT before the snow flies. Your comment on needing a place to live rings true.

Cheers


----------



## james4beach

I see a similarity between Argonaut's 5 pack and ZLB (BMO Low Volatility) which has intrigued a few of us. This has also steadily outperformed the TSX. Like the 5 pack, it's low on energy & miners, and high on utilities.


----------



## Eder

I'm hesitant to drop REI...malls are great for things like restaurants, gyms, theaters, hair salons... many things in life we need as well as a destination for many people...online shopping is the king but malls will reinvent themselves gradually.


----------



## GalacticPineapple

What is the generally held wisdom for allocation in the 5-pack? Equal slices?


----------



## My Own Advisor

londoncalling said:


> Thanks for the update. Your 5 pack is truly inspirational. I hold 2(T and IPL) of the 5 in my 30+ stock portfolio. Had I found this thread when I first started I am certain I would have followed suit. What I have done instead is tried to incorporate the same philosophy in a dirty dozen of Can stocks with some sprinklings of spec plays (to keep the active side of me satiated). I also hold some ADRs and some internationally exposed Canadian large caps. I know what you offer up is simple and effective. I am looking at adding a REIT before the snow flies. Your comment on needing a place to live rings true.
> 
> Cheers


I've held all 5 for years with no plans to sell  DRIPping all of them.


----------



## My Own Advisor

GalacticPineapple said:


> What is the generally held wisdom for allocation in the 5-pack? Equal slices?


Own them and about 20+ more stocks to collect dividends for retirement.


----------



## GalacticPineapple

My Own Advisor said:


> Own them and about 20+ more stocks to collect dividends for retirement.


Equal slices then.


----------



## Argonaut

Just to clarify, the intention of the 5-pack is not to buy 5 stocks and then buy 20 more. That would be a 25 pack. One might be liable to get pretty drunk.

The more stocks you add to a portfolio the more it behaves like an index, so at that point you can just buy the index. 5-pack says to get alpha by choosing the best of breed companies in specific sectors and cut out the losers of the market.

I've always gone equal weight. But never rebalanced directly, that would be too much in commissions at my stage. Right now I equal weight by putting new contributions into the ones with a smaller balance in my account. They're all about the same dollar value at this point. IPL and CNR have been the biggest winners overtime so I haven't added much to them.


----------



## My Own Advisor

Thanks Argo  Is there an issue with a hangover with 25+ CDN stocks though?

To your point, 5-pack and then index is your mantra, is that right?

I'm more about building my own index. It's worked out rather well over the last 6+ years (i.e., beating the index).


----------



## Argonaut

Mantra is 5-pack for Canada and then S&P 500 index for the USA. Canadian market easier to beat for a number of reasons. American market much harder to beat and has many more companies in sectors that are harder to understand and predict - technology, health-care, etc.

5-pack (or 6-pack if including a utility) are in oligopoly-type industries that can profit with higher margins and produce more stable dividends than the average Canadian stock. With some economics knowledge it's not surprising that these companies are less volatile and collectively beat the index.


----------



## My Own Advisor

Excellent points. This is why I've decided to unbundle the CDN market, create my own CDN index with 30+ stocks, but largely index invest with the U.S. and international stocks.


----------



## londoncalling

As mentioned up thread, if I were starting fresh I would go this way for 90% of my Canadian holdings. the remainder is play money. I would also etf 90% of my US holdings and cherry pick the remainder. I would also go with VTI or VXUS for international exposure and hold about 10% ADRs. Glad you are posting more frequently Argo. I have also left instructions with the Mrs. upon my death to either go argo 5 pack or 3 Vanguard etfs with my portfolio. 

Cheers


----------



## mrPPincer

Argonaut said:


> Made the first change to this portfolio in years. It now looks like:
> 
> Inter Pipeline (IPL)
> CN Rail (CNR)
> Telus (T)
> TD Bank (TD)
> CAP REIT (CAR.UN)
> 
> Same basic outline the same, but swapping RioCan REIT for CAP REIT. The reasoning is so simple, it's a wonder I didn't act on it sooner. *Shopping malls are on their way out* in the future with the move to online retailers (Amazon, etc.). But apartments will always be in demand. Especially in places like Toronto and Vancouver where housing is completely unaffordable for the next generation. People always need a place to live. Hope that they will increase their British Columbia exposure in the future. I like that RioCan's run up this year has given me a chance to unload it.
> 
> The portfolio has done well, including dividends it has nearly doubled in the last 5 years. Great in comparison to the flat TSX. The comeback in Inter Pipeline has given me an opportunity to think about its place long term. I still like the business model, but is oil itself a dying business? Maybe a switch back to the utility idea, FTS and EMA have done really well lately. Though they may have stretched themselves into being overvalued.


I like my riocan, but,


----------



## A_Penny_saved

*Argonaut's 5 - Pack*

Hello all,

This is my first post and I'm very new to the investment game. Anyhow I recently bought into the 5 pack theory on Aug 25, but I made it a 6 pack by adding Fortis. I basically jumped in with $12,000 equal weight across the board. Obviously those of you following the same approach know its been a rough road since then. Anyone made / planning any changes. What about the news with TransCanada lowering tariffs to try and feed more Canadian oil east, or Enbridge buying Spectra? , Do these scenarios impact your IPL choice? I'm not over reacting just trying to get an update here..... Does anyone buy more when prices goes south?


----------



## mordko

Oh, man... You should not be investing in stocks. You have the wrong temperament for investment.


----------



## My Own Advisor

No changes here. Buy and hold and hold some more.


----------



## humble_pie

A_Penny_saved said:


> This is my first post and I'm very new to the investment game. Anyhow I recently bought into the 5 pack theory on Aug 25, but I made it a 6 pack by adding Fortis. I basically jumped in with $12,000 equal weight across the board. Obviously those of you following the same approach know its been a rough road since then. Anyone made / planning any changes. What about the news with TransCanada lowering tariffs to try and feed more Canadian oil east, or Enbridge buying Spectra? , Do these scenarios impact your IPL choice? I'm not over reacting just trying to get an update here..... Does anyone buy more when prices goes south?




Penny welcome to the forum. It would be normal for a very-new-to-the-investment-game investor who had made his first purchases only 3 weeks ago, to feel a bit concerned. This does not mean you have the wrong temperament for stocks nor does it mean that a brief downward correction should trigger more buying on your part.

adding a 6th stock was a good idea & fortis was a good pick imho. Remember that the 5-pack, aka a modified 6-pack, was created as a specialty portfolio of 5 curated stocks, all picked because they have strong histories, wide moats plus near-monopoly status in a critical core canadian industry. The 5-pack, with its rare adjustments along the way, was created for lifetime holds.

hopefully you'll see how a 3 week long rough ride is only a quiver in history.

cheerful thought: just about any equity investment you could have made 3 weeks ago - whether mutual fund, ETF or mix of stocks - would have given you the same rocky ride in the short term.

pessimistic thought: some experts are saying the downward correction could continue into 2017.

what to do? i believe that a brand-new investor who feels concerned after a small 3-week drop should not be buying additional stocks at this time.

it takes fire to temper nerves of steel & you will have to go through the fire. In the meantime, if i were in your place i would not go with the Buy More Average Down Now school of thought. That's for more experienced investors. Next year, you may be one of them, but in the meantime your momentary nervousness is suggesting to that you might consider putting savings into a nice safe HISA war chest.

keep the 6 stocks, though. You've shown you're training a good eye on their news. At $12k, they are a perfect learning tool. Best of luck to you.


.


----------



## Pluto

A_Penny_saved said:


> Hello all,
> 
> This is my first post and I'm very new to the investment game. Anyhow I recently bought into the 5 pack theory on Aug 25, but I made it a 6 pack by adding Fortis. I basically jumped in with $12,000 equal weight across the board. Obviously those of you following the same approach know its been a rough road since then. Anyone made / planning any changes. What about the news with TransCanada lowering tariffs to try and feed more Canadian oil east, or Enbridge buying Spectra? , Do these scenarios impact your IPL choice? I'm not over reacting just trying to get an update here..... Does anyone buy more when prices goes south?


I agree with HP. You made a good move here. Stick with it. 
These stocks have tons of assets, good balance sheets, and decent managements. You don't have to sell such stocks in a panic, as the odds are very high they will come back. You ask good questions too. That mean's you are a thinker and not just a follower. 
The best time to buy this type of stock is when prices are falling. As a buyer of assets, you obviously want the best price you can get for those assets. The worst time to buy is often immediately after a sharp rise in price as traders take profits, and re-balancing portfolios might kick in causing a pullback. Some people don't care when they buy based on the idea that time in the markets fixes all mistakes, but I go by the theory of accumulating small advantages that pile up over time. Buying during pullbacks is a small advantage that compounds over time. 

Anyway, argo is on the right track and I believe you are too.


----------



## My Own Advisor

Well done Penny, if you bought:
Inter Pipeline (IPL)
CN Rail (CNR)
Telus (T)
TD Bank (TD)
CAP REIT (CAR.UN)
Fortis (FTS)

That 6-pack should provide loads of dividends for the coming decades. 

As per HP and Pluto:
1. You don't have to sell such stocks in a panic. Train your investing brain such that when stocks like these go down in price, hold on. 
2. If you can, buy more shares when prices go down. More shares = more dividends  
3. "Buying during pullbacks is a small advantage that compounds over time."

100% agree.

Keep your hands off the steering wheel and enjoy the cash flow. 

Argo has it right.


----------



## A_Penny_saved

*Argonaut 5-pack...*

Thanks to all who replied. That reinforcement goes a long way. I bought 20 more shares of Fortis today. Good luck to everyone with your investments and look forward to reading into your opinons.


----------



## My Own Advisor

FYI.

FTS dividend history. Can you imagine if you bought back 40 years ago?
https://www.fortisinc.com/investor-relations/share-information

I know past performance is never indicative of future results, but if the past is anything like the future for Fortis, you're golden.


----------



## humble_pie

A_Penny_saved said:


> Thanks to all who replied. That reinforcement goes a long way. I bought 20 more shares of Fortis today. Good luck to everyone with your investments and look forward to reading into your opinons.



wondering how are your broker commissions? if you're buying odd lots such as 20 shares at frequent intervals, it might be a good idea to concentrate on just one of the holdings in order to get the number of shares high enough that a dividend payment can be DRIPPed.

BCE might be a good candidate, although acquiring the 100 shares or so that will be necessary to DRIP even one new share per dividend could take some elbow grease.

here's an anecdote for you, Penny. I remember argonaut on here when he was a 23-year-old recent graduate with a BA in history plus a marked talent for investing. Argo was working at a TD bank branch in victoria BC, i believe it was his first job. He went through exactly your situation, buying tiny quantities of stocks at questrade to save on commish. As best i can recall, this stage lasted a good two years.

it's a really painful stage. The new investor is doing his absolute best - investing savings as best he can spare the funds, but paying proportionately high commission charges in relation to the size of his account.

some workarounds to this problem are 1) stiff upper lip; or 2) accumulate cash in a 2-2.40% HISA account for a year or 2; or 3) if you are a questrade client, buy zero-commission conservative ETFs while being prepared to see them, too, fluctuate with the market. In addition, questrade does charge a commission to sell an ETF.


.


----------



## A_Penny_saved

*Commission Fees*



humble_pie said:


> wondering how are your broker commissions? if you're buying odd lots such as 20 shares at frequent intervals, it might be a good idea to concentrate on just one of the holdings in order to get the number of shares high enough that a dividend payment can be DRIPPed.
> 
> BCE might be a good candidate, although acquiring the 100 shares or so that will be necessary to DRIP even one new share per dividend could take some elbow grease.
> 
> here's an anecdote for you, Penny. I remember argonaut on here when he was a 23-year-old recent graduate with a BA in history plus a marked talent for investing. Argo was working at a TD bank branch in victoria BC, i believe it was his first job. He went through exactly your situation, buying tiny quantities of stocks at questrade to save on commish. As best i can recall, this stage lasted a good two years.
> 
> it's a really painful stage. The new investor is doing his absolute best - investing savings as best he can spare the funds, but paying proportionately high commission charges in relation to the size of his account.
> 
> some workarounds to this problem are 1) stiff upper lip; or 2) accumulate cash in a 2-2.40% HISA account for a year or 2; or 3) if you are a questrade client, buy zero-commission conservative ETFs while being prepared to see them, too, fluctuate with the market. In addition, questrade does charge a commission to sell an ETF.
> 
> 
> Currently using TD Waterhouse 9.99 , 7 over a 150 shares per quarter...
> 
> Yeah I'm grinding for it!


----------



## Argonaut

Yeah, I guess if you bought in late August it hasn't been great since, but it's a very short window. I don't pay as much attention to the every-day gyrations as I used to. As long as the portfolio isn't significantly under-performing the TSX, which it never really has, I have nothing to worry about.

My current 5-pack is CNR, T, TD, ENF, CAR.UN. I will add Fortis to make it a 6-pack next as well. Aggressively paying off MBA debt right now instead of investing, I didn't want to sell my precious portfolio to pay for school!

Once my TFSA gets large enough I may consider making it a 12-pack, but keeping the same sectors. What I've found is that the success of this portfolio hasn't necessary been the individual picks, i.e. Telus over BCE, but the sectors themselves that have been right the ones to be in. Idea is stable, predictable cash flow that translates into good dividends. Also like the oligopoly-type industries, better for margins.


----------



## My Own Advisor

Argonaut said:


> Once my TFSA gets large enough I may consider making it a 12-pack, but keeping the same sectors. What I've found is that the success of this portfolio hasn't necessary been the individual picks, i.e. Telus over BCE, but the sectors themselves that have been right the ones to be in. Idea is stable, predictable cash flow that translates into good dividends. Also like the oligopoly-type industries, better for margins.


I like the idea of a 12-pack. I'd be curious to what you might own.

Brother and sister stocks?

i.e., CNR + CP?
T + BCE?
TD + RY?
ENF + TRP?
CAR.UN + HR.UN?


----------



## Argonaut

Yeah, almost. My preliminary plan is:

TD, RY, BNS
T, BCE
CNR
FTS, EMA
ENF, IPL
CAR.UN, REF.UN

I wouldn't want to buy CP Rail, it would water down my dividend yield too much. Yield and dividend growth rate is superior at CNR, along with operating ratio. I would be comfortable with it as my only railroad and largest individual holding. I think it's probably the best stock in Canada.

What I'm battling with is the weights, whether to stick with 5-pack doctrine and go equal sector and/or stock weight, or something like 25/15/15/15/15/15 for the sectors. 
Probably that is deviating from my thesis too much with the bank weighting, but 16.67% each sector bothers my fondness for round numbers.


----------



## Pluto

Argonaut said:


> Yeah, almost. My preliminary plan is:
> 
> TD, RY, BNS
> T, BCE
> CNR
> FTS, EMA
> ENF, IPL
> CAR.UN, REF.UN
> 
> I wouldn't want to buy CP Rail, it would water down my dividend yield too much. Yield and dividend growth rate is superior at CNR, along with operating ratio. I would be comfortable with it as my only railroad and largest individual holding. I think it's probably the best stock in Canada.
> 
> What I'm battling with is the weights, whether to stick with 5-pack doctrine and go equal sector and/or stock weight, or something like 25/15/15/15/15/15 for the sectors.
> Probably that is deviating from my thesis too much with the bank weighting, but 16.67% each sector bothers my fondness for round numbers.


well argo your fondness for round numbers and portfolio harmony could mean you have the heart of Pythagoras. But somehow I think you are going to do well even with out round numbers. 

If one is going for a 12 pack, I think one should at least consider one or two US stocks. Disney could add a new industry as well as US exposure. Entertainment seems to be a universally accepted product.


----------



## Argonaut

For American stocks my approach is to just go with the S&P 500. It's a big, relatively efficient market that would take a lot of extra research to beat. It also complements the Canadian sectors I'm interested in rather well by adding lots of technology and health care, two sectors that are hard to understand for the average Joe. Although the yield is only about 2% these days, I'm happy with total return in US dollars while living in Canada.

Canadian market is nice to pick-and-choose, and I think there's not much beyond those 12 stocks that I'm interested in at all long-term. Other names that have done well in Canada like Alimentation Couche-Tard aren't really what I'm looking for. Original 5 or 6 stock approach is still great for small accounts. Once portfolios get bigger there's some nice synergy/diversification from picking up the "brother" stock as MOA says. I.E. Telus and BCE, where they follow each other pretty well and tend to revert to the mean when they drift. Dare I invoke portfolio theory and say it also eliminates some unsystematic risk.


----------



## My Own Advisor

Funny you wrote that Argo.

I tend to index most of my U.S. holdings via VTI because the U.S. market is much more diverse and very difficult to pick the leaders of pack, unlike Canada. This is why I think you can unbundle CDN ETFs for income, but for the most part, you should index invest in the U.S. market.


----------



## canew90

Argonaut said:


> Yeah, almost. My preliminary plan is:
> 
> TD, RY, BNS
> T, BCE
> CNR
> FTS, EMA
> ENF, IPL
> CAR.UN, REF.UN
> 
> I wouldn't want to buy CP Rail, it would water down my dividend yield too much. Yield and dividend growth rate is superior at CNR, along with operating ratio. I would be comfortable with it as my only railroad and largest individual holding. I think it's probably the best stock in Canada.
> 
> What I'm battling with is the weights, whether to stick with 5-pack doctrine and go equal sector and/or stock weight, or something like 25/15/15/15/15/15 for the sectors.
> Probably that is deviating from my thesis too much with the bank weighting, but 16.67% each sector bothers my fondness for round numbers.


I'd add a Cdn Pipeline either ENB or TRP or both ( I prefer stocks with a longer dividend history). I wouldn't worry about weighting, just add the one which has the lowest price or best yield. Over time it will average out.


----------



## Argonaut

I wouldn't fault someone for choosing TRP/ENB or both. My preference is the ENF/IPL combo right now. Yield closer to 6%, so it boosts my aggregate yield. Aim for 4% overall. I think with pipelines these days the big ones will be finding it difficult to grow. Who knows what will happen with TRP's Energy East? Enbridge's purchase in the US is good, hopefully they will spin off some of those pipes to ENF. The oil sands in general is really up in the air now with current oil prices, but IPL is such a well-run company that I would be a buyer again in the future.


----------



## Franko

Argonaut said:


> For American stocks my approach is to just go with the S&P 500. It's a big, relatively efficient market that would take a lot of extra research to beat. It also complements the Canadian sectors I'm interested in rather well by adding lots of technology and health care, two sectors that are hard to understand for the average Joe. Although the yield is only about 2% these days, I'm happy with total return in US dollars while living in Canada.
> 
> Canadian market is nice to pick-and-choose, and I think there's not much beyond those 12 stocks that I'm interested in at all long-term. Other names that have done well in Canada like Alimentation Couche-Tard aren't really what I'm looking for. Original 5 or 6 stock approach is still great for small accounts. Once portfolios get bigger there's some nice synergy/diversification from picking up the "brother" stock as MOA says. I.E. Telus and BCE, where they follow each other pretty well and tend to revert to the mean when they drift. Dare I invoke portfolio theory and say it also eliminates some unsystematic risk.


Hi all,

I'm a newer investor (have been indexing for about 4 years) and am intrigued by the 5/6/12 pack concept for CDN stuff (many kudos to Argo and everyone else here, for the informative posts). 

Argo, can I ask what your overall portfolio % in the CDN market is? How about US/international, etc? My portfolio is large enough that my TFSA and RRSP are full (with foreign/US stuff, to optimize taxation), so I'm forced to hold my CDN index funds in non-registered accounts. The idea of weeding out the garbage from our relatively small, inefficient stock market certainly resonates - I'm just concerned about the high yields from the 5pack being quite punitive in a taxable account. What are your thoughts on this?


----------



## humble_pie

Franko said:


> Hi all ...
> 
> I'm just concerned about the high yields from the 5pack being quite punitive in a taxable account.




i'm not Argo but you did say Hi all ...

one would tend to cluster REITs & unit trusts if any in TFSA, in order to neutralize their complicated tax consequences (no tax reporting in TFSA.)

i don't believe the somewhat high yields from the 5-pack are necessarily punitive though. These yields will also deliver eligible canadian dividend tax credits, which will be a big assist on your tax return. The credits will be subtracted from income tax otherwise owing.


.


----------



## Argonaut

Yeah, common wisdom is to put REITs in tax-sheltered accounts to avoid extra hassle. The rest of the portfolio has eligible dividends as far as I know, I've had it in TFSA so didn't have to worry about it.

I'm 100% Canadian stocks at this time and will be for about a year and a half more.

Eventual goal is:

25% Canadian (12-Pack)
25% USA (S&P 500)
25% Gold
25% Cash and/or Bonds

I'm not losing sleep over being only invested in Canada right now. When I add S&P 500 it will provide plenty of international exposure. Not really interested in no-growth Europe and Japan, and emerging markets may be a neat idea but their stock markets suck. Wouldn't mind entering short-term trades for VEA/VWO at times though.

Both my asset allocation and Canadian stockpicks are the choice for myself though, don't necessarily recommend them to someone who has a different situation.


----------



## Franko

humble_pie said:


> i don't believe the somewhat high yields from the 5-pack are necessarily punitive though. These yields will also deliver eligible canadian dividend tax credits, which will be a big assist on your tax return. The credits will be subtracted from income tax otherwise owing.
> .


Definitely true. I'm no accountant, but I believe that I'll still end up paying some net tax on these eligible CDN dividends in the end, after the credits, correct? I currently hold HXT, the TSX 60 swap fund, in my non-registered/corporate accounts, so I've been spoiled by the no-yield, no-tax swap structure I guess .



Argonaut said:


> I'm 100% Canadian stocks at this time and will be for about a year and a half more.


Can I ask - is the year and a half thing more to do with timing up your personal finances, or for a particular strategic reason?


----------



## Argonaut

Franko said:


> Can I ask - is the year and a half thing more to do with timing up your personal finances, or for a particular strategic reason?


Personal timing, I am aggressively paying back debt from MBA degree at the moment. 

Had a lot of gold at one point but cashed it when the bull run ended. There will be time to get back in, I wager.


----------



## gibor365

> Eventual goal is:
> 
> 25% Canadian (12-Pack)
> 25% USA (S&P 500)
> 25% Gold
> 25% Cash and/or Bonds


25% Gold?! Isn't it too much? Do you mean bullion or miners?



> Yeah, almost. My preliminary plan is:
> 
> TD, RY, BNS
> T, BCE
> CNR
> FTS, EMA
> ENF, IPL
> CAR.UN, REF.UN


Hold 7 out of 12. Instead of T hold RCI.B (also T:US)... was thinking about CNR many times, but it's usually too expensive and yield is too small , may buy it if there will be big pullback after elections... Hold FTS, EMA, ENF and CU... was thinking to buy IPL , but opted out 
Hold other 5-6 REITs


----------



## Argonaut

gibor365 said:


> 25% Gold?! Isn't it too much? Do you mean bullion or miners?


Bullion, either in coins or GLD. Part of the permanent portfolio doctrine. Miners suck long term, but sometimes I would be interested in a short-term or medium-term trade. Owned the aptly named Argonaut Gold for a while and got out around $8. Zero interest in it anymore.

Interested in silver sometimes depending on its ratio with gold, but would probably not hold too much physical silver (weight-to-value issues).

Like I said, this asset allocation works for me, others may not be interested in gold as an investment.


----------



## gibor365

> Interested in silver sometimes depending on its ratio with gold, but would probably not hold too much physical silver (weight-to-value issues).


 For Silver I hold SLW


----------



## thepitchedlinkagain

glad I found this thread again....I was always thinking about seeing it expanded into a 10 or 12 pack,, What's the thoughts on how something like this would evolve as you get older? Would you keep the same 12 pack until your dead, or change it as you need the income after retiring??


----------



## james4beach

Argonaut said:


> Eventual goal is:
> 
> 25% Canadian (12-Pack)
> 25% USA (S&P 500)
> 25% Gold
> 25% Cash and/or Bonds


That's very similar to my own plans. We think alike... I'm not very keen on Europe/Japan exposure, and US has enough multinationals to give global exposure. And I still like having heavy Canadian exposure because I'm most familiar with it and I think can find the best investments domestically (I'm more likely to do well in this sphere than in the global sphere)


----------



## Argonaut

thepitchedlinkagain said:


> glad I found this thread again....I was always thinking about seeing it expanded into a 10 or 12 pack,, What's the thoughts on how something like this would evolve as you get older? Would you keep the same 12 pack until your dead, or change it as you need the income after retiring??


I'm always reevaluating, but keeping the same core principles. The portfolio is already great for income now, as it aims for around 4% dividend yield. That's about as good as it gets in this day and age without reaching for companies that yield too high or return capital. Who knows what interest rates will be when I retire? Maybe there won't even be such a thing as interest rates. 35-40 years is a long time ahead to predict the future. All I can do now is earn, save, and invest.


----------



## Argonaut

Performance for the 5-Pack in 2016 was *24.1%* including dividends, the best year yet. Some of this was the pipeline component coming back from a bad year in 2015. TD Bank was also a great performer. I plan to add more components over time but keep the same investing principles and sectors. TSX 2016 return was 17.5%, and you could probably add 2% for the dividends. Good news was that the portfolio outperformed the TSX even during a period where mining stocks did well, which I avoid purposefully. 

Time-weighted rate of return is annualized at *14.4%* since inception in 2011.


----------



## 1980z28

Argonaut said:


> Performance for the 5-Pack in 2016 was *24.1%* including dividends, the best year yet. Some of this was the pipeline component coming back from a bad year in 2015. TD Bank was also a great performer. I plan to add more components over time but keep the same investing principles and sectors. TSX 2016 return was 17.5%, and you could probably add 2% for the dividends. Good news was that the portfolio outperformed the TSX even during a period where mining stocks did well, which I avoid purposefully.
> 
> Time-weighted rate of return is annualized at *14.4%* since inception in 2011.



Nice to see that it has worked for you,,keep up the great work in 2017


----------



## james4beach

Argonaut said:


> Performance for the 5-Pack in 2016 was *24.1%* including dividends, the best year yet.


Congrats Argo! Hopefully you'll have another good year ahead (I'm hoping the same for my own similar portfolio). The large caps did ridiculously well in 2016.


----------



## My Own Advisor

Yes, they did! Happy for large caps in 2016


----------



## bobsyouruncle

Is the 5-pack the same as mentioned in the first page? I'd rather not wade through 19 pages to find an updated selection.

So that would be: 
Inter Pipeline
RioCan REIT
CN Rail
Telus
Bank of Nova Scotia


----------



## redsgomarching

bobsyouruncle said:


> Is the 5-pack the same as mentioned in the first page? I'd rather not wade through 19 pages to find an updated selection.
> 
> So that would be:
> Inter Pipeline
> RioCan REIT
> CN Rail
> Telus
> Bank of Nova Scotia


He updated on it on page 14-15 i believe.

Inter Pipeline (IPL)
CN Rail (CNR)
Telus (T)
TD Bank (TD)
CAP REIT (CAR.UN)


----------



## bobsyouruncle

redsgomarching said:


> He updated on it on page 14-15 i believe.
> 
> Inter Pipeline (IPL)
> CN Rail (CNR)
> Telus (T)
> TD Bank (TD)
> CAP REIT (CAR.UN)


Thanks!

Does this have tax benefits in a non-reg account?


----------



## redsgomarching

bobsyouruncle said:


> Thanks!
> 
> Does this have tax benefits in a non-reg account?


I believe each are canadian public corps eligible for dividend tax credit - might have to double check though.


----------



## Argonaut

I just made two trades in 2016. Switched Inter Pipeline for Enbridge Income Fund and switched RioCan REIT for CAP REIT. The first trade resulted in a net loss of a couple percent by the end of the year, and the second trade resulted in a net gain of several percent by end of year. I had switched BNS to TD a couple years ago I think.

Right now it stands as TD, CNR, T, ENF, CAR.UN. I plan to add a utility sometime to make it a 6-Pack, Fortis or Emera, but I'm in no rush. Also plan on expanding it to 12 stocks in the future when the TFSA gets large enough.


----------



## redsgomarching

Argonaut said:


> I just made two trades in 2016. Switched Inter Pipeline for Enbridge Income Fund and switched RioCan REIT for CAP REIT. The first trade resulted in a net loss of a couple percent by the end of the year, and the second trade resulted in a net gain of several percent by end of year. I had switched BNS to TD a couple years ago I think.
> 
> Right now it stands as TD, CNR, T, ENF, CAR.UN. I plan to add a utility sometime to make it a 6-Pack, Fortis or Emera, but I'm in no rush. Also plan on expanding it to 12 stocks in the future when the TFSA gets large enough.


This is great! Excited to see your additions. Do you DRIP all eligible holdings or receive the as cash?


----------



## bobsyouruncle

Argonaut said:


> I just made two trades in 2016. Switched Inter Pipeline for Enbridge Income Fund and switched RioCan REIT for CAP REIT. The first trade resulted in a net loss of a couple percent by the end of the year, and the second trade resulted in a net gain of several percent by end of year. I had switched BNS to TD a couple years ago I think.
> 
> Right now it stands as TD, CNR, T, ENF, CAR.UN. I plan to add a utility sometime to make it a 6-Pack, Fortis or Emera, but I'm in no rush. Also plan on expanding it to 12 stocks in the future when the TFSA gets large enough.


Is there anywhere where you've shared your philosophy for choosing, so that if someone wanted to follow something the same/similar they could choose without trying to follow you or keeping track on the forum indefinitely?


----------



## Eder

You seriously should at least spend 20 minutes to read this thread before shipping your bucks. Call it research.


----------



## Argonaut

I was thinking about having a financial blog or website, but going for the CFA charter and having a full time job means I don't have time for that. Anyway a lot of musings are in this thread as Eder says. But my approach was never intended to be a cut and paste for other people anyway. It works for me and I like to discuss it with others and share strategies. It took me a few months to decide that this approach was also appropriate for my girlfriend's investing as well. Let alone people on the internet who I know nothing about!


----------



## bobsyouruncle

Argonaut said:


> I was thinking about having a financial blog or website, but going for the CFA charter and having a full time job means I don't have time for that. Anyway a lot of musings are in this thread as Eder says. But my approach was never intended to be a cut and paste for other people anyway. It works for me and I like to discuss it with others and share strategies. It took me a few months to decide that this approach was also appropriate for my girlfriend's investing as well. Let alone people on the internet who I know nothing about!


If it beats the TSX, why would it not work for others?

P.S. I read through the thread. What I learned:


The TSX is supposedly easy enough to beat that an ETF isn't necessary, or perhaps even wise.
The 5-pack are leaders in their industry which pay out approx 4% dividends.
This is essentially a buy and hold approach.


----------



## Argonaut

It's not a silver bullet to beat the TSX. Although it has done so for the last 6 years, you can't buy past performance. I'm sometimes tweaking things here and there or thinking about the future and how that might look with respect to a portfolio today. But you're right in that it's mostly buy-and-hold.

If you invest with the couch potato style, this sort of top-down approach of choosing an allocation and sticking to it can work. But with individual stocks, it may be better to start from the bottom-up. What kind of stocks do you want to own, and why? That's what I did, and then it sort of morphed into a strategy from there. When you purchase these 5 or 6 or 12 stocks, you're owning the companies, not the investment strategy.


----------



## bobsyouruncle

Argonaut said:


> It's not a silver bullet to beat the TSX. Although it has done so for the last 6 years, you can't buy past performance. I'm sometimes tweaking things here and there or thinking about the future and how that might look with respect to a portfolio today. But you're right in that it's mostly buy-and-hold.
> 
> If you invest with the couch potato style, this sort of top-down approach of choosing an allocation and sticking to it can work. But with individual stocks, it may be better to start from the bottom-up. What kind of stocks do you want to own, and why? That's what I did, and then it sort of morphed into a strategy from there. When you purchase these 5 or 6 or 12 stocks, you're owning the companies, not the investment strategy.


There's a lot of sense and a history of performance with five stocks, or even Eder's Triple-Pack for his daughter.

It's whether to go all in with a handful or stocks, or split a few Canadian stocks with a diversified ETF.

I've been reading and thinking about this endlessly, and I don't want to keep investing such time going forward. I'm trying to make sense of something I've never looked at in my entire life, decide on a plan for my RRSP, TFSA, and and NRA, and then spend my effort on living, working, and saving, with the hope that by the end of it, even on my modest income, my wife and I will be comfortable.


----------



## CanuckBull

Argonaut said:


> I was thinking about having a financial blog or website, but going for the CFA charter and having a full time job means I don't have time for that. Anyway a lot of musings are in this thread as Eder says. But my approach was never intended to be a cut and paste for other people anyway. It works for me and I like to discuss it with others and share strategies. It took me a few months to decide that this approach was also appropriate for my girlfriend's investing as well. Let alone people on the internet who I know nothing about!


Wish I had seen this thread a few weeks earlier. I'd been away from investing for other commitments, now I'm back with 15-20 years to go. Gratefully I have the best income I have ever had (not what you think, just a high middle income!)

My TFSA is empty, Wife's TFSA is full with TD Growth dividends TDB887 and Scotia BNS385 mutual funds. I have some AQN.TO, MAW104, and REI.UN.TO in my RRSP. I just bought 15K MAW104 a few days ago. Had I known the 5-6 pack approach, I would have gone that route. I wont touch what I have but will continue with the 5-6 pack approach from now on. maybe when prices come down a little bit. Most stocks are in their 52 week high !!!

You guys are wealth of knowledge and experience. Thanks for sharing your findings. Please keep this thread going.....its a great sources for those learning....

Cheers


----------



## james4beach

I use a similar approach to Argonaut's, with a handful of stocks. I have back-tested my method 15 years and I agree that a bit of careful selection beats the TSX, since 2000 anyway.

However I still have hesitations about this method. The method that Argonaut, Eder, me and others are using emphasizes the "largest cap" TSX stocks. This means that small and mid caps have been underperformers.

All of this works since 2000, but there have been past periods where midcaps outperformed. So we all are riding a current "largest caps" theme.

What's going to happen to all our X-packs once the market theme changes again and the largest caps become underperformers? That's what worries me. It would take us 5 or 10 years to even notice that the theme has changed, and then it becomes too late to pivot and adapt.

And that's one argument for sticking to the broadest TSX Composite even though the "largest caps" are on a streak of outperformance.


----------



## treva84

james4beach said:


> I use a similar approach to Argonaut's, with a handful of stocks. I have back-tested my method 15 years and I agree that a bit of careful selection beats the TSX, since 2000 anyway.
> 
> However I still have hesitations about this method. The method that Argonaut, Eder, me and others are using emphasizes the "largest cap" TSX stocks. This means that small and mid caps have been underperformers.
> 
> All of this works since 2000, but there have been past periods where midcaps outperformed. So we all are riding a current "largest caps" theme.
> 
> What's going to happen to all our X-packs once the market theme changes again and the largest caps become underperformers? That's what worries me. It would take us 5 or 10 years to even notice that the theme has changed, and then it becomes too late to pivot and adapt.
> 
> And that's one argument for sticking to the broadest TSX Composite even though the "largest caps" are on a streak of outperformance.


As indexing grows and more money flows into the market large caps will continue to outperform - it is a virtuous cycle. As these companies are the largest components of market cap weighted funds, as the money piles in, their prices go up, leading to ongoing outperformance. Even most active managers are closet indexers. When the cycle turns and people stop putting money into index funds, mids and smalls will start to outperform.

I don't think one can predict when you'll have to pivot and adapt - the easiest way would be just to add mid or small cap exposure. You can do this by hand selecting stocks if you prefer, or broadly via an ETF.


----------



## james4beach

treva84 - good comments, I agree. For this reason I keep small & mid cap exposure in my Lowdiv portfolio, and am seeing if I can develop a good track record with them.

I've also considered investing in the Beutel Goodman Small Cap fund (link to performance) though it has a front end load fee


----------



## Argonaut

What is the threshold for large caps in Canada, anyway? 2 out of my 5 current names are in the ~$4B value, which to me is more of a midcap. I think to call it a large cap strategy is using only the words of j4b. I've never called it or thought of it as such for a moment. It's more of a sector selection strategy. Avoiding miners, consumer, technology, health care, etc. Because of their volatility or low dividends or unreliability or whatever. It's closer to dividend investing than large cap investing.


----------



## james4beach

Argonaut, ok I can see the point that it's more of a sector selection strategy. That makes sense. But don't underplay the market cap characteristics of your profile. Let's use median market cap so that the enormous TD doesn't skew it.

3 billion: TSX Composite median market cap from tmxmoney
16 billion: TSX 60 median market cap from tmxmoney
26 billion: Argo 5 pack (CNR, T, TD, CAR.UN, ENF) median market cap

So yes I agree sectors are a big part of your strategy but your picks also have quite large market caps vs TSX


----------



## mordko

treva84 said:


> As indexing grows and more money flows into the market large caps will continue to outperform - it is a virtuous cycle. As these companies are the largest components of market cap weighted funds, as the money piles in, their prices go up, leading to ongoing outperformance.


Historically, small caps have outperformed large caps. And the math doesn't really support the claim about indexing. People investing in the composite index contribute to each company's stock in the index growing by the same percentage.


----------



## Eder

The really good small caps turn into large caps over time. The others...well...


----------



## VLT

Argonaut said:


> I just made two trades in 2016. Switched Inter Pipeline for Enbridge Income Fund and switched RioCan REIT for CAP REIT. The first trade resulted in a net loss of a couple percent by the end of the year, and the second trade resulted in a net gain of several percent by end of year. I had switched BNS to TD a couple years ago I think.
> 
> Right now it stands as TD, CNR, T, ENF, CAR.UN. I plan to add a utility sometime to make it a 6-Pack, Fortis or Emera, but I'm in no rush. Also plan on expanding it to 12 stocks in the future when the TFSA gets large enough.


You've probably said, and I can't find it so I'll ask. Are these equally weighted?


----------



## Argonaut

Initially they were, but I don't mind letting them deviate a bit. Rebalance with new money rather than shifting. TD Bank has performed the best in the past year or so and is ahead of the pack at the moment.

When I move to a 12-Pack it'll be slightly different than equal weight -- CNR will be the largest holding given that I'm not interested in CP.


----------



## VLT

Argonaut said:


> Initially they were, but I don't mind letting them deviate a bit. Rebalance with new money rather than shifting. TD Bank has performed the best in the past year or so and is ahead of the pack at the moment.
> 
> When I move to a 12-Pack it'll be slightly different than equal weight -- CNR will be the largest holding given that I'm not interested in CP.


Thank you. I'm not adding new money but I get what you're saying.


----------



## TomB19

IMO, active balancing doesn't apply to stock investing. That's an index investing idea.

You try to keep things within sane limits but I can't imagine selling a great performing investment to buoy up a poor one.


----------



## Argonaut

Well then you can rebalance with dividends. Unless you're at the stage where you're living off the dividends and there's really no new money. In which case I would be inclined to just leave the share numbers as-is. But that's just me.


----------



## CanuckBull

I'm torn between Stock/Dividends investing and Balanced Indexes. My registered accounts need a revamp. Injecting some cash but I just cant push the button. need some insights.....


----------



## cn_habs

I was wondering what's everyone's picks for the telecom and O&G/pipeline sector. 

Telus seems cheaper than BCE and Rogers and Enbridge seems to be the easier pick but Keyera is expected to offer the faster growth. Any thoughts?


----------



## GalacticPineapple

cn_habs said:


> I was wondering what's everyone's picks for the telecom and O&G/pipeline sector.
> 
> Telus seems cheaper than BCE and Rogers and Enbridge seems to be the easier pick but Keyera is expected to offer the faster growth. Any thoughts?


If I was buying today I think I'd go SJR.B for the telecom and ENF for the pipeline.


----------



## Ag Driver

*Wrong thread*


----------

