# Investment strategy which requires very little time and the return is ok



## PWong (Mar 26, 2016)

I invested by active mutual funds previously but found its return below the index, so I googled and looked for investment strategy alternatives which requires very little time and the return is ok.
As a result, I discovered the Couch Potato strategy.
I like it because it requires very little time (rebalance portfolio once per year) and the return is very close to the index.
This will be my primary strategy - my major percentage of investment, mainly ETF, will be based on it.
A secondary strategy will be Beating the TSX (BTSX).
i.e. I will buy a few stocks recommended by BTSX.
Please comment whether this sound reasonable.
Please share your experience about the Couch Potato strategy and/or BTSX.


----------



## Just a Guy (Mar 27, 2012)

Neither strategy requires "very little time" in terms of growing your money, it requires "very little time" in terms of time to manage. As long as you understand that distinction, I think you'll be fine with either.


----------



## GalacticPineapple (Feb 28, 2013)

PWong said:


> I invested by active mutual funds previously but found its return below the index, so I googled and looked for investment strategy alternatives which requires very little time and the return is ok.
> As a result, I discovered the Couch Potato strategy.
> I like it because it requires very little time (rebalance portfolio once per year) and the return is very close to the index.
> This will be my primary strategy - my major percentage of investment, mainly ETF, will be based on it.
> ...


The whole point of the couch potato is that you're not trying to beat the indexes. Why employ two conflicting strategies?


----------



## bgc_fan (Apr 5, 2009)

GalacticPineapple said:


> The whole point of the couch potato is that you're not trying to beat the indexes. Why employ two conflicting strategies?


It is not that unusual. It is the core and explore method. The couch potato being the core of your investment portfolio and you take a bit of a risk for other stocks.
http://www.moneysense.ca/magazine-archive/best-of-both-worlds/


----------



## tygrus (Mar 13, 2012)

Funny people want to spend more time rearranging their sock drawer than managing their money.


----------



## james4beach (Nov 15, 2012)

I think many people do what the OP suggests. You primarily index, and then take some gambles in another portfolio or account. My only suggestion is to use separate accounts so that you can track the performance of the different strategies.

Beware that many people try to beat the index, and very few succeed in doing so. Usually when we read about this, none of us really takes it to heart and so we go try to pick stocks anyway. Tracking and watching your own performance will be the thing that finally convinces you that indexing is the best long-term approach.


----------



## indexxx (Oct 31, 2011)

bgc_fan said:


> It is not that unusual. It is the core and explore method. The couch potato being the core of your investment portfolio and you take a bit of a risk for other stocks.
> http://www.moneysense.ca/magazine-archive/best-of-both-worlds/


Yep, I agree with this and think the OP is on the right track. Most of my holdings are index funds, my 'beat the index' stocks are usually tech plays like Apple and Nvidia, and I also hold a few good divvy payers to drip.


----------



## gibor365 (Apr 1, 2011)

> A secondary strategy will be Beating the TSX (BTSX)


 Is it strategy similar to "Dogs of the DOW" ? you buy 10 stocks with highest yield on TSX (exclude former trusts)?
In this case (combining both strategies) , you will be over weighted in Canada .... maybe better if you will replace Canadian equities in Coach potato strategy by BTSX?
On the other hand you can replace US equities in Coach potato strategy by Dogs of the DOW 

Thus, you will need only 1 ETF for rest of the world 
BTW, how ofter do you plan to rebalance BTSX portfolio? Once per year? But if yield of 1 stock strongly overpasses yield of another during the year? What if stock cuts dividends?


----------



## GalacticPineapple (Feb 28, 2013)

tygrus said:


> Funny people want to spend more time rearranging their sock drawer than managing their money.


I like rearranging my socks.


----------



## TomB19 (Sep 24, 2015)

It seems to me, an individual saving the appropriate amount of money for retirement will experience a shift in the importance of these funds over time. If you have $200K in an RRSP, you should comfortably be earning something close to 5% on average. That's $10K per year.

I would invest a lot of time, for $10K per year.

You'll get to retirement or, at least, financial stability a lot quicker if you know what you're doing. It's not that difficult to learn the basics.


----------



## Beaver101 (Nov 14, 2011)

TomB19 said:


> It seems to me, an individual saving the appropriate amount of money for retirement will experience a shift in the importance of these funds over time. If you have $200K in an RRSP, you should comfortably be earning something close to 5% on average. That's $10K per year.
> 
> I would invest a lot of time, for $10K per year.
> 
> You'll get to retirement or, at least, financial stability a lot quicker if you know what you're doing. *It's not that difficult to learn the basics*.


 ... but it does take time and that's something alot of people don't have (or the patience thereof) as noted by the OP's thread title ... well, maybe except GalacticPineapple who likes to re-re-arrange his socks(?!), and not pineapples? :biggrin:


----------



## drpap (Nov 10, 2015)

Sorry to interrupt, but I was wondering, if someone wanted to manage their money a tad more than employing a purely couch potato investment, where would one start to "learn the basics"?

I would like to learn more in general from picking stocks to shorting stocks how and when to do it, etc.

I'd like to learn more to manage a small amount that I'd be willing to entirely gamble, and to learn how the pros on this forum do it.

I am currently a very long term passive couch potato investor and simply want to be more active in hopes of learning more, and potentially (sometime in the future) making a little more profit than I am currently making with this.

Any guidance on resources and where to get a solid foundation would be great (aside from going to Univ for it). Preferably with alot of real-life examples, so I don't get lost in the theory-muck of things.

Also, I have looked at the sticky on the investing thread with the reference to 8 investing books, I would be looking for something more hands-on with easier to grasp concepts and/or examples. Online resources are always great too.

Much appreciated.


----------



## none (Jan 15, 2013)

drpap said:


> I am currently a very long term passive couch potato investor and simply want to be more active in hopes of learning more, and potentially (sometime in the future) making a little more profit than I am currently making with this.
> 
> .


That's the rub though - by getting into active trading the opposite will actually happen.

The couch potato method maximizes the probability of ending a time frame with the most amount of money. Sure, you could speculate and potentially make more but you probably won't.


----------



## gibor365 (Apr 1, 2011)

Current BTSX methodology
The current methodology takes the following form:

1.Sort the 60 stocks in the S&P/TSX 60 by dividend yield.
2.Eliminate former income trusts from the sorted list.
3.Invest equal dollar amounts in the 10 highest yielding stocks in the remaining list.
4. Reconstitute once a year.
(If fewer than 10 stocks are desired, the list is resorted by price from lowest to highest and stocks are selected beginning with the lowest priced.)

I understand that currently there are no income trusts in TSX60, but what are "former income trusts "? CPG, ARX ...what else?


----------



## humble_pie (Jun 7, 2009)

drpap said:


> Sorry to interrupt, but I was wondering, if someone wanted to manage their money a tad more than employing a purely couch potato investment, where would one start to "learn the basics"?
> 
> I would like to learn more in general from picking stocks to shorting stocks how and when to do it, etc.
> 
> ...




looking at your message & reading between the lines, you'd like to gamble with a small amount of $$ & you'd like to find a resource or a teaching modality that would show you how, with plenty of advice & hands-on examples?

there are subscription newsletters that offer services like the above. It would be a terrible mistake to subscribe, of course, but they do offer specific examples.

apart from newsletters, which are likely to teach by negative instruction, there is no other way to learn except by climbing that steep hill all by oneself, in baby steps. Meanwhile keeping the couch potato in tip-top condition.


----------



## drpap (Nov 10, 2015)

humble_pie said:


> looking at your message & reading between the lines, you'd like to gamble with a small amount of $$ & you'd like to find a resource or a teaching modality that would show you how, with plenty of advice & hands-on examples?
> 
> there are subscription newsletters that offer services like the above. It would be a terrible mistake to subscribe, of course, but they do offer specific examples.
> 
> apart from newsletters, which are likely to teach by negative instruction, there is no other way to learn except by climbing that steep hill all by oneself, in baby steps. Meanwhile keeping the couch potato in tip-top condition.


I didn't mean examples of what actually to buy going forward. Just pointers of prior trends or historical data to explain fundamental concepts. I was looking for a layman's guide to investing, as the verbose book versions tend to drivel on a lot on theory, which can be confusing for anyone without a degree in economics or whatnot.

Just was wondering where people started off, and looking for a good point to start. I figured all the investing gurus on here would surely know some source of info. I wasn't asking for hand holding if that's what was interpreted.


----------



## humble_pie (Jun 7, 2009)

dr pap i don't know of any quick-n-easy short primer on how to buy or short speculative stocks. If you've never owned individual stocks at all, perhaps the first 2 titles in the 8-with-weight list might be ok? canadian stocks for dummies?

i am wondering how you were able to set up & manage your couch potato. Moving on to individual stocks is just another stage in a continuum. The same learning modalities would apply, the reference points in the learning process would be similar.

perhaps you are one who - for one reason or another - finds books a bit daunting. Would audio books perhaps be more manageable?

another technique might be to borrow 5 or 6 books from the library, then quickly browse each one. The idea would be to aspirate some key opinion of value or core point of view out of each book, but to put each down before it becomes oppressive (not the best way to proceed but at least it's better than nothing.)

lastly, i'm a tiny bit concerned about someone who has mastered a couch potato but who doesn't like to read, someone who thinks books are drivel, suddenly saying he wants a tip sheet on how to short stocks ...


----------



## Moneytoo (Mar 26, 2014)

drpap said:


> Just was wondering where people started off, and looking for a good point to start.


Check out these threads: rodbarc's DGI http://forums.redflagdeals.com/investing-idea-dividend-growth-1587815/ and Trading idea based on Graham (he's also great with answering questions and sharing his knowledge)

Also watch what dlhunter and Jeenyus1 are trading: http://forums.redflagdeals.com/what-did-you-buy-what-might-you-buy-1363161, but of course copy-cat at your own risk


----------



## drpap (Nov 10, 2015)

Thanks for the tips humble_pie. Perhaps I did things backwards and I'm not aware of it, but following a couch potato strategy - after doing research of course - is quite different (at least in my mind) vs being able to do pick stocks and/or short them. There's a ton of great references on solid couch potato strategies with pretty clear cut guidelines on what to do and how to do it.

Having said that, I just wanted to expand my horizon and learn more about HOW to pick stocks individually, and when to short them, etc. Kind of how a lot of other savvy investors are doing it on here. I wasn't asking for a tip sheet per se, I was just asking for a general direction of where to begin doing research to LEARN more about investing, but from an easier to grasp source.

Perhaps I phrased it wrong, but I did not mean to imply book are drivel as a whole, but that they tend to go off on a lot of tangents and drivel a lot on theory, which can be cumbersome for a newbie coming into investing.

I am fully aware I will not make millions by investing for myself, I am not disillusioned. But I would like to learn more about the various facets of investing, and how to do them. How do I pick a stock (without of course asking for a tip sheet), when to buy/sell if I was to go down that route (short & medium term investing), when to short and by how much (how do I know when its the right time). Just some more advanced concepts which I wanted to learn more about.

As for my couch potato investing, it is (for the most part) a long-term plan with minimal effort. Having done research and having found 4-6 ETFs to invest in and balancing them out every 3 or so months, is not really that complex. Then again, as I said, I may have done things backwards and not have realized.

Once again, thanks for the tips humble_pie.


----------



## drpap (Nov 10, 2015)

Moneytoo said:


> Check out these threads: rodbarc's DGI http://forums.redflagdeals.com/investing-idea-dividend-growth-1587815/ and Trading idea based on Graham (he's also great with answering questions and sharing his knowledge)
> 
> Also watch what dlhunter and Jeenyus1 are trading: http://forums.redflagdeals.com/what-did-you-buy-what-might-you-buy-1363161, but of course copy-cat at your own risk


I really appreciate the links Moneytoo. I will look into them and hopefully grow from there. Maybe someday I'll have something to actually contribute on these forums too.


----------



## humble_pie (Jun 7, 2009)

pap you appear to have built a fine couch potato, so this means you are much farther along the path to stock selection than you may be giving yourself credit for. 

some of the processes are the same, ie geographical & sector allocation. Some of the worries are the same, eg could-this-high-flying-sector-be-a-sell-now? could-this-crashed-&-burned-sector-be-a-buy-now?

here's a question i like for a very first stock pick. It's all the more applicable since you have your couch potato already up & steaming ahead. The question goes, What stock is close to you & your life right now? clothing? smartphone? bank? sports equipment? IP provider? do you work for a publicly-traded company? 

the answer - just one stock to begin with - should pop into your head in a second. Next step is to identify one or two of its competitors. Not all competitors, just one or two.

after that, research away. How are their earnings? PE ratios? can you find simple 10, 5 & one-year linear charts? can you plot out the 200-day moving average? the triple moving average? do you see how these cross each other?

do the companies have recent important insider trading activity? take a look at INK insider, if your broker doesn't offer the service for free.

visit their websites. Check out their news, check out their dividend histories, check out the bio histories of the directors & executives (i always do this; i'm looking for management with sound career experience in the industry plus i'm alert to avoiding sleaze.) Most corporate websites have videos & recent presentations prepared for their investors.

does your own pet stock have a very different recent history from its competitor(s)? if so, what caused its relative success/downfall?

most brokers offer the Recognia technical analysis service, what does recognia have to say about your pet stock & also about its competitors?

lastly, is there a thread for your stock here in the forum? this might be worth reading, although please keep in mind that this very morning, cmf member Mukhang Pera was gracefully warning us that the forum consists solely of "invective, misinformation and lies."

all of the above activity for only one stock! and a decision to buy hasn't even been made yet? it'll keep you busy for a wee while.


----------



## drpap (Nov 10, 2015)

humble_pie thanks again. Lots of insightful tidbits to take note of while I start doing more research on all this. Coupled with Moneytoo's links, hopefully I'll get some more know-how on things. 

As for anything else you mentioned, I have no clue about the specifics you were referring to, however, as with any public forum, everything should be taken with a grain of salt, especially when opinions and facts sometimes get blurred.

Just really want to learn a little more and be a tad more savvy. Figuring out when to buy a stock and sell it, and till what price to short a stock, etc. Without having insider information (obviously) it feels that any stock trading would be reactive based on news releases or shareholder meetings. Just trying to grasp how people are able to predict buy and sell patterns, and price ranges at which to short, etc.

Appreciate the input guys.


----------



## PWong (Mar 26, 2016)

bgc_fan said:


> It is not that unusual. It is the core and explore method. The couch potato being the core of your investment portfolio and you take a bit of a risk for other stocks.


Yes, that article express my view - Core and explore investing.
Thanks!


----------



## PWong (Mar 26, 2016)

gibor said:


> Is it strategy similar to "Dogs of the DOW" ? you buy 10 stocks with highest yield on TSX (exclude former trusts)?
> In this case (combining both strategies) , you will be over weighted in Canada .... maybe better if you will replace Canadian equities in Coach potato strategy by BTSX?
> On the other hand you can replace US equities in Coach potato strategy by Dogs of the DOW
> 
> ...


Beating the TSX (BTSX) is a Canadianized version of the Dogs of the Dow.
I discover BTSX recently and have not implemented it yet.
Excellent point! I may be over weighted in Canada.
I will do research about the Dogs of the DOW investment strategy.
Which 1 ETF for the rest of the world do you recommend?
I plan to rebalance my portfolio once per year.
My secondary portfolio may not be large enough to buy all stocks recommended in the BTSX or the Dogs of the Dow.
After taking transaction expenses into account, I plan to buy only a subset of the stocks recommended in the BTSX or the Dogs of the Dow.
I assume that the stocks recommended by the BTSX or the Dogs of the Dow are ok (close to or even better than the index).


----------



## PWong (Mar 26, 2016)

humble_pie said:


> pap you appear to have built a fine couch potato, so this means you are much farther along the path to stock selection than you may be giving yourself credit for.
> 
> some of the processes are the same, ie geographical & sector allocation. Some of the worries are the same, eg could-this-high-flying-sector-be-a-sell-now? could-this-crashed-&-burned-sector-be-a-buy-now?
> 
> ...


Thanks!


----------



## My Own Advisor (Sep 24, 2012)

FWIW, I don't follow BTSX strategy although I own the same stocks. That's because the buying and selling every year in fees take their toll over time. Not for me. Buy and hold and buy more when things tank.

I think a primary strategy of passive investing is great, and if you wish, some dividend stock selection is a very good "Investment strategy which requires very little time and the return is ok".

Don't overthink it


----------



## james4beach (Nov 15, 2012)

Let's check up on the BTSX for recent periods. This post describes the 2019 BTSX portfolio, and this one shows the 2020 BTSX portfolio.

BTSX for 2019 was: ENB, POW, TRP, BCE, EMA, CM, MFC, BNS, T, SJR.B
BTSX for 2020 was: IPL, ENB, CM, BCE, PPL, BNS, POW, T, SJR.B, EMA

*Performance for 2019:*
BTSX +26.6%
XIC +22.8%

*Performance for 2020, Jan 1 - Dec 18, YTD:*
BTSX -8.4%
XIC +6.0%

The 2019 performance was nice, but the 2020 YTD performance was absolutely horrible, doing 14% worse than the TSX!

*Cumulative total performance from Jan 1, 2019 - Dec 18, 2020*
BTSX +16.0%
XIC +30.2%

Over these two years, BTSX has about half the performance of the TSX index. Well look at that, I guess _it isn't so easy_ to beat the TSX.


----------



## MrBlackhill (Jun 10, 2020)

james4beach said:


> Let's check up on the BTSX for recent periods. This post describes the 2019 BTSX portfolio, and this one shows the 2020 BTSX portfolio.
> 
> BTSX for 2019 was: ENB, POW, TRP, BCE, EMA, CM, MFC, BNS, T, SJR.B
> BTSX for 2020 was: IPL, ENB, CM, BCE, PPL, BNS, POW, T, SJR.B, EMA
> ...


Portfolios with high returns will also have some years where it performed worse than the index, it's simply the global volatility of the risk-return.

What's a few bad years when the 30-year track record is 12% CAGR against 9% CAGR?









BTSX results — DividendStrategy.ca


A 30+ year track record As of the end of 2021, the 30-year average rate of return using the “Beating the TSX” method was 13.13%. To put this in context, the benchmark index rate of return was 10.46% over the same time period. There is not a single mutual fund in Canada with a track […]




dividendstrategy.ca


----------



## james4beach (Nov 15, 2012)

MrBlackhill said:


> What's a few bad years when the 30-year track record is 12% CAGR against 9% CAGR?


It's true that only the long term record matters. This strategy was first published in 1996, so there really is a good track record of 24 years here. BTSX is more viable than stock picking newsletters that have much shorter histories... this one has actually demonstrated real performance over 24 years. This is good, I like that.

The challenge is (like with any non index approach) how the investor responds to this year, or the last two years. Trailing the index by 14% this year is just horrendous; are investors going to be cool with that? How about watching the TSX index double your performance over the last two years.

Would you be cool with that and continue sticking with the strategy? People using BTSX have had a horrible two years, especially this year.


----------



## AltaRed (Jun 8, 2009)

It often takes several years, a decade or more perhaps, to have had the experience to 'stay the course'. My perspective is today's 'higher tech' generations are less likely to be patient in such matters and thus sticking to broad based index investing overall is the most promising way to avoid 'buy high and sell low'. It is just too easy with today's low fees and a million options to jump all over the place.

Most will be best served to just buy an asset allocation ETF or so and get one's jollies elsewhere in life. Boutique strategies like the BTSX can't win all the time, if no other reason than Canada as a total market cannot be right all the time. The world is where it is at. As the Periodic Table of Annual Returns for Canadian Investors tells us time and again. Why try to beat the clock?


----------



## afulldeck (Mar 28, 2012)

AltaRed said:


> Why try to beat the clock?


Time is short and needs are great? Sure it makes sense for those who have a long time to make hay stay the course. Those on the short list may need/want to swing for the fences.


----------



## AltaRed (Jun 8, 2009)

That is exactly the inverse of what should be done. Those with a long horizon have time to correct their experiment in swinging for the fences. It is the opposite for those with little time to recover. 

There is no better than a 50% chance of beating the market...by simple math of weighted average aggregate investors in the total market. A swing for the fences at a late(r) stage in accumulation has a 50% chance of leaving one worse off, potentially severely so.


----------



## MarcoE (May 3, 2018)

It's very, very difficult to beat the index, and it also involves a good amount of luck. Even the greatest and smartest investors struggle to consistently beat the index. Most can't, not for the long term. That's why I just buy and hold an index. Not because I'm lazy or dumb (well maybe I'm a bit of both) but because it's the best way to invest over decades. I do keep a small amount of money for stock picking, but that's my Vegas money -- just for fun, not for serious investing. I'd rather spend my time doing something else and just let my index do its magic over years and decades. But that's just my opinion. Others here have very different opinions.


----------



## I am the Walrus (Jul 9, 2018)

Paging Mr. Wong... can we get an update?


----------



## afulldeck (Mar 28, 2012)

AltaRed said:


> That is exactly the inverse of what should be done. Those with a long horizon have time to correct their experiment in swinging for the fences. It is the opposite for those with little time to recover.
> 
> There is no better than a 50% chance of beating the market...by simple math of weighted average aggregate investors in the total market. A swing for the fences at a late(r) stage in accumulation has a 50% chance of leaving one worse off, potentially severely so.


Agreed.

But that isn't the scenario (late(r) stage) I was suggesting. I was thinking of something sadder--the young family stage. This is definitely the stage when accumulation is low and the needs are great. The braver thing might be to take that swing since it might make a positive 50% difference to those left behind, but 50% chance of missing the swing doesn't change much.


----------



## newfoundlander61 (Feb 6, 2011)

Mawer and some good solid funds to build a nice long term portfolio.


----------

