# What is your investment strategy, at a high level?



## james4beach (Nov 15, 2012)

There are many very successful investors on this forum, and I hear little bits here and there (e.g. Argo's Five Pack) but it would be great to hear people's investment strategies -- at a high level. Even if you think it's boring, or obvious, I still think it would be great to share.


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## james4beach (Nov 15, 2012)

My own strategy is: overall allocations similar to the permanent portfolio (nearly equal weights stocks, bonds, gold, cash) along with a few experimental strategies to hopefully beat the index.

This means that most of my investments fit obviously into the permanent portfolio methodology. Govt bonds, gold bullion and ETFs, stock indices, savings accts & GICs (which I categorize as cash). All straightforward and mostly couch potato stuff.

The experiments are a bit weirder. I have 3 in progress and am tracking them over a few years. I have small amounts of money in each. They're fun to play with, and with time I will see if any of them are good ideas. I have a thread on DIVZ for example, and though very volatile, it may be promising.


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## 1980z28 (Mar 4, 2010)

started back in 1980


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## Argonaut (Dec 7, 2010)

Right now it's over 100% in same 5/6-Pack I've been using since 2011. Goal is to end up with a modified Permanent Portfolio: 

25% Canadian Stocks (5-6 Pack) in TFSA
25% US Stocks (SPY) in RRSP
25% Gold in GLD and 1oz maple leafs
25% Cash/Bonds

Not interested in bonds right now, would keep that part cash or equivalents unless interest rates change significantly. Would also use cash portion to do some trading. It will take several years to secure this allocation, but I'm not in a hurry right now. Prefer to re-balance with new cash rather than with selling.


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## TomB19 (Sep 24, 2015)

My understanding of business dynamics is limited but I do know a couple of industries pretty well. I don't stick to those two industries but I do weight strongly toward them.

I look for businesses I want to own and then the strategy is: buy low, don't sell. My investment horizon is 20 years.


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## Oldroe (Sep 18, 2009)

I have 10 div stocks, it would be 22-24 years I've held some and drip them all with Shareowner. I also jump in and out of smaller stuff for profit to buy more of those 10 div stocks. 

On thurs I sold a weed stock for a 95% gain.

Then I have ladder GIC with money constantly available for opportunity's.


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## GreatLaker (Mar 23, 2014)

Low-cost broad-market indexing, pure and simple. Minimize cash.
60% equity / 40% fixed income.
Equity split 1/3 each to Can, US & global.
Fixed income split half in Cdn universe bond index, half in 5 year GIC ladders.

Based on writing of authors like William Bernstein, Charles Ellis, Rick Ferri, Dan Bortolotti, Larry Swedroe, Jack Bogle, Burton Malkiel.

My investment policy statement does make reference to dividend growth investing through individual stocks, preferred shares, high-yield bonds, but I am not using any of those techniques at this time.


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## pwm (Jan 19, 2012)

Been retired 11 years. 100% stocks, no bonds or GICs. My XIRR since Jan 2010 is 6.72%. The Bank of Canada inflation calculator says inflation during that period was 1.66%, so with rounding I'm getting a 5% real return. I'll be sticking with this plan from now on. Here's the breakdown:

View attachment 11602


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## Argonaut (Dec 7, 2010)

TomB19 said:


> Having said that, I think Argonaut's 12 pack is pretty clever but just as dangerous as any Internet hot tip when it comes to investing.


I don't think it's a hot tip, as that is something I tend to warn people against. Tips are for waiters, as they say. It's a strategy to take into consideration for the Canadian stock market. My thoughts on it evolve over time, but the fundamentals have remained the same since inception. I wouldn't even necessarily buy this for someone else, it's just what I'm doing with my money.


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## canew90 (Jul 13, 2016)

Retired 10 years and 100% Cdn equities. Invest for Income so look at my dividend growth below:


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## TomB19 (Sep 24, 2015)

Understood, Argo. I didn't mean to disrespect the wisdom you have shared with us.

The point I so badly presented was that I wouldn't use any internet strategy or ideas that I didn't understand. I think it's dangerous. Even if Warren Buffett called and gave me a hot tip, I hope I wouldn't take it. If I want to invest using Warren Buffett's strategy, I'd buy Berkshire.

That doesn't discount the educational value and stock ideas that yourself and others have presented. I've benefited greatly from this site and appreciate every morsel of wisdom offered. Thank you.


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## Market Lost (Jul 27, 2016)

I have a three part portfolio

1) Conservative - HISA, GIC, and emergency fund
2) Steady and reliable - ZAG, REITs, and insurance companies (held in anticipation of an int rate hike)
3) Anything goes - naked options, pipelines, utilities, financials, and short-term speculative stocks

Originally it was a 1/3 split but even without putting any new money into #3 for over 9 years, it's now over half my portfolio.


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## james4beach (Nov 15, 2012)

Interesting concept, Market Lost. So it sounds like your "Anything goes" bucket has done very well?


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## My Own Advisor (Sep 24, 2012)

A high-level:
-Invest in 30-40 CDN stocks for dividend income. The goal, to earn about $30k per year from those companies. At about $12,800 per year now.

-Invest in a handful of U.S. stocks for dividend income and index invest everything else - US and international markets. 

-Semi-retire at age 50 after I reach a $1M portfolio and paid off home.

Time will tell


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## Sm5 (Nov 2, 2014)

Stock pick Canada to avoid resource related stocks and seek out 'safe' dividend paying stocks to DRIP - 25% of portfolio;
Index the USA - 35% of portfolio; 
Active management for foreign ex-US as I feel this is an area that can benefit from active management - 35% of portfolio; and
the remaining 5% or so can go into bonds, or cash, options, or speculative plays.

Rebalancing through new funds only.

Apply leverage when it seems prudent, but only when my blended dividend rate will be higher than the interest payments. 

Rinse, repeat, and come back in 35 years.


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## 1980z28 (Mar 4, 2010)

My Own Advisor said:


> A high-level:
> -Invest in 30-40 CDN stocks for dividend income. The goal, to earn about $30k per year from those companies. At about $12,800 per year now.
> 
> -Invest in a handful of U.S. stocks for dividend income and index invest everything else - US and international markets.
> ...


That is nice :smile-new:


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## leeder (Jan 28, 2012)

Overall ideal portfolio weighting breakdown (does not represent actual breakdown, as I have some cash that I could put to work, and some of the actual %'s are about 3% from my ideal):

25% Canadian stocks
40% US stocks
25% EAFE stocks
10% Emerging market stocks

With the Canadian content, I hold about 10-15 individual Canadian stocks. These stocks represent mainly mid to large caps that have a history of dividend growth, lower payout ratios and debt ratios, and strong cash flows. I used to invest in the Canadian index, but, like others, I find the index too concentrated in the volatile resource sectors. Luckily, I didn't get burned too badly by the oil shock, as I had sold the Canadian index long before it occurred and my energy stocks (such as CPG) at the initial months even before the dividend cut occurred. I am currently a bit overweight with my Canadian content, so I don't plan to add more to my portfolio. That said, if I do add, I plan to add only to existing positions.

With my foreign content (US, EAFE, and emerging), my positions are mainly index ETFs. Unlike the Canadian index, I believe US, EAFE and emerging indices are not as concentrated. I am a bit underweight with my EAFE and emerging market exposure. I would like to add to these on any significant dips or in the next contribution month (next year when my TFSA and RRSP cycle comes up again).

My plan is to keep this up as long as I can. I still have quite a long time horizon. I may adjust my strategy as I get older (i.e., maybe add some fixed income), but I don't foresee any changes right now.


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## Jaberwock (Aug 22, 2012)

100% stocks, focused primarily on stocks that pay dividends with a high portion of stocks that regularly raise dividends.

Dividend income of 5+% in the RRIF, with enough dividend increases to offset inflation.

Non- registered investments focused more on dividend growth rather than dividend %age


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## agent99 (Sep 11, 2013)

James, what do you mean by a High Level? Most of the posts just see to be from your average CMFer. Were you looking for something different?


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## james4beach (Nov 15, 2012)

These replies were what I was looking for. I was curious about general strategy without getting bogged down into details (like exact stocks & ETFs, or exact percentages). I thought we might see more couch potato strategies actually.

agent99 - how about you ? Do you have multiple portfolios in play? I know you pick stocks, are your investments simply 100% equities in a stock picking portfolio, or are there other things going on?


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## DavidW (May 27, 2016)

My investment strategy the last few years has been a combination of _The Thomas Crown Affair_, the 1999 version, and _Outbreak_ 1995 - with occasional episodes of _Behind Enemy Lines _2001 and _Live Free Die Hard _ 2007.


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## agent99 (Sep 11, 2013)

james4beach said:


> agent99 - how about you ? Do you have multiple portfolios in play? I know you pick stocks, are your investments simply 100% equities in a stock picking portfolio, or are there other things going on?


James, 

No high level thinking or book learned theory here. Just doing whatever makes sense to us in retirement. 

Objective 14 years ago was to withdraw 4% pa from value of nest egg each year plus have portfolios grow by more than inflation rate. 

Fixed income has varied 40-60% of combined portfolios depending on value of equity, and at present only held in RRIFs (TFSAs soon) (Our safety Net!)
Only buy FI if it will return 2x inflation rate or more (to allow for taxes on withdrawal from RRIF). 
Stocks in taxable accounts are mostly stalwarts of the TSX that earn healthy dividends that provide cash flow for living expenses.
Stocks in RRIFs are similar because they will soon be withdrawn in kind. But also have some mining & energy & "growth" stocks that are mostly losers at present.
Not overdone, but not afraid to increase risk a little in return for higher return. However, very little trading. Mostly buy and hold. 

At present market values, we have more than achieved our objectives, but markets go up and down. I don't worry about them because the dividends keep flowing in (along with CPP/OAS)


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## Spudd (Oct 11, 2011)

I'm 90% couch potato, with the allocation:
25% Can
20% US
20% intl
10% REIT
25% Bonds

For the other 10% I play with buying what I feel are undervalued small-cap Canadian stocks, a few momentum stocks, and whatever else catches my fancy. I like to play but I limit it to 10% because I don't trust myself that much.


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## Nerd Investor (Nov 3, 2015)

At a high level:

*Non-reg CDN:* Dividend paying stocks: buy the best ranked on a value/quality weighted screen I have.
*Non-reg $US:* Credit spreads on US dividend paying stocks using same methodology as my RRSP selections. 

*RRSP:* Pretty much all US dollar - US dividend paying stocks, similar screen as for my Canadian ones but slightly different metrics and excludes financials. 
*DCPP:* Dollar cost average into an international index fund and an emerging market index fund. 

*TFSA: * ETF momentum rotation strategies (relative strength with an SMA market timing rule that goes to cash)
Small number of small cap stocks. 

I still have some hold-overs from when my porfolio/strategies were structured a bit differently but this is essentially what I'm moving towards. 
I always have a long-term view towards cash flow in retirement.


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## Koogie (Dec 15, 2014)

Here is where our portfolio actually sits at current. This is not "ideal" as it hasn't yet reached our target percentages but I am fairly happy with it. We are complicated by holding 2/3rds of our assets in a holding company and also by a bunch of legacy holdings.

cdn etfs	10% (mostly VCN and ZUT)
cdn dvy	12% (banks/ins. cos./telcos mostly)
us 5% (mostly VTI)
intl 5% (mostly VXUS)
private eq. 8% (funds loaned to our OpCo)
f.i. 55% (GIC ladders)
cash 5%

Currently planning on an early retirement. Am 43 and aiming for age 45. I effectively semi retired last September by cutting my own hours back to about 24 hours a week on average. Have always been an extreme saver and lucky to be a high earner during the boom years before the Grand Recession. Our conservative allocation reflects my wifes desire to sleep soundly at night. I would take on more risk but respect the fact that one day it is more likely to be her portfolio than mine.. lol 

Goals prior to full retirement include moving the cash and private equity into VTI and VXUS as opportunity presents and the funds are freed up. Possibly also to convert some of the GICs into VAB or similar but that depends on interest rates over the next two years. Am also toying with the idea of selling VCN and putting most of the funds into more of our current divvy stocks and the rest into VTI/VXUS. I usually just sit down, have a drink and relax until that feeling goes away......


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## mordko (Jan 23, 2016)

Overall strategy based on Couch Potato/Permanent Portfolio.

About half is in US and Canadian-based ETFs and the other half in British pension funds. 

Allocations:

- Canadian - 6% (XIC)
- US - 27% (VBR and VTI)
- UK - 13% (index tracking funds)
- Other Developed - 14% (XEF, VPL and UK funds)
- EM - 21% (VWO, EPI, UK funds).
- Fixed - 14% (HPR, UK funds)
- Other -5% (VNQ, PPLT, CEF.A, HUZ)

Rebalancing - once a year or if allocations are off by >20%
Target percentages are adjusted every 5 years

The hope is that this would achieve 8% money-weighted return on an annualized basis, which is typical for this style of portfolio and which is roughly where I am over the entire investment period since mid-90s.


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## AltaRed (Jun 8, 2009)

!0 years into retirement:

80% Equity:
- Cdn.... dividend paying stocks, REITs, prefs
- US & Int'l...... ETFs.... both US and Cdn domiciled

20% Fixed income (not including modest DB pension):
- GIC/Bond/debenture 6 year ladder
- HISA (online banks)


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## mordko (Jan 23, 2016)

AltaRed said:


> !0 years into retirement:
> 
> 80% Equity:
> - Cdn.... dividend paying stocks, REITs, prefs
> ...


I think Prefs are usually classified as fixed income.


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## AltaRed (Jun 8, 2009)

I actually classify prefs as Other. Only the old 'straight perpetuals' could be considered (long) bond like. The fixed (5 yr) reset class of prefs that have hit the market like an avalanche since circa the financial crisis can be some of the most volatile instruments around. In any event, about 8% of my portfolio consists of prefs (both straight perps and fixed reset). It won't be going any higher.


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## mordko (Jan 23, 2016)

Agreed, "other" makes sense. 

I bought reset prefs within HPR late last year. Wouldn't buy them at par, but at ~30% discount thought it would be OK. Yet they fell further and only now got back to the purchase price. Still, they are playing the role I had envisaged which was as a form of insurance against interest rate rises. 

They make up about 9% of the total.


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## Market Lost (Jul 27, 2016)

james4beach said:


> Interesting concept, Market Lost. So it sounds like your "Anything goes" bucket has done very well?


It took some time to get rolling due to learning the ropes just as the housing crisis hit. 

However, after the first couple of year of learning to take some lumps, it's done extremely well, and over the past 9 years I've done this I'm have a CAGR of 7.22%. This year has been a pretty good one, and I'm up 24.8% YTD. Now, I hope I'm not jinking myself. :crushed:


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## MrMatt (Dec 21, 2011)

At a high level, buy profitable companies that have been profitable for a while with good prospects.

Plus a few gambles.

Worked out well so far.


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## janus10 (Nov 7, 2013)

Combine the adage of buy low and sell high with use of naked options, derivatives and futures.

Wait for really good setups (contango flipping to backwardation as one trigger), use the above tools as appropriate to get leverage and scale in and out.


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## humble_pie (Jun 7, 2009)

.


old manuscripts. rustic farm properties. ski hills. goat herds. queen anne sterling silver. rich husbands. early pine furniture made here in la nouvelle france. a few stocks. an emily carr. two lismers. some options. the beaver hall group. prudence heward.

.


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## TomB19 (Sep 24, 2015)

janus10 said:


> Combine the adage of buy low and sell high with use of naked options, derivatives and futures.


I believe in: buy low, don't sell.


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## NorthernRaven (Aug 4, 2010)

humble_pie said:


> .
> 
> 
> old manuscripts. rustic farm properties. ski hills. goat herds. queen anne sterling silver. rich husbands. early pine furniture made here in la nouvelle france. a few stocks. an emily carr. two lismers. some options. the beaver hall group. prudence heward.


I'm partial to tulip bulbs, myself - due for a rally any day now...


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## Market Lost (Jul 27, 2016)

humble_pie said:


> .
> 
> 
> old manuscripts. rustic farm properties. ski hills. goat herds. queen anne sterling silver. rich husbands. early pine furniture made here in la nouvelle france. a few stocks. an emily carr. two lismers. some options. the beaver hall group. prudence heward.
> ...


That's "husbands", with an 's'?


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## Pluto (Sep 12, 2013)

1. My available money is destined for cdn dividend paying stalwarts. Companies that have a history of weathering storms. they have lots of assets, debt is not large relative to equity, and the return on equity is decent. The idea here is to get some income with low risk of losing capital, and a high chance of making the capital grow a bit. This means the big 6 banks, 2-4 piplines, 2-3 telecoms, and a couple of utilities. I could care less about diversifying by industry. Safety is not really in diversification, it is in the quality of the company. If I was young with meager savings, say 5000 or less, I would have no problem putting it all on one stock, then save another 4-5000 and buy another one. I like buying during corrections. A correction can pair 1 to 2 years of growth off a stock and the stalwarts come back. Bear markets are even better. They can pair 5-12 years of growth off, providing a fine opportunity to buy stalwarts. I have no plans to sell these. These re buy and holds. In the event of a correction or bear market, I will buy more of same on margin then upon recovery sell some to pay off the debt. 

2. Some of the dividend income is earmarked for so called growth stocks usually smaller than the stalwarts, lower dividend, and growing faster. I like to buy these in a correction or bear market. Another way to say it is, I like a market reset before committing as it tends to squeeze any excess out of p/e ratios. These are usually not buy and holds. Buy the breakout, and when they run out of gas, take profits and buy more stalwarts. 

3. Turnarounds: These are the cyclicals usually. Oil, mining, autos and what not. These are never buy and hold. Buy when they are in trouble, and sell when they are booming. 

I don't expect to put more than 10 - 20% in growth and turn around.


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## mars (Mar 11, 2014)

I've been trying to refine my way of investing over the last few years as I have become more comfortable with managing my investments.

Currently I have about 15% of my portfolio in prefs and ETFs just to collect the divies. I have around 75% in dividend stocks from Canada, US, ADRs, etc. I use the rest to do quick trades such as stocks I think are going to move because of a specific event - EFN is an example, they are splitting into two different companies so I bought shares when the price dropped and recently it is coming around and starting to rise as the split date approaches.

The other thing I started doing back in June is writing covered calls. I do this with my dividend stocks and sometimes I will buy a stock just to write the calls. An example was today I picked up shares in Microsoft and immediately wrote covered calls on the stock, this gave me an instant 1.6% return, if the shares are not called away I will write another call on the stocks next month, if they get called I make some additional cash from the increase and will look for another stock to do the same trade. 

I just started in June as before I wrote any calls I learned about them and how they work. I am currently working on learning more about other option strategies and will implement those once I get to a point that I feel comfortable with knowing what I am doing.


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## BigMonkey (May 31, 2016)

I invest in myself & 100% equities using ETFs.


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## lonewolf :) (Sep 13, 2016)

Drop shipments, cut me a cheque I order product from manufacturer you pay shipping & duties I make a profit on the order. My favorite trade to make using other peoples money


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## mark0f0 (Oct 1, 2016)

My strategy is basically to own XIU on lots of credit. Collect the dividends, use them to pay down the credit. 

I borrow at 1.5% which works out to be approximately 1% after-tax. XIU currently yields around 3% on a cash basis, and has an after-tax earnings yield of nearly 7%. Historically earnings can grow at some rate resembling economic growth.

The TSX (and hence, XIU) is significantly undervalued, especially relative to real estate. The TSX P/E is ~15. Canadian RE's P/E based on 2013 peak prices was approximately 35 nationwide. 

I believe that these numbers will eventually be reversed. With earnings growth, I believe the TSX will be at the 60,000 level within a decade, while housing will drop nationwide by over 50% nominal and 66% real. The TSX P/E will be 35. Canadian RE P/E will drop to 10. At which time, I will sell my XIU holdings and pile into rental properties.

Wash, rinse and repeat once or twice but probably less aggressive each time around. Each overall cycle of outperformance seems to take 10-12 years (ie: housing outperformed stocks 2001-2013 in Canada, for example!).


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## mordko (Jan 23, 2016)

^ makes sense to me, at least in general terms. A couple of questions:

- how do you borrow at 1.5%?
- why would you expect P/E of 35 for stocks? Bubbles like that are extremely rare. 15 is pretty close to historic average. 
- as always, there are several scenarios. E.g. House prices could stop rising and stagnate for an extended period rather than actually crash. And if they crash, so will TSX.


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## Bort (Mar 19, 2015)

Up until the middle of summer I was a strict couch potato investor. In August I completely changed my strategy (and did everything I said I would never do), and sold all my index funds. I then began investing/trading solely in cannabis stocks. I have a core position that I will hold until I feel the bubble will burst, in the larger more stable companies: CGC, APH, MT, OGI. I add to these positions with available cash when the dips occur.

That's where about 40% of my portfolio sits. I trade with the other 60% in the smaller/mid size cannabis stocks (ACB, SL, THC, EMH, etc.). Usually day trade, however if I'm in the red on a trade I will usually just hold it. 90% of the time it's back in the green within the week. Complete and utter speculation is allowing these stocks to rise at a rapid pace right now.

In September alone I am up 40% on my money. Risky, perhaps... but being in my 20's I'm willing to accept that risk. That being said, I also use my HELOC (3.2%) to add to the excitement :triumphant:.

Forward thoughts: Once the hype is gone and these things come back to reality, I will revert back to a couch potato investor.


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## mark0f0 (Oct 1, 2016)

mordko said:


> ^ makes sense to me, at least in general terms. A couple of questions:
> 
> - how do you borrow at 1.5%?


Interactive Brokers. I think you can figure out how much $$$ I'm using here by doing the math on their tiers system.



> - why would you expect P/E of 35 for stocks? Bubbles like that are extremely rare. 15 is pretty close to historic average.


Because bull markets end in manias typically. 



> - as always, there are several scenarios. E.g. House prices could stop rising and stagnate for an extended period rather than actually crash. And if they crash, so will TSX.


House prices stopped rising pretty much nationwide in 2013. And a housing crash would be quite positive for the TSX as it was in the 1990s, as capital is freed from the housing sector and directed towards the markets. 

With houses falling in price, and the TSX looking so undervalued with a high dividend yield on the index, what else really is there to buy? Where else can you obtain a 3% tax-paid dividend that grows at 7-8% annually over the long term? (ie: 6-7% from earnings, ie: E/P, 3-4% from nominal GDP!) 

I anticipate the Bank of Canada will need to cut its policy rate down to zero to deal with the ongoing housing price declines and the economic stagnation such brings. That puts 5-year GICs at what, maybe 1%? Investors aren't going to deliberately starve themselves to death, they're going to pile into another bubble.


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## humble_pie (Jun 7, 2009)

Bort said:


> Up until the middle of summer I was a strict couch potato investor. In August I completely changed my strategy (and did everything I said I would never do), and sold all my index funds. I then began investing/trading solely in cannabis stocks. I have a core position that I will hold until I feel the bubble will burst, in the larger more stable companies: CGC, APH, MT, OGI. I add to these positions with available cash when the dips occur.
> 
> That's where about 40% of my portfolio sits. I trade with the other 60% in the smaller/mid size cannabis stocks (ACB, SL, THC, EMH, etc.). Usually day trade, however if I'm in the red on a trade I will usually just hold it. 90% of the time it's back in the green within the week. Complete and utter speculation is allowing these stocks to rise at a rapid pace right now.
> 
> ...




what wonderful entertainment. This is one of the funnest stories to appear in the forum in 2016.

Plugging once called me a mother bear in the forum who defends her cubs. It's true i tend to encourage the young, so to you may i say:


the above is crazy like a fox
how will you know when the hype is gone
what are your criteria for detecting reality
using your HELOC is way overdoing things imho
won't you please keep us copiously posted

.


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## james4beach (Nov 15, 2012)

mark0f0 said:


> I anticipate the Bank of Canada will need to cut its policy rate down to zero to deal with the ongoing housing price declines and the economic stagnation such brings. That puts 5-year GICs at what, maybe 1%? Investors aren't going to deliberately starve themselves to death, they're going to pile into another bubble.


I agree that the central banks will be cutting rates again, but I'm not sure that's going to scare more money into stocks. And yes I think the Bank of Canada is on its rate to zero.

At this point I think investors are "all in". Retirees have already started to draw down capital, or will be imminently. Plus there is so much bullish sentiment out there I really don't think there's any more money to find for stocks.

Pension funds have already gone heavier into stocks in response to ZIRP and QE. In other words there is no more money on the sidelines.

The younger generations (e.g. 20s and even 30s) have no money to invest in stocks. I can tell you first hand that my coworkers, some of whom earn over 100k, have nothing in the stock market and that isn't going to change in the foreseeable future. Same in both Canada & USA.


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## mark0f0 (Oct 1, 2016)

james4beach said:


> At this point I think investors are "all in". Retirees have already started to draw down capital, or will be imminently. Plus there is so much bullish sentiment out there I really don't think there's any more money to find for stocks.


I believe investors are "all in" all right. "all in" on GICs and other fixed investments. What are the stats, like 80-90% of TFSA accounts are 100% in cash or GICs? And we know that the housing bubble is financed with absolute mountains of GICs and other savings deposits. The balance sheets of the banks make this perfectly obvious. 

At some point, with rates driven down to zero or negative, investors will need to go somewhere. When presented with the option of renewing into a 1% GIC (0.7% after-tax!), or a 3%-yielding XIU with dividend growth upside, I believe eventually the TSX option will make more sense to a large swath of Canadians. 



> Pension funds have already gone heavier into stocks in response to ZIRP and QE. In other words there is no more money on the sidelines.


Disagree here. Pension funds have been chasing bonds, as part of the 'immunization' fad. And they've been chasing "alternative" assets such as RE. If anything, pension funds appear to be under-allocated to stocks, at least in Canada.




> The younger generations (e.g. 20s and even 30s) have no money to invest in stocks. I can tell you first hand that my coworkers, some of whom earn over 100k, have nothing in the stock market and that isn't going to change in the foreseeable future. Same in both Canada & USA.


Sure, the workers aren't buying. But the companies are, with buybacks. Throw in "GIC refugees" and you have a recipe for a much higher TSX.


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## capricorn (Dec 3, 2013)

50% : mawar balanced
25%: TD monthly income
25%: US stocks (individual stocks. holding 6 currently)

If I find new money to invest, put them in individual Argo-5 like stocks on TSX.


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## mordko (Jan 23, 2016)

Mark,

Very interesting. You are seeing future with certainty. I am seeing it as an event tree with probabilities assigned to each branch. For example interest rates might go up or down. Given Liberal plans to borrow and spend, I assign conditional probability of 70% to rates going up. In the event of rates going down, we are having a deflation. Under that scenario TSX falls with a 90% probability simply because that's historic performance for deflationary conditions. 

And if house prices actually drop by a lot (a low likelihood event, they tend to stagnate or drop a little after a bubble), then almost certainly a lot of cash is going to be sucked out of Canadian economy. House bubbles have been supporting the economies of Vancouver and GTA and if people stop feeling rich and remortgaging, spending drops too. Also, our real estate has attracted a lot of foreign money, that would cease as well. And banks would lose money too. All in all, with a major house price drop, TSX falls with a 90 percent probability. 

Anyway, admire your intestinal fortitude, I would never borrow on margin to invest in stocks.


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## Bort (Mar 19, 2015)

humble_pie said:


> what wonderful entertainment. This is one of the funnest stories to appear in the forum in 2016.
> 
> Plugging once called me a mother bear in the forum who defends her cubs. It's true i tend to encourage the young, so to you may i say:
> 
> ...


I figured some criticism would follow. As I mentioned, I try not to hold these stocks overnight if possible. I do hold some core positions long (roughly 40% right now). The rest, I simply day trade. As I said, the sector is heating up like crazy and the speculation is driving up the SP's. I made 35 trades in September, winning 70% of the time. The majority of my losing trades were me selling back at what I bought them for... as the SP wasn't moving the way I thought it would. Very small losses. More often then not, I would catch momentum and sell for a 6-10% gain. Even more often, the SP would rise another 10%... but I've accepted that I will never sell at the top and to never be too greedy. 

Hype will continue to flood into the sector until after legalization occurs. If legalization never occurs, then a lot of people will lose money... including myself. That's a bet I'm willing to take.

All I'm saying is that currently, it's by far the hottest sector. I have made great returns thus far, and will continue to employ what I wrote about in the initial post. Being a younger investor with a stable job, I can afford the risk, and will certainly reap any rewards. I encourage you to actually look up any pot stocks that hold a valid Health Canada license to produce and/or sell and follow along. The returns speak for themselves at this point and I feel as if the sector is still on the ground flooreaceful:.


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## Eder (Feb 16, 2011)

If pot is legalized it may sell for $300/ounce but $290 of that will be taxes....weeds are easier to grow than soy beans.


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## GreatLaker (Mar 23, 2014)

Eder said:


> If pot is legalized it may sell for $300/ounce but $290 of that will be taxes....weeds are easier to grow than soy beans.


YEAH... I saw some analysis on CBC's The Exchange that compared pot to tea. Both are dried leaves, easy to produce, distribute and sell. I don't remember the details or the analyst's name, but he strongly recommended against trying to make money investing in marijuana as it gets legalized.


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## hboy54 (Sep 16, 2016)

Hi:

Unlike many who calculate and figure, trying to find an edge, much of what I do and hold is arbitrary. However there are a few foundation principles...

Stocks have historically been the best returning asset class at about 8% PA. This is better than fixed income and real estate. In the absence of any way to predict the future, the most reasonable thing to my mind is to assume this situation will continue. Not necessarily the 8% bit, but the best performing asset class, especially given the current state of RE and FI pricing.

I tend to hold only companies that trade in long term useful (usually) real goods that don't change much. This avoids my being in stuff I don't understand and stuff that might be of a transitory nature, or changing quickly. So I like things like OSB, a fundamental building material, even more fundamental now that some building codes allow wood structures to 6 stories high. Or MX, methanol a feedstock chemical. Or oil, copper, food, the financials ... I avoid stuff like Facebook, Google, Microsoft and Apple because even in hindsight I do not understand why they are left standing and all the peer companies failed over the last 3 decades.

I see volatility as a feature, not a bug. More volatility provides more opportunity to buy lowish and sell highish. So stocks are a better vehicle with more volatility than ETFs or mutual funds.

My brain is not wired for the usual "fear a loss more than value a gain".

Given the previous points, I am quite happy buying more shares at ever lower prices, building a huge current loss position, when most investors will not. Buying ever lower plus patience and time (very) often equals outsized profits. 

I can think abstractly, what might be playfully called doing a FFT (fast financial transform). The real FFT is a mathematical operation that transforms a signal from time domain to frequency domain to assist in understanding what you are trying to achieve in an engineering sense. Similarly my made up FFT is a transform from dollars to the assets or nature of the business if you will. So for example, consider an oil company that at time 1 $10,000 ACB, $10,000 market<->100 barrels of oil. Consider time 2 $20,000 ACB $10,000 market<->500 barrels of oil. In dollar domain, you are down $10,000 or 50%, but in asset domain, you are up 400% or 400 barrels. Most can only see the (likely) transitory loss of dollars, and not the actual increase in real physical assets in the holdings. By sticking with companies that trade in real useful things, and by adding to the quantity of real useful things I own, the dollars tend to follow eventually.

Most of the time, my goal to do SFA. The activity level picks up during the greater volatility times, either general market like 2008/2009, or specific industries/ companies like oil, mining and Bombardier the last 2 years.

I don't benchmark yearly because what I do has a much longer time frame. My benchmark is 8% PA average over years. I know how well or poorly I am doing over the short term, but it is not actionable information in the sense that it can drive a change in what I do.

The stocks I own are pretty much arbitrary. For example, there is no reason or justification as to why I own CM, RY, BMO, and BNS but not TD. I have some industry and international diversification, but I don't stock pick in the sense that it is usually meant: Doing a bunch of reading and figuring, trying to predict what will do really well. Given what I do, I don't think it matters what 20 or so stocks I hold as long as they meet the conditions of long term useful stuff that is unlikely to go bankrupt due to the product being rendered obsolete, and a bit of diversification.

In fact, my holdings at a really high level can be in a sense considered vectors for human emotion, like mosquitoes are vectors for malaria. When people really want to unload something out of fear at a lowish price, I am your guy. Then when a few years go by, and things are more upbeat, and your fear has transformed to greed, I'll sell it back to you highish. In between is the do SFA time.

I leverage at about 25% of holdings as borrowing costs are 3% against my average returns of somewhat higher.

Never done options or short selling.

MX is a good long term example. I have absolutely no recollection as to why I first purchased 600 shares about 20 years ago at about $8. I soon after (year or 2) purchased 1600 more at about $4. It went under $2 at one point, I guess I didn't have another $5000 kicking around to buy another 2500 shares. About 10 years go by doing nothing but collect a few dividends. Then volatility/opportunity/heavy losses struck: After recent high about $35, purchased again at $19, $17, $8 during the panic 2008/09, sold in mid to high 20s a few years later to rebalance a bit. More recently purchased about $31, sold at $37, purchased at $38 and $37 to currently hold 5100 in high single digit% of portfolio. Imagine all the reading and research I avoided by just playing with MX all these years instead of a series of 20 or 50 stocks I could have run through after much reading and figuring.

There you have it. Stocks only, mostly Canadian. Arbitrary. Lazy: don't do much reading, research or calculating. Long term useful products. Think in asset domain not just dollar domain. Look for volatility not look to avoid volatility. Mostly buy and sell what I already know and understand to maintain portfolio balance or react to opportunity. Go somewhere completely new (oil, mining) if things get really and obviously interesting. Try to do absolutely nothing most of the time. Bit of leverage.

hboy54


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## Eder (Feb 16, 2011)

Thanks for taking the time to type up this post (novel)... and for your honesty...many here won't like your investing style but I do.


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## amitdi (May 31, 2012)

I am 30-something. Dont need money for another 15 years. frugal with savings rate of 40% of gross salary. have stable-ish job, single earner.

RESP - Faber's Relative Strategy based on a research paper. Buy 2 ETFs with relative strength every month from a pool of diverse 12-15 ones.

TFSA 1 - buy and sell 5 Stocks every quarter based on a rule-based momentum strategy.

RRSP - buy and sell 5 Stocks every quarter based on a rule-based momentum strategy. this is different strategy from above. both are loosely taken from "What Works on Wall Street"

TFSA 2 - right now this is bonds as i am scaling back on equities, waiting for a correction. but eventually this will be similar to above. all 3 are in CDN stocks, but i plan to get into US stocks. just couldnt do it because i keep "feeling" that CAD will rise.

DC Pension - selected the "aggressive" portfolio from a set of 5-6 they have, i think its all equity or 80-20 dont remember

ESOP TFSA - 6% goes towards ESOP. strategy is - sell everything in December and free up cash.


===========
Future - 
HELOC - this will also be the 5-stock quarterly (or maybe 10-stock annual) strategy but idea is same.

my mortgage is at 1.85%, so i never pre-pay. wont do it until maybe it reaches 5-ish.


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