Tuesday, August 9, 2011

On buying low or timing the market

I try to buy low but one look at my portfolio makes it clear that I often don't. This should come as no surprise as it is impossible to know the future.

They say, "Don't try to time the market." That sounds like downright foolish advice. One has to try. Just don't be too upset when you fail. And don't try too hard.

Surely, you were not surprised when the market corrected. There have been signs for months that the market was losing momentum. I took the weakness as a time to dump almost all my mutual funds. They were not doing all that well and they were not delivering the dividends I need in retirement.

I kept only two mutual funds: the TD Monthly Income fund and the CIBC Monthly Income fund. I have approximately 15 percent of my portfolio in each one. Both these funds hold their value rather well in a severe down market. This is not surprising as both are nicely balanced funds with a good chunk of bonds in each. (The CIBC fund pays a better monthly dividend while historically the TD fund has performed a little better overall.)

Today I tried to time the market; I bought on the bounce. I bought the following:

  • AUSE WisdomTree Trust Austrailia Dividend Fund --- Dividend 6.84% --- Average Risk
  • CPD Claymore S&P/TSX CDN Pref Share (ETF) Units --- Dividend 4.84% --- Low Risk --- 5 Star (Performs more like a bond investment than an equity one.)
  • REM iShares TR FTSE NAReit MTG Plus Capped Index Fund --- Dividend 10.46% --- Low Risk --- 5 Star
  • TD Monthly Income Fund --- Dividend 3.12% --- Low Risk --- 5 Star (I buy this for safety.)
  • XRE iShares S&P/TSX Capped Reit Index Fund --- Dividend 5.32% --- Average Risk --- 4 Star
  • ZUT BMO Equal Weight Utilities Index ETF  --- Dividend 5.54% --- new ETF but has been in the 1st/2nd Quartile

I've been watching these investments for sometime.  I liked them all for a variety of reasons for my retirement portfolio. Today they all were priced for sale, for sale to me.

Tomorrow they may be even better priced. I may have bought early. I know they cost more today than they did yesterday. So, I bought 'em at a price I wanted, for a price I've been waiting for, and I'm not going to worry.

Hey, you can't time the market.

No comments:

Post a Comment