Wednesday, May 23, 2012

Dumped DRW: Seemed like the right thing to do

Just a quick update.

Today I dumped my Wisdomtree Global ex-US Real Estate Fund. (DRW:NYSE) With DRW losing value quickly, I can imagine this fund dropping another ten percent. If it delivers a decent yield come the end of June and if it has dropped well over the ten percent, I might, I just might entertain buying a little. But, for the moment, I'm out.

With all the economic uncertainty in Europe, dumping this international ETF seemed prudent. It hasn't performed well, it hasn't delivered the expected yield; It has been a dog.

I am still up for the year with my portfolio. So, I feel good about getting out now and possibly buying some better yielding investments in the coming months. I'll give a list of the stocks I decide to buy in the coming days.


Still mulling over the questions posed by a reader. I'm learning a lot as I work through all the research info in order to arrive at some answers I can stand behind.

Saturday, May 19, 2012

Risk and Volatility, Active vs. Passive management and more

Risk and Volatility

I have never been comfortable with risk questionnaires. I used to fill them out to appease the bank but I have refused to cooperate after having my responses thrown back at me. I was on vacation and my Latin American investment started to move up in value, rapidly. It was quickly becoming a relatively huge chunk of my portfolio. I had waited years for this damn fund to move and now it was. Unfortunately, I as on vacation and having so much of my portfolio in a "risky" investment went against my investor profile on file with the bank. They took it upon themselves to lessen my exposure. I had unknowingly given them this power while filling out the risk questionnaire.

I learned the risk profile questionnaire is designed to protect the bank as much as it is designed to protect me. This experience was one reason I took all control of my portfolio into my own hands.

Also, I learned that the bank and I see risk differently. I do not see volatility as risk. The world is an ever changing place. I'm comfortable with gains and losses. The tide comes in and the tide goes out. C'est la vie.

For a look at risk and volatility that makes sense to me, please read: risk and volatility by Gummy (don't ask.) Gummy sees risk, as commonly defined by the investment community, as financial techno-babble. Gummy may be attacking a bit of a straw man here, some advisers may see risk differently, but his criticism is right on when it comes to my experiences with banks and their investment arms.

Active vs. passive management

More to come. But now it is off to Port Stanley with the granddaughter. I've got a 33-month-old who wants to learn how to use a camera.

This is a picture that she shot yesterday. She loves purple and wanted to shoot a picture of the purple flower. I have cropped the image, set the endpoints and burned and dodged it in Photoshop but it is her picture at the core.

I'm trying to teach her to jump in and try. To look carefully first, compose her picture on the little screen and then take action: Shoot the picture.

I'll get back to this post soon. When I do, I will remove this silliness about my granddaughter and her photography.

Saturday, May 12, 2012

Unsettled Times

Recently I had a comment noting that it is hard to take advantage of a downturn in the market if one is fully invested, as I often am.

The person commenting was right. When the market is down, I put my dividends into what I hope will be good spots to stash the cash but there are times I wish I had a bit more to invest. Well, I've taken that comment to heart and moved a bit of my investments from the market and into cash. If the summer proves to be a bad time to be in the market, I'm prepared.

I bought some Inter Pipeline when it was going for the fire sale price of about $8. I've enjoyed a nice monthly dividend every since. Recently, my holdings had grown to about 160 percent of the original investment, and this does not count the dividends that I have spent for living in retirement. Nice. I sold all my remaining IPL.UN at just more than $20 this week. I can see IPL.UN climbing another ten percent but I'm comfortable exiting at this time.

I now have close to 8 percent of my portfolio in cash. I will remove a little to live but no more than what I would have made if I had continued to hold the stock. By doing it this way, the cash will last for more than fifteen years.

I'm comfortable.

If there is a crash, and with Greece threatening to back out of their debt solution promises it could be in the cards, the cash will add stability to my portfolio. Plus, I will have the funds to buy some of the bargains. If the market does not crash but climbs, my other investments will carry my portfolio higher.

It is a can't lose situation. I thank the person who made the comment. I'm comfortable and that is an important part of investing.

Trinidad Drilling (TDG) may be my next buy

P.S. Some of my recent plays, if you've been following, have done well, especially if you have gotten in and out as discussed. Progress Energy returned a quick ten percent and Penn West did likewise. If you have continued to hold as PWT turned south, my guess is that it will come back. There will be another exit point in the future. As long term holds, oddly I favour Progress Energy over Penn West but I'd rather not hold either well into the future.

Right now I am looking at buying some Trinidad Drilling (TDG). If it drops a bit more, I'm in. The dividend is small but it will do in a pinch. It's about 20-cents annually. Many believe that TDG will outperform and they see a future price of about $11 a share. Unfortunately, the risk is high.

This is what I found on the Scotiabank site:

Trinidad is Canada's fifth-largest contract driller with one of the newest, deepest, and most technically advanced fleets in both Canada and the United States, and growing exposure to Latin America. Trinidad's other business lines include coring, pre-setting, and rig construction.

They also say:

Solid outlook. We continue to have confidence in TDG's operations. With 65% of its fleet contracted for two years and essentially a Tier I fleet, we believe TDG is better insulated from reduced industry levels.

I checked some other sources and mostly they concur. I'll buy a thousand shares or so and move on when the shares get past $9. The dividend will keep me happy while I wait.

Cathedral Energy may be another option with 5.1% dividend

If TDG is not what you are looking for, my other pick in the drilling field is Cathedral Energy Services Ltd. (CET). This investment has the extra bonus of, according to Scotiabank, "a stable 5.1% dividend yield."