Friday, July 27, 2012

Taking a little off the table

Penn West had a nice little bump today as it followed along in lockstep with the market. I sold enough of my wife's PWT to give us the cash to get through the year. The small profit made from holding this stock for about a week was a nice bonus.

Now to sit back and wait. If all falls apart in the financial world, my wife and I have our dividends. If markets continue to simply stumble along, my wife and I have our dividends. If markets recover a little, hey, we have some profit along with our dividends.

Nothing is certain when one is guessing the future but I feel comfortable. I say, enjoy the feeling now because who know what the financial Gods have in store for us.

Some quick notes:

Cathedral Energy (CET) has finally made a solid move to the up side. Finally!
Penn West (PWT), as mentioned, has begun to get back into more familiar territory. I have my fingers crossed.
Sun Life Financial (SLF) climbed back into the black today. I heard a fellow on BNN say that he rather liked SLF. Nice to hear. (I have a friend who refuses to touch SLF as it was the insurance company, he says, featured in a CBC news show looking into travel insurance in Canada.)
My AUSE ETF is recovering from recent lows. Good to see. This says fear levels in Southeast Asia are receding.
From what I can see, almost the entire Canadian financial sector has had a rewarding day today.

Cheers!

Wednesday, July 25, 2012

Keeping your eye on the ball

As the markets bounce along, one day up and the next day down, it is important to watch the performance of one's portfolio and not get too hung up on what the rest of the world is doing. Find comfort in the stuff you own that is resisting the downward pressures of the moment and realize that all is not as bleak as the business pages of the paper would have you believe. (If some of the stuff I read is right, the world is coming to an end and I sure can't do much about that. That is out of my hands entirely. Oddly, this is very comforting.)

My overall portfolio is down. No surprise. But my Tax Free Savings Account is up. Not a year old, my TFSA is up 11.06 percent. Comforting. I bought Royal Bank at $45.01 and Cathedral Energy Services at $15.15. All very comforting.

I have a small RSP account that I opened at TD Canada Trust when I retired in 2009. That account is up nicely from its opening balance. It has about 14 percent in cash, gotta be ready for a really rainy day, and the rest is in Cathedral Energy Services, CPD (the iShares preferred Canadian shares ETF) and lastly the CIBC Monthly Income fund (CIB512). My most recent addition, CET, is up 2.7 percent today.

Not all of my relatively recent adds are up. AUSE is down 4.33 percent, SLF is down 5.77 percent and some of my early purchased shares of CET are down. Yet my REM, a real gamble, is still up nicely today: 12.7 percent in the black. Even my Singapore ETF is still humming along with a gain of 28.6 percent since purchase.

I confess my Penn West is struggling. But, I'm still rooting for the western oil and natural gas producer.

There is still lots to take comfort in. I'm cool.

Tuesday, July 24, 2012

Penn West suffered downgrades

With the turmoil in Europe continuing to fester, stock markets around the world are suffering. This was not the moment to try some day trading. Something I usually avoid, and for good reason.

I bought some Penn West Energy (PWT) for my wife for a quick profit and instead I have made a quick loss. It is a small loss. She won't divorce me over this but she won't pat my head either. Today, while floating about the Internet, I read this in a Business Desk report from the July 18, 2012 National Post:

Penn West shares have been hit substantially harder, having faced a litany of downgrades in recent months. The stock was down more than 4% shortly after 1:15 p.m. ET on the TSX to $12.76 per share, though it has fallen 37% since the start of 2012.

Mr. Pardy was also not the only analyst to lower his expectations for Penn West on Wednesday. Barclays Capital cut its rating on the company to Underweight from Equalweight in a research note published Wednesday morning.

Macquarie Capital and TD Securities also downgraded Penn West in May and June respectively as its share price has continued to steadily decline.

The company has pledged to reduce its mounting debt load by $1-billion over the next year through asset sales. While Mr. Pardy said he believes Penn West will be able to sell some assets successfully, “we have chosen to move to the sidelines for the time being pending further clarity regarding the timing and definition of the process, including the impact on its production levels.”

I'm looking for a window to ease my wife out and maybe lighten my own load when it comes to PWT.

Not all analysts are in agreement when it comes to PWT. StockReports + is still generally positive and recently upgraded the average score it posts for PWT. It only moved up a notch but PWT did move up.

I'm keeping my fingers crossed.

Wednesday, July 18, 2012

Guessing the future

Continuing on the theme of how hard it is to estimate accurately what will happen tomorrow, let alone in a decade or two, I ran some figures through a Monte Carlo calculator. An MC calculator will give a range of possible outcomes and not just pump out one result.

When I read something to the effect that if I invest so much and get such and such a return each year for so many years I'll end up with this, I cringe. The one thing I am certain of is that my investments will never return exactly the same amount two years in a row, let alone two decades.

Simply plugging an annual percent return into a calculation tells you next to nothing.

So, I plugged some numbers into an MC calculator and here are just two of the many results.


As you can see, based on past results, the above numbers could power a lucky portfolio well into the financial stratosphere

But take the same numbers and run another monte carlo scenario and you discover that an unlucky investor can have his/her RSP portfolio completely devoured in little more than a dozen years.


So, what will happen in the future? I don't know. But, if 80 percent or more of the results from my MC calcualtions are in the black, I'm happy.

And remember, if one actually saw their money disappearing at the rate it does in my second chart, corrective measures should be taken quickly and the total collapse would most likely be prevented.

Use the Internet to research investments

No one knows the future. No one.

That said, it is clear that some folk make more informed guesses than others. When you are investing you want to be among the informed.

Being adequately informed can be difficult. There's a lot of information out there and it is often in conflict. That said, start investing early in life and as your portfolio grows so will your abilities to discern good info from noise.

If you've been following my posts over the past few days, you will know I've been buying the western Canada oil/gas producer Penn West. I've averaged down my cost to own PWT to the point that I now have an exit point that is well within the target price of almost all analysts.

Yesterday I pushed my wife into the oil space by buying her a nice chunk of Penn West. At the time, I thought PWT would gain on the day and she would make a nice bit of change by selling before market close. This didn't happen. The stock dropped and only recovered late in the day. She ended up holding PWT.

This morning I did a little more research into oil prices. This is so very easy today thanks to the Internet. I read a number of reports similar to this one published by J.P. Morgan:

Oil prices have taken a beating in the last few months as euro-zone debt problems and bearish economic data from other major economies triggered concerns that demand for oil may fall. But sentiment has improved with the latest rebound in both West Texas Intermediate and Brent crudes, suggesting the bottom has already been reached. 

Will oil prices continue to firm up? In the short term, who knows? Will oil prices go higher in the near future? I think so. And so apparently does J.P. Morgan.
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By the way, a better investment for my wife would have been ARC Resources Ltd. (ARX). This stock is part of the ScotiaMcLeod Canadian Core Portfolio. I have allowed myself to get too focused on Penn West. Getting too focused is always a danger and usually a mistake. ARX jumped 1.34 percent yesterday and it would have been a better fit in my wife's portfolio. ARX yields 5.1 percent.

When I do get an opportunity to sell my wife's PWT, I'll probably keep a very small percentage. It does offer a fine dividend. I'll take another small chunk of her money and buy some ARX if it is still selling at a discount to its target price.

And a final add: After the open today, PWT had dropped more than two percent while ARX had climbed almost a full percent. Enough said.

Tuesday, July 17, 2012

Day Trading

I keep telling myself that I'm not going to try day trading. Then I get some cash ahead and I can't resist trying to make a little quick money. I confess, I haven't got the knack.

Recently, I bought some Penn West for myself and it is up. My goal here is to hold on for a couple of years and dump it if and when it breaks the $20 barrier.

Today I bought my wife some PWT. Oil was up in pre-market trading. I thought she might make a few quick bucks. It went up at the open but it quickly lost momentum and then retreated after investors heard Ben Bernanke speak. Oops!

I'll keep my fingers crossed and maybe I'll be able to extricate myself from this position soon. If she ends up with PWT as part of her portfolio, I won't be overjoyed --- but I won't be all that upset either. I'm sure this will resolve itself in her favour in the end.

The question is: When will she see an end?

Addendum


Before heading off to bed I checked the closing figure for PWT. My wife was up a penny on her investment. Hey, that 's better than a loss.

Then I checked the price of oil in Europe. It is already July 18th in Europe. I learned:

"Oil also rose as confidence among homebuilders climbed in July to the highest level in five years and US equities advanced. Crude, which reached an intraday high of $US89.46, settled above the 50-day moving average for a second day."

I also read:

"Oil rose to a seven-week high on speculation that oil inventories fell and as a report showed US industrial production increased in June.

"Prices advanced for a fifth day as supplies probably declined 800,000 barrels last week . . . 'The economic data is pretty good and it's painting a better picture for oil demand,' said Phil Flynn, senior market analyst at the Price Futures Group in Chicago."

I failed at day trading but I may still come out of this smelling like Roses.

I figure I can comfortably keep about .5 percent of our portfolio parked in PWT. If the stock makes a nice push back to its former levels I'll sell all but an amount equal to that half a percent. I'll consider that money parked and leave it to its own devices for a few years. If it does well, nice. If something awful happens, who cares.

I'm off to bed with a smile gracing my aging face. (I'll keep you posted.)

Friday, July 13, 2012

Finding a bottom

My Cathedral Drilling (CET) hasn't done much lately but that's good. The almost daily fall has stopped. It seems to have found, as they say, a bottom. I'm hoping I can now sit back and wait.

I'm not a big believer in stuff like bottoms. Oh, they exist, no doubt. But determining when one has hit bottom is only possible well after the fact. When the bottom is clearly history, then we can declare a bottom with confidence.

Now that I am so deeply mired into Penn West, I am hoping that I can soon declare it has bottomed, turned around. I don't need much of a recovery to make all rosy. Rosy is not to be confused with red. When it comes to PWT, I have lots of red.

Would I buy more PWT? I would consider it but I might pass. If the market is that weak, there might be better places to park my RSP savings and spread the risk a little.

Oh well, the markets open in a minute or two. Let's take a look at the opening action. I have a few stocks I watch. Mostly, I'm looking for entry points. I'm well invested and can wait patiently for what I see as bargains.

PWT has opened stronger. It's up more than a percent. Nice. CET is sitting on the sidelines. Trading is often very light when it comes to CET. All I ask is that these two stop hemorrhaging money.

All the other stocks that I follow are in the green. Such stocks as: IPL.UN, TDG, EMA, BEP.UN, FTS, PD, CPG.

Oil is above $86 at the moment. Anything over $85 is good. It may be a good end to a rough week. But it is always good to remember individual days, or even weeks, are only important when viewed in context. Take the long view.


Thursday, July 12, 2012

Added some PWT. Could not resist.


Penn West Petroleum Ltd. dropped into the $12.50 range today. I said just a day or two ago that the bottom was dropping out of my PWT investment. I couldn't have been more right.

Seeing PWT at today's price was simply too tempting. I bought the better part of a thousand shares. The purchase today did a great job at averaging down my per share cost. I'm happy.

I got into PWT through the back door. I originally bought Canetic Resources Trust and then Penn West and Canetic merged under the Penn West name. I wasn't happy when the merger took place and I haven't been all that happy since. The merged company has lost a lot of value over the years and at one point I was down very big bucks.

PWT has a fairly good name. It has a good chance of recovering a lot of value in the coming years. For those who are patient, I am, it may be a very nice stock to own if your entry point is in the $12.50 range.

The dividend at the moment is 8.6 percent and that worries me. When yields climb too high, I worry the dividend may get knocked down a notch. I don't lose sleep over this as even chopped in half I can live with the dividend.

Yes, I'm happy.

Wednesday, July 11, 2012

Jumping ship


Over the past few weeks my portfolio has been losing value. It is now well into five figure losses since hitting its high for the year. This is decision time. Some jump the financial ship at times like this, while others stay put and ride out the storm.

Jump early and you do very well. My problem is that I can never discern "early." By the time I'm feeling queasy the worst is here and the turn around is imminent.

Some of my relatively recent purchases are still in the black. REM is up 11.32 percent. I wish I had bought more. SLF is up 4.01 percent and I'm wondering how long until it drops into the red. The bottom is dropping out of my PWT but then the entire oil/gas sector is collapsing at the moment. The CET that I thought was a bargain at $5.12 is now down almost two percent since my recent purchase. My ZUT has been dropping, but slowly; It is still in the black with an 8.7 percent gain. My China ETF and my Hong Kong one are both in the red but my Singapore ETF (EWS) is still up by more than 25 percent since I bought it some years ago.

It's nasty out there and shows signs of getting a lot worse. Will I sell? No, I will buy if I get a gut feeling a bounce is on the way. And then I'll sell what I bought on the bounce.

If you only buy stock you would be comfortable being stuck with, (the bounce may not come), it is not a terrible approach. But it is not the best one either. I tried this trading stuff a few years ago and made a small profit and then got stuck holding IPL.UN. It was a good stock and I was comfortable being "stuck" with it. It delivered very good dividends and recently I sold my last holdings for more the $20.

As the markets around the world drop in value, I'm looking at what I own, and what I wish I owned, and looking for the right stock and the right moment to take a stronger position. I worry we are heading into uncharted waters and I worry I should have given more thought to "jumping ship."
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I figure oil, if not natural gas, will stage a comeback within a year or two. I'm looking at oily investments that will pay me a dividend while I wait for the turnaround. I heard comments on BNN yesterday that it could be late 2013 before oil gets back into three digit territory. And one must be prepared for oil patch companies to cut dividends as oil continues to dip below $85.

If some of my non oil investments drop a lot, I will consider adding to my position. I liked them enough to buy them once, I may find I like them enough to buy them twice.

One stock I have been following is: Brookfield Renewable Energy Partners L.P. (BEP.UN-T) The Daily Edge posted today by the ScotiaBank said: "We are raising our target price by $0.50 to $32.50 per share and maintaining our 1-Sector Outperform rating." That's enough to whet my interest. That and the 4.8 percent yield.