Monday, January 26, 2015

Investing: not gambling but still taking chances

I liked what I knew about Norbord. In my opinion, it made a good product and it had a commanding position in the industry. The product? Oriented strand board (OSB). One can think of OSB as a cross between plywood and the cheaper, both in price and quality, chipboard. There is a lot of OSB used in building construction, especially home building. As home building in the U.S. rebounds, Norbord should benefit. I bought some stock.

Norbord briefly popped and then started on a long, bumpy road downward. I should have bought more when it dipped below $22 but fearing the falling knife, I have some deep financial wounds from doing this in the past, kept me on the sidelines.

Today, Norbord is back in the black in my books. My tax free savings account, started after I retired, is now up almost 25%. Is this like winning a small lottery? No. This gain is simply the result of making a good call. A good investment call.

Take care, invest carefully, and, over time, you will win more than you lose. There is no way to guarantee a win with a lottery ticket. In fact, buying lottery tickets for all but the very lucky is a guaranteed way to lose money.

Learn about asset allocation, set some investment goals, find some stock analysts you trust . . .  And stick to your decisions unless something happens to prove you were wrong. Don't flit here and there, buffeted by changing financial winds.

I am going to go on record as saying I will hold Norbord until I have at least made a profit of about ten percent on my original investment. That was my original goal and I see no reason to change it. Because I am retired and I need to be moving into safer investments, I will put my investment plus the profits into something less risky, something less volatile. If I were younger I'd be bolder. But, I'm not. I'm old.

For instance, I will be making fewer forays into resource stocks like Labrador Iron Mines in the future. My winners have easily covered my losses in LIM. I didn't jump into LIM with both feet. Still, it was not a great move for a retired chap. But, my asset allocation encompasses making wild-flings-for-fun and I did not put more into LIM than I had budgeted as a manageable loss.

Will the path upward be smooth for Norbord in 2015? I don't know. I would be surprised if it was. Still, I have confidence Norbord will deliver a tidy profit in the end.

Other stocks and ETFs that have helped buoy my portfolio:

Bank of Nova Scotia: up 122%
Crescent Point Energy: up 34%
iShares XIC: up 36%
iShares MSCI Singapore: up 60%
iShares XMD: up 47%
Royal Bank: up 55%
Sun Life Financial: up 85%

Only four of my investments are in the red.

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