Attention nieces, nephews and other family members

When we got together in the late summer, I heard a lot of talk about getting into the stock market to make money for retirement or future education or simply to get wealthy. The market had been on a record setting bull run and optimism was running rampant with the bulls.

Well, the bulls have halted their stampede. The bears have come out of hibernation and holding onto one's gains seems to be the name of the game today. And its a tough game. And it may be the wrong one. I don't know. I'm holding on. I'm resigned to losing a lot. I celebrated my wins over the years and now I must take my inevitable licking.

So far I have sold one stock: Hydro One. And that was not a sale based purely on the recent market weakness. Hydro One, H, is showing of decline based on its close connection to and control by the provincial government in Ontario under the guidance of Doug Ford.

There are other stocks I might jettison if there is a good rebound, one big enough to get me back into the black. But, there has to be a rebound. I'm not prepared to take the large cut in income that accompanies the sale of a lot of my stock holdings.

That said, I am not going to simply sit tight and wait. I'm going to watch my holdings carefully in the coming year. If I see a good exit opportunity, a chance to re-jig my portfolio to  put it more inline with my present thinking, I'm going to jump at it.

For instance, I've owned mostly XIC for years but I've also held a much smaller position in XMD. I have not seen much advantage to this strategy. XIC has generally performed better than XMD and it has paid a larger dividend. Every so often XMD outperforms XIC and when this happens at some point in the future, I'm selling my XMD and switching the funds into a better performing investment. I might even put the money into XIC. I'll make more in dividend income and my portfolio will be a little simpler.

I'm also looking at my bank holdings. In the coming year, there may be a chance to diversify my exposure to the Canadian banks. With the banks, I'd like to hold more banks not less. I'm mostly into the Royal, the ScotiaBank and the TD. I'd like to spread this investment out a bit, to diversify my holdings, by buying some Bank of Montreal and some CIBC at the very least.

But I won't be dumping any bank stock without a matching purchase anytime soon. The banks have a history of resisting the temptation to cut dividends during tough times. I'm going to bet the Canadian banks will hold to that tradition and continue to pay me quarterly come whatever in the market. And nothing, short of a recovery, lessens the pain of a bear market like money, like dividend income.

So, my advice to all my relatives looking to get into the market is "have a plan". Develop an allocation model based on your own personal needs and bolstered by your personal financial beliefs. And then, stick to it. When the time looks right, buy the good stuff, build your portfolio and do it with the confidence that comes from having a plan.

Stay in touch and have a happy new year!

What's black and what's red

What is black, in positive territory, and what is red, losing ground, in my portfolio? That's easy. Anything I bought back when I retired has climbed massively and is still up nicely from when I bought in. A market downturn of 50% would not drive these holdings into negative territory.

My recent buys are mostly a different story. Almost uniformly down. In the red. Emera and Fortis are about the only recent buys that are showing a profit. IPL, PPL, SJR.B . . .  and the list goes on, are all down. Some are now down in the four figures. Ouch!

Oh well - sigh - tomorrow is another day and, shortly, another year. And it may get a lot worse before it gets better. I'll sell a little on the pops -- if there are any pops in the near future.

Cheers,
Rockinon!

Battening Down the FInancial Hatches

Since the beginning of last year, Judy and my portfolio has dropped some 7.9% in overall value. That sounds bad but remember, we're retired and we take out some 3.5% annually, or a bit more, to live. Still, in a good year, we remove some and the market goes up even more. In a good year we make money. This year we lost it.

I bought some stock late in the year and much of it wilted. Bad move. Yet, my Emera and Judy's Fortis both climbed very nicely. Those two were the standouts. My TD Bank is down in the four digits and sadly it is par for this course at the moment.

It looks as if the correction is almost here. (A correction is a drop of 10% or more and a bear market kicks in when the losses hit 20% and more.) I'm looking about to raise some cash for future buying opportunities. It's tough letting go of stuff at a loss. I'm very poor at it. My Hydro One was perfect for dumping, it was up and between the labour problems and Premier Ford, it looked like it may take a quick trip to the mat. If it drops below $18.99, I may come off the sidelines and buy back in.

I've been pitting our actual present portfolio against a portfolio based on an allocation model that I calculated would be good for an aging geezer with a bad heart and against another portfolio called the Couch Potato. So far, all three are jockeying for the lead position. That said, our present portfolio is pumping out the most dividend cash. This lets me sleep at night despite the recent losses.

I'm working on a new, allocation model portfolio. It will be a bit more diversified than our present portfolio. If Judy thinks it looks good, I may make the leap to a full re-balancing in the coming year.

And what must the new portfolio offer in order to win our hearts? More dividend cash -- but without taking bigger risks. Too big a dividend is a dividend that almost certainly will be cut. One should not be greedy.

Cheers folk!

Freedom Fifty-five failed to deliver; it lost more than 25% of my money!

Look carefully at the posted bar graph.  I invested almost $4200 in March of 2000 with Freedom Fifty-five. It was an investment in my future retirement. After 15 years, only 41% of my original investment remained. The London insurance company running Freedom Fifty-five had lost 59% of my investment.

As bad as this was, I was assured that on turning 71 a 75% guarantee would kick in. I'd get back 75% of my original investment or $3147.53. This was guaranteed.

Well, I turned 71 and I didn't even walk away with my guaranteed amount. After contacting London Life in July, an investment expert appeared at my door. He was only involved for a brief time but between then and December 5.6% of my guaranteed amount vaporized. Amazing.

While the experts were investing my retirement fund, I was buying Fortis shares. I see Fortis as a solid investment for a retiree. It goes up and down in value but it always delivers a decent dividend. My Fortis grew by more than 10% in the time that my Freedom Fifty-Five fund shrunk 5.6%.

My Fortis pays 4.4% on my original investment. If my guaranteed funds had been put into Fortis, I'd already have been sent about $35. Granted, that's not much but it's still $35 more than I got from my Freedom Fifty-five investment. I was invested for almost 19 years and received not one penny of retirement income.

I'm going to let London Life and Freedom Fifty-five know about this post. If anyone at the London firm wants to explain how their whiz-bang investment experts lost not only a lot of my original funds but under their guidance continued to lose big chunks of retirement funds, they are more than welcome to post a comment.

A late add: I never heard a peep from them. Not one word.

The Market’s Been Falling. I’m Putting My Money in Stocks Anyway.

The title to this post is straight from a New York Times story of the same name: The Market's Been Falling. I'm Putting My Money in Stocks Anyway.

This an excellent article. It says what I feel but am afraid to say. I find it hard to lose money in the market but I feel downright guilty when friends and relatives enter the market at my encouragement and then lose five or ten percent of their investment.

The article tells us: "Some persuasive analysts marshal strong arguments that the main trend for stocks at the moment is downward. “There’s a good chance that the bull market is already over, that it ended in September, and that a bear market has begun,” said Doug Ramsey, the chief investment officer of the Leuthold Group in Minneapolis."

But read on: "Mr. Ramsey said, the American market is still overvalued. He calculated that stocks need to fall 25 percent below their Oct. 31 levels in order to reach their median valuations since 1970. Stocks outside the United States are about 10 percent underpriced compared with their historical valuations, he said, so there are better opportunities in market niches around the world."

If any of this is grabbing your attention, click the link and read the article. By the way, the NYT isn't all that expensive. You might consider a subscription.

Volatility is rocking the market

Yesterday was a down day. All my bank stocks lost more than a buck a share. Today the Royal Bank is up about $2.70. That's simply non-nonsensical. The bank's true value has not fluctuated that wildly over the past 24-hours.

I'm watching my stocks and considering lightening up when move up and into the black. Why lighten up? Because I see more dips in the future. I could be wrong, I've been wrong before, but I know I'll be more comfortable being a little less exposed in the coming months.

But I will keep a big presence in the market. I must. I need the income from the dividends. There is a limit to how much of my investment portfolio I can afford to jettison.

The following was added two days after this post was originally written. The day after this piece was posted, the bank lost value. Oh, it didn't lose even a buck but it lost a fair amount. And the next day it was down for much of the day and then headed up and into the black before the close. It gained 12-cents for the day. As I said, volatility is rocking the market.

Buying stock should not be gambling but business.

The market crashed again today. It has been heading generally down for months. Late last summer a fellow I admire asked my advice when it comes to investing. I put him off. At the time, I had a bad feeling when it came to the market and I feared he would lose money in the short term. I was right. Late summer was a poor time to enter the market.

About a month ago, I learned some of my relatives are considering putting some money in the market. I tried to encourage them to learn a bit more before putting too much money into stocks, mutual funds and ETFs. Again, I wasn't convinced that it was a good time to start investing. (Novice investors don't accept losses well.)

Why didn't I just tell all these folk not to invest as a correction was coming? Because I  didn't know. I don't have a crystal ball. Plus, my advice would have been contrary to one of the axioms of investing: Never try to time the market.

At least, never try to time the market as if it were a game and one is placing bets. Think of the market as place selling small slivers of ownership in numerous businesses. These slivers are stocks. If you have some money you don't need at the moment, some money that can be tied up for a number of months, possibly even years, and there is a business in which you'd like to have a sliver of ownership, it may be the right time to buy the stock.

The above is a screen grab of my top movers of the day. All moved down. And the banks all lost more than a dollar a share. That's a lot in one day. Think about it. If one owned a mix made up of a thousand bank shares, one lost more than a thousand dollars in just a matter of hours. And that is just today.

This year, the Royal Bank hit a high of $108.52. It closed today at $93.62. That's a loss of $14.90 per share. The TD is down $9.60 from its 2018 high and the Scotia Bank has lost $15.83. It is easy to see someone holding a thousand shares being down more than $12,500 or more from this year's highs.

If you are a gambler, you are upset. You bet on some losers. Nags. But, if you are an investor you own some small slices of three banks. That cannot be all that bad. Banks are good businesses to own. The Scotia Bank has a $3.40 dividend, the Royal yields $3.92 and the TD delivers $2.68 annually. The investor sees his bank stock as a solid source of income -- possibly as much as $3300 or more annually.

And the investor who is in for the long term, believes bank stocks will recover. The investor has confidence in the system. The investor will follow the financial numbers and if the bank ones are good or, even better, show improvement, the investor will buy more stock if possible. They might even buy that extra stock in a fourth bank, spreading the risk.

One never truly knows the future.