Interesting Day Today - Interview on BNN

I see that I now actually have a few followers, other than just my friends and family, so I assume that you saw me on BNN today. I must say that it was an interesting experience being interviewed by Pat live on TV. I know my family and co-workers got a big kick out of it.

I have been asked to outline my approach in a little more detail, so here goes:

You start by selecting a stock - let's take Westjet (WJA-TSX) for example. You then need a site that allows you to graph the stock price and compare it to a moving average (I use my bank trading site, but I think Yahoo and others have this service - any home-gamers likely already have a site that lets them do this).

Next, you graph the daily stock price and the 40-day moving average line (you can use the 50-day, or any other, if you prefer, but I like the 40-day) and make sure you look at six months worth of data at least (a year is better).

Right now, the price of WJA is above the 40-day moving average so that means that you keep it if you already own it but you don't necessarily buy it (you missed the buy point), but you CAN always buy it if you want, since it is in HOLD territory (and it HAS been going up steadily since early November, all above the 40-day moving average line).

IF the share price was to go down over the next few days, the daily price would approach the 40-day moving average. When the daily price goes below the 40-day moving average, you SELL WJA. I only check each stock in the evening, so if the daily price is below the moving average, I put in the stop loss (a few cents lower than the current price) for the next day. I use stop losses since I work during the day but if you have the luxury of being able to watch the market, you can wait until the open to see where WJA goes - selling it if it goes down and maybe waiting a bit if it starts to go back up (it could have been a false sell signal).

You should look at the historical data from the past year and note how many times the daily share price bounces off the 40-day moving average and goes back up (for WJA, I count 4 times). That is why this line is a good buy / sell indicator.

Similarly to the above, if a stock you are following is currently below the 40-day moving average (like CP, for example), you wait until the share price appreciates and goes up through the 40-day moving average and then you BUY the next day.

Plain and simple - you buy a stock when the daily price goes UP through the 40-day moving average and you sell a stock when the daily prices goes DOWN through the 40-day moving average.

** Additions I have made to this strategy:

1) I didn't like when I bought a stock and it went up initially, only to end up going back down, meaning I didn't make any money. To counteract this, once a stock is up a bit (say 5 - 7%), I put in a stop loss to preserve some of the gains (careful to give the stock a bit of room to move).

2) If I don't own a stock, and the daily price is above the 40-day moving average and stays above it and goes back up then I buy it (just like if it had been below the line and moved up through it). Once I buy the stock this way, I follow it the same was as the other stocks I follow and sell it when the graph tells me to.

Keep in mind, there are only three possibilities for each stock you follow - BUY, SELL, or WAIT (keep it if you own it, don't buy it if you don't). I really do keep it that simple.

For tomorrow, for example, I will look to sell HXU and ENF.UN if they go down more, since they fell below the 40-day moving average line today. I will also look at selling COS.UN (I actually should have sold it today, but didn't).

The BUYS I am looking at for tomorrow are LIF.UN, S (note - released good results today), and TRP. Keep in mind that if I buy them tomorrow and they drop on Friday, the graphs may tell me to sell it. False buys and sells are a reality of my approach and I just have to learn to live with them.

As I say in my profile, my goal is to have more winners than losers, and to limit the size of the losers. Sounds simple, but as you know it can prove challenging. In the last 16 months (starting in November '08), I am up in 14 of the months, even in 1, and down 0.75 in the last. Given the state of financial markets during that time, that is a pretty good record. Especially when I only spend about 20 minutes each evening watching the 40 stocks and 10 ETF's that I follow.

Good week for stocks - YLO.un keeps chugging along

Only a 4-day week this week, but my portfolio was up almost 1.5% this week. Yellow Pages (YLO.un) was one of my leaders again as it approaches $6 per unit, but many other stocks performed well too.

For the first time in a while, I am back into the 'up' index ETF's, jumping into HOU (oil), HBU (gold bullion), and HXU (TSX) in the last few days. Other indices such as HQU (NASDAQ) and HSU (US S&P) are getting close to buys as well, but not yet.

I mentioned in an earlier post that I invest my RRSP money first, then move on to non-RRSP funds. Right now, I am fully invested in my RRSP and almost half invested in my non-RRSP funds, so that is a pretty high rate of investment for me, at least for the last many months while the markets have been so uncertain. I am now about 59% invested overall.

Other than the ETF's mentioned above, I am also in SLW (Silver Wheaton), G (Goldcorp), COS.un (Canadian Oilsands Trust), AGU (Agrium), OCX (Onex), BIN (BFC Ltd.), BBD.B (Bombardier), ECA (Encana), ENF.UN (Enbridge), PN (Photochannel, my one small cap stock), PWF (Power Financial), TCM (Thomson Creek Metals), RIM (Research in Motion), PMZ.UN (Primaris), and YLO.UN (Yellow Pages Income Fund).

There are two other stocks that I watch that moved into buy territory on Friday - MSI.UN (Morneau Sobeco) and RUS (Russel Metals). I likely won't buy MSI.UN, though, since it has fairly low daily trade volumes and it makes it hard for me to buy and sell since I used stop buys and stop sells to do so (since I can't watch the market during the day). This is a case where outside information - like trading volume - overrides the moving average indicators for me, having been burned before by low volume stocks.

YTD, I am up 3.5% in my portfolio, so I have to be pretty happy with that. January was a pretty flat month for me (and down for most of the indices), so most of my gains have been in the last two weeks.

Yellow Pages Persistence Pays Off

Sorry I haven't written in awhile but I just got back from some time in Cancun - some much-needed relaxation (of sorts). I was pleased to see, when I returned, that Yellow Pages Income Fund had not only released their latest financial results and confirmed their monthly payout, but they also announced that they would be converting to a Corporation at the end of 2010. They are reducing their current 80 cent per year distribution to a 65 cent dividend - still about a 12% yield at the time it was announced! With the tax treatment of dividends versus trust distributions, it looks like the investor return is actually HIGHER once they convert. Investor response to the news was great, with YLO.un moving up about 4% on Thursday and another 5% or so on Friday. The units jumped from 5.15 to 5.67 in two days. Since I am in YLO.un mostly for the high yield, getting unit appreciation is a bonus. I could honestly see the units moving back to the $7 range in pretty short order, as long as the unit holders hold tight.

I am just over 61% invested in equities at the moment - I had been expecting a correction (which happened in January), and the moving average graphs have been telling me to buy lately. Most of the ETF's (upside) are still in 'don't own' territory, but I am looking to them pretty soon. I will be looking to purchase HFU on Tuesday (financial ETF), as it just passed the 'buy' signal on Friday.

Currently, I own many securities including YLO.un (Yellow Pages), ENF.un (Enbridge), PMZ.un (Primaris), PN (Photochannel), PWF (Power Financial), TCM (Thompson Creek), QBR.B (Quebecor), RCI.B (Rogers Communications), WJA (Westjet), RIM (Research in Motion), AGU (Agrium), COS.un (Canadian Oil Sands Trust), OCX (Onex), TCW (Trican Well Services), LIF.un (Iron Ore Income Fund), and S (Sherritt).

I am more heavily invested right now than I planned to be but that is what the graphs told me to do. The markets have had a good couple of weeks so it seems to be the correct call for now. If there are a couple more strong days early next week, even more stocks will move into 'buy' territory.

Next week, I am looking to purchase HFU (Financials ETF), MSI.un (Morneau Sobeco), and T (Telus - even though they just announced disappointing results, the graphs still say buy right now).

I am up 2.02% YTD, which doesn't seem all that good, until you consider that the markets were down considerably in January. As the markets continue to recover, I hope to ride that momentum upwards.

The End of 2009 (and the Beginning of 2010)

Happy New Year, and sorry that I have not posted in awhile. I have had alot going on since my last post.

Stock-wise, I actually got back into the market relatively soon after my last 'I'm Out' post, as the moving averages told me to get back in. I was even for November but I was up a little over 1.5% in the month of December. Not sure if it was a Santa Claus rally or not, but I will take it.

One of the securities that I am in is my old standby Yellow Pages Income Fund (YLO.UN). It is in 'Hold' territory right now, and it looks to have pretty solid support. It is also paying out a great distribution yield, so I actually hold quite a bit. If it turns down, I will get rid of it, but for now it looks good.

I am only about 15% invested currently (it fluctuates), with the rest in cash. My other current holdings are Manulife (MFC) which I just bought on Dec 31, and two telecoms - Rogers Communication (RCI.B) and Telus (T) that I also just bought mid to late this past week. I don't have a problem holding two very similar stocks, as long as their indicators are good and they are both going up.

I ended up 2009 up 54.5% from my 2008 close, when you factor out my contributions for the year. I haven't recovered all of the money I lost last year yet, but I am off to a good start. If I had of used my current strategy last year, I would have made money (on the 'Down' ETF's) instead of losing money.

Now, on to 2010. I have already stated which securities I currently hold, and there are a few more that just went in to BUY territory on December 31st, so I will try to pick up some of those on Monday, Jan 4th. Those securities are HOU (Horizons Betapro Oil Bull), COS.UN (Canadian Oil Sands Trust, PMZ.UN (Primaris Real Estate Income Fund), and TCM (Thompson Creek Mining). MFC, RCI.B, and T are also in BUY territory, but I already own all of those.

I will reset everything for the start of 2010 and start calculating my returns from zero, starting next week. I doubt that 2010 will be as good for me as 2009 was, but I will stick to my easy to follow rules, continue spending about 20 minutes a day following stocks, and see where that gets me. It was certainly worth my time last year...

I'm Out!

As you know from my earlier posts, I have been expecting a correction of some sort in October, and the 4.1% decline in the TSX this past week seems to be the beginning of that. Consumer confidence is down, and even though GDP is up in Canada and the US, that is likely the result of all the government stimulus and not any real improvement in the economy.

I had been gradually reducing my holdings all summer, and I actually sold the last of my stocks (MSI.UN, TRP, and YLO.un) on Thursday. Late Thursday, I actually bought HXD (TSX double down ETF) and HGD (Gold stocks double down ETF) and held them throughout most of Friday's big plunge (the moving average lines said to buy them, so I did, but I got nervous and sold them after making a bit of cash). I sold them before the end of the day, so I actually am 100% in cash right now.

I am not getting any interest at all in my accounts, so I admit that this investing strategy is not brilliant, but I am in capital preservation mode right now, so this helps me sleep at night. If none of the so-called experts knows where the market is heading right now, then how are small investors like me (us) supposed to make investing decisions?

I am still looking at safe ways to make a guaranteed return, and I may just open a high-interest savings account, to I don't tie up my money. High interest is a bit of a misnomer here, as I think I can only get .75% to 1.0% on my money right now, but I can access it any time and transfer it to my trading accounts if I decide to get back into the market on a large scale. This is only my non-RRSP money, and I will use my RRSP accounts first, when I decide to get back into securities (since the gains are tax-deferred).

There are some things I am looking to buy next week, but most of them are the 'down' ETF's. I use the Horizon Betapro 'double' ETF's. The ones that are a buy (or hold) for early next week are HED (energy), HFD (financials), HGD (gold stocks), HQD (Nasdaq), HSD (S&P in the US), and HXD (TSX). Remember, all of these ETF's go UP if there underlying areas go DOWN. I will warn you that if you are wrong on the down ETF's, it does give you a sick feeling when you lose money when the market is actually going UP.

Even with the TSX going down over 4% this past week, and other indices declining as well, it was a break-even week for me since I had the down ETF's.

Well, that is enough for today. Good luck next week, and let's hope the market finds some direction soon (up OR down, I don't care).

Weekly Update (and the ever-climbing market)

Well, another week has passed and the market correction hasn't happened yet. Earnings last week weren't spectacular but they weren't bad enough to bring the market down, as everyone seems to be waiting for.

Many stocks that I watch continue to move sideways but I continue to buy and sell as the graphs tell me to. I can't give up my method now, but I will admit it gets frustrating when you have to sell a stock a day or two after you buy it.

I am currently in a couple of ETF's - HBU (Gold bullion) and HFU (Financials), and many stocks - AGU (Agrium), FTT (Finning), MFC (Manulife), MSI.un (Morneau Sobeco), PDP (Prolifera), PWF (Power Financial), TCM (Thompson Creek Metals), and YLO.un (Yellow Pages).

I am 24.5% invested right now, with the balance in cash. I really hate getting no interest on the cash but I haven't found anything that is safe and worthwhile, at this point. If anyone has any suggestions that can get me at least a few percent interest and no, or very little downside, please let me know.

I am up 51.4% for the year so far, although I am down a bit in October. I have been positive every month since last November (there, I probably jinxed myself now), so I would like to continue that streak. The best I could likely hope for at this point is a nice little pullback - I would sell the securities I hold right now, then buy back in when the market resumes its upwards push. There is still lots of cash on the sidelines (including mine) waiting to get into this market, but I don't feel comfortable putting much more in at this point.

For Monday, I am looking to perhaps sell MFC, HFU, PWF, and TCM if they move downwards on Monday, as they are all right at the sell line right now. On the other hand, I am looking to pick up some THI (Tim Horton's), TRP (TransCanada Pipelines), and maybe some more PDP (Prolifera, to lower my average cost) on Monday, as they have all just cross upwards into buy territory.

Thus, the game continues...

Back to the Blog...

Sorry I haven't updated lately, but there is lots going on (outside of stocks). I have been buying and selling over the last few weeks, as the moving average lines have indicated that I do. I rode up Gold in the HGU (would have been better in the HBU), and I made some money on energy in the HEU.

Right now, I hold Manitoba Tel (MBT), BCE Inc (BCE), Finning Int's (FTT), Manulife (MFC), Prolifera (PDP), and Yellow Pages Income Fund (YLO.un). I have less YLO than I have in the past, as I sold into strength on its 15% run in September, and I have PDP as a speculative stock (although I am still following the lines and they said to buy). I try to stick with blue chip stocks but I still follow a couple of spec stocks from my past.

I may have to sell BCE and MBT on Tuesday, as they are in 'Sell' territory, although MBT is at its support level around $32. I will sell it if it drops much more. Also, FTT and MFC at at 'Buy' (I bought them late last week), which means they could quickly become 'Sells' if the market drops this week.

I am watching a few stocks and ETF's to buy on Tuesday - HFU (Financial 2X ETF), HOU (Oil 2X ETF), AGU (Agrium - fertilizer, etc.), HSE (Husky), MSI.un (Morneau Sobeco income fund). I will put in stop-buys on all of these securities today and pick them up tomorrow if their prices strengthen a bit. I like to buy stocks on upward momentum, not only in the graphs but also on the day I actually buy them.

YTD, I am up 51.4% for the year. I have been positive (by at least a little bit) every month since last November. I am a little bit negative so far in October, but it is early in the month. I am still chipping away at the loss I had on the first of the month. I am still expecting the market to pull back, sometime soon, as investors lock in some of their profits, but I will continue to follow the graphs until that happens. Earnings have been fairly strong lately, and a few US banks report this week so that will show us how the financials are doing.

I am just under 14% invested (in stocks and ETF's) right now, with the remainder in cash. I looked for money market funds and other 'safe' investments for my cash but the return is so low, I am just choosing to leave it in cash. This way, I lock in my gains from earlier in the year, I won't lose a significant amount in any correction, and I have lots of cash ready to buy stocks and ETF's on the next leg up.