My Best Investment

Back to school

I always get nostalgic this time of year.

Once upon a time, in a faraway land, I was a fretting teenager about to finish high school. While all the other girls were obsessing over prom and what college they were going to, my own world was crashing around me. My boyfriend dumped me two weeks before prom, leaving me dateless. That was also the year my father became chronically ill and was ordered to go on medical leave. There would be no college fund to support me. I was admitted to the university I had set my sights on, but I had no idea how I was going to afford it.

Humiliated and defeated, I opted to lowball my expectations on everything. I wouldn’t go to prom and I wouldn’t go to university. I had some great excuses to stop caring, so I leaned into them. My friends became my fairy godmothers. One took it upon herself to find me a date. Through her grad date, she managed to set me up with a model/actor (or actor/model?). My other friend made me copy and study her year’s worth of notes for my Biology 12 exam, the most demanding subject I had to study for that year. Because of my friends’ clutch support, I was motivated to keep going.

With Starbucks’ chocolate covered coffee beans to keep me jacked, I crammed like a champ. I aced everything that counted and I finished with honours. My grad date, whom everyone ogled that night, turned out to be a seasoned partier. Instead of binge-drinking at a house party with the other grads after prom, my friends and I followed our dates to a rave in Vancouver’s Downtown Eastside where we danced until four in the morning. I took a cab home with my bestie as the sun was rising. I finished high school feeling like a rock star.

My next problem was going to be going to university. I got a job, but I couldn’t qualify for a student loan because the tax year prior to my dad’s medical leave stated he made a lot. The financial issue was moot as I didn’t even know what I was going to study even if I could afford school. With no money and no clear ambition, it made no sense for me to go to study at all.

I continued to work. Without any goals to anchor me, I spent my money faster than it came in. I was living the Gen X dream buying beer, candy, and cigarettes, watching movies all day, wondering about the future. I’ve told this story many times before and it’s because it was critical to everything I’ve ever done thereafter. My boss saw how much money I was quickly wasting after each payday. She gave me a talking to and told me how to start saving and investing. Her persuasive sisterly coercion got me going to the bank and getting started. Then after saving for a while, things changed. With money in the bank, I saw school as a possibility. Determined to go to law school, I reapplied to university.

I finished my bachelor’s in record time (thanks, Starbucks coffee beans!). By the end of it, though, I decided not to go to law school. With good financial habits and the benefit of going to university when it was still affordable, I graduated with no student debts. I traveled a lot and lived overseas for a few years but came back to Canada. Even though my studies in humanities was never directly applicable to any line of work I sought, having a degree gave me better job options.

After ten years of drifting, I was still by definition a slacker, but at least I had savings. I brainstormed many possibilities on where I was headed next. I found I was most curious about opening a business. This led to my part-time studies in business school and eventually, further studies and pursuits in investing and the stock market.

Today, I am once again a student. I am deeply curious about how the stock market works on the inside. I know what it is to be a trader/investor, but what happens behind the curtain is what I really want to know next. I am currently enrolled with the Canadian Securities Institute, working towards my Certificate in Equity Trading & Sales. I don’t know exactly where studying this will take me; whether I trade for others or still just myself, I will always be a trader, only a more educated one.

Whether you achieve your career peak and hit your financial goals, learning should never stop. You can take courses or just read books that will help you develop in parts of your life that you feel need focus. In the long run, being dedicated to your personal and professional development really is the best investment.

Stock Video!

Watch the Loonie to Toonie Stock Video!

Finally! My stock video is ready for the world – specifically the world of people interested in reading stock charts, which I believe is a small, yet growing world. My hope is that one day, reading charts of investments is no longer a practice unique to investment pros, but a basic skill that we all have.

You can hit it big in stocks without ever having to read a chart, but for me, it’s key to my decision process. I created this video to provide a more visual supplement to all the information that I’ve been sharing on how I find and select stocks. 

I’m often asked where to find stocks. I feel it’s important to not only tell you where I find stocks but how I decide on which ones to pay attention to. I hope this helps you in your investment endeavours! 

L2T Updates

updates


November

Financial Literacy

Lots of stuff going on especially with Financial Literacy Month coming up this November. In my world, almost every day is Financial Literacy Day

I’m always trying to learn more about investing and anything related. Right now I’m reading a book called Money, by Felix Martin. Next, I plan to read a book on options trading. I’m sure for most of us, the idea of reading such books doesn’t trigger the same excitement as reading a best-selling thriller like Girl on the Train (which I read too), but it’s great stuff for investor nerds like me.

Speaking of thrilling reads, to encourage financial literacy among new investors, I’ll be offering a massive discount of $5 off my eBook, which is currently available for $6.99. So for the low price of $1.99, you can become financially literate in the short time it takes to read this easy book on your phone or tablet. What’s so thrilling about the book is how knowledgeable you become as you read it!

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Columnista

I’ve got another column coming out in Investor’s Digest of Canada‘s November 25th issue, which you can find at most Chapters Indigo stores. Earlier this month, I was on the cover, front and centre, for another column I’d written. 

id-4

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Stock Picking Cont’d

I will also continue to blog my strategies on Stock Picking which I hope to complete over the course of November.


December

YouTube School of Investing & More

I’ll be posting a video on my process of selecting and analyzing stocks before the end of the year.

I’ll also be posting on various investment strategies based on investments I’d written about in my book to consider for the new year.


2017

Transparent Investing

I’m going to be doing a STOCK INVESTING CHALLENGE. I’m opening a separate RRSP account and I’m going to put $1000 in it. I’ll be selecting Canadian stocks for the portfolio and posting every week the results, my picks, my strategies, my analyses on performance, and the markets. I’m going to be totally transparent to all my readers about the results.

My goal is to make that portfolio grow through stock performance and compounding its growth through regular deposits. It’ll be fun and a great learning experience for us all. I wonder if this is how David Blaine feels when he thinks of his next on-TV challenge…

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Summer Kick-off at the Toronto Public Library in North York

This is an early announcement, but I’m too excited about it to keep it bottled up for almost eight months…

Mark your calendars: On June 20th, I’ll be hosting an event called, Investment Basics Made Easy, at the TORONTO PUBLIC LIBRARY! It’s going to be engaging, extremely informative, and loads of fun. If you’re brand-spanking new to investing, you’ll leave financially savvy and ready to make your money grow!

You really gotta love libraries and their commitment to being incredible resources to the public. The Toronto Public Library offers the Small Business Program in which they regularly schedule experts there to teach you about things related to business, marketing, and investing. I am so grateful for this wonderful invitation to share and engage with people interested in learning how to invest. 


 

That’s it for now, folks!

Stock Picking – Part 2: Determine Your Investment Goals

Part 2: Determine Your Investment Goals

Objective: Identify your investment objectives first, and then let them guide you when you’re choosing a stock.


The main objective for investing in anything is to make money. With stocks, you make money two ways by selling your shares at a higher price than you paid and from dividend payments. Additionally, your decision to invest in a stock could be supported by a number of other reasons. Such reasons will guide you in the selection process.

Here are some reasons to buy a stock:

  • To fund your retirement 
  • For faster portfolio growth
  • To generate dividend income
  • You see potential growth in a particular sector, so you want a good stock from that sector
  • The economy is looking to slow down, so you want to invest in a defensive stock
  • The economy has been in a slump for a while but now business activity is starting to pick up, so you want to buy stocks to get in on the action
  • You like a company for its products, services, or growth potential, so you want to be a shareholder.

My investment objectives vary as I want to invest for the long-term (a fun and comfy retirement life) and the short-term (concerts, trips, and buying a couple of properties in Canada and somewhere hot).

For my retirement portfolio, it’s all about the long game and I’m looking to invest in something that will do me well for years, even decades. So, I look for stocks that have ‘blue chip’ qualities: they pay dividends, they’re well-known, well-established and have been around for a long time, and they usually offer more than one type of product or service which allows them to adapt to various consumer demands and trends. It’s also a bonus when the stocks are in defensive sectors such as utilities and consumer staples. I don’t do much analysis here, I apply a very basic, rudimentary logic.

There is no guarantee these stocks won’t suffer when the economy is slow, but the idea is that even during tough times, they’ll do better or suffer less, and they’ll still likely pay you dividends. If their stock prices take a hit, I’ll likely buy more shares when they start to recover because they’ll be cheaper.

For my swing trades, I look for stocks that look like they’ll do well over the next few months to a year. I look for typically strong stocks that have been quiet for a while and haven’t seen much trading action. When this happens, it’s usually because their sectors have also been quiet. If all the stocks in a particular sector have been down for a while, I’ll narrow down my selection based on the stock price and volume. (See Stock Picking – Part 1.)

The selection process for my swing trades is more involved as I use a very basic form of technical analysis of a stock’s price history to help me decide on where I’m going to buy and where I’m likely going to sell. Technical analysis is about analyzing the price history of a stock in relation to its trading volume, sector, and market environment. 

Many people dispute the validity of technical analysis and prefer to examine the fundamentals of a company’s value in relation to its share price instead. They’re all valid to some degree and many financial pros analyze both the technical and fundamental information.

I prefer to analyze charts because I’d rather see if I’m paying much more than others who got in earlier than me. The lower the price I pay for a stock, the more confident I am in the trade. It’s not a guarantee that the price won’t go lower, but even if it does, I will suffer less by getting in at a lower price than if I bought a stock after it became hot and expensive. I never buy a stock after it makes the news because it’s usually too expensive by then.

chart-1d

Above is a very basic chart of a stock that I actually own. I consider a stock to be ‘quiet’ if it’s trading sideways (the first horizontal line). Think of a stock’s price in terms of flying in an airplane; trading sideways is like starting on the runway. I try to buy either when it’s still on the runway or just as it’s taking off (no higher than where the airplane is). So I just have a quick glance at a stock’s chart to determine if it’s just taken off or if it’s gone far beyond the clouds. If it has long taken off already, I’ll just wait for another sideways setup. Sometimes this wait time could take months to years and I’ll just keep checking the charts every now and then.

For years, I’ve been using freestockcharts.com to look up charts for Canadian and U.S. stocks. It’s FREE and the features and tools for the charts are very similar to what you would use if you had a pro trading account with a brokerage. To look up a stock, you just type the company name and you can select it from the list of options it provides. Sometimes a company will trade on both the Canadian and US stock exchanges, so be sure you’re selecting the proper exchange for you. There are many short and informative tutorials available on its site and on YouTube.

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I look at the charts for everything I buy for both long-term buys and shorter-term swing trades as my goal is always to buy shares at lower prices. For the long-term trades, it’s more important that the stocks meet some ‘blue chip’ criteria. For the swing trades, I rely more on technical analysis, the sectors, and the markets.

Next time, I’ll get into how I analyze sectors and markets!