Stock Markets and Stock Picks

Marks

Monthly charts of market ETFs: XIU, DIA, SPY, QQQ on freestockcharts.com

The Markets

I typically like to analyze the XIC ETF as it consists of more TSX stocks. The XIC is very much like the SPY ETF for the S&P 500 index. When I want to know how the tech-focussed stocks are doing, I check out the QQQ.

I admit, I rarely look at the XIU (the TSX’s top 60 large cap stocks) or the DIA (the U.S. ETF for the Dow Jones Industrial Average). It’s an old habit of mine as my trading background was more focussed on shorter timeframes and bigger price action. There is less price action in these indexes that cover the large-cap, blue chippy stocks. Molasses moves faster than some of these stocks’ prices — this is because there are so many more shares to go through at each price level before the price moves up or down. Less price action, though, doesn’t mean less money. It’s just more stable. I really should watch these ETFs more because this is where big money, like funds, tends to go. With investing, it’s often good to follow the big money.

I drew horizontal lines on the charts for the XIU, DIA, and QQQ to show where those stocks had reset. The XIU has been “resetting” for a long while now, pretty much since February. The DIA (often called “the Diamonds”) had a reset in April and the Qs had one in July. Look at the SPY’s trendline that goes straight up. When is the SPY going to take a breather? If we’re going by season, then perhaps in the fall?

Observing the timing of these corrections demonstrates well the cyclical nature of markets. To get a better idea of what drives these differences means to take a closer look at the sectors and specific stocks that dominate their respective markets.

I worry that if the SPY makes a correction, it will affect the Canadian market. If I didn’t concern myself with the U.S. market at all, I have to say that I like what the charts tell me for the Canadian market. It’s been rationally pulling back for over half a year now and moving sideways for three months. It could be gearing up for another bullish move up. Let’s hope that if and when the SPY comes down, investors move into the Canadian stocks and start a new investment cycle.


Stocks to Check Out

Here are some stocks with nice-looking monthly charts:

  • TCW.TO
  • CVE.TO
  • SJR.B.TO
  • HSE.TO
  • IPL.TO
  • POU.TO
  • MG.TO
  • THCX.V (I own shares of this one already.)

Now, keep in mind, most of these are oil stocks. If you’re considering trading any of these, keep a close eye on the sector. And as I always advise, do your own necessary research on the company, the sector, and the markets. Consider how your choices fit into your grand plan and decide on the appropriate time horizons and how much you can safely risk for your portfolio.

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.

The Transparent RRSP: Relative Strength

The Week of August 14
  • On Wednesday, August 16th, I bought 100 shares of Bombardier (BBD.B.TO) at $2.65 per share.
  • With $1 in commissions, the whole purchase was $266.00. I now have $18.47 in cash in the RRSP account.

I actually meant to buy the shares on Tuesday, but I totally forgot to put in an order! So, on Tuesday night, I put in a limit order to buy 100 shares at $2.68, a couple of cents above the current bid/ask price. I was peeved by my sloppiness, but I’d been stalking this stock all month, watching it against the market. I wanted it that badly that I was willing to pay more than I knew I should have.

Thankfully, on Wednesday, my order was filled at the lower price of $2.65! This happens sometimes; other times it can go the other way and your order will be filled at a much higher price. It’s called slippage when you get filled at a higher price than what you have on order. Slippage tends to happen more when stocks are lightly traded. Bombardier is a heavily traded stock, so slippage is less likely to happen.


Let’s do some chart analysis!

 

BBD analysis

Price charts for BBD.B and XIC on freestockcharts.com

On Chart #1, the pink arrow shows the day I bought BBD.B. No special day and it closed negative. On Chart #2, the pink arrow for the XIC market ETF shows the market on the day I bought BBD.B.

The blue arrows on both charts #1 and #2 show how they closed for the week. BBD.B closed more positive than the market did, showing relative strength. There’s been uncertainty in the overall markets in general with the possibility of war — and then you add violent protests and terrorist attacks to the mix and you get even more negativity. I hope this little stock, along with the rest of the RRSP portfolio (come on, LIQ!), will show resilience in the face of all this.

Chart #3 is the weekly chart for BBD.B. It’s a healthy looking chart with a very bullish setup. (If you’re not familiar with the market lingo, bullish means optimistic and positive because apparently, bulls look up when they’re in attack mode; bearish means negative and pessimistic because bears look down when they’re about to pummel you. There could be more to the meaning of these terms, but all that matters is that you get the picture.)

Chart #4 shows a lot of potential for BBD.B to move up if and when it gets past the previous price resistance points as seen on that pink dotted line.

Of course, all of this can go potty — regardless the relative strength and bullish setups — if the overall markets get really negative and there are more sellers than buyers. No matter what, just try to stay positive and strong!

 

The Transparent RRSP: Market Fears

The Week of August 8
  • I left the RRSP account alone. I wanted to buy shares of Bombardier (BBD.B.TO), but I couldn’t find an entry. There might be an entry on Monday or Tuesday.

 

BBD vs XIC

Price charts: BBD.B vs. XIC on freestockcharts.com

As you can see in the top two charts, BBD.B has been more positive than the market (the two lower charts of XIC). If the market continues to head lower, I’ll either abandon the plan to buy shares of BBD.B or just wait until the market settles down.


Last Thursday, the markets collectively demonstrated anxiety over North Korea. There was a big market sell-off and most gold stocks went up. It’s hard to say at this point if this is a reaction temporary in nature, or if it will signify the beginning of more and more selling due to fear. I’m going to make it a point to pay closer attention to the news and to how the market trades over the next couple of weeks.

Last week, I put together a big watch list of stocks that had promising charts. After last Thursday, only a few of them still look okay:

  • L.TO (Wait another few weeks to a month for this to properly set up)
  • H.TO (I own shares of this stock already.)
  • EXE.TO (I own shares of this stock already.)
  • TCW.TO
  • D.UN.TO (This is a REIT.)
  • CNE.TO (Needs a better setup unless you’re into aggressive, riskier entries.)
  • LIF.TO

Until you know what’s going on with the market, I don’t recommend buying anything. These stocks would be worth looking at while also observing the market. Watch how these perform against the market or their sector. If resilient stocks start to show weakness, then it’s usually a good sign that a weaker market will become even weaker.

There are different ways to play defensive during uncertain times. You can buy gold or shares of gold stocks. You can also buy consumer staples stocks. You can buy nothing or you can sell all your stocks. Whatever you do, don’t lose sight of what you want for your portfolio long term and think strategically.

Since the late spring, I’ve been unloading shares of stock. I’m either selling portions of my positions or all of them to either collect profits or reduce my exposure to the market. I have still been buying shares here and there, but not as actively as I used to. This has nothing to do with North Korea. Rather, it’s more about the market, which has been pulling back since the end of April. Maybe eventually, it will have everything to do with a conflict with North Korea. Regardless of what happens, I’ll let the charts guide me, not my fear.

 

 

 

 

 

U.S. Stocks

I get this Monday off at work because it’s a holiday. The US stock market, however, is still open, and I really hope to get my trade on.

It’s been so long since I’ve been able to watch the US market live. I still have an active trading account with Interactive Brokers set up just for day trading and swing trading. My US trading account looks a lot like a backyard that needs a lot of tending to: some big glorious trees (a couple of winning stocks) among a bunch of weeds (half a dozen losers).

Regardless of its imperfections, my US portfolio has been outperforming the market all year — a huge reason why I leave my trades alone. I’ve been busy transplanting my life to a new city, anyway. Making any attempts at fast trading while busy and heavily distracted would be bad practice. The US market is full of action, but it’s a hostile environment to navigate. The payoff can be fast and big, as can be your losses. I need to be focused and ready to execute even just one quick trade. Now that I’m all moved in and my office is all nicely set up, I hope to do a bit of ‘yard work’ for the first couple of hours that the market is open.

Half of my money in this trading account has been sitting there doing nothing for a very long time. I hope to open one or two swing trades this Monday – and maybe get a day trade or two in there while I’m at it.

I did a search on finviz.com using the filters and criteria for finding stocks I like based on price and trading ranges. I found a few worth considering:

  • CARA
  • CLR
  • DKS
  • DVN
  • FL
  • NSC
  • TRIP
  • UAL

I noticed some pretty beat up stocks that would be worth considering if a shocking reversal were to happen (a VERY aggressive play):

  • LNG
  • RH

Usually, before the market opens, my brokers provide a number of stocks that are actively trading in the pre-market (before 9:30 AM). These stocks often end up being in play all day, or at least for a big part of the morning session (trading usually slows down around lunch).

My own discipline requires that I only select only a few of these stocks and watch them closely. If and when an opportunity presents itself, then I’ll do a trade that will last anywhere from a few seconds to a few hours. Day trading is not for most people and I would never recommend for anyone to even try it.

I discovered day trading is not for me either. Swing trading (a few days to a few months) and position trading (months to years) is more lucrative and a more realistic way to handle your money. I haven’t totally given day trading up because doing it every now and then (like once a month) keeps my instincts sharp. Most importantly, it reminds me of the value of never risking too much on any one trade. I might win on these trades 80% of the time, but the losing 20% can be such a blow financially, mentally, and emotionally. Losing keeps things real and really forces me to learn from my mistakes.

If the market is too volatile or my choices aren’t great or don’t open well, I might just leave the account alone and not trade anything. Always have a great Plan B so you don’t end up trading just because you had originally intended to. Not every day is a good day to trade — it’s just not something worth forcing. I might just take the holiday off and go to Niagara Falls instead!

 

The Transparent RRSP: Summer Sideways

The week of July 24
  • I took no action for the RRSP. I will be depositing $150 this week because we’re entering a new month.

My next consideration for the RRSP was to buy shares of Bombardier (BBD.B.TO) as it was forming a nice base on the daily chart. It did, however, already break out last Friday on a good second quarter earnings report. I might have missed the move; however, if this forms a base from this breakout, then I will still consider getting some shares. I do already own this stock in my TFSA.

BBD.

BBD.B.TO price chart on freestockcharts.com


The market didn’t do much this month other than hit the levels it was at in November last year – this is what I was hoping for in order to have a substantial enough correction before going up again. If it comes down even more, I’ll be totally okay with that too.

I went through the 100 top weighted holdings of the XIC ETF. The financials look like they’re weakening. It’s hard to say if they’re going through a bit of a slowdown or if they’re on the way to a major plunge. Some of the stocks in the energy sector are starting to move above their bases while some of the other bigger energy stocks are still weak. It’s all very wait-and-see.

I don’t think the market will do much next month. I think this August, it will just be moving sideways. Summer is always a boring time to trade, but this gives you more time to do other things like work on better trade strategies before it gets busy in the fall, or get out and do more fun summer things. I really hope to find a great long-term gem in the next week or two!

The Transparent RRSP: Summer Reading

The Week of July 17
  • I took no action for the RRSP.

Instead, all week I’ve been stewing and brewing over something I wrote two weeks ago:

This week, I was actually considering buying shares of APH.TO for the RRSP, but it’s not quite ready yet. I know this one is capable of developing really good patterns. Once I see the trading range tighten, the selling volume lessen, and a pattern improvement on the daily and weekly charts, then I’ll pick the price I’d like to enter at and I’ll put in an order. I’ll give it another couple of weeks. If it ends up going up while I’m waiting for these things to align, I won’t be too concerned if I miss the run. It will either set up again later or I’ll find something else.

So, APH had a major breakout three trading days after that post. The setup I was identifying actually happened – just a lot sooner. I took my eye off the ball. So, I went with my next play. Last week, I bought ECN at $4.03 with a strong feeling that it was going to take out a previous low of $3.87, which it did only three trading days after I put in my limit order.

 

APH ECN

Price charts for APH.TO and ECN.TO on freestockcharts.com

 

I was right both times. The problem is, I’m left frustrated, mainly because I missed the stock that had the bigger move. You know what’s worse than losing money for most traders?

  • Exiting a stock too soon and leaving money on the table;
  • Missing out on something you knew was going to happen;
  • Overcompensating for either of the above two reasons.

I actually shouldn’t be frustrated. Let’s say I never noticed APH at all. I would take that ECN trade any day and I’d be okay with it.

Trading Psychology

Trading psychology is actually a ‘thing.’ I once had a trading coach – an infinitely kind, generous, patient, uber positive day trader based out of Colorado. He was really into trading psychology and he consistently banged the drum on the importance of visualization, meditation, and forming a strong belief system supported by mindful practice. He got me reading Psycho Cybernetics and books by Tony Robbins, among many other things. This reading took me down a path of self-exploration deeper than any other self-improving attempt I’d made in the past. This was when trading had changed me.

I learned that most of what drives our decisions is conscious, but so much of what drives our actual actions is subconscious. A common action for traders is to right a wrong. When we lose, we become prone to overtrading or overcompensating for something we should’ve done instead. We try to make back what we lost or make what we should’ve made on something we ‘knew’ would work. The reality is, there is no certainty in markets and everybody knows this. Nor is there total certainty about anything in life.

I finished reading Market Wizards, a great book featuring interviews with top traders in the U.S. These traders all had their own unique strategies, their special recipes for success. What they had in common, however, led to their success: tested strategies, experience, persistence, the need to manage their losses, and learning to deal with the uncertainties of the market.

In this book was also an interview with Dr. Van K.Tharp, a psychologist who focuses on the psychology of trading. It was so fascinating to read about how this psychologist understands the thought process behind trading and has dedicated his work to helping traders get past mental and emotional road blocks in order to achieve their goals for success. Of course, I ordered one of his books from Amazon. I’ll be reading Super Trader – Make Consistent Profits in Good and Bad Markets over the next few weeks as I also read Edwin Lefevre’s Reminiscences of a Stock Operator.

Am I upset about missing the move on APH?  150% yes. Have I missed other amazing opportunities in the past? Yes, hundreds of times. Has that ever stopped me from making other decisions with good payoff? No. Will I miss other great opportunities in the future? Of course. Will I take other great opportunities in the future? You betcha.

The market will always be there. Opportunities will always present themselves. I will try to be ready for them, but I can’t catch them all. Learning and growing from these experiences is part of the fun and adventure of trading. I know I’ll get over this missed trade with APH. I hope that things work out with ECN and that I’ll have another few opportunities to buy more shares of it. One day, APH will present yet another opportunity and I will do my best to be ready.

 

Money Talks

 

Recently, I did a presentation at the Toronto Public Library on investment basics. I had no idea how it would turn out, but I ran through my head a number of best and worst-case scenarios. It was better than I could’ve ever imagined.

I’d never seen a more diverse audience in age, background, and investment interests. Each person was comfortable enough to engage or ask questions – great questions, I might add. To all those who attended, I’d like to offer my deepest gratitude for your participation. This was the conversation I’ve been dying to have with people. This is the type of conversation more Canadians need to have with each other.

Today I’m going to share with you the questions that I can remember. I’ll add parts of my original answers, but I want to answer the questions more fully. These are in no particular order.


How long does it take for you to do your investment research each week?

Now, it’s a few hours a week, anywhere from two to six hours. But I also apply up to 20,000 hours of previous learning and experience. I hope that I can help others enough so that you don’t have to take as long as I did to learn how to invest.

I’d like to also add that many of my decisions result from bouncing ideas off my man, JP. He has put in the time and discipline to learn as well. We have the advantage of combined knowledge and experience. I share a lot of these very ideas in my weekly blog.

As much as I’d like to spend more time doing research and trading more actively, I would become more prone to micro-managing my trades. I’ve done a lot better with a more passive and hands-off approach.

How did you get a 70% return last year?

2015 was a terrible year for the Canadian market. The loonie and the Canadian economy were weak. We patiently waited for the market to stop going down. This happened around late February 2016. We looked for stocks that we knew traded actively and had suffered huge drops in share price. It was a very good time to get into the market. These opportunities don’t come very often.

We bought shares in TECK.B.TO, ECA.TO, BBD.B.TO when they were really cheap, and then in April, bought some APH.V (now APH.TO). We bought a few other stocks, but these few alone did very well after just a few months. We kept selling shares incrementally each time the stocks surged in order to secure profits (called ‘selling into the strength’), but they kept going up. We could’ve done much better had we just kept the shares in and moved up our stops (selling prices). It became a decision between banking on certain profits and waiting to see what will happen. We did a bit of both and we still have shares in all those stocks.

I don’t anticipate as big a return this year, unless the market has a major correction, soon after which there’ll be many more big buying opportunities (a bad and selfish thing to wish and wait for, I know, but…). My US portfolio, though, has been my big winner this year because I had the same idea with US tech stocks last summer.

One of the things I always say is that investors are always looking for new opportunities.

What ETF should I buy?

Many financial institutions create ETFs. Some are:

  • BMO
  • Horizons
  • Vanguard
  • iShares
  • Claymore

When doing your research, consider your investment objective – dividend income, market index performance, sector selection (like banking), fixed income, etc. Also consider the MER, share price, distributions, and frequency of distribution payments, to name a few things. You can look up this information on the ETF info sheet. For me, I only select among ETFs with higher trade volume.

Market ETFs can swing a lot in price because of the demand of traders in the market. So the ETF might be worth more (or less) than its actual value (NAV). Would it make sense to put some money in a market index ETF and some in an index mutual fund (which will be less prone to price swings)?

If you want to invest in the market, consider an ETF or an index fund – or both. The major distinction between these is the MER as it’s a lot higher for mutual funds than it is for ETFs; however, it can be more affordable to buy units in an index fund than it would be to buy shares in an ETF.

An actively traded market ETF can experience more volatility than the actual index it’s based on. Its price will vary based on the demands of buyers in the market. If buyers drive the price up, it’s possible for the ETF to be worth more than the net asset value (NAV) of its assets, so you’re paying a premium in share price. If investors are fearful, heavy selling can drive its price down below its NAV, so it’ll be trading at a discount. For index funds, the NAV is what it is after the market closes. At the end of the day, you shouldn’t notice a big difference between similar index funds, be it an ETF or a mutual fund. (If you do, the mutual fund will likely be underperforming because of the MER.)

What’s most important is that you’re 1) comfortable in what you’re investing in, and 2) you’re not paying too much in fees.

What do you think of mortgage-backed securities?

These have had a bad reputation as these were hugely responsible for the 2008 recession, but mainly because they were deregulated. They’re just bundles of mortgage loans that pay investors interest.

If you’re after real estate income, the REIT (real estate income trust) is great because it can pay investors their share of the distributions which will come from a mix of rent, mortgage interest, capital gains, as well as return of capital. You can also get real estate ETFs. Because of the mixed forms of investment income that come from these, they’re best held in registered accounts. Also, keep in mind the MER. I own a couple of these to add diversification to my portfolio. Other than the value of real estate happening in my own backyard, I don’t really follow the real estate market as much as I should.

What brokerages do you use?

I have opened accounts in the past with Disnat Direct and Questrade. I now have accounts with Virtual Brokers and Interactive Brokers. I’ve been with the last two for years.

What do you pay in commissions per trade?

With Virtual Brokers, I pay 1 penny per share. It’s less if the stock price is under $1. With Interactive Brokers, it’s 1 penny per share, but a minimum of $1 per trade. So if I buy 125 shares, I pay $1.25 plus any market data fees.

Both of these accounts were opened as margin accounts – trading on margin means you need to open with and maintain a minimum amount of cash in the account which allows you  3 times the buying power. So if you open with $25,000, your buying power is $75,000. To attract active traders, the commission fees are very low.

I also have TFSA and RRSP accounts with Virtual Brokers (VB). Thanks to JP’s slick skills in negotiation, we managed to have the same awesome rates extend from the margin account to our registered accounts. Often with registered accounts, you get charged a quarterly administrative fee. With VB, they do charge $25 plus HST unless your account has a minimum of $5000 in it.

I am an active FOREX trader. How should I be doing my taxes every year?

With an accountant. I did our taxes the first couple of years we started day trading. I had the advice of a friend who’s an accountant. She gave me samples on how to calculate the adjusted cost base of securities and their exchange rates, etc. It was actually a really good exercise in learning about taxation for the self-employed and how to factor in fees and expenses; on the other hand, it was a total headache. After that, we started using an accountant who magically does it all in a few days.

What is your take on robo-advisors?

They’re great if you don’t know what stocks or ETFs to buy, or when to sell them. They take away from you the inconvenience of guessing and researching and they make those decisions for you. I’d just be cautious about the frequency that the portfolio is rebalanced and focus on the ones that meet your criteria and charge the lowest fees. As you get more comfortable and savvy with reading the market, you should compare how your portfolio is performing against it and decide then if you might be better off investing in an ETF.

What is your advice for women and their investment choices, especially as they age?

Women have developed a reputation for being great long-term investors because we typically make conservative, less risky decisions. I feel that the financial markets have shifted so that being conservative could work against us in the long-term. Those traditionally conservative decisions, like owning a lot of GICs and low-risk mutual funds, could leave us with less money than what we actually need to have, especially as we live longer and longer. We should be thinking about how our portfolios need to keep generating income as we age. In my opinion, we should consider dedicating more of our portfolio to more medium-risk choices, like blue chip funds or stocks that pay us a dividend.

I know I have a pretty aggressive approach when it comes to making money, but I’m careful with most of my money and more risky with a smaller amount of it (or maybe that’s just what I tell myself and it’s more like half and half). A big part of my own early retirement plan is to live off of dividends, although I still want to make money on capital gains if I have to sell my shares to rebalance my portfolio.

What are good websites that could tell me more about Canadian securities?

I drew a blank – thank you to the audience members for their helpful input. Motley Fool Canada and Retire Happy were mentioned. I also think that Canadian Couch Potato and My Own Advisor are excellent.

You must have a really diverse portfolio?

Yes. It not only keeps things interesting, it spreads and reduces the risk factors within my portfolio. A lot of my trade decisions come from looking at the sector or industry first. That’s why the economy is a big part of my book. I have stocks and ETFs across many different sectors.

I risk very little for each stock, so I’m not worried if it turns out to be a dud (a rare occurrence). After a while, if I like a stock enough, I’ll buy more shares if there’s a new entry (called scaling in).

How do you research fundamentals?

I said I cared about two things: the price I got in at and dividends. I’ll admit, it was a shortcut answer. I don’t pay as much attention as I should to the fundamentals mainly because I learned about stocks from traders who studied price charts and used only technical analysis. When it comes down to it, even if a company’s fundamentals look good, if the stock price has gone too far up or isn’t trading well, I just won’t enter.

I use technical analysis for all my decisions and I apply very general guidelines when considering a company’s fundamentals. One day, I’d like to take the time to figure out how to use both forms of analysis to become an even better trader. For now, I rely on good charts that indicate signs that a trend is about to start; I look at the sector the stock is in; and I compare the stock to other stocks in its sector. Then I cross my fingers hoping that the rest of the market catches on and buys the stock up.


We all have different ideas on what we want to do with our money. There are so many different ways to apply strategies, even between people who have similar takes on risk and opportunity. What I think we all need to have is a general basis of knowledge and from there, we each can branch out and find our own approach to investing.

Thank you, TPL! I had a wonderful evening.

 

 

The Transparent RRSP: My Own Stocks and Father’s Day

No actions taken the week of June 12

It’s been a very busy week for me, but it’s a good time to be busy as the markets are still looking like they’re headed lower. I don’t feel the need to take action quite yet. The US markets need to go down through May’s lows – at the very least – before going up again. This could affect the Canadian market; we have already been weakening the last couple of months and going through our own correction. If the US market goes down more and we don’t, then that’s a good sign for us that our correction could be over.

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Price charts of QQQ, AAPL, XIC, and SPY on freestockcharts.com

Apple (AAPL) is a big part of the NASDAQ (ETF: QQQ) and it’s been weakest of the big tech stocks (Facebook, Amazon, Netflix, and Google). Until it stops going down and levels out, it will continue to lead the NASDAQ down.

It’ll be interesting to see if the rest of the US market follows suit. I’ll keep my eye on the S&P 500 (the SPY ETF). Its financial sector (XLF) has been quite strong, but this sector is due for a correction. A slower summer market could cause it to stall and look less inspiring to investors. A correction in the financial sector could take the SPY down. There was a lot of selling last week in some of the big US banks (BAC, JPM and WFC) as well as Visa (V). Other big financial stocks (C, MA, and AXP) were trading strong. A divergence between a sector’s biggest stocks creates uncertainty.

Summer Trading Means Fewer Selections

Often, when the leading market heads lower, other markets eventually do the same. However, it can be different in the summer because of less trading volume. Performance is more stock and sector specific and less market dominant.

Investors and traders pile onto the fewer, more promising opportunities that stand out. Sectors kind of do their own thing and are less prone to overall market moves because there’s less of a dominant trend. It becomes more obvious which sectors are stronger and which ones are weaker. It’s actually a very good time to look for sectors and stocks that are about to embark on a new move or trend before it gets busier again in the fall.

For me, the summer is usually the time when I focus on the quiet under-performing sectors and I try to see if there will be a new longer-term opportunity in it. I’m going to watch the Canadian financial sector as it’s been weak since late February. I feel that it should correct just a titch more, and if it does, I will watch very closely for when it sets up again. If this happens, Canadian banks, here I come!

I didn’t have time to do a stock search this week – I only had time to look at my own portfolio. Here are a few of my stocks that I’m considering buying more shares of:

  • Aphria Inc. | APH.TO
  • Aritzia | ATZ
  • Bombardier | BBD.B
  • BMO SP TSX Laddered Index ETF | ZPR
  • ECN Capital Corp. | ECN
  • Extendicare REIT | EXE

I’ve been complaining a lot about having too many stocks. It’s better for me to focus on what I have and get more shares of the ones that I like. I just have to wait for a new entry point.


Thanks Dad!

My dad passed away in 2009. He was 59 and battling a long-term ailment. At least I can say that shortly before his death, he was living life to the fullest. What happened to me after his passing was something worth thinking about. Without his guidance, his half-believable stories, and hilarious anecdotes, I had to use whatever resources he’d passed onto me to keep going. I’m sure this recognition was all subconscious, but I finally had the courage to see things for what they were and let them go in order to do the things I most wanted to do. I took a promotion at my job, saw my career trajectory and said, “On second thought, I’m going to learn how to trade stocks. However that turns out.” The rest is my history.

I’m halfway through reading Jack D. Schwager’s, Market Wizards: Interviews with Top Traders. It’s been an incredible read so far. I’ve heard of some of these guys before. It’s so cool to hear about how they all had to overcome so many barriers to get to where they were. One thing none of them had to overcome was their gender. I can honestly say that neither have I, even though I am a woman.

Since I was young, my dad convinced me that being a girl was an advantage. His dad, my grandfather, was in the US Army, and he was away a lot. He served in WW2 and in Korea. So my grandmother ran the show when my grandpa was away. My dad was the youngest of seven siblings, four of whom were older, amazing sisters. My dad ended up being a very macho guy – who saw women as being greater than anything macho.

Because of my dad, I never felt disadvantaged for being a woman. I actually thought that I could do whatever I wanted to because I was female – he’d long convinced me it gave me an edge. Maybe it is true – our society has yet to accept this concept. Or maybe he just told me a tall tale knowing what I’d be up against. As I got older, I became more painfully aware of the disadvantages women frequently encounter. I love trading because the market doesn’t care about your personal details. You’re either in at the right time and right price, or you’re not. It doesn’t get more gender neutral than that.

As I’m reading Market Wizards, I feel that I can relate to these traders on so many levels, but it feels a bit too much like a boys club. I know there are a lot of extremely successful female traders out there. We’ll just have to cover our own stories. Whether or not I become a market wizard worth writing about one day, I’m sure my dad would be proud of me.

Happy Father’s Day, Dad!