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.

 

Trading Dreams and Stocks to Watch

Trading Dreams Can Reveal Good Ideas 

I have always been prone to having work dreams after I’ve been at a place for a while. When I was a very active trader, price charts were a constant occurrence in my dreams in which they had the strangest capacities. For instance, I couldn’t open a door until a stock price went up another 50 cents. Or I couldn’t get to a party until I made $1000 on a trade, so I’d have three trades open. Weird stuff like that.

I had one profound dream where I was talking to my buddy about stocks. In real life, I knew he had gambled unsuccessfully on penny stocks and sports. In this dream, we were catching up while looking at a glass wall that had a stock chart on it.

He told me that he stopped wasting his time on penny stocks. Instead, he decided to keep things simple. He bought the stock of a company that made sense to him. This company started to become successful rather quickly. Every time he had extra savings, he would just buy more shares and increase his position. Over the next five years, the stock kept going higher in share price. As he explained this, the chart on the glass wall started to grow live on a timeline. The chart finally stopped moving once it reached the present day. At that point, he was up $18,000 with that one stock.

Scaling In

While I don’t believe it’s a good idea to put all your money into one stock, I do believe in the strategy of adding to a good position. At the time of this dream, I wasn’t confident enough in my own methods to add to any position. If anything, I was exiting too soon. Over the years, I got over my fears; it eventually became a practice I employ in the situations I feel most confident in.

I’ll often decide on a stock because I like the chart and its sector. My initial strategy might be shorter term. I might sell shares to take profits or lighten my position and just keep some shares for the longer term. Other times, I’ll change my outlook. If the chart and the stock show more potential for longer term growth, I’ll buy more shares of it at the next opportune setup.

I don’t think of investment decisions in definite terms because there’s no way to predict exactly how much you’re going to make. I like the idea of interacting with your investments over time in order to be fluid with the demands of the market or to take advantage of new opportunities that come up.

My Own Stocks

The market has been doing a nicely controlled correction – thankfully, it hasn’t dropped rapidly. I don’t know if it will react further to the news next week if we find out for sure that interest rates will go up. The market doesn’t like surprises, so if interest rates do go up, then there should be no major shock to the market. If anything, the anticipated news is already priced into the market and we can move on once it comes out.

I’ve been casually looking for stocks, yet I haven’t been very inspired by much of what I’ve seen out there. When this happens, I become more interested in watching how the stocks in my own TFSA portfolio are doing. Some of them are either consolidating nicely or seem to be doing their own thing. Here are some of my stocks that I might scale into:

  • ZPR.TO
  • MSI.TO
  • ECN.TO

These other ones I’ll be watching for more confirmations from the sector and/or market:

  • BBD.B.TO
  • EXE.TO
  • TECK.TO
  • APH.TO

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.


N.B.

The last thing I want to do is to make stock calls for the purpose of getting others to pump up my own stocks. I tend to pick stocks that trade higher in volume, so price jumps are less likely to occur unless A LOT of investors step in. I lack that kind of influence – this is a low-key blog, not BNN. I expect investors to do their own necessary due diligence before making investment decisions.

 

The Transparent RRSP: Interest

Action taken the week of June 26
  • Transferred $150.00 into the RRSP. That gives me $170.90 in cash.

If I see anything that looks interesting, I’ll be ready to take action with some cash in the account again. I’ve been looking around and I found a few compelling charts. However, the market is just so uninspiring right now. I’d much rather wait for it to settle down before I do anything. It would be great if there was nothing to do until next month.

Another thing to note: If we raise interest rates sooner, that will greatly impact the market. I plan to consider, over the next week or so, some good trading/investing ideas.


July xic

XIC ETF in freestockcharts.com

Let’s look at the monthly chart of my favourite TSX index ETF, the XIC. I would like the market to pull back until the blue line. I mentioned in a previous blog that I’d like a market correction to come down to the same area we were at around November last year.

I think, though, that we’ll likely only pull back to the orange line, which is where we were at in December. This year so far, we had the heaviest selling volume in June. To get significantly below June’s levels we’d have to sell a lot more.

If interest rates do actually go up, a lot of sectors like retail and housing will be impacted. The financials, on the other hand, have been recovering since late May. Higher interest rates will be better for their business, especially after they’ve been running on low interest rates for so long.

I wrote previously that I think there’ll be a recovery in energy (oil) this summer – and I still think that. It’s worth considering swing trade opportunities in this sector as it could go up over the next few months to a year.

After a quick search, I noticed that the following stocks have had heavy selling volume the last few months:

  • SU.TO
  • PD.TO
  • CVE.TO
  • BTE.TO
  • ENB.TO
  • ECA.TO

If you feel conflicted about putting money into the yucky oil industry, you can just treat this as a study into my process when I look at sectors that have been beaten up. Here is a general run down of my process:

  • Watch the daily and weekly charts of stocks;
  • Look for signs of sideways trading;
  • Watch for reduction in trade volume. The volume should indicate less selling some more buying;
  • Check the monthly chart – it should look like a reversal is happening;
  • Compare all this to the sector ETFs;
  • Among the sector’s stocks, watch for the ones that are looking the best;
  • For swing trades, look at the strongest stocks that meet your criteria for entry, price, and trading ranges. In other words, figure out which ones that will give you the most bang for your buck.

I’ll share my ideas on this more recent trade idea and if I do take a trade, I will let you know. If this makes you nervous, then you can sit back, relax, and enjoy watching me fall flat on my face. I often go into trades thinking that I will do just that, but it’s exciting enough for me to take action. This mindset forces me to only risk enough so that I won’t be devastated if I’m totally wrong. Personally, it’s more devastating to not financially benefit from an idea I had that actually worked.

Your Special 4/20 Newsletter of 2017: Medicinal Stocks

“What weed stock should I buy?”

If there is one question I am asked the most, it’s the cannabis question. I’m asked about this more than whether to buy Facebook, Apple, or Lululemon. I don’t know anything about cannabis strains, but I can speak a bit more about cannabis stocks.


2016 to 2017

Last year I posted a newsletter on this celebrated day. I listed a few stocks to check out:

  • Canopy Growth Corporation | Ticker symbol CGC.V | $2.60
  • Aphria Incorporated | APH.V | $1.56
  • OrganiGram | OGI.V | $1.10
  • Mettrum Health | MT. V | $1.66
  • Emerald Health Botanicals | EMH.V | $ 0.17

This is where they’re at now:

  • Canopy Growth Corp.| Ticker symbol now WEED.TO on the TSX | $10.24
  • Aphria Inc. | APH.TO now on the TSX | $7
  • OrganiGram | $2.87
  • Mettrum Health | It halted trading at $7.05 because it’s merging with Canopy Growth Corporation
  • Emerald Health Botanicals| $ 1.54

WOW.

I wanted to buy all of them out of pure excitement, but at the time, it was a decision between me and JP. We decided on Aphria, mainly because of its price and proven earnings.


Cannabis presents a new industry for the public, and it’s still in its early stages as it’s working its way through various long and rigorous legalization processes. You can’t expect this journey to be straight and easy, but it’s going to happen whether you agree with legalization or not. (Interesting personal observation: Among the people who ask me what weed stocks to buy, half of them are very conservative and would never smoke it. The other half smoke it and still have shown no indication of buying any of these stocks.)

I remember the time when Colorado and the few other states were legalizing. It was impossible to tell which weed stocks to buy on the US exchanges. They each had the patterns of the new publicly traded company in a speculative industry: cheap with wild swings in volume and price moves. I had to wonder if a company was going places or was just another pump and dump.

I watched a lot of media coverage on Colorado. There was definitely a saturation of industry players – in other words, too many suppliers. Some went just as quickly as they arrived. The stronger, more resilient, established, and adaptive ones survived and endured. Others joined forces and resources to become bigger companies. It will be interesting to see how the industry plays out in Canada.

I’d purchased a couple of other weed stocks since, both of which trade on the TSX Venture Exchange. I bought shares of:

  • Maple Leaf Green World Inc. | MGW.V | 0.62 and
  • The Hydropothecary Corporation | THCX.V |$2.28

I did a quick search and found other stocks with good trading volume:

  • ICC International Cannabis Corp. | ICC.V | $1.29
  • Aurora Cannabis Inc. | ACB.V | $2.84
  • CanniMed Therapeutics Inc. | CMED.TO | $11.61

Oh! And I love that Horizons has created a new ETF: Horizons Medicinal Marijuana Life Sciences ETF (ticker symbol HMMJ.TO, $10.80). It’s got a wonderful mix of medicinal cannabis stocks from Canada, the US, and the UK, including one of my portfolio darlings, Aphria. It also owns some of the stocks mentioned in this newsletter so far. At some point, this ETF will start paying distributions (none yet). If this is a long-term investment for you, then you might want to hold this in your RRSP to avoid withholding taxes.

There are a few things to note about Canadian cannabis stocks. They’re inexpensive and they all overreact to any cannabis information that comes out of Trudeau’s mouth. They settle down after the market reaction to any news and shape up again for more investors to get on board before the prices go up for another run. It’s generally been run after run at higher and higher prices.

Most of these stocks trade very similarly to each other, with only their prices and trading ranges that might differ. If your stock isn’t moving like the others, you might have to wait longer to better see whether or not it’s a dud before getting rid of it. It also might just be a company that needs a lot more time before it proves itself to the market.

If you’re considering buying shares of cannabis stock, you’d have to look deeper into the company’s fundamentals. Remember, because they’re new and in their early phases of development, they all promise growth. I would pay most attention to company earnings and pick the one generating profits already.


The Cannabis Industry vs. the Market

Without trying to sound the alarm, I will strongly suggest that I feel that the market is going to have a major correction soon. The market had a huge nine-year run. We’re now facing rising inflation rates, a new US president, and heavier selling volume in the market as of late. Major stocks that had a good run outshining the market, are showing signs that their investors are now being cautious, even uncertain.

As proactive investors start to unload their positions, they’ll be executing their defensive plays (getting into utilities and consumer staples), as well as looking for what is trading on its own page and less affected by market moves. I think that cannabis stocks, given their industry newness and lower prices, will provide that opportunity for investors.

You might feel conflicted about cannabis and if you do, then you should probably feel the same way about alcohol. As we all know, booze was once outlawed and look at it now. The same will happen to weed. They say if you can’t beat them, then join them. What’s nice about a cannabis stock is that you don’t have to smoke it to own it.

 

 

 

 

The Transparent RRSP: Markets Closed

No actions were taken the week of April 10

This week has been a busy one for me. All week, I was getting my tax stuff in order. No, I haven’t filed yet! If you saw what I had to do to get ‘er done, you’d understand why I was procrastinating. If that’s not enough, I’m in the middle of moving.

The dreadful task of packing always necessitates decluttering. Moving forces me to ruthlessly get rid of what I no longer want or need. For the last month, I’d been going through my things and filling up boxes and bags of stuff I knew had no place in our lives anymore.

This drive to purge shifted to my TFSA. Mid-week, JP recommended that I sell two of my stocks he noticed were underperforming for a long time. They were in the money but had barely budged for a year. I sold them, then I sold four more stocks. I had way too many stocks – we’re talking 33 in this one account! I won’t even get into what’s in my US trading account. 33 is more than I could manage, but I guess I just kept buying them the way my brothers buy shoes and ball caps. This is what can happen if you pay very little in commissions per trade.

After we had a decent market last week, it was easy to see who the laggers were in my portfolio. I don’t mind active stocks that go up and even down, but I do mind the stocks that just don’t move at all. A healthy stock needs steady volume and a decent amount of movement. Without enough investor interest, they’re just duds.

Today, the Canadian and US markets were closed for Good Friday. The volume in the markets was low which is typical before a holiday weekend. People either don’t take on new positions or they sell or reduce their positions because they don’t want to hold them over a long weekend.

I feel lighter with fewer stocks to manage (yet I still own quite a few!) and more cash in my account. I might buy more shares of stocks I already own and am happy with. I’ll see what the market does next week and what my stocks do in relation to the market. Now, back to packing!

The Transparent RRSP: Post #13

No action was taken the week of March 20

This week felt like my own personal spring break. I’ve just been waiting for the market to pull back. When the market is uninspiring, I’m uninspired to do much in that department. When this happens, most stock charts look unpromising to me. Being patient can be boring; it is, however, a necessary virtue for a trader to have.

In my freed up time, I managed to catch up on some of my reading. JP and I typically have a number of books, magazines, and articles littered around our house. Depending on where I end up sitting, I pick up and read whatever happens to be right next to me. 

The last couple of weeks, I found myself focussing on three of the twenty or so items within my lazy reach. I’ve been reading Felix Martin’s Money: The Unauthorized Biography, Michael Lewis’ first hit book, Liar’s Poker, and Joseph Nocera’s, “The Ga-Ga Years,” an old article that was published in Esquire magazine in 1988. Interestingly, at one point this week, I found the subject matter of all three works intersecting at the topics of bonds, money market funds, and beating the market. To boot, they were all referencing the same point in financial history’s timeline: the years leading up to the stock market crash of 1987. I am not a fast reader, but by golly do I wish I could just read it all in one sitting right now. I just find people’s different experiences and ideas on money fascinating.

I have a very loosely formed concept of money that’s been evolving since I started working and saving it. While I can’t say that my understanding is advanced by any stretch, I can say that it’s deepening the more I learn about it and invest it. Money is one of those human inventions – a “social technology” as Martin calls it – that is fluid instead of concrete in its nature. Different forms of it, whether as a currency, a security, a financial product, or a means of exchange, can and will go up and down in value. As I spent more time watching the markets, it became increasingly apparent to me that these fluctuations are created by us. We get optimistic about the promise of growth or the next big opportunity. People pump money towards potential. As more people buy in, prices go up, cash runs low, and perceptions start shifting; as people start to cash out, fear of losing runs high. It’s amazing to think how the general agreement of our feelings about something has the power to change the market value of our investment accounts.

Beating the market is what every investor or fund manager wants to achieve. I’ve done it. I’ve also been horribly beaten by it. I learned that the best way to not get beaten by it is to sit patiently and wait out any fear or pessimism until optimism sets in again. Until then, I’ll just keep reading about the rise and fall of others instead of letting history repeat itself with me. 

 

 

The Transparent RRSP: Post #8

Actions Taken the Week of February 20th
  • Bought 24 shares of Canadian Life Companies Split Corp. (ticker symbol: LFE.TO) at $6.12 per share on Wednesday, February 22.
  • This cost me $146.88 plus 0.24 cents of commission.

I had S147.60 left in the RRSP so I couldn’t afford to buy 25 shares, which would have made it a better bundle to manage. When you buy shares in ‘odd lots’ (not by the 100s), you sometimes run the risk of your order not all getting filled at the very price you want; or if you pay higher commissions per transaction, you will get better value for your trade costs when you buy in round lots of 100 shares, 200 shares, 300 shares, etc.

Times like this make me feel like a teenager who spent the rest of her allowance too quickly (only here I didn’t blow it all on bubble gum and nail polish). I now have 0.48 cents left in my RRSP, which means it’s definitely due for a re-up. To stay true to my commitment of regular monthly contributions, I will deposit another $150 at the beginning of March.


I found this stock when I was perusing the ‘Canadian Common Stocks’ tab on freestockcharts.com on Wednesday morning.

lfe

LFE.TO on freestockcharts.com

 

Even though the monthly chart wasn’t my ideal setup, the daily chart was too nice to pass up. When you see a three-month long consolidation with that kind of volume action, you pay attention. This could still consolidate longer, which means I might have to sit uncomfortably for a while, but if this continues to tighten up, I will buy more either in my RRSP (when I’m better funded) or my TFSA – or both.

Also, this investment company is a portfolio of four major life insurance companies, so if you can’t afford to buy shares of those individual companies, you can of this one and receive a nice monthly dividend to boot!


Don’t forget the RRSP deadline of March 1, 2017!

Claim your RRSP deductions and get a bigger tax return!

And when you get your tax return, invest it!

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!