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: More Thoughts on the Market

I posted on Monday that I had bought another 16 shares of LFE.TO at $6.12. This cost me $97.92 + 0.16 of commission. I now have $60.90 of cash remaining in my account. This was at the same price I got the previous 24 shares of LFE.TO at, giving me 40 shares of this stock.

Currently, I’m not crazy about entering any new positions given the market. I would prefer it to have a more substantial correction before it resumes going up. My preference would be for the market to just slightly sell off below February’s lows. The market could just move sideways for the rest of March, which I’ll be satisfied with. If the market isn’t going to have a correction, then it at least needs to take a break from going straight up.

When the market is operating near a peak like this, I tend to find that stocks with great setups are merely shortlived opportunities in that they might only be in the profit zone for a few days – then people get scared at the slightest hint of a reversal and sell their positions to take their profits.

Another thing I find when the market is iffy: investors tend to gravitate towards stocks doing their own thing regardless of what the market is doing. That is the only reason why I bought more shares of LFE. I said earlier this month that I didn’t want to take any new positions for the RRSP until the market had a decent correction. This stock was resilient during some market weakness and looked like it was taking off.

When I am doing something that goes against my intentions, I have to ask myself, “If this stock takes off without me, will I be upset?” Some setups are dodgy enough that I wouldn’t have regret even if it works because I’ve learned that if I took such setups every time, I’d have consistently worse returns. The setup LFE was demonstrating is the kind you just can’t ignore.

Below is a comparison of the daily and weekly charts of LFE to one of my favourite market index ETFs to watch, the XIC. I also watch the actual TSX Composite Index, however, I prefer looking at the XIC because I get a better view of the trading volume in the market.

lfe

I haven’t lost sight of the increased amount of risk when taking trades in a market like this. I feel that LFE will trade on its own page for a while. Eventually, it’ll likely be more affected by the market. Hopefully, that happens when it’s at a much higher price!

 

The Transparent RRSP: A Quick Update

Action Taken the Week of March 13

It’s really hard to schedule my blog posts because it’s just as hard to schedule opportunities! I much prefer to write about the Transparent RRSP towards the end of the week after watching the markets for the week. I will do another post either this Thursday or Friday. I just really wanted to share this recent trade in case others might want to consider this opportunity.


 

 

LFE2

LFE charts on freestockcharts.com

 

After I first bought shares of LFE.TO, the stock went up only to come down again and consolidate longer. I loved how the range got tighter and held up beautifully – while the market during the same time came down. It always gets my attention when a stock holds stronger than the market. It’s now trading above all the previous prices in this consolidation. Could this be taking off?

The Transparent RRSP: The Investor’s Mindset

No Action Taken for the Week of March 6

Let’s have a gander at the charts for the stocks in the Transparent RRSP.

 

4 charts

Four weekly charts on freestockcharts.com

 

The charts for LFE and GRL still look good. LFE is particularly nice in that it held up strong yesterday, despite a big down day for the market.

ZPR could use a correction. I’d like it to either go sideways or have a tiny selloff (hopefully, no lower than the $11.00 area) before going up again.

LIQ got ‘wasted’ on their earnings report yesterday morning, but the fast drop was followed up by some serious buying. Seeing volatility like that can be a little thrilling (for me, at least). A shakeout like this is called capitulation. This is when sellers get out in large numbers due to panic. The stock dropped off the open and went up for the rest of the day.

Whenever a stock trades like this at an abnormal price range and trade volume, it attracts the attention of many: the media, scared investors, and traders who are watching for a potential buying opportunity. I’ve lived through enough earnings/news shakeouts – my biggest regret for most them was abandoning my positions. This is because usually after enough time passes, there was almost always a recovery. I’m going to hold on.

As I mentioned in last week’s RRSP post, the market is in need of a correction before investors can feel confident in taking new positions or adding to their current ones. Remember, I only just entered these positions in the last two months; when you buy a stock at a time when the market is nearing the end of its shorter-term trend, you can face a bit of turbulence while the market either levels out or has a bit of a selloff. I’ve said it before: selloffs are temporary and often short-lived. When the market resumes its uptrend, all you can do is hope that your stock either follows the market or will have started going up before the market gets going again.


The Investor’s Mindset

Investors feel confident when they’re right. If you buy a stock and it’s positive, then you feel like a top contender for Wall Street’s Got Talent. You look for more stocks to buy or you buy more shares of the same one. A rising stock within a rising market is positive feedback and confirms that you made the right call.

If you buy a stock and it’s negative and lower than the position you took, you start frantically looking for reasons that explain where you went wrong. There will always be reasons to support why you’re making money as well as why you’re losing money. The problem with human psychology is that we tend to focus on losses and failures more than our successes and long-term progress.

Losing something is often a traumatic experience for us. We withdraw and try to rationalize why it happened and what could’ve been done to prevent it in the first place. Just watch an athlete on a streak make one mistake. The athlete who recovers quickly and keeps at it like nothing happened conquered that hit on the ego by staying focussed on the goal of the game, not the hitch. (If you’re interested in this high-performance mindset stuff, read The Inner Game of Tennis by Timothy Gallwey.)

This doesn’t mean I stick my head in the sand and ignore all the signs saying to cut my losses when I should. I just need more information that’s relevant to me and my plan. I didn’t become a good trader/investor until I truly accepted the ups and downs that come with trading. It has taken me years to get comfortable with that. I’ve read countless books on trading and psychology to see if I was missing something in my mental processes. What I realized was that I was denying myself the joys and rewards that come from being patient.

I discovered the importance of having plans for your trades. Writing it down helps to remind you of your original intentions. (I’m getting better at this. No more loose post-it notes!) If you start getting antsy, then review your plans to see if you’re still on track with your short and long-term expectations.

Have a plan, stick to it, learn from it, and get confident!


The Transparent RRSP: Market Timing

Action Taken for the Week of February 28th
  • Deposited $150.00, giving me $150.48 of available cash in the RRSP.

At the time of writing, the net equity in my account is $1771.02. I’ve contributed $1750.00 in total to the RRSP. I’m up $21.01 so far. $2.10 of that is from a ZPR dividend payment received in early February.


The Canadian market has gone up six months straight. The U.S. market has gone up four months straight. On top of that, the trading volume has declined – a sign of the market running out of the steam needed to keep going straight up. There is nothing I would love more than for the market to have a little correction – that is, a little selloff – before going up again for another leg. I would feel more confident in making a new trade if this happened.

 

tsx

The S&P TSX Capped Composite Index Fund ETF chart on freestockcharts.com

 

 

spy

The S&P 500 ETF Trust chart on freestockcharts.com

 

Market timing means timing your trade entries and exits with the stock market moves. It’s more of a shorter-term strategy. When the market is on its way up, you buy. When it begins its move down, you sell.

A lot of people rag on market timing and its futility. I don’t blame them. It’s not easy to estimate and it’s impossible to be right and exact all the time. On CNBC, the analysts and traders always goad each other into making short and long-term predictions and when one is right over the other, they really rub it in! It’s pretty entertaining. It doesn’t really matter because, in the long run (we’re talking years), the stock market generally goes up as it has historically for decades upon decades. Why is this so?

Investors, by nature, are optimistic. You invest because you believe there’s a decent chance you’re going to make money. When optimism shifts to pessimism (due to recessions, world events, interest rate hikes, etc.), investors sell to take their profits or reduce their exposure during a downturn, or as in my case, hold off on making new investments.

So what happens if your market timing is off? Well, if you bought at the height of action before a turnaround, you’ll just have to wait until you’re back in the positive. No matter what, don’t panic. These downturns are more temporary in nature.

There are ways to be impacted less by market timing. The general goal is that over the course of your life as an investor, you’re accumulating assets and creating a diverse portfolio. If your portfolio is diverse enough, a part of it should be performing better than the other part of it during a market dip. When the market is strong again, most of your assets should be doing well. Then, you’ll eventually get rid of the ones that don’t meet your minimum expectations regardless the market and sector. After years go by, you’ll be beyond caring about market timing as most sound securities pass the test of time and should increase in value.

Why do I care about market timing? I simply prefer to take positions at the start of the uptrend. I learned to look for signs that a trend might be tiring out and if I do enter a trade, it’s with fewer shares and moderate expectations. I watch the market enough that I’m able to pay attention to where I’m positioning myself within the trend (at the beginning, mid-trend, near a top).

Before taking another position for the RRSP, I’m going to hold off until later in the month to see if there will be a correction, or if the market will take a bit of a breather that will be more apparent on the shorter time frame of the weekly chart. The only way I’d break this commitment is if I saw a perfect setup (to-die-for charts on all time frames, volume action, sector making a new move, and the market had sold off, yet the stock wasn’t affected).

This is actually a good time to look for stocks in the middle of setting up. That way, I’ll be ready with options when the timing is better.

 

 

 

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!

The Transparent RRSP: Post #7

Actions Taken the Week of February 13th
  • Bought 50 shares of Global Real Estate Dividend Growers (ticker: GRL.TO) at $7.74 per share on February 14th
  • This cost me $387.00 plus 0.50 cents commission

I now have $147.60 remaining in my RRSP left to invest. If I don’t find anything cheap enough to invest in, I’ll probably wait until my next regular deposit of $150 in the first week of March before I can afford to buy another stock.


 

grl

GRL’s Price History Chart on freestockcharts.com

 

I personally like the newness of this stock. The lowest it’s ever been is $7.30, so buying it 0.44 cents above that seemed like a good deal to me, especially if it goes up from here. It’s possible this can still go down to the $5 area. Stocks tend to test major price points of $5 multiples. If this doesn’t go down, then the first target area would be around $10 where there’ll be some profit-taking and then some more buying before going up even more.

I really liked this chart; although I will admit that my entry was aggressive and possibly premature. What I’d love to see this stock do is continue to trade in the $7.50 to $8.00 range. If this consolidates for another month or two in this area, you can bet I’ll be buying more shares before it breaks out. What’s also great is that this stock pays a monthly dividend of 0.05 cents per share.

The Transparent RRSP: Post #6

Actions Taken:
  • Bought 50 shares of Liquor Stores N.A. (ticker symbol: LIQ.TO) at $10.46 this morning
  • 50 shares x $10.46= $523.00 plus 0.50 cents in commission. I paid $523.50.
  • I also deposited another $300 this week because I got birthday money (my parents-in-law tend to spoil me!)
  • There is now $535.60 left to be invested for the next opportunity

Alcohol is a consumer staple that will carry people through good and bad times. For this reason, I believe it’s a good portfolio staple. Right now, what I want to do for this RRSP account is start it off with some solid stocks. I like to think of it as having good wardrobe basics in your closet first before leaping to more flashy and frilly gear!

This wonderful stock also pays a monthly dividend. I own this already in my TFSA at a nice lower price of $7.88. I like it because it pays a monthly dividend (currently at 0.03 cents a share).


liq

It’s possible this could go lower in price. The pattern setups on the daily and weekly charts don’t inspire excitement and confidence in me. I do, however, like the clean setup on the monthly chart. To me, the larger time frame is more important than the shorter time frames. The current entry at $10.46 is close to where it last sold off at $9.80 as indicated by the pink arrow.

In case this stock doesn’t go down and continues higher from this place, I took action and bought 50 shares. If the setup were a bit better, I would’ve bought more shares. 

If it does go down more in price and then sets up again later on with a nice consolidation pattern, then you can bet I’ll be buying more shares!

 

Couples Who Invest Together Stay Together…Right?

Beach Talk

“What do you mean you have a bunch of money just sitting there?!?”

My forever man, JP, one of the calmest people I’ve ever known, had a mini conniption when I casually told him that I had a large chunk of uninvested cash in my TFSA. I had no explanation to offer other than a sulky, “I’ve been too busy to figure out what to get.” Saying that to someone who is busier than you won’t get you far. Thankfully, this conversation happened on a sunny beach in Florida last week, so it wasn’t hard for him to simmer back down in the face of my cringe-worthy apathy.

“Just buy anything that pays a dividend. Buy more shares of ZPR or SPB. Anything. How else are we going to retire in five to ten and live off dividends if you don’t have those shares? You know what to do. All your money should be working,” he gently advised before taking a deep swig of his particularly strong grapefruit juice and returning to his beach reading. 

I couldn’t argue with him about putting your money to good use – I tell people to do this all the time, after all. Now that I’m back from vacation and resettling into my icy reality, I’m ready to hunker down and start looking for stocks again.

We ‘Split Up’ and Went Our Separate Ways

When we were learning about stocks, JP and I started off trading together. However, we discovered the hard way that we often had different ideas that threatened the other’s need to try something a little off-script. We then split our account into two and started to operate separately. As our respective accounts grew, so did the number of accounts. We each now have three trading accounts.

We now share our ideas, but that doesn’t mean we act on them. Sometimes we’ll take the exact same trade, entry and all, but many of our trades are done without telling the other until later. It was when we started making independent decisions that we started to see our respective portfolios truly take off. The reason I think this improvement in portfolio performance happened is because we wouldn’t get shaken out of our positions due to fear of trade criticism.

In chat rooms, I’ve seen traders and investors criticize each other’s decisions. This is why I left chat rooms. People always share ideas and then sometimes scare each other out of taking chances or out of the trades they already took. It’s already bold enough to take a position, the last thing you need is an outside voice to instill fear or add doubt. If you invest from a position of little faith, you will have incredible difficulty at succeeding financially.

Whether or not we totally agree with each other’s stock picks, JP and I support and trust each other’s decisions because we share the same long-term vision. We want to have a second property in a hot place, we want most of our income to come from our investments, and we want to help others learn how to achieve their financial goals through investing.  Most importantly, we want to help each other become better investors.

Moving Forward in Harmony

For 2017, I resolved to be less of a ragtag investor. JP is so disciplined in that he reviews our stock portfolios – mine and his – almost every day and then he emails me (so I don’t misplace it) his watch list of stocks to pay attention to. I have missed many opportunities. Maybe I should just post his lists for my readers?

I am trying to be more organized and watchful of my stocks. I’m working on being more proactive with my investment ideas, and thanks to weekly blogging, I’m getting a bit better at it. It’s only February so I won’t beat myself up over how far I have yet to go. 

There is rarely a completely straight and easy path to any goal, but my conversation with my partner in life and business reminded me that it’s time to get back on track and to contribute more to our joint efforts. Our future beach bum selves are counting on it.

The Transparent RRSP: Post #5

Actions Taken the Week of January 30th

  • Deposited $150 into the RRSP, which now has $1316.50

The RRSP’s only security so far is ZPR, my ETF darling. It has been steadily going up since I bought it at $10.86. It’s up 0.34 cents as of yesterday, making me $16.50 so far (after paying 0.50 cents in commissions). I have yet to receive my first dividend payment from this stock, but it’ll come soon.


zpr

The charts for ZPR still look healthy. I can’t help but think I should have bought 75 shares instead! The idea was that I wanted to find another stock to invest in late January, but I just didn’t find anything suitable.

The best charts for the right prices were in the gold sector. For me, gold is more of a swing trade to actively watch – I didn’t feel that would be a suitable choice for new investors. I recognize that gold is considered a hedge if you anticipate a drop in the market. After trading gold and silver for years, I can tell you that the market going down isn’t a guarantee that gold stock prices will go up. Commodities aren’t always the easiest trade. So much depends on the supply and demand in their own markets where people actually buy the raw or processed materials.

I’m not saying to not invest in gold or silver stocks. I just think it’s better to start diversifying when you have more money and own enough of the standard securities to give your portfolio a solid foundation.


Another thing I’d like to mention is to never lose sight of your goals. It’s a big mantra of mine. I tell that to myself all the time, particularly when times are challenging.

I’m in the Florida Keys right now on a short vacation. It’s hard to beat lying in the sun, reading, napping, drinking, and just totally recharging. I want my retirement to have plenty of days such as this. As sad as I am to leave this  wonderful place, I’m more motivated than ever to make this goal a reality.