I’ve been buying stock since I was a boy. I used to save the money earned from my paper route and, when I had enough, use it to buy a few shares of Bell Telephone.
It has been five decades since I was a youthful investor and I may have the name of the stock wrong but I sold my Ma Bell at one point to buy Pacific Pete, a junior oil stock. I did this on the urging of my uncle and against the advice of my knowledgeable stock broker.
I made a tidy profit and plowed my winnings back into Bell – the widows and orphans stock. I held that stock until my mid-twenties when I cashed out to raise the down payment on my first home.
In the early to mid-eighties I again did just fine playing in the market. It was a bull market and I read that one could simply throw darts at a stock list and make money. I think they were right.
Recalling my earlier good luck with the oil patch, I bought a stock called Britoil. It traded in the $3 to $5 range and paid a very nice dividend. I bought on the dips. I also bought Apple computer with the belief that their innovative laser printers would be profit generators for the young company. These stocks and others did very well.
I was out of the market before the infamous Black Monday crash of 1987 occurred. I partially credit an early charting program that came on a 400K disk and ran on my Mac for my prescient move to the sidelines. After the crash, I ran lots of tests of that program and it seems it was more luck than logic that had saved me.
As I have mentioned in other posts, I got back into the market when my wife retired. This move forced us to confront the idea of retirement and ask ourselves, “How do we use our RSP to fund our retirement?”
Saving for retirement had been easy. Just put in a chunk of money every year. But, spending that money is another matter. Take too big a chunk out every year, add the bad luck of living too long or suffering through a market collapse and you run out of those annual chunks of money.
I worked out a quick allocation model with about 40% of our money in bonds (XSB), 30% in Canadian stocks (XMD and BTH.UN were favoured), 12% U.S. equities, 12% International equities (taking care to steer clear of Russia), and the remaining change in cash. We had some TD Monthly Income fund but it was folded into our bond and Canadian stock investment allocations. I was back in the market.
I tried to talk with business folk at The London Free Press where I worked about BTH.UN but they had no interest. After Jim Flaherty’s Halloween Surprise all anyone would say was, “I told you so.” I had been foolish and had paid the price. I could get no one to discuss income trusts with me – it was just, “Take your lumps. Sell and move on.”
I didn’t sell. BTH.UN slowly crawled back. It even surpassed the price at which I had originally bought this Barclays ETF based on the top 100 Canadian income trusts. It had paid better than nine percent over the time I had owned it and I managed to move on without suffering a huge loss. I took no lumps.
So much for the great expertise of the business pages boys.
Which brings us to today and a little discussion of yesterday’s blog featuring my silly benchmarks. I call them silly because I don’t want anyone to be lead astray. That said, I find them curiously interesting.
If you had bought into the Canadian banks two months ago when they were at their lows, you could sell a hefty chunk of your investment and take a vacation. I bought some, but not enough for a vacation. The advice I was give by some retirees has so far performed very well. Now to see if that advice continues to succeed or if it disappoints like my old charting program.
Each one of my little fun portfolios has its roots in stuff that I have heard but which is often out of mainstream thinking. There are lots of ways to determine how the completely classic approaches are working. The two Russell funds are excellent indicators, or the Financial Post FPX benchmarks.
I openly admit that my personal portfolio is closer to the Russell approach than to the sometimes wild advice I have been given at times. But, just as my BTH.UN showed that income trusts could deliver solid profits and allow you a profitable exit – despite all the advice of the experts – maybe, just maybe, going heavily into Canadian financials a couple of months ago when they may have bottomed would have been a wonderful, dividend paying, move for an old retiree like me.
Cheers,
Rockin’ On
This is the post which inspired the above. How did your investments perform?
This is my post on asset allocation.