Sunday, November 25, 2012

Steady as she goes!

With our 2013 macro scenario in place, what are we going to do with our 2013 portfolio? Since the Great Recession in 2008 -2009, we have bought our stocks for dividend income in mostly large and great companies such as Microsoft, Power Corporation, the Canadian Banks and oil and gas service companies such as CalFrac and TransCanada Pipelines. In addition we have our Low P/E and Moderate Dividend Portfolio that we will have to re-balance in the coming month (last trading days before Christmas). Gold and silver are represented through investments in Silver Wheaton and the S&P/TSX Materials ETF (XMA). We own ETFs in the Canadian Stock Markets (XIUs and CDZ), in Canadian Bonds (XBB) and in the U.S. we own ETFs based on the Dow and S&P indexes. Finally we have an ETF for Europe in place that hopefully will take advantage of the coming recovery over there.

This year we significantly reduced our oil producer holdings and we have started to nibble at gas producing companies such as Peyto and we kept our Encana holdings steady.
We also have our Alberta real estate portfolio where we took advantage of the 2008 correction and added properties over the following years.
Now, we only have to tweak our holdings, ad natural gas investments when that market segment improves. We also will add to our various other holdings while the global markets recover using cash flow from our various paper securities. But mostly, we’re ready to harvest. This is one of the toughest things to do – i.e. keeping our fingers off the buy and sell triggers. But that is what the 2013-2015 period is going to be about. This will be the ‘boring investment’ era where we sit back, collect and reinvest dividends and from time to time we may buy a new stock or property if new cash comes in and in an extreme case we may have to dispose of a under-performing investment.
While the markets recover and appreciate over the coming years, we may sell and buy options to enhance our dividend income and we may start to use stop loss orders to protect our profits from major corrections and bear markets. Don’t worry about investing in Asia – our commodity stocks and our U.S. blue chip holdings will help us there. You may not even realize it, but many U.S. large caps earn a lot of their income from Asia and other overseas markets and commodities are driven to a large extend by emerging economies such as Chine and India. Thus you get to benefit from any Chinese growth resurgence while you have the transparency of North American stock markets (well everything is relativeJ).
Barring a major collapse of Alberta’s energy sector, Alberta rental properties will do fine and with added leverage your ROI will reflect this. Now it is time to focus on your real life apart from finances. Maybe plan or revisit your life vision, i.e. your personal Belize. See whether you are on your way to achieve it or whether your plans have to be adjusted by a career change or an unexpected curve ball lobbed into your life. Maybe more specific planning for your upcoming financial adulthood is required.
We’re departing from a buying opportunity of a lifetime and are traveling through the waters of a prolonged recovery. As the captain of your voyage to the port of your personal Belize, you should now be ready to say: “Steady as she goes! “




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