February 12, 2016

Portfolio Update February 2016

Note that you can expect my next update in about 12 weeks or so, in May 2016.
Meanwhile, you can also have a look at our actual portfolio and/or previous portfolio updates here:

Since our last update, important changes put in place by the new liberal government for fiscal year 2016 prompted us to make a Special Extra RRSP Contribution for 2015. This meant fresh new money coming in our portfolio.

Yet again, markets gave us a pretty wild ride, especially in the first weeks of 2016.

Now, should we be worried about the markets?

Again, I’ll remind you that I am not an investment or tax professional of any kind. The intent of this blog is not to give specific investing advice. Before investing yourself, we suggest you to do all necessary research and consult a licensed financial professional if need be.
Terrific Buying Opportunities

We just don’t think so.

For us, volatile markets often only translate into interesting buying opportunities. Bargains plus accessible money meant we were going to buy something, regardless of uncertainty.

We also think that bad news about particular stocks frequently results in attractive prices. The impact of these so-called bad news on well-managed corporations should only be temporary.

Always keeping our long term perspective, we will simply continue to stay patient and invest in solid companies when we have money on hand to do so. To be clear, we are never in a hurry to buy but won’t wait to «time» the market either.  

In theory, our approach looks simple to apply but it can be a totally different ball game in practice. Trying times like these will surely test our resolve to walk the talk. This means you have to avoid selling on panic and keep buying even if some folks tell you a big crash is eminent.

No change in tendency as capital return still is lingering.

Yet our DIY Portfolio continues to grow strong. Our Special Extra RRSP Contribution sure gave it an additional boost.

Recent Buys

This time around, we had the courage to pull the trigger a few times!

Here’s an overview of securities we recently grabbed.

Note that we still have some cash left in our investment accounts and that we should buy some more stocks soon. In our upcoming acquisitions, you’ll probably find some financial candidates from our Watch List like banks and insurance companies.    

Canadian Pacific Railway (CP)      Down 22.91% Dip Factor 3.43

CP Rail’s stock price has been fluctuating a lot lately. Most of it can be explained by all the hoopla surrounding CP’s failed attempts (twice) to acquire Norfolk Southern Corp.

To a lesser extent, CP was also affected by falling oil prices. Reduced oil production resulted in less oil for CP to transport. Fortunately, most of CP’s business does not depend on moving that ailing resource.

Despite these setbacks, we are confident that in the long run, CP will still profit from solid recurring revenues and that its results will remain strong.

CP already was a modest member of our PortfolioWe took advantage of its Dip Factor at 3.43 to purchase additional shares.

American Express (AXP)      Down 27.08% Dip Factor 4.08

American Express fell in 2015 as it ended its association with Costco. That contract had been very profitable for AXP over the years.

A stronger US dollar also harmed AXP as it meant less profitable international operations.

Again, we feel like a robust enterprise like American Express will bounce back from these difficult times. Recurrent sales and healthy business structure will help AXP regain its leading position in the industry in the future.

Earlier in 2015, we had acquired a small number of AXP’s stock. We benefited from a Dip Factor over 4, along with other indicators, to buy additional shares in the first days of 2016.

Our timing was a little off on this one as AXP sharply fell a week afterwards (about 10% on a single day).

This is not the first time a security has fallen just after we acquired it. We still feel you have to remain patient and live with those kind of short-term setbacks. In fact, it’s probably one of the keys to be a successful long-term investor.

Holding our ground and retaining our long term view has paid off for us in the past. As it happened with many others, keeping AXP should bolster the value of our Portfolio over the long haul.

Canadian Tire Corporation (CTC.A)      Down 22.90% Dip Factor 4.29

We are happy to welcome a new face to our Portfolio with Canadian Tire.

This newcomer is one of Canada’s top retailers. Canadian Tire is a very strong brand that every Canadian seems to know. Through the years, Canadian Tire has posted very solid results and we kind of wonder why we didn’t purchase it sooner.

In recent months, Canadian Tire continued its strong performance despite an important slowdown in several sectors of the Canadian economy.

Many investors look a little scared of the impact of these financial struggles on Canadian Tire but its sales and profits have remained on the rise at a steady manageable pace of about 3%.

So we were glad to have the opportunity to purchase Canadian Tire with a Dip Factor of 4.29.

Not that it really matters, but our timing seems a tad better on this acquisition.

Net Worth Update

Looking at our Net Worth is far from our main focus as we prefer to concentrate on saving enough to realize most of our projects. We always try to save money and improve our financial situation while having some fun along the way.

But monitoring our Net Worth every now and then can still constitute a great way to evaluate our financial health and to measure if everything is going according to plan.

As you can see, despite some major huddles caused by the financial crisis in 2008-2009 and a rough patch where we deviated a bit from our plan around 2012, we managed to do quite well.

Attaining our two main Investing Goals to save at least 12% of our income and to obtain a long-term investment return of 12% sure helped booster our Net Worth.

Our other ambitious objective to gradually Escape 9-to-5 made our journey a tad harder money-wise and probably hurt our Net worth. But despite some missteps, we were still able to get back to our original plan.

Our discipline to avoid debt as much as possible made things much easier.

We are not completely deft-free as we have a small outstanding balance on our mortgage. We are not in a hurry to clear it as our investment performance is much better than interest we get charged on it. Nonetheless, we should be mortgage-free in about 2 years.

In some rare occasions, we also use our home line of credit if our cash flow timing is not quite right but reimburse it as soon as we can, usually within a few weeks.

For us, the keys to success evolve around tackling on challenging goals and maintaining good financial habits. If we are able to do so, in a sense, we feel that our Net Worth should take care of itself and continue to growth over the years.

Hope our story can inspire you!

Please feel free to ask questions or tell us about your own ventures.

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