Derek Foster

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
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BRIAN5000
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Derek Foster

Post by BRIAN5000 » 08 Dec 2009 12:26

He corrected his mistake on needing to apply for a TFSA by the end of the year in his email newsletter sent today.
“Sometimes you are going to sell early and wish you would’ve held on, other times you will hold on a
little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns

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Re: Derek Foster

Post by BRIAN5000 » 08 Dec 2009 14:31

True story or fabrication?

Back in late 2008, when stock markets encountered extreme volatility, I sold my shares of JNJ at around $58 US. I then generated income following the strategy I outlined in the back of my latest book, "STOP WORKING TOO". However, JNJ is a great franchise that I want to own, so I recently repuchased the shares at $60 US. At first glance, this manouvre would appear to be a case of "sell low, buy higher", but since my portfolio is kept in Canadian dollars I was able to sell at over $72 Canadian and repurchase the shares at $63.50 - a move which saved me over 12% (not counting the money I earned during that time).

When FWF'ers sell a US stock in your open US portfolio do you convert to Canadian dollars? Was this inside his RRSP and just got lucky with the Canadian dollar increase?
“Sometimes you are going to sell early and wish you would’ve held on, other times you will hold on a
little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns

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Re: Derek Foster

Post by Shakespeare » 08 Dec 2009 14:39

When FWF'ers sell a US stock in your open US portfolio do you convert to Canadian dollars?
Whether you do the conversion or not, you are liable for the tax amount in C$ in a non-registered portfolio. So looking at the C$ equivalents is entirely valid.
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Re: Derek Foster

Post by Michael D » 08 Dec 2009 14:42

BRIAN5000 wrote: When FWF'ers sell a US stock in your open US portfolio do you convert to Canadian dollars? Was this inside his RRSP and just got lucky with the Canadian dollar increase?
He got lucky. He also missed out on dividends.

(I hold JNJ, in RRSP, so all $CDN).

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Re: Derek Foster

Post by scomac » 08 Dec 2009 14:44

BRIAN5000 wrote:True story or fabrication?
He's just playing with numbers in an attempt to justify what he did as a smart decision.
When FWF'ers sell a US stock in your open US portfolio do you convert to Canadian dollars?
I don't. I leave my money is USD. I certainly have no interest in paying the vigorish on every transaction.

When I do periodic performance updates, I'll will convert USD (on paper) to CAD so that I can measure results in CAD.

What Foster is doing maybe valid, but I believe it's mostly in the name of semantics in this instance.
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Re: Derek Foster

Post by bones1 » 08 Dec 2009 16:20

Why would anyone take Derek seriously anymore? The guy has zero credibility.

He's great at manipulating the media. But really, the media is pretty brainless, so that's not too difficult.

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Re: Derek Foster

Post by expertinvest » 10 Dec 2009 13:48

Derrick's latest email talks about Johnson and Johnson and how it would be a great investment - NOT GREAT ADVICE!
Why would he recommend an investment that pays only 3%. In 2 minutes I can come up with and investment that pays more than 12%. For example, Yellow Pages pays over 12%,
Let's see - YLO over 12% and JNJ only 3%. Any child will tell you 12 is more than 3.

Then look at the stock. At the end of 2001 it traded at around $60. It's still around $60. Anyone with a brain can see this is not a good stock to invest in.

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Re: Derek Foster

Post by augustabound » 10 Dec 2009 18:20

The last thing I am is a fan of Derrick, but you can't compare JNJ and YLO.UN.
"Whenever I'm about to do something I think, would an idiot do that? And if they would, I do not do that thing." - Dwight K. Schrute

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Re: Derek Foster

Post by jimmyjeblonski » 11 Dec 2009 00:02

expertinvest wrote:Derrick's latest email talks about Johnson and Johnson and how it would be a great investment - NOT GREAT ADVICE!
Why would he recommend an investment that pays only 3%. In 2 minutes I can come up with and investment that pays more than 12%. For example, Yellow Pages pays over 12%,
Let's see - YLO over 12% and JNJ only 3%. Any child will tell you 12 is more than 3.

Then look at the stock. At the end of 2001 it traded at around $60. It's still around $60. Anyone with a brain can see this is not a good stock to invest in.

Expertinvestor
Yellow pages has no growth. JNJ has historical growth of about 8% per year for the last 50+ years. Which of the two companies does Warren Buffett own?

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Re: Derek Foster

Post by scomac » 11 Dec 2009 07:02

expertinvest wrote:Derrick's latest email talks about Johnson and Johnson and how it would be a great investment - NOT GREAT ADVICE!
Why would he recommend an investment that pays only 3%. In 2 minutes I can come up with and investment that pays more than 12%. For example, Yellow Pages pays over 12%,
Let's see - YLO over 12% and JNJ only 3%. Any child will tell you 12 is more than 3.
Would that same child tell you that it is total return that matters, not just yield?
Then look at the stock. At the end of 2001 it traded at around $60. It's still around $60. Anyone with a brain can see this is not a good stock to invest in.
What does that make YLO using this rationale? It IPOed in 2003 @ $10.50/unit and is currently trading @ $5.23/unit.
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830

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Re: Derek Foster

Post by ModeratorM » 13 Dec 2009 12:59

For those of you who are obsessed with "Merry Christmas" and those of you who like to whip the obsessed into a off-topic frenzy, you will find your posts in the appropriate thread in Around the Watercooler. The thread you are now reading is about Derek Foster and it is in the financial part of the forum. Hijacking a thread is frowned on and repeating tired old arguments again and again annoys Moderator M especially when the posts are completely off-topic. All of you know better (Scomac, you are excepted from this admonition). Don't do it again or a lump of coal will be your only seasonal present.
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Re: Derek Foster

Post by DanH » 13 Dec 2009 20:19

ModeratorM wrote:Don't do it again or a lump of coal will be your only seasonal present.
You can always do what my grade 9 science teach used to do: whip chalk coal at their heads to see if they're paying attention. ;)

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Re: Derek Foster

Post by DanH » 13 Dec 2009 20:22

expertinvest wrote:Derrick's latest email talks about Johnson and Johnson and how it would be a great investment - NOT GREAT ADVICE!
Why would he recommend an investment that pays only 3%. In 2 minutes I can come up with and investment that pays more than 12%. For example, Yellow Pages pays over 12%,
Let's see - YLO over 12% and JNJ only 3%. Any child will tell you 12 is more than 3.

Then look at the stock. At the end of 2001 it traded at around $60. It's still around $60. Anyone with a brain can see this is not a good stock to invest in.

Expertinvestor
If you want to slag the guy, at least do it with facts. He was not RECOMMENDING JNJ. He was simply recalling what he'd done with JNJ and that he'd done better than it may have looked on the surface. It's a valid point. He may be cherry picking among his picks but it's a valid point. And if you're going to mention this info, at least paste an accurate account of what he wrote. Failing to do so simply damages your credibility.

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Re: Derek Foster

Post by expertinvest » 14 Dec 2009 17:38

Okay, Derrick bought JNJ and it is a lousy investment. It is trading at the same price it was a year ago. Why not invest in something that has gained a lot. If you had bought Ford as an example, you would have earned over 400% in the last year. And that is just one example. There are many stocks that have done WAY better than what he writes about. It just shows how little he knows.

I met Derrick in Toronto at a finance show last year and talked to him. I told him about my situation. At that time I had around $20 000 in credit card debt from school. I had a fairly low rate of 9.9%. I asked him what he would do in my situation. He said he would pay of the debt. I followed his advice, but still have around $13 000 in debt. If I would have invested that money into stocks that have doubled and tripled, I might be debt free now or very close.

My strategy is too look for companies that have fallen 75% or more and invest. If they get to the point of only being down 50%, then I have doubled my money. There are lots of stocks that have done that in the last year that I have been watching the stock market. Derrick's idea of buying dividend stocks is dead. Many people have said so. It's a dumb strategy. And Derrick doesn't even buy stocks with high dividends. JNJ pays only around 3%. Who is going to get rich only earning 3%? I will never listen to foolish advice again.

BTW, if anyone has any stocks that they think will double in the next year or so, let me know. I can also post some of the picks I have found.

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Re: Derek Foster

Post by Norbert Schlenker » 14 Dec 2009 17:46

expertinvest wrote:I met Derrick in Toronto at a finance show last year and talked to him. I told him about my situation. At that time I had around $20 000 in credit card debt from school. I had a fairly low rate of 9.9%. I asked him what he would do in my situation. He said he would pay of the debt. I followed his advice, but still have around $13 000 in debt. If I would have invested that money into stocks that have doubled and tripled, I might be debt free now or very close.
Or you might have invested in Yellow Pages Income Fund.
BTW, if anyone has any stocks that they think will double in the next year or so, let me know. I can also post some of the picks I have found.
Start a new thread. I'm sure it will be interesting.
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Re: Derek Foster

Post by AltaRed » 14 Dec 2009 17:53

expertinvest wrote:BTW, if anyone has any stocks that they think will double in the next year or so, let me know. I can also post some of the picks I have found.
I don't think you will find too many speculative investors/traders in these parts. But you may wish to peruse the Stock, Bond, REIT forum to see what other people think about individual picks, and have a discussion on your picks there. I recall some very recent dialogue about Teck and Grande Cache Coal, but these are 'winners' having come back from the brink a year ago, but do not necessarily have strong 10 year track records.
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Re: Derek Foster

Post by marty123 » 14 Dec 2009 19:17

expertinvest wrote:My strategy is too look for companies that have fallen 75% or more and invest. If they get to the point of only being down 50%, then I have doubled my money. There are lots of stocks that have done that in the last year that I have been watching the stock market. Derrick's idea of buying dividend stocks is dead. Many people have said so. It's a dumb strategy. And Derrick doesn't even buy stocks with high dividends. JNJ pays only around 3%. Who is going to get rich only earning 3%? I will never listen to foolish advice again.

BTW, if anyone has any stocks that they think will double in the next year or so, let me know. I can also post some of the picks I have found.
GM was down 75% or more about a year ago. It would have been about $4.00 when you met Derek. What would have happened with your $4.00?
Citigroup was down 75% or more about a year ago. It would have been $7.00 when you met Derek. What would have happened with your $7.00?

It's quite simple, if a stock is down XX% to $Y.YY, it's because the consensus amongst millions of experts is that it's only worth $Y.YY. The millions of investors may be right, they may be wrong, but they represent a better statistical sample than anyone else's opinion.

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Re: Derek Foster

Post by NormR » 14 Dec 2009 19:25

Buying based on 1-year negative momentum is a very tricky game. The odds tend to be stacked against you.

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Re: Derek Foster

Post by JaydoubleU » 16 Dec 2009 00:52

Okay, Derrick bought JNJ and it is a lousy investment. It is trading at the same price it was a year ago. Why not invest in something that has gained a lot. If you had bought Ford as an example, you would have earned over 400% in the last year. And that is just one example. There are many stocks that have done WAY better than what he writes about. It just shows how little he knows.

I met Derrick in Toronto at a finance show last year and talked to him. I told him about my situation. At that time I had around $20 000 in credit card debt from school. I had a fairly low rate of 9.9%. I asked him what he would do in my situation. He said he would pay of the debt. I followed his advice, but still have around $13 000 in debt. If I would have invested that money into stocks that have doubled and tripled, I might be debt free now or very close.

My strategy is too look for companies that have fallen 75% or more and invest. If they get to the point of only being down 50%, then I have doubled my money. There are lots of stocks that have done that in the last year that I have been watching the stock market. Derrick's idea of buying dividend stocks is dead. Many people have said so. It's a dumb strategy. And Derrick doesn't even buy stocks with high dividends. JNJ pays only around 3%. Who is going to get rich only earning 3%? I will never listen to foolish advice again.

BTW, if anyone has any stocks that they think will double in the next year or so, let me know. I can also post some of the picks I have found.
I suppose there have been few replies to these comments because few take them very seriously. Who thinks they can pick the stock that is going to rise 400% or even double over the next year? How many mortgaged the house or borrowed money to buy stocks in March of this year when the sky was falling? Who picked Wachovia or Lehman Bros. as possible great value stocks? Who would have dreamed BMO would gain 70% in 8 months? We made a few investments then, and did well, but overall we're happy just to have recovered from the beating of the past 2 years.

Derek Foster gave you good sensible advice to pay off your debts first.

Just for fun, I went to globeinvestor and in a hypothetical portfolio, bought 100 shares each of JNJ and FORD on January 3rd, 1980. I tried to do the same for YLO.UN (!) but couldn't go further back than 2006. So I bought 100 shares of YLO.UN on January 3rd, 2006.

Today I would still have 100 shares of YLO.UN @ 5.20 for a loss of 68.6%. I'd have 100 shares of FORD @ 9.39 for a gain of 810%. Not bad. But I'd have 200 shares of JNJ (one stock split) @ $64.74 for a gain of 7,992.5% ! And these figures do not include dividends. (Others who are better at math might tell us what the numbers work out to in average annual compound return.)

In 1980, JNJ paid .0464 cents per share in dividends, which on $1.60 yields 2.9%. Pretty crumby, eh, expert. Today the dividend is $1.96 a share, higher than the original price paid for the stock! Incidentally, on January 3rd, 1980, JNJ was trading at $1.60 a share, and Ford closed at $1.29 :D

3% may not seem impressive, but a rising dividend is reflecting growing earnings, something YLO.UN is not doing.

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Re: Derek Foster

Post by randomwalker » 04 Sep 2010 06:48

I haven't watched this but I see Mr Foster is making the rounds again, perhaps he has another book coming out,
http://watch.bnn.ca/#clip344177

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Re: Derek Foster

Post by augustabound » 04 Sep 2010 19:54

He's also speaking at the Canadian Moneysaver's Investment Conference in Toronto in September.
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Re: Derek Foster

Post by bones1 » 06 Sep 2010 14:44

Has he no shame at all? Does hypocrisy mean nothing to him?
Why do people pay any attention to that guy?

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Re: Derek Foster

Post by Spidey » 06 Sep 2010 15:49

Coincidentally I just finished watching him interviewed with Patricia Lovett Reid on BNN and when asked about his stock sell-off a couple of years ago he admitted, "I was an idiot". I have my criticisms of Foster, as well, but I always give a couple of brownie points to those who will admit their mistakes, especially since it is so rare these days.

I tend to go a little easier on Derek than many on forums. I don't believe he is retired any more than any small business person is, but he still is an encouraging example of someone who left the traditional workforce to follow a dream. Sure, he oversells the reliability of his strategy, but he's hardly the only one guilty of using hyperbole to market a product.
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Re: Derek Foster

Post by deaddog » 06 Sep 2010 18:46

I sat through the interview. What is it about Derek that every one seems to dislike? I haven’t read his books but in the interview he seems to pretty well follow the buy and hold philosophy.

Buying dividend stocks at low prices or selling puts to purchase these stocks hardly seems to be beyond the thinking of most on these threads.

I was always under the impression that he took way more risk than what was considered acceptable. According to the interview I didn’t see that.
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Re: Derek Foster

Post by augustabound » 06 Sep 2010 20:04

deaddog wrote: I was always under the impression that he took way more risk than what was considered acceptable. According to the interview I didn’t see that.
He made the bulk of his wealth by using margin to buy boat loads of Altria about 10 years ago. In his first book he claimed to invest $200 per month in dividend paying blue chips and trusts and he apparently had enough to retire on. (about $400k if memory serves me).

It wasn't until he was challenged many times that he admitted to the margin. He was hounded about his math, but defended it, until one day when he wanted to release a second book, that he came clean on the margin use.

He also fails to admit the book revenue is a part of his retirement nest egg. I'm pretty sure it was easily in the 6 figure range for the first book.
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