Investing styles

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
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kcowan
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Re: Investing styles

Post by kcowan » 10 Dec 2014 13:29

Flaccidsteele wrote:Success comes primarily from being lucky.
and enjoying cutting your losses as a lesson...
For the fun of it...Keith

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Re: Investing styles

Post by BRIAN5000 » 13 Dec 2014 20:44

Trying to make each "safer" core dividend stock pay dividends of at least $1200 a year and less "safe" core stocks $600. A safer stock IMHO may be a Canadian bank. This would mean a stock like TD I would need to own about 650 shares and something like HSE I would only need about 500 shares A $34000 investment compared to a $11,000.
“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: Investing styles

Post by ghariton » 13 Dec 2014 20:56

BRIAN5000 wrote:A safer stock IMHO may be a Canadian bank. This would mean a stock like TD
:rofl: :rofl:

Some ten days ago I decided to speculate a little with some of my play money. I knew that TD would update investors on its outlook, and I thought I would gamble on a positive reading. So I bought 100 shares. So far my loss is approaching 10%.

George
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Re: Investing styles

Post by BRIAN5000 » 13 Dec 2014 21:30

I'm buying some NA on Monday if it doesn't pop.
“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: Investing styles

Post by SQRT » 14 Dec 2014 09:03

ghariton wrote:
BRIAN5000 wrote:A safer stock IMHO may be a Canadian bank. This would mean a stock like TD
:rofl: :rofl:

Some ten days ago I decided to speculate a little with some of my play money. I knew that TD would update investors on its outlook, and I thought I would gamble on a positive reading. So I bought 100 shares. So far my loss is approaching 10%.

George
Yes, if has been quite a roller coaster

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Re: Investing styles

Post by scomac » 14 Dec 2014 11:12

SQRT wrote:
ghariton wrote:
BRIAN5000 wrote:A safer stock IMHO may be a Canadian bank. This would mean a stock like TD
:rofl: :rofl:

Some ten days ago I decided to speculate a little with some of my play money. I knew that TD would update investors on its outlook, and I thought I would gamble on a positive reading. So I bought 100 shares. So far my loss is approaching 10%.

George
Yes, if has been quite a roller coaster
This is nothing. It could get really entertaining if when housing rolls over. Everybody is banking on CMHC saving the day, but the ripple effects of such a roll over will be quite pronounced on banking profits none-the-less! The banks are beginning to look enticing with this correction, but we need to remind ourselves just how low they got the last go round! :shock:
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
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Re: Investing styles

Post by AltaRed » 14 Dec 2014 12:17

I generally insist on approximately 52 week lows (correction terrritory) to buy blue chips, especially in uncertain environments. I miss some (e.g. FTS, EMA) and get some that way (e.g. ACO.X). I think the opportunity could get there this time to buy some of the banks* that way. I am pretty much full up on BMO, RY and BNS. Waiting on TD to get there (~$47).

* Not CWB or NA as I consider them regional banks subject to regional peculiarities.
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Re: Investing styles

Post by BRIAN5000 » 14 Dec 2014 14:44

Tinkering with a few 100 shares of the bank stocks (above core positions) I think they all pretty much have the same risk. So if I was to buy one I would throw a dart and buy the one which I thought had the most short term return potential. In this case I'm also adding to my lowest core position in a cycle 2 payer, bonus points.

BMO 3.8%* + div 4.10%
BNS 11.7%* + div 4.14%
CM 4.4%* + div 4.23%
TD 6.8%* + div 3.62%
NA 14.5%* + div 4.41%
RY 3.1%* + div 3.88%

*dart throw estimate of potential 1 year return
“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: Investing styles

Post by AltaRed » 14 Dec 2014 16:09

BRIAN5000 wrote:*dart throw estimate of potential 1 year return
Those darts seem pretty precise...to one decimal point. How did you get to that conclusion?
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Re: Investing styles

Post by ghariton » 14 Dec 2014 19:46

AltaRed wrote:Those darts seem pretty precise...to one decimal point. How did you get to that conclusion?
Superior chimp, fed on only the best quality bananas.

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Re: Investing styles

Post by BRIAN5000 » 14 Dec 2014 21:05

AltaRed wrote:
BRIAN5000 wrote:*dart throw estimate of potential 1 year return
Those darts seem pretty precise...to one decimal point. How did you get to that conclusion?
Let's take one stock let's say TD you say $47 dollars.

I say somewhere @ $47.47 - $49.97 it starts to look interesting. Depending on how bad I want it and what's happening in the market (all dart throwing) I might buy some at $49.97 or might wait till $47 ish or let it fall through $47 before I may buy depends on which way the wind is blowing.
I generally insist on approximately 52 week lows (correction terrritory) to buy blue chips
This hasn't worked for me maybe because I'm not paitent enough.
“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: Investing styles

Post by BRIAN5000 » 15 Dec 2014 15:07

Some more dart throwing

Considering nothing else but a short term return which of these stocks has the best relative value in the group or the best chance of making a few bucks on a couple 100 shares? Anyone have an automated system for determining this? If the intended trade goes wrong you would have to be willing to hold and collect the dividend.

Shakes IIRC used to use Trans Alta below $20 and above $22, another person on here uses Molson's with purely a price value. AltaRed just bought IAG but sounds more like he's building a position not a trade.

BMO BNS CM TD NA RY IGM PWF IAG GWO MFC SLF
“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: Investing styles

Post by DenisD » 15 Dec 2014 16:26

If you had a ranking system, you could throw the darts with the odds in your favour. :wink:

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Re: Investing styles

Post by ghariton » 21 Dec 2014 21:34

Behavioural portfolio management as a separate investing style?

Apparently the first principle is to NOT know the names of the stocks you own.

Another tidbit:
I want companies with as much debt as possible.
The entire piece makes sense in a weird sort of way. It's quite funny throughout.

George
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Re: Investing styles

Post by DenisD » 21 Dec 2014 21:48

ghariton wrote:Apparently the first principle is to NOT know the names of the stocks you own.
I don't know the names of most of the American small caps I own or what they do. :lol:

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Re: Investing styles

Post by gsp_ » 22 Dec 2014 07:14

Thanks, enjoyed the article. Many of his principles resonated with me, particularly the part about decisions being correct based on info available at that time, regardless of the outcome.

Thoughts of DenisD's screens popped into my head at one point, nice to see he approves. I think FS will find many affinities here too.

I remain a passive investor in large public markets, not so in less efficient areas.

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Re: Investing styles

Post by ig17 » 22 Dec 2014 08:07

I want companies with as much debt as possible.
Jim O'Shaughnessy, the author of What Works on Wall Street
Beware companies piling on debt
So, is a company’s debt something you should worry about? For the most part, the answer is only in extreme cases. For example, when ranking our All Stocks Universe by debt, Decile 5 is smack dab in the middle of the All Stocks Universe—using debt, but in a responsible way. An Investment of $10,000 in that decile on December 31st, 1963 grew to an inflation-adjusted $704,541, a real average annual return of 8.87 percent.

...

It’s only at the extremes where we find the real culprits—looking at the 25 and 50 stocks which had the highest percentage change in debt is truly a portfolio destroying exercise. Had you consistently bought the 50 stocks with the highest percentage change in debt, your $10,000 would shrink to just $941, a real average annual loss of -4.61 percent a year. And if you REALLY want to destroy a portfolio, buy the 25 stocks with the highest percentage change in debt. $10,000 consistently invested in those names fell to just $196! That’s a real average annual loss of -7.55 percent!

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Re: Investing styles

Post by kcowan » 22 Dec 2014 08:13

Good article. Thanks. A contrarion on almost every stock metric. Loved it.

It sure would produce less things to chat about in this forum.
For the fun of it...Keith

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Re: Investing styles

Post by ghariton » 27 Feb 2015 12:08

Was QQQ the first "smart beta" fund? And is it still relevant today?

George
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Re: Investing styles

Post by ghariton » 07 Apr 2015 21:53

Some value styles involve looking at the price to book ratio. But how reliable are measures of book value? Here's a book of essays on the subject.
My summary: Value of intangible assets is very hard to measure. And the trend is for intangible assets to make up an increasing proportion of an increasing number of firms.

See also this paper by Baruch Lev(free).

Gorge
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Re: Investing styles

Post by ghariton » 25 May 2015 22:34

Larry Swedroe on investing in dividend paying equities
The low yields generally available on safe bonds during the past six years have led many once-conservative investors to shift their allocations from safe bonds to much more risky dividend-paying stocks. This has been especially true for those who take an income, or cash flow, approach to investing, as opposed to the total return approach, which I believe is the right one.

The interest in dividends also arises from the belief that dividend-paying stocks are better investments.

<snip>

It’s also important for investors to understand that the popularity of a strategy correlates negatively with future expected returns. In short, the popularity of dividend-paying strategies has altered their very nature. Dividend-paying strategies historically have been value strategies.

Yet Morningstar data shows that, as of April 29, 2015, the price-to-earnings (P/E) ratio of SDY was 19.6, higher than the P/E ratio of 18.1 for the SPDR S&P 500 ETF (SPY | A-98). The price-to-book ratio for SDY is also higher, at 2.6, compared with SPY, which is at 2.4. Higher price-to-earnings ratios and book value forecast lower future returns.

<snip>

In summary, 2008 should have taught investors that dividend-paying stocks aren’t a viable alternative to safe bonds. Unfortunately, far too many investors failed to learn that lesson, one that could prove to be very expensive when the next bear market arrives. The problem is compounded by the fact that the popularity of dividend strategies has led to valuations now above those of the overall market. Forewarned is forearmed.
I personally invest in broad market indices, such as VTI.

George
The plural of anecdote is NOT data.

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Re: Investing styles

Post by NormR » 25 May 2015 22:46

ghariton wrote:
It’s also important for investors to understand that the popularity of a strategy correlates negatively with future expected returns.
I personally invest in broad market indices, such as VTI.
Yet another popular approach. :)

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Re: Investing styles

Post by ghariton » 26 May 2015 00:08

NormR wrote:
ghariton wrote:
It’s also important for investors to understand that the popularity of a strategy correlates negatively with future expected returns.
I personally invest in broad market indices, such as VTI.
Yet another popular approach. :)
True enough.

Except that, this time around, the approach is pretty well guaranteed to deliver the broad market return (after fees and taxes). If one believes that, over the long term, broad market returns are determined by productivity in the economy (and resulting earnings) rather than by the investing styles of various subsets of investors, then it doesn't much matter how popular broad indexing is.

What does matter is the valuation of equities as a whole, as opposed to other asset classes (including cash). Here, I'm not smart enough to figure out the answer.

George
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Re: Investing styles

Post by Taggart » 26 May 2015 04:04

Swedroe has been griping about dividend stocks for years now, until I got tired of reading his articles on them. He's responding to a different audience (Americans) where the last time I looked, they don't have anything remotely close to Canada's dividend tax credit in a taxable account.

There's a few dividend investors post on here, and from what I've seen we're not all owning the same stocks.

Since I myself, wear two hats in investing, both broad based indexing and owning individual Canadian stocks, I learn from doing both. I don't do market timing and whatever is down, whether it's an index or a sector of individual equities, then that's where any fresh money gets invested. A mild form of value investing.

As far as individual equities, I've said this before. If there's going to be a sharp downturn in the near future for stocks, with no mass dividend cuts across the board, like back in the 1930's, then I for one will be looking forward to it, since not only will the equities themselves be cheaper, but the dividend yields will also be higher. If dividends continue to increase, it just makes for more capital I can allocate with any new purchases.

In a bear market, as long as I'm a buyer and not a seller, even in retirement, then everything's fine. If dividend investors could make it through the stock market of the mid-60's through to the early 80's, then I'm confident that with some persistence, they can do it through just about anything thrown at them.

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Re: Investing styles

Post by like_to_retire » 26 May 2015 08:49

ghariton wrote:
Larry Swedroe wrote:In summary, 2008 should have taught investors that dividend-paying stocks aren’t a viable alternative to safe bonds. Unfortunately, far too many investors failed to learn that lesson, one that could prove to be very expensive when the next bear market arrives.
What lesson was learned in 2008? All my dividends continued to pay, while the lower share prices that had no effect on my income allowed for some nice purchases. Compare this to the Total Return followers who had to sell depressed stocks to feed their income needs. I know the lesson I learned - dividend investing works.

ltr

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