A New Addition and a Couple of Potentials

Last week I added another stock to the portfolio. It's one that I found quite recently and shows good future potential. Also pays a solid 5% Dividends, and is rated at a 1 by Valueline.

Another thing going for this stock - I had a friend who is a financial analysis wonk run the numbers on this stock and he came back with an enthusiastic thumbs up. Now we are talking about creating a stock recommendation service with our pooled knowledge... but I digress. More on this at a later time.

Back to the new addition:

Name:                                BCE Inc.

Industry:                            Telecom Utility

Symbol:                              BCE
Timeliness:                        1
Safety:                               2
Technical:                          3
Approximate Price:            $48.00
Dividend Yield:                  5.00%
Industry Rank:                   25
Low Gain Estimate:            0%
High Gain Estimate:           25%

The only thing lacking is a price gain potential, but add it to the Buy list.

I'm also looking at a couple more Potentials.

Name:                                Santander Consumer

Industry:                            Financial Svcs. (Div.)

Symbol:                              SC
Timeliness:                        1
Safety:                               3
Technical:                          1
Approximate Price:            $23.00
Dividend Yield:                  3.7%
Industry Rank:                   12
Low Gain Estimate:            25%
High Gain Estimate:           110%

Not much you can complain about with this stock.

And one that I could not find in the Valueline survey:

Name:                                Nuveen Municipal High Income Opportunity Fund

Industry:                            Municipal Bonds (?)

Symbol:                              NMZ
Timeliness:                        ?
Safety:                               ?
Technical:                          ?
Approximate Price:            $14.00
Dividend Yield:                  5.00%
Industry Rank:                   ?
Low Gain Estimate:            ? %
High Gain Estimate:           ? %

This is a bond fund that invests in municipal bonds so the Dividends it pays are tax free, meaning they are more than they appear to be by your tax bracket.

I am actively looking at adding both these to the portfolio soon.

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Money For Nothing...

Talking about all this selling reminded me of the second way I have been trying to make money with stocks; namely DIVIDENDS. If you pick stocks in companies that pay regular (and hopefully increasing) dividends, then you keep making money while you are waiting for your stocks to get to a place where you are ready to sell.

In that quest I have been trying to buy stocks that provide this passive income in addition to the price growth potential. I can fill this page with tables, charts, and graphs with details, but I'll spare you the details. If you do want all the nitty-gritty let me know in the comments WhatSayYou?

In the four years since I have been on this adventure, my brokerage firm got acquired and some of the data from the prior brokerage got lost in the shuffle. So I only have dividend info for the years 2017 - 2019, and here they are:


2017: $5054.55
2018: $4699.63
2019: $5322.59

For a Grand Total of $15076.77 
Ka-Ching!

In terms of where this came from - here are the top 5 dividend producers. 

Apple Inc. (AAPL), Annaly Capital Management Inc.(NLY), Vanguard S&P 500 ETF (VOO), Alliance Bernstein Holding L.P. (AB), Alliance Resource Partners L.P. (ARLP). 
Home Depot Inc. (HD) is a close 6th.

Of course what also matters in terms of dividends is what is the rate of return over the money I have invested in all the stocks that are producing the dividends. I have not yet had the time to generate that information and will leave it for another post.

One change you might notice in the blog going forward is that all the stock links will now take you to MarketWatch instead of Yahoo Finance (no link). This is in protest for Yahoo Finance continuously restarting ad videos every time you do anything on the site.

Feels good to be back and writing, hopefully I have not lost the three people that were reading this blog and they will reconnect and continue to read... 

Give me a shout out in the comment, will you?
Thanks!

Missed One

In the frenzy of Sell notifications I missed one in my last post, Sell, Sell, Sell.

This one happily was also sold at a profit. Seagate Technology PLC (STX) was a stock that I had bought before this (mis)adventure began based on a recommendation from the Valueline Investment Survey. The stock is still rated better than average by Valueline, but the price has been steadily declining for the last six months. I figured it's time to lock in my gains and reconsider the stock at a later time if it shows signs of a recovery in the price.

Purchased at a little above $35, I sold quickly at market price fetching just shy of $44 for a net gain for 25%, not bad. Ka-Ching.

Sell, Sell, Sell

After two posts full of thoughts It's Hard to Say Goodbye... and ...Goodbye Again about selling stocks, I am back to the reporting about stock transactions. And what am I going to talk about? Stocks I just sold of course! Sell, Sell, Sell as the title says!!

I got rid of a few stocks in the past week or so, most of them at a good profit, one at a loss based on some of the thoughts I presented in the last two blog posts. All of these stocks are not represented in this blog because they were purchased before I began documenting my (mis)adventures. Here are the details:

The first was Amarin Corp. PLC (AMRN). This was a stock that had been sitting at the bottom of the ocean for a few years. A biotech stock that I first bought when they were at the verge of a breakthrough drug. Unfortunately, this was a case of being hit by hidden information. The drug failed, and the stock tanked dropping from my purchase price of ~$13 to between $2 and $3, where it has stayed for a few years. Then suddenly a couple of weeks ago the stock rocketed up to over $16. Once again hidden info, this time working for me; a drug they tested turns out to be very effective and with no side effects. Using a trailing stop I got out a little above $16 for an approximate gain of 23%. Ka-Ching.

Next, Apollo Global Management (APO) an asset management company I had bought when it was highly rated in the Valueline survey. It was showing a good profit but had since dropped out of favor in Valueline and it was time to get out. Another exit via a trailing stop, sold at a little above $34.50 for a net gain of about 26%. Ka-Ching.

Another money maker was Scholastic Corp. (SCHL). This is the beloved publishing company, most famously known for stories they published about a most famous wizard named Harry Potter. Perhaps you've heard of this book series!! The company is doing well, but the stock had run out of magic, so it was time to get out. A sell at almost $45 gave me a boost of a little over 17%. Ka-Ching.

Then comes the heart-breaker, Atlantic Power Corp (AT) a power/utility company that was rated highly, wasn't a price mover, but a company that paid a good dividend. Then things turned sour. I stuck around a bit in the hope that things would recover. But a few years passed with no signs of a price recovery. Then the straw that broke the camel's back... dividend went to zero. It was time to take my lumps. A sell out at $2.20 and a loss of 50%. :-( Ka-Flunk.

... Goodbye Again

In my last post I started talking about what I consider the most difficult part of the stock market investing game; SELLING. In that post, It's Hard To Say Goodbye, I presented my Thoughts about the first of three aspects of selling stocks -- What To Sell. In this post I will continue that thought process and talk about When To Sell, and How To Sell.

A quick recap; I break down what to sell into three broad categories:

• Sell something that is showing a profit
• Sell something that is not showing a significant profit or loss
• Sell something that is showing a loss

Let's talk about selling something that is showing a profit. I can see a few reasons to sell.

The stock price has reversed and is going down. An important bit of information to consider in this case is if the stock is going down with the entire market. If that is the case then you need to decide how much of the downtrend you are going to ride out and if the stock is strong enough to recover quickly when the broader market makes a recovery. If the stock is going down against the general trend of the market, it may be time to take your profits and move on,

The stock price has stalled. Important considerations in this situation are the fundamentals of the company, it's medium to long term outlook, and if the company pays a good dividend. A strong stable company, a company that has good things expected in the near future, or a company that pays a dividend that is above average, especially when compared to other companies in the same industry group would be worth holding. Lacking two or three of these factors would be reason to sell out. I would pick a day that the entire market is in a good mood and get out with the profits.

The company has been rated poorly for reasons related to its fundamentals, the market, the economy, or geo-political factors. A stock in this situation can be very confusing. The market being irrational as it is, a stock that should not be doing well anymore could still be on the way up! If this is the situation you find yourself in, I would recommend a sell order with a trailing stop to protect your profits. of course if the broader market has gotten wise to the companies troubles and the stock is starting to reflect that by heading down, I would sell it quickly to secure your profit.

With a little consideration it's obvious that selling something that is not showing significant gains or losses has the same parameters as selling something that is showing a profit.

What are your signals for selling stocks that are profitable or flat? WhatSayYou?

This brings us to the most difficult subset of selling stocks. Selling something that is showing a loss. Here are some Thoughts on why you should sell:

A stock that has dropped significantly can take just as long or even longer to recover. This means if you sell the stock and put the proceeds into a stock that is doing well at the moment you are more likely to recover your loss faster than staying with the loser.

Your losses from a stock sale can be used to reduce your taxes. In some cases, stock losses can be written of in your taxes for the year. There are fairly restrictive rules for this, so be sure to check with a tax consultant. But you may be able to use the tax write-off to offset your loss.

The climb back up is longer than the distance of the slide down! Consider this, if you bought a stock at $100 and it has slid down 33% to $66; for it to recover the $33 to get back to $100 the stock has to climb up 50% of its current value of $66. The same $100 stock at a 50% loss to $50 has to double itself (100% gain) to get back to where it was before. This is a fact that can easily be missed and can cause you to hold on to false hope of a recovery.

The company has hit hard times due to bad management, the market, the economy, or geo-political factors. The stock market is a hidden information game; you will never know all the facts until they have hit a company's stock in adverse ways. In these cases you might be better off realizing that everyone makes mistakes sometimes, or gets hit by badly timed purchase once in a while. Take your lumps and your remaining capital and put it in something that will help you recover from the misfortune.

In the case of a loss making stock, once I have decided to sell I would sell out quickly if the stock is actively losing altitude, or pick an up day to sell if it has plateaued out at a lower price than purchase price.

I'm sure there are other reasons to sell stocks that are down. Have you sold stocks at a loss? What were your reasons? WhatSayYou?

OK, enough with the long thought filled posts. I promise I'll get back to business of buying and selling in my next post, because there are a few to report!

Keep on reading.

It's Hard To Say Goodbye...

Investing for most people is a resources game. Unless you have an unending supply of money, at some point you are going to have to sell some of your stocks to buy some others. And this my friends is the hardest part of the investing game.

In my (mis)adventures to date, and even earlier, when I was investing without really paying attention, I've had the hardest time when it was time to sell. I've been reasonably good at picking stocks, most of the time I have made money. I've been good with risk, not getting spooked into selling. I've been good with my homework, not buying stocks just because the talking heads are talking about them. I've been good with patience, willing to let good stocks take time to give returns. The one thing I find most difficult is selling.

There are three aspects to selling; what to sell, when to sell, and how to sell.
I'll share my Thoughts on them one post at a time.

What to Sell:

This can be broken down to three possibilities.

• Sell something that is showing a profit
• Sell something that is not showing a significant profit or loss
• Sell something that is showing a loss

Selling something that is showing profits is the easiest of these three possibilities. You make money, you feel good, you feel smart, all good things -- right? But what if this is the stock that is on the way up and could have made twice as much profit? Not feeling so good and smart now, are you? Consider this; the stock was doing very well and you have a good profit ready to cash out but the stock has been going down for some time. Would you get out, or would you wait for it to go up again? What about a stock that is on a tear, heading up like a rocket; do you worry that this upward momentum is a signal that this stock is heading for a crash. How long would you wait and stay on the ride? These are the kind of thoughts that have always have held me back from selling stocks that are doing well for me. Under what conditions would you sell a stock that is doing well? WhatSayYou?

Selling something that is not showing a significant profit or loss can be a conflicting decision. This kind of stock can be treated as a stock in one of the other two categories based on its current price in relation to the purchase price. This part of the discussion is only relevant if the price is close to your purchase price. A stalled stock can be a dead investment, holding on to your money, but not giving you anything in return; a bit like a fox in the manger. But what if it is a good stock that does not increase or decrease in price, but pays a good dividend. What if it is highly rated and expected to increase in price.Would you sell it? What are your parameters for selling off a stock that is in the doldrums? WhatSayYou?

The most difficult category of stocks to sell, are the ones that are showing a loss. In addition to the obvious reason of losing money, it's also an acknowledgement of the mistake you made when picking, and then holding on to this stock as it went down. I've talked myself out of selling stocks that are losing me money by believing that they will come back, the company is good, etc. etc. But in general holding on to your losses is the worst thing you can do; selling and getting over your mistake quickly is the smartest. It's not easy, but a carefully considered loss is good for many reasons; I'll list a few.

• You can write off the losses on your taxes (consult a professional for details)
• You can free up your money to buy something that will help offset the loss
• Stocks that are losing money have the potential for losing more money
• Even good stocks that can recover take a long time to do so locking you in

Even knowing all this, I have had a difficult time accepting my mistakes and moving on. What prompts you to sell your loss making stocks? WhatSayYou?

I would love to hear your thoughts on the issue of selling stocks.

Join the conversation by leaving a comment.

Thanks for reading.

Where Did I Put That Stock?

So, as part of turning my attention back on this (mis)adventure I ran an audit on all the stocks listed in the portfolio and to my dismay discovered that I had misplaced a stock!!

I was almost certain that I had bought Magna International, Inc (MGA) but I could not find in any of my accounts. I also did not remember selling it. A frantic dig through my transactions over the last two years finally cleared up the mystery. 

Some time early this year this stock had started to make me nervous and I had set a trailing stop Sell order on it. Apparently, it sold sometime in February!! And, if I had not sold it then, I would still be looking to sell it at a slightly lower same price now, because it has dropped to a Timeliness rating of 3 in the Valueline rankings. 

The happy ending to the story is that it sold at a profit of almost 16%. Ka-Ching.