November 21, 2013 Comments

Well, Thursday was yet another very strong day in the markets. The S&P 500 was up 0.8%, The Dow was up 0.7% and closed above 16,000 for the first time ever. Toronto was up 0.3%.

As for our stock picks we had Bank of America up 3.0% and Toll Brothers up 2.0%.

Obviously stocks cannot and do not and will not keep going up indefinitely. They can go sideways or down at any time. If we hold some cash and we hold good companies, declines need not be that huge a concern as we can use declines to add to positions. Still, we all hate to lose ground.

When I look at what stocks I own and might trim myself it’s a bit tough. I have Wells Fargo and Melcor rated in the strong buy range and so it’s not that easy to sell any of those two. Regarding Canadian Tire I already trimmed it by about 50% from what I held about a year ago. Regarding Toll Brothers I believe I have trimmed that as well from my peak levels. I already sold all my Stantec. When I look at what I hold there are few I would want to trim. I mentioned earlier the possibility of trimming or selling Constellation Software, so that is one. There is my oil sands ETF which I don’t have a rating on but which also has not risen much. These is Liquor Stores which I rate low but which I am nevertheless not that keen to trim.

Possibly I should enter some hopeful orders to trim most positions if they rise much further…

My cash is sitting at about 37% which has been a drag on my returns but which seems prudent for risk management given I hold no fixed income.

I could decide to raise the cash to 40% or even 50% and just trim all stocks in proportion to achieve that. That might be logical. My cash level should really be set at some target rather than just be set sort of accidentally as I sell stocks and buy.

As of the moment I am not much inclined to take action on trimming but just wanted to share my thoughts on it.