November 2, 2015

Monday was a strong day in the markets with the S&P 500 up 1.2% and Toronto up 0.7%.

The Canadian Western Bank preferred shares that I updated yesterday were up 2.6%. I notice the volume is very light in these shares. It was up about 2.6% early in the day on just 100 shares traded. That low volume was a bit disturbing to see. I would hate to think my Buy rating had anything to do with the increase today. It’s never ever my intention to cause stocks to rise. I wish to identify under-valued stocks and then ride them up due to their earnings growth or as their P/E multiples increase as the market perhaps begins to recognise the value.

Some advisories are in the business of actually pushing stock prices up. In the worst cases they are engaging in “pump and dump”. (Garbage will rise if you blow on it hard enough.) I would never engage in or condone pump and dump nor do I wish my advice to affect the price of any stock. What would be the point of the InvestorsFriend subscribers pushing a stock price up with our buying? To whom would we then sell? If the price rise was justified then there would be nothing wrong with pushing the price up. Still, that is not something that I am comfortable engaging in other than perhaps temporarily and inadvertently on some of the thinner trading stocks (of which we have only a few).

In the case of very thinly traded stocks it could occasionally happen that the buying of the InvestorsFriend subscribers pushes a stock price up. But that is never the intention. And for the most part we don’t cover stocks with very low trading volumes. But it could happen with Melcor and probably some of the preferred shares.

On thinly traded stocks we should all be careful not to just buy at the market but rather we should probably enter a fixed price when buying those stocks.

Certainly Canadian Western Preferred shares did not rise all that much today but still I wanted to point out that I would never intentionally push a stock’s price up.