October 27, 2016

At mid-day Toll Brothers was down another 2.0% to about $27.50. I have almost no U.S. cash available but used what I have to add to my Toll Brothers position. Perhaps I am just being stubborn but I do like to show the courage of my convictions.

I also considered selling some Wells Fargo in favor of more Toll Brothers. But most of my Wells Fargo is in a taxable account and has a large gain since I bought it. I am not inclined to create the work of reporting a gain and don’t want to pay tax so I will not likely sell any in the taxable account. I might lighten up in the non-taxable accounts where I hold it. I have 10% of my portfolio in Wells Fargo. If that fell by half it would be very painful but not disastrous for me. I have a high tolerance for volatility having lived through much volatility only to emerge with a higher portfolio eventually and even most (but not all) individual stocks that I own that crater eventually come back. How far could Wells Fargo fall or will it drop at all? I am sorry but I don’t know. Neither does anyone else. I try to buy/own stocks that appear to be undervalued based on analysis. There are never any guarantees but it tends to work out well over time.

(I wrote and posted the above mid trading day and the remainder of this post after the close)

P.S. I did end up selling some of my Wells Fargo about 90 minutes before the close as it was up a bit and would free up cash for potential purchases.

On Thursday, the S&P 500 was down 0.3% and Toronto was up 0.2%.

CRH Medical was up 5.3% in the U.S. and 3.1% on Toronto. This came after its earnings release this morning.

Canadian Western Bank was up 1.9%.

Constellation Software was up 2.0%.

Toll Brothers was down 3.1%. A recent story on Pulte homes said this of the home building industry: “U.S. homebuilders are struggling to keep up with rising demand as land and labor costs increase, squeezing their margins.”

…so the market is taking “struggling to keep up with rising demand” as a negative? It seems to me that is higher costs due to being so busy led to lower costs then that is easily fixed with higher prices – which rising demand can support.  I would have no concern with lower margins if it was accompanied by higher sales and higher earnings per share.

TransForce is making another sizable acquisition financed by cash and debt (no new shares to be issued). This continues the successful growth-by-acquisition strategy.