April 16, 2015

On Thursday, the S&P 500 fell 0.1% and Toronto fell 0.4%.

The Canadian dollar rose and now sits at 82.0 cents. Oil (West Texas Intermediate futures New York) rose and now sits at $56.13.

The dollar had bottomed out at just under 78 cents and so is now up 5% in the few weeks since it bottomed. I probably should have transferred more U.S. funds back to Canadian. I did transfer some as the dollar fell and near the botton. But as the Canadian dollar rose I suffered somewhat from the common problem of getting a reference number stuck in my head. In other words when it rose to 79 cents I became reluctant to transfer more U.S dollars back to Canadian because I had missed out doing it at 78 cents and at that point it was natural to hope it went back to 78 cents. I think most of us suffer from this sort of referencing or anchoring tendency on stock prices as well. It’s hard to buy at “X” plus something when you had thought about buying at “X”. Such anchoring is usually illogical and it’s best to overcome it by thinking rationally about whether an investment or trade is still a good trade at today’s price and not worry about some other price that is no longer available.

Oil (New York WTI futures) had bottomed out at just under $45.

I don’t keep track of predictions about the dollar or oil but it’s safe to say that predictions have been all over the map. When oil was $45 there were some analyst suggesting it would go to $20. and many said the dollar was headed to 70 cents. Others said oil and the dollar would rebound. In my view, they were all basically guessing. My own approach to investing does not rely on trying to predict these things. It’s more a matter of buying when things appear to be low or offer good value. If they go lower, so be it, I am then often inclined to buy more. This seems to be easier to do with stocks (businesses) than with commodities.

Canadian Western Bank and Stantec both edged up again today. Toll Brothers, however, fell 3.1% on a report about housing starts that was judged to be a bit weak. My understanding is that the housing recovery in the U.S. is continuing and I am not worried about my investment in Toll Brothers.

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