Markets were a bit weak today, but the week overall was good. The year has started off well for our stock picks. The six stocks that are rated in the Strong Buy category are up an average of 3.4%, led by RIM at 12%. The 17 stocks in the Buy category are up an average of 1.3%. My own portfolio which is quite concentrated in a few stocks is up 3.1%.

Shaw Communications reported earnings before the open today. The market was not excited by the earnings and the shares were down 1.4%. To me, the earnings looked pretty good. There was a loss of 23,000 basic cable customers or 1.0%. But I figure that is not that bad considering the competition from Telus T.V. And Shaw gained another 23,000 digital phone customers and 11,000 internet customers, so still some growth. And lots of cable customers are upgrading to digital and I suspect more channels.

Dividend was raised by 5% and yield is 4.8%.

But there are some signs of weakness in that the media division revenue was down 3% (on a comparable basis — last year they did not own Shaw Media for the whole three months of the comparable quarter). Cable revenue also was only up 4% and that counts digital phone as well. Also it looks like competition with Telus is getting more intense – never a good thing for profits.

I plan to update the report soon. Our rating on the stock is currently (higher) Buy and so I suspect it will continue to be rated somewhere in the Buy range.

Research in motion was up 5.5% to $16.80, which is a nice recovery from its very recent low of $12.80 in mid December. On December 17 (below) I commented that this stock might represent a “real opportunity” and I bought some options in December being the first time I have bought options on anything in about four years or so. Still, with all the negative publicity I was not prepared to make a really large bet on it. And we don’t know yet where this company is headed. It’s always possible the price will plunge again with the Q4 results. But it sure looks cheap on a trailing earnings basis.

Markets overall were down a little today. However, our stock picks did well.

In particular Toll Brothers was up 2%. My Bank of America (talked about in these daily comments previously, but not rated) was up 3.6%. and Couche-Tard was up 2%. I did not do any transactions today or enter any orders.

 

I may trim a few positions…

It was a good day in the markets, Toll brothers was up 4.4%. Bank of America which I hold and have discussed but which is not in the list above was up 5.7%. Here in Canada, Boston Pizza which I bought for yield and not gains was up 1.7%. And Walgreen was up 2.7%.

My Portfolio…

The composition of my own portfolio was very recently updated. It shows that I am over 97% invested in equities and less than 3% in cash. And actually a little bit of money if borrowed outside of my investment accounts and so my net equity position is actually a bit over 100%.

By most any standards my portfolio is very aggressive. On top of the high equity exposure, I am concentrated in not very many stocks. So in that regard I am living dangerously.

So… from an asset allocation or risk management perspective it makes sense for me to trim my equity exposure and trim my exposure to certain companies.

But… I have trouble doing that because all my larger positions are stocks that I rate highly. So I am conflicted about selling a highly rated company.

However, I know that logically asset allocation and risk management should come first and logically i should trim some positions.

And recall that I added to Melcor and other positions as their prices dropped and so it makes perfect sense to reverse that as the price rises.

So… I did sell what amounted to 16% of my Melcor shares today (at $13.65).

I also have a previously disclosed order in to sell a bit more Wells Fargo at $30.40. This will sell only about 4% of my Wells Fargo.

My thinking is to enter a few more Sell order and trim some positions. Ideally I would trim while prices rise in the next few weeks, but certainly that may not be the case.

I really should trim fairly aggressively right now but I am inclined to go more slowly and see where we stand after the Q4 results come in. For example I am hopeful for good results from Canadian Tire in particular. And probably Wells Fargo, although for Wells Fargo the real catalyst I hope for is a dividend increase.

This risk if I don’t trim positions we get a leg down in the markets due to Europe or Iran and I won’t have money to take advantage of lower prices.

Adding to my risk is the fact that my portfolio has grown quite nicely and I have been investing for some 23 years now and I am at the point where new contributions from savings will not save the day if the market falls. Younger investors are in a better position to ride out don-turns since their new contributions from savings are material realtive to their portfolios (no longer necessarily the case for me).

Hopefully that is not too confusing. If it is, well, it is also honest and when we are being honest every investor must admit they have conflicting thoughts about the market. We all struggle with the extent to which greed or fear is going to guide our investment decisions at any point in time. My asset allocation and portfolio composition indicates I have been rather brave — but that does not mean I don’t have my moments of fear or at least moments of thinking I should lower my risks.

Having said all this, I do feel good about the markets right now. And, having said that, anything can happen at anytime. It’s the nature of the beast.

 

It was not a bad day in the markets as U.S. bank stocks rose. We are now into earnings season. Alcoa reported after the close and its results were apparently better than expected.

I am taking a look at Dollarama right now. Perhaps I am two years too late, I should have looked at it earlier. As always it is going to take a lot of analysis and work before I add it to the site here. If nothing else it will help me in my understanding of retail operations.

As of late Sunday evening, futures suggest the Dow will open down about 35 points. However there was some indication that certain bank liquidity rules are not going to be enforced as rigorously as earlier thought and this may be good for banking shares on Monday.

 

Our comprehensive reference article on Canadian Exchange Traded Funds is updated. This article contains current P/E ratios and dividends yields for a broad selection of ETFs. It also includes Gold, Silver, Oil and Natural Gas ETFs. Most of you may prefer individual stocks rather than ETFs. still, ETFs can be a good way to rapidly enter and exit the market it you wish to do that. They can also help you fill in any missing sectors. Some of the higher yield ETFs may be of particular interest.

Markets did not do much today. But some of our stock picks did quite well.

Wells Fargo was up 1.6% and Toll Brothers was up 2.1%. A stock that I hold but don’t have a rating on, Bank of America was up a hefty 8.6%. My investment in bank of America was detailed in the comments below (see July 26 and August 2 in particular). I ended up buying it at around $9.50. In retrospect I was at least too early. And I was too greedy as I grabbed quite a bit. Perhaps though time will rescue what seemed like a bad investment as 2011 closed.

So far 2012 has started off quite well for our stock picks and my own portfolio. It would be nice to finish off the week this way. However, as of tonight the futures suggest a down day in the market tomorrow. The fun never ends in this game.

 

Of interest today, Toll Brothers up 2.9%. So hopefully that bodes well for the U.S. home building industry.

Markets got off to a very strong start for 2012.

Most everything was up.

I sold what amounted to 9% of my Wells Fargo. I had continued to add to Wells Fargo at lower prices this past Fall. So I sold some today at $28.40. I also placed an order to sell a bit more at $30.40. In some ways I don’t want to sell any. But it is my largest holding and perhaps it makes sense to play the volatility a bit. Also I want to raise cash for other investments now or later.

markets seem confident at the moment. Of course things can always change quickly.

 

The composition of my own portfolio has been updated. It includes mainly Strong Buys and (higher) Buys from the list above but also one two that are Buy rated. My portfolio is by almost any standard over concentrated in a few stocks and I may work to reduce the concentration.

Trading for 2012 starts tomorrow. A few companies in the list above were well out of date. I have now removed these form the list. Some of these might return especially if I think that they would be good buys. I don’t think I would consider any of these to be Sells. If I held them I would be in no big hurry to sell. Then again, I have not looked at them recently. The removed companies are:

Staples, Telus Tim Hortons, Visa, Aeroplan, Bombardier, Constellation Software, Reitmans, and TMX Group.

So, we start the year with:

9 U.S. companies

5 Canadian companies that are also listed in the U.S. for a total of 14 U.S. listed

6 Canadian companies

7 higher yield Canadian entities

27 investment choices in total.

7 entities are rated in the Strong Buy category (but please consider the full report and the reasons why we think it is a Strong Buy and all the comments in the report)

5 are rated (higher) Buy and 10 are rated Buy.

I hope to add a few new companies before too long and some of those deleted from the list may return.

Generally speaking stocks appear attractive as we enter 2012. There are, as always, risks. World events could push the entire market lower at any time. And individual companies are always subject to negative developments. Stock investors tend to do well over time but it is not without periods of losses.

Walgreen Company inc., the largest U.S. drugstore chain is updated and rated (higher) Buy at $33.06. It’s price has dropped to quite an attractive level due to the loss of about 5% of its customers who are covered bor drugs through a drug plan management company called Express Scripts. Walgreen refused to lower its prices sufficiently for express scripts but feels this was best for Walgreen and it believes it can win back many of the customers. It may be an opportunity to buy a great company at a time when it has been somewhat wounded. I may buy some shares.

eBay is updated and rated Weak Buy / Hold at $30.33. This company is a sort of toll booth collecting fees on everything sold on eBay as well as fees for payments with PayPal. Both auction sites and payment systems benefit from “first-mover” advantages whereby an incumbent has competitive advantages and it is difficult to compete against an incumbent. Given these characteristics eBay could be considered as an investment. Personally I am bothered by its attitude toward stock options and would not buy unless the price were more compelling.

Happy New Year. Our Performance for 2011 has been updated. It was not a great year in the markets but we did easily beat the the market for the 10th year out of 12.

I feel good about the selection of Buys and Strong Buys (in the table above) as we enter 2012. World financial conditions could certainly throw a wrench into he works. But that is always the case. Stocks tend to be unpredictable in the short term but tend to do well over the long term. And if one can manage to hold better than average stocks then, all the better.

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