Oil Companies set for Record Profits

Usually I don't support buying oil stocks (due to environmental reasons), but during the past month I have been quietly buying up oil stocks in companies I foresee making huge profits because of the ongoing events happening in Ukraine and Russia.

I have also bought up additional stocks in gold mining operations for similar reasons.

Combined with the oil stocks venture is a rather simple strategy:

I buy the oil stocks when they're still relatively low, and I set a 90 day Limit Sell to sell the oil stocks when they're worth double (or roughly double) what I paid for them.

So for example I bought AAZ (Azincourt Energy Corp) for $0.0651 each and I plan to sell them when they're $0.13 each. Currently they've gone up to $0.08.

Another one I purchased was BTE when it was a mere $4.99 per share, and when it reaches $10 per share I will sell it automatically using the 90 day Limit Sell. Currently it is now at $6.10 per share.

And others. I basically purchased a bucket list of Canadian oil companies that I predict will double in value.

If my various oil stocks don't manage to double in value during the first 90 days of the war in Ukraine then I will reassess at that time.

If Putin is assassinated before the 90 day period is up, I will reassess and probably sell at that time, taking my profits before the world returns to some semblance of normalcy. I expect Putin's assassination to have a stabilizing effect on global oil prices, and add buoyancy to stock markets in general.

I expect people will be dancing in the streets the day Putin is assassinated and for investors to have a wild day as many stocks soar in value.

Will Shopify ever go back up in value? Is this actually an opportunity?

In the past few months Shopify did something unexpected, diving from record highs to a fraction of what it used to be worth.

Thankfully I didn't buy that much stock in Shopify, and I have insulated myself by diversifying my portfolio.

Indeed, Shopify isn't the only stock during badly lately. The looming war in Ukraine with Russia on the war path has put a dent in many of my long term "darling stocks".

But I see this as an opportunity.

For a fraction of the price someone like myself can now purchase Shopify and other stocks for a relatively low price, and when the market goes back to normal eventually (assuming Russia doesn't start a nuclear war) then the stock prices should go back up again.

Not just Shopify, but many other companies that have also been hard hit in recent months, and can be expected to rebound sharply once the looming war (and the pandemic) are both over.

This rough patch right now is an opportunity for investors. The trick is to be on the lookout for what stocks are likely to go up in value due to the war, and what stocks are likely to go up in value after the war is over.

Why I love 90 Day Limit Sells

I really love Limit Sells, especially the 90 day version.

The beauty of this particular feature is that I can buy a stock for $1 and then immediately create a Limit Sell to sell it when it reaches a specific price. So for example I might sell it for $1.50, but it is unlikely to reach that price in 1 day.

But if I am expecting the stock to reach that price eventually, sometime in the next 3 months, then I can do a 90 Day Limit Sell.

So I can buy 100 shares of a stock for $1 each (using a Limit Buy so I know exactly what price I am getting) and then immediately create an order to do a 90 Day Limit Sell for a specific price. Eg. $1.50.

It might not reach that price immediately, obviously, but I am willing to wait 3 months for it to achieve that.

Obviously I would never due to this with a stock which I consider to be a "Long Term Darling" or with a Dividend Stock which I am buying because I want the dividends from it.

No, the purpose of the Limit Sell is really so I can buy a stock I expect to rise in value sharply during the short term, then sell it and collect my profits.

The stock market equivalent of a short term relationship, wherein the "buyer" dumps the stock once they've made the desired amount of profit.

And if it doesn't reach the desired value after 90 days then it is time to reassess and perhaps sell for a lower profit. Or perhaps keep it and do another 90 Day Limit Sell so that it eventually reaches the desired amount.

Let's pretend for a moment you did this with 4 stocks during 1 year.

You start by investing $1000 in 1 stock you expect to go up a lot in a hurry. You sell it for $1500 using the limit sell.

You then have a choice. Pocket the extra $500 or reinvest it?

Let's pretend you reinvest it.

You buy $1500 worth of a different stock (#2) and do a limit sell that sees you selling it for $2,250.

Again, same conundrum. Pocket the profits, or reinvest?

Stock #3: $2,250 x 1.5 = $3,375

Stock #4: $3,375 x 1.5 = $5,062.50

So in the space of 1 year you went from a $1000 investment to $5000.

Or if you played it safe by pocketing the $500 each time, you would have turned your $1000 into $3000.

Of course, you wouldn't really do it this way with 4 specific stocks.

Ideally you would want to diversify and pick say 40 different stocks, and you wouldn't necessarily be selling for 1.5 the value you originally bought the stocks for. Instead, sometimes you might predict a profit of 1.2 to 1.4.

Or if you think a stock will skyrocket in value, you might even expect it to sell four double the original value.

But this all goes back to why I love 90 Day Limit Sells. It is a "Do it and don't worry about it" solution to selling the stock.

Sometimes stocks go down, sometimes they go up. You can't win on all of them. But sometimes there are certain stocks that due to circumstances (political or economic) in which it makes sense to invest now and sell it in the next 90 days for a sharp profit.

Limit Selling BLU

BLU is one of my best performing stocks currently, but I have decided to do something unusual.

I am going to sell 46% of my BLU stock when it hits $8.25 CDN per share.

I bought the stocks months ago for $3.49 per share, so if I sell roughly half of my shares I will get back my initial investment in the stock (plus a tidy profit) and my remaining shares of the stock I can then just "let it ride".

Imagine for example you had purchased 1000 shares for $3.50 each ($3500 worth) and you wait until it is worth $8.25 per share, at which point you sell 500 shares for $4,125...

So you just made a profit of $625, got back your initial $3500, plus you get to keep the other 500 shares, to see if the shares continue to go up in value.

My issue, part of the reason I am doing this, is because I have a sizable chunk of my portfolio in BLU (a bit too much really) and I would rather take my profits from that and put that money into some ETFs so I am diversifying my portfolio more.

...

And my stocks just sold. In less time than I needed to write this blog post my stocks of BLU sold for the price I was asking for, using a Limit Sell of $8.25. And the value of the stock price just got pushed up. It started the day at less than $8.

 

What is a Limit Sell?

A limit sell is when you set a minimum price you are willing to sell the stocks for.

Earlier today the stock was hovering around $8 even, but I wanted to sell for $8.25 or more so that I am guaranteed to make a profit off my sale. (Buying/Selling at Market Rate is for suckers.)

So I set up the Limit Sell and put a 90 day extension on the sale, so that even if it doesn't sell today (which it did), it could still sell tomorrow or any time within the next 90 days for my asking price.

The beauty of doing a Limit Sell is that there are suckers out there who are buying at average Market Rate who will pay your asking price (either as a Market Buy or a Limit Buy), even if it is more than what they are bidding, so long as the Average Price of their purchase averages out to a number matching their Limit Buy (etc).

Thus if your Limit Sell is within a certain range (5% more than asking price or less) of what people are bidding, you can usually sell your stock for a higher amount than what it is actually worth because there will be other people selling their stock for less (5% under the normal price), but the value of your stocks will be bundled together and sold to the buyer.

Like I said above... Buying/Selling at Market Rate is for suckers.

If you're good at math you can easily just buy/sell everything for between a margin of 3 to 5%.

Thus if you want to buy $1000 worth of stock, but you make a Limit Buy for 3% less than the value of the stock chances are likely you will still make your purchase because your purchase will be bundled together with other people looking to buy versus other people looking to sell (at market rate or a limit sell).

And later when it is time to sell for a profit, you do the same thing, but in reverse - asking for a higher price that is 3% to 5% above market rate.

Thus you can potentially make a 6% to 10% profit off a stock, trusting that it is popular and volatile enough to make up the difference.

What is the downside to Limit Buying/Selling?

Sometimes your purchase or sale doesn't get done. Nobody matches the price you are asking, even when bundled together and averaged. This is why I like the 90 day extension when doing such buys and sales. Someone might not buy/sell it within the 7.5 hour long trading day at the TSX, so it is better to wait and see if it buys/sells the next day/etc for your asking price.

So the downside essentially is that you're either not making the trade at all, or you have to wait longer than expected.

In which case you can always cancel the trade before it happens within the 90 day period if you change your mind. Then you've lost nothing but time spent waiting.

Myself, I would rather be patient and gain an extra 6 to 10% on my investment just by being patient.

So what about BLU?

I am going to sit on the stock now. Let it ride. I have already made a profit on it. I want to see what happens next to the stock. Maybe years or decades from now I will sell it. Or maybe the company will be taken over by a bigger corporation. Should be interesting to watch and see what kind of profit I can get out of it now that I have already made back my initial investment.

Penn National takeover of theScore

Recently I received a notification on WealthSimple regarding the takeover of theScore (a Canadian company also known as Score Media and Gaming Inc.) by Penn National (an American company)...

What followed was that I received stocks in Penn National... and cash.

Now I have to decide several things, chief of which is:

Is it worth keeping my new stocks in Penn National (PENN), or should I sell them?

When I first bought theScore stock (SCR.TO) it was a smart buy. The company is essentially an online casino that uses an app that allows users to gamble on sports. So very low overhead, but high profits thanks to the app being the #1 sports gambling app in Canada (and #3 in North America).

It was a smart move for me to buy the stocks... and it is similarly a smart deal for Penn National (which runs hotels, casinos, slot machines, online gambling, horse races, etc.

And we're not talking a small amount either. The takeover of theScore went to the tune of $2 billion USD. So that isn't chump change.

Now you might think: "Wait, isn't there a pandemic going on? Isn't a company that owns hotels inherently risky?"

Yes, in a country that cares about the pandemic. But we're talking about American hotels, a country with a reasonably high vaccination rate and a laissez-faire approach to handling the pandemic. America is open for business. Come hell or high water, they want to make money.

So should I feel guilty about owning hotels in the USA where people will go out, socialize and a percentage of them will die from COVID because they aren't vaccinated?

Nope.

Absolutely not. They made their choice not to get vaccinated. If they die, they die. Not my fault. They live in a pro-choice country (except for Texas).

So the fundamentals of owning stocks in a company which owns hotels/casinos/gambling is pretty solid. Pandemic? Pff! It is full steam ahead in the USA.

So I might as well keep the American stocks in PENN for now. They have a nice upward curve, so they do fit into my definition of a Darling Stock.

What about my rule about preferring to own Canadian stocks?

It is true, I do prefer to own Canadian stocks.

But I also own Canadian companies (and ETFs) which operate internationally. And I own ETFs that invest in American stocks, but are hedged in Canadian dollars. This allows me to invest in American companies, but limits my risk since I prefer to use ETFs that are hedged.

So it doesn't matter.

What about the cash I received after the takeover?

I received half the value of my SCR.TO stocks as cash. So far I have decided to use a portion of that cash to invest in:

FIE.TO (iShares Canadian Financial Monthly Income ETF)

Now it should be noted that this ETF is currently growing very nicely due to the pandemic, but historically tends to have a flatter curve. What I like about FIE is that it has a yield of 5.79% and it is a historically very stable ETF. So it is a smart buy as a dividend ETF.

I expect it to trend upwards for the next year and then level off, and continue to provide nice fat dividends.

I haven't decided what to do with the rest of the cash I received from the takeover of theScore, but I will sprinkle it around in different things.