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.

The Rich get Richer, A Self Perpetuating Cycle

You know the old saying "The rich get richer, but the poor stay poor"? Chances are likely you've heard this saying, or some variation of it before.

So here's the thing about wealth. Once you have it, unless you do something stupid with it, you are pretty much guaranteed to get wealthier over time.

Consider this:

Imagine you own your own home and have $1 million in stocks.

You own the home so you still need to pay land taxes, insurance, and repair bills... but you own it, so you're not paying to rent or lease. It is yours to keep.

Plus you own $1 million in stocks. If they are Dividend Stocks then you might be earning perhaps 5% annually on the value of those stocks. So $50,000 per year, just for owning the stocks.

That $50,000 is more than enough to pay for your land taxes, insurance, repair bills, etc... plus your food, electricity, etc... And you would still have money left over. You don't even need to work and you're still making money.

Add to that a part time job for $20,000 per year (you know, as something fun to do since you don't need to actually work like a normal person) and even with government taxes you've got plenty of money.

Meanwhile let's do the same math for a poor person living in a big city like Toronto or Vancouver.

You are working TWO part time jobs to make ends meet, earning $40,000 per year, minus taxes.

• Your rent is $2000 so deduct $24,000 per year.
• You don't own a car so you're taking the subway regularly. In Toronto a 12-month pass costs you $143 per month, so deduct $1,716.
• You still need to pay for internet, phone bills, electricity, food, etc. So deduct $400 per month ($4800) for all of that.

So you've got $9,484 left before income taxes.

And keep in mind that is someone who manages to earn $40,000 per year working two part time jobs. In order to do that those part time jobs would need to be 40 hours per week, 52 weeks per year, at $19.23 per hour, with zero sick days, no vacation, etc.

The working poor meanwhile aren't making that much. $19.23 per hour for 40 hours x 52 weeks would sound pretty nice to some people because at least they're getting paid a living wage.

Meanwhile a vast number of Canadians are making $14.35 or less. In Ontario the minimum wage is $14.35, but the minimum wage varies by province.

Plus good luck finding two part time jobs that provide 40 hours of work per week without a ridiculous schedule. More likely a person will be working 30 to 35 hours because the schedule fluctuates based on how often their boss needs them to cover someone else's shift.

So $14.35 x 35 hours x 52 weeks = $26,117.

Oh look. Don't bother having kids. You couldn't afford the apartment + expenses. Instead you'll be living in an apartment you share with a roommate and you cannot afford to have children.

If you want to be living, actually living, then people need to demand the following:

#1. Full time work. 40 hours per week. Anything less than full time isn't worth it unless they're paying proportionally a lot more.

#2. A minimum of $20 per hour. Otherwise you will be perpetually poor.

#3. Two Weeks or more Paid Vacation. So you don't burn out doing a job you hate.

People need to be demanding better paying jobs, better hours, and more vacation time. Otherwise it isn't worth their time in the long run.

This is fundamentally a problem which separates the rich from the poor. Decent wages, the ability to own property, and the ability to invest their excess wealth in order to create more wealth.

A wealthy landowner plus stock investor doesn't even need to work in order to make money. Their stocks are doing the work for them. They could spend their life being an artist, a dancer, an actor, etc and never make a lot of money, and still be financially better off than the working poor thanks to the fact that they already own land, don't pay rent + have over a $1 million in dividend paying stocks.

They could take the extra $24,000 they are saving from not having to pay rent and put that into buying more stocks. After 40 years they would have closer to $2 million plus whatever increase valuation of the stocks due to them going up in value over 40 years.

Imagine you bought just $1000 USD in McDonald's stocks in October 1981. Those stocks today, almost exactly 40 years later, would be worth $30,188,890 USD, plus you would have gained the dividends for 40 years. The dividend yield of MCD is currently 2.26%, which amounts to $682,268.91 per year currently.

All that just by investing $1000 back in October 1981. MCD is a great example of a darling stock that really returned on the initial investment.

Anyone sitting on $30 million worth of MCD stock is laughing all the way to the bank.

And thanks to the way governments tax stock investors, this is unlikely to ever change. The rich are going to continue to get richer.

While the working poor, eg. the people working at McDonald's for minimum wage, continue to pay rent while the rich get richer off of the fruit of their labours.

It is an incredibly unfair system, but the sooner YOU realize that you can become one of the people making money and creating wealth for yourself, the sooner you can become one of the people who is making money off of the poor instead of just being poor.

If you want to stop being poor you should sign up for a WealthSimple account today and get 2 free stocks.

Notes

Now I know some people are going to complain about $2000 rent/month. That is pretty normal for a 3 bedroom apartment in a major city, which is what you need if you're raising a family. Roughly 40% of Canadians live in Canada's 10 biggest cities/regions, and due to higher rent and low wages many of them are likely to be the working poor.

Higher Bond Values = Temporarily Lower Stock Market

When the value of government bonds go up, the stock market gets hurt. It is a wound, but it is temporary. That is what is happening right now with the US and Canadian stock markets. The government recently raised the interest rate for government bonds, which means that some investors take their money out of the stock market and buy government bonds instead.

Give it 2 or 3 weeks however and the stock market, I have noticed, will typically recover. Why? Because investors are still making money from their jobs and they want to put their money into stocks (not everyone likes bonds for various reasons) so it is just a matter of time before the market recovers.

It is a temporary shock to the stock market...

But it is USEFUL.

The temporarily lower stock market might cause various stocks to become 2 to 3% cheaper, which effectively means they're on sale. You wait until the stocks appear to have reached the bottom, likely a week or two after the initial sell off, then you buy.

Then you wait another 2-3 weeks later and your stocks have shot up in value by 2 to 3% already.

Just temporary. Nothing to worry about. Check the TSX index in 3 or 4 weeks from now, roughly around October 22nd or 29th, and you will see I am right. Might be a full recovery, or a partial recovery, but guaranteed they will be back up again unless there has been some huge disaster (highly unlikely) in the markets caused by something else.

Eg. I am foreseeing the Chinese stock market to get hard by the Evergrande decline in value unless it gets some kind of bailout from the Chinese government. That house of cards is going to come tumbling down eventually because Evergrande has basically been running a ponzi scheme with Chinese investor money and real estate.

UPDATE OCTOBER 14TH

Evergrande has dropped in value 11.1% since the last time I checked on October 1st. I expect it to keep going down in value. Notice the 52 week low of 0.0001 USD??? I expect it to reach that or lower again.

Evergrande is just the tip of the iceberg when it comes to Chinese companies running real estate ponzi schemes. They take money from investors to build condos and office buildings, but so few people end up living or working in the buildings that in order to make their companies look better than they really are they cheat on the finances and use money from new investors to pay off the old investors, and fudge the records to make their balance sheets look better than they really are. And Evergrande is a HUGE company. It is the 2nd largest property developer in China by sales... But their assets are only worth $306 billion USD, but their debts are over $300 billion... so the stocks are really worth almost nothing.

This is why people really should do their research to determine a company's assets vs debts.

And to make matters worse, Evergrande is hurting China's bond market and its stock market. Speculation abounds that China's stock and bond markets are due for a rough ride.

Plus China is currently planning to invade/conquer Taiwan, which could spell disaster for the global computer chip industry, which could see foreign investment in China collapse.

When Chinese investors start talking nervously about "World War Three" you should definitely worry. An invasion of Taiwan would effect American tech stocks, car manufacturers and more. The USA and their NATO allies will want to secure their access to computer chip manufacturing, otherwise their economies could also collapse. Taiwan makes approximately 65% of the world's computer chips. The global economy depends on those chips. It would be an economic disaster for many companies, including companies in Russia, India, the USA and others who have nuclear weapons who will be very upset if the global production of computer chips is hurt and the global economy collapses.

Hopefully China will come to its senses and realize that invading Taiwan would be economic and military suicide.

Dividend Stocks - TXF

There is another way to measure successful stocks.

By their dividends.

Profitable companies which have already plateaued in terms of their ability to expand (ignore tech stocks, tech stocks are always looking for ways to expand and would rather have excess cash for acquisitions almost never pay dividends) have to do something with all that extra money they are making. So if they cannot expand, and they cannot acquire other companies in the same field, one way for them to attract investors is paying out good dividends.

So how are dividends calculated???

Annual net income minus net change in retained earnings = dividends paid.

Basically it is output as a percentage.

And any percentage about 2% (or above whatever other institutions are giving as interest on bonds) is generally a good company to be putting your money into because of the value of the dividends being paid out.

Thus a company (or an ETF in the example below) that is providing a very large dividend while growing consistently over a 5 year period is a very solid investment which pays you money over time, in addition to growing in value.

I am speaking, of course, about the TXF, which is an ETF that invests in 25 of North America's largest tech companies and currently pays a whopping dividend yield of 10.02%.

So if you own $1000 worth of TXF stock you will be making roughly $100.20 per year in dividends, in addition to it going up in value.

And whenever it goes up in value and pays dividends you are basically making money hand over fist. Which is apparently a nautical term for pulling a rope on a ship, I learned recently. I thought it was a case of you are holding coins in your fist, so many coins that you have to put your hand over the top to prevent yourself from dropping some of them... But apparently that is not the case. It is just a nautical term.

Anyway, back on topic.

TXF took a hit back in March 2020 during the start of the pandemic and then quickly recovered. It has been a solid earner during the past 5 years.

And if you look back further in history to October 2011 then you see it has more than doubled in value during a 10 year period.

I have other reasons why I like it too (asides from that nice growth curve).

Take a look at the stats block below...

A yield of 10.02% is amazing.

Compare that to other stocks like Tim Hortons (THI has a 0% yield) or Canadian Tire (CTC has a 2.56% yield) or Royal Bank of Canada (RBC has a 3.41% yield) and you have to wonder why would you ever invest in a restaurant, a hardware/department store, or even Canada's largest bank.

True, 3.41% yield isn't bad... but it isn't spectacular either.

RBC stock has gone up in value 55.93% in the past 5 years, so it is only marginally worse than TXF, but it is getting only roughly one third of the dividends that TXF offers.

With stocks that pay really good dividends they end up paying for themselves over time, but the length of time could be dramatically different depending upon the stock.

With RBC stock it would take about 29 years to pay off the initial investment.

With TXF stock it would take about 9-10 years to pay off the initial investment.

Stocks that pay 10% or more in dividends are very hard to find. Heck, stocks that pay dividends in the 5% to 9% range are also very hard to find.

If you can think of another stock or ETF that pays 10% or more, while still recording a 5 year valuation growth rate above 60%, please leave a comment below. I would love to hear about it.

Plus TXF invests in the biggest tech stocks in North America... and tech is the future. Like investing in robotics and microchips, investing in tech is a very safe bet.

Canadian Dollar Hedged ETFs

I like these...

Canadian Dollar Hedged ETFs.

These allow me to invest in the US stock market without having to worry about the exchange rate. Plus hedged ETFs on average earn about 0.5% more than unhedged ETFs.

Currency hedging reduces the effect of exchange rate fluctuations on international investments, making it very useful for Canadians to invest in American stocks and/or bonds.

Let's pretend you want to invest $1000 in American stocks, but the Canadian-American dollar exchange rate changes over time. So if your stocks go up by 20%, but the Canadian dollar goes up in value by 20%, how much money have you made when you measure it in Canadian dollars?

Well $1000 CDN of unhedged stocks... x 1.2, but then x 0.8... = $960.

 But if you buy $1000 CDN worth of hedged stocks then the math works like this: $1000 x 1.2 = $1200.

See the huge difference?

Now often it won't be as dramatic as that. I am using an extreme example in which the Canadian dollar goes up in value by 20%... which is known to happen usually about once per decade whenever oil prices skyrocket and the Canadian dollar ends up going up thanks to the value of oil.

Choosing an unhedged ETF can allow you to gain from beneficial currency changes, but you also carry the risk of the negative effects of currency price changes.

So there are pros and cons to using unhedged stocks, but for me it isn't worth it. I would rather hedge my bets and then not have to worry about it.

After all a war could break out in the Middle East literally at any time and the Canadian dollar could go up 20 to 30% because of it. Seriously, do some research. The Canadian dollar and the price of oil always goes up whenever there is a war in the Middle East.

And do you really want the value of your investments to be dictated by whether there is currently a war happening in Iraq, Iran, Saudi Arabia, etc??? It isn't worth the risk.

Plus unhedged stocks usually end up being worth more anyway. So you might as well buy the hedged version.

Gold, Silver, Copper and Nickel Stocks Worth Researching

AYA is a gold and silver mining company in Canada.

CMMC deals mostly with copper, as the name "Copper Mountain Mining Corporation" implies.

CNC (Canadian Nickel Company Inc) deals with nickel, obviously.

Now what I want you to look at is the nice upward curves these stocks have. AYA and CMMC have sharper curves, but I fully expect these stocks to go up in value as demand for gold, silver and copper continue to rise thanks to the electronics industry.

The price of nickel meanwhile has been steadily rising since 2016 and is expected to continue to become a hot commodity into the 2030s.

CNC is one of the biggest nickel producers in the world, and if you want to research more about their company I recommend visiting their website:

canadanickel.com/investor/news-releases/

The point I am trying to make is that these are Canadian companies which are performing very well, and I believe they will continue to perform well during the next 20-30 years as demand for their precious metals continues to grow.

And demand means more profits, which means their stocks keep going up. Right now their stocks are quite affordable too. $3 to $10 per share is very reasonable.

I bought AYA back in July when it was less than $9 per share, and now it is close to $10.

CMMC and CNC haven't moved much since I purchased them, but I am confident they will go up gradually over the long term. I look forward to checking in on these stocks in July 2022 and seeing how well they've been doing since the time I purchased them. Or 5 years from now. Or 10 years.

 

 

Gold Shortage Coming

Both Ivanhoe (IVN) and Kirkland Lake Gold (KL) are smart bets in my opinion.

Why?

Because demand for gold is going up, and both of these stocks have a proven track record.

China is a growing economy and their thirst for gold jewelry is skyrocketing, but so is the demand for consumer electronics (which uses gold in the microchips).

The global demand for gold continues to grow. This is a supply and demand issue. There simply isn't enough gold to go around, but there are two Canadian companies which are plentiful with the stuff.

Nor are these the only gold mining companies I have invested in. There's about 20 different mining companies I have invested in, with many of them dealing with gold, silver, copper, rare earth metals, lithium, and basically anything that is useful for making either batteries or for electronics.

Because that is something else that people often forget. Our consumption of electronics goods continues to soar, globally, and those electronics need metals that are hard to find and mine.

Which means they end up being valuable and the mining companies extracting them from the earth are likewise profitable and worth investing in.

I am also invested in companies which deal in mining exploration, which means they are dealing with finding new places to mine such metals, and then sell their finds to the government or mining companies for a hefty profit. 

And like always, I only invest in those companies with a proven track record, and I am investing long term.

 

Energy Stocks

Algonquin Power (AQN) and Ballard Power (BLDP) are two energy stocks worth researching and investing in, in my opinion.

AQN has nice steady growth over the past 5 years, so definitely a strong contender.

You can see a blip from March 2020 for the start of the pandemic, but it had a very quick recovery.

This is a company which will continue to grow in my opinion, as they are expanding into renewable energy production and solar/turbine energy production is going to become a huge business during the next 30 years. Definitely a smart long term investment.

Nor are they limited by that. They are already a huge company that deals in both production, transmission and distribution of energy across Canada and the USA.

Ballard Power meanwhile is really banking on renewable energy. Hence the big spike in their stock price during the past year, followed by a calmer period.

BLDP as you can see has lots of room to grow, having gone from $2 per share 5 years ago and is now over $20.

I wouldn't be surprised if BLDP was worth $100 to $200 per share by the end of the decade.

Buying both of these stocks to me is a no-brainer. You buy both and you hedge your bets.

There are other energy stocks to consider, but I haven't seen any yet that are performing like these two.

Nor am I worried about BLDP's upward blip. That to me is a sign that this stock is ready to go even higher.

It will be interesting to come back a year from now or 5 years from now and see how well these stocks are doing.

I put my money where my mouth is. I bought both of these stocks, and I believe you should too while they're still affordable.

HAPPY INVESTING!

Two ETFs Worth Researching

 ETFs is something to definitely consider if you're looking for stocks, but you're not sure what to invest in.

An ETF (exchange traded fund) is when an investment company or investment bank creates a fund which people can buy in a manner similar to buying a stock, and then that company/bank uses the money from the fund to invest in other companies which they think will go up in value (and/or provide dividends).

The company or bank managing the ETF takes on the responsibility of managing the money/trading stocks of a variety of companies for you, and you don't have to worry about doing it yourself.

However not all ETFs actually have that nice "Darling Curve" that I am looking for.

Take XIU (from BlackRock) for example. You can see that big dip from March 2020 when the pandemic happened and how it hurt a lot of the stocks that the ETF was invested in. This wasn't that unusual however. A lot of stocks took a nose dive in March 2020, and as you can see many of them also recovered.

XIU has seen soared to record highs, which tells me that this is an ETF that is recession resistant and recovers quickly.

Did it take a few months to pull off a full recovery? Yes, it did. But did it pull it off? Yep. Yep, it did.

What I also like about ETFs is that they're stable. They're basically guaranteed to go up in value. Eventually. Not always right away. You just have to be patient, which makes them a good candidate for long term investments.

The other thing I like is that they invest in companies that I might not otherwise consider investing in (or can afford to invest in). Thus it allows me to diversify my portfolio more, with less research required on my part, while still hedging my bets.

Overall, a smart investment.

The next one I want to talk about is WSRI (Weathsimple's North America Socially Responsible Index ETF).

WSRI is a relatively new ETF. It has only been around for a little more than a year, hence why the chart shown on the right is set to 1Y (one year).

But during that one year you can see the ETF went up in value by almost 25%, and that it is very consistent about going up in value.

That is a very sexy Darling Curve in my opinion.

So if you want to hedge your bets by investing in ETFs I recommend starting with these two ETFs.

Any other ETFs you come across you should definitely research, but when researching these two I think you will find them to be very smart choices.

Definitely worth researching AND investing in.

HAPPY INVESTING!

Shopify will set record high before Xmas

I am predicting that Shopify (SHOP) will go to a new record high sometime in the next 4 months, likely before Christmas.

The stock is currently trading at around $1937 CDN, and set a record high back in July when it reached $2075.88.

My prediction is that it will top $2200 or more before xmas. Or more. And then stay in the $2100 to $2600 range during 2022.

Which means buying it right now is kind of a no brainer. Stocks like Shopify always go up before the Christmas shopping season, and because of COVID's continuing effect on online shopping, this effect should see a boost since Shopify is geared exactly towards that. Facilitating online shopping.

Shopify is also one of those Darling Stocks that I recommend just buying and keeping. Buy, keep, collect dividends.

Furthermore, you can buy fractional shares of SHOP via Wealthsimple. So you don't need to shell out $1937 to buy stocks in it, you can buy $1 or you can buy $100 or a $1000 worth. Whatever amount suits your fancy.

So let's say you buy $1000 worth when it is worth $1950 or less. Enough to buy 51.28 fractional shares.

Then the stock goes up $2200.

You sell your fractional shares for $1128.20.

Certainly a better move than keeping your money in the bank where you are getting in 0.05% in a TD High Interest savings account. Seriously. The interest rates are so low that even the "High Interest" savings accounts are giving you almost nothing.

0.05% interest over a 4 month period on $1000 is... 16 cents.

So you have to ask yourself, do you want to earn 16 cents of interest from your bank, or at least $128?

Or do what I do. Buy Shopify stock and then just keep it.

Right now it is my "Go To Stock" for whenever I have money leftover in my Wealthsimple account. Any extra money leftover from my other investments gets put into Shopify. That is how confident I am in it. I want to invest in other things, of course, in order to diversify my portfolio (I have a lot of stocks in Canadian gold, silver, copper, lithium and mining operations) and I need to offset my other investments with tech stocks and other topics. Shopify is one of the best Canadian tech stocks you can invest in right now.

The only real trick is that it is so expensive that many people have to buy fractional shares instead of whole shares. Hence why having a Wealthsimple account comes in handy.

The History of a Darling Stock: McDonald's (MCD)

If you had invested $100 USD in 1981 in McDonald's stock it would have been an extremely safe bet that it would go up in value over the next 40 years.

That $100 investment, back when MCDs was worth $0.71 per share, would now be worth about $33,447 + 40 years worth of dividends.

Wait another 19 years and by 2040 it is a fairly safe bet MCD stock will be worth about $400 per share. The company continues to expand into foreign markets.

The only problem, in my opinion, is that it is an American stock, and I don't invest in American stocks because of the exchange rate.

But also because there is a 15% withholding tax on foreign investors.

If I was an American however, that would be a very smart investment.

Cielo Waste Solutions = BioDiesel & the Future

Cielo Waste Solutions is a Canadian company that owns the patents on how to convert various types of garbage into biodiesel.

The value of their stock has shot up within the last year by a crazy amount, and I expect this company to keep growing as they expand their operation across Canada and the USA.

The graphs on the right show the stock valuation for the past 5 years and the last year, respectively.

Normally I only show one graph, the one for the last five years, but the value of the stock in the last year is the one you want to be looking at.

Ignoring the steep climb at the beginning, what you are seeing is a steady increase in the stock's value. It may be only worth $1.24 per share right now, but at the rate it is climbing it will be worth $2.50 six months from now.

And I expect it to keep going up in value over the next 10 to 20 years, although it should taper off at some point.

My point is that now is the time to buy this stock and then hold it for the next 10-20 years.

Buy it now when it is relatively cheap and then see what happens in the next 20 years.

I wish I had bought this stock when it was only 4 cents per share, but whatever. Hindsight and all that.

This is why it is important to be researching new stocks regularly and then when you see one that looks like it has great potential then you buy it up.

Even a small investment, $100, would have gained a person 2500 shares of CMC back when it was 4 cents per share. That 2500 shares would now be worth $3100, and possibly $6000+ within the next 6 months as the company expands its operations.

Companies which make electric vehicles, hydrogen vehicles, vehicles that run on green fuel... These are the future. Likewise any company that makes those fuels is similarly the future. Any of these Green Tech companies that are small now will be worth a fortune 10 to 20 years from now.

 

Drone Delivery Canada Corp = A Darling Stock for the Future

 I purchased Drone Delivery Canada Corp (FLT) back when it was $1.13 per share, but I suspect it will be worth a lot more by 2030 or 2040.

Drone Delivery Canada Corp is a tech / software company that makes drone delivery software and drones, and I foresee that this is the way of the future.

Just looking at their stock valuation, which was $0.14 per share back in July 2016 versus now when it is hovering around $1.36 or $1.37 per share, and you see that upward trend going on. When major delivery companies switch over to automated drones to make deliveries, cutting out most of their delivery staff, that is when I expect this stock to skyrocket.

Most packages are quite small and using drones to deliver the packages saves on fuel and personnel costs, and electricity and drones are relatively cheap.

Furthermore, Drone Delivery Canada Corp is already a $300 million company. I fully expect it will be worth over a billion in less than 5 years. Several billion by 2030.

You will note that the value of Drone Delivery Canada Corp has gone through two plateaus, but this doesn't worry me. I bought the stock when it was relatively cheap, and I would be quite happy to hold onto this stock until it is worth $50 per share - which I am confident it will eventually reach, although it might take 20 or 25 years to reach it.

At some point I might even buy more of FLT stock, but only after I have developed a well rounded portfolio of various diverse stocks.

Stock Market Ebbs and Flows and Duds

 I have been paying attention to the stock market since I was a little kid. Always fascinated by it. I first started owning stocks when I was just a teenager. I still have those stocks. Lately I have been thinking I should sell those stocks, take the money and invest in something else that isn't a dud.

Duds are definitely an issue for the stock market.

If a particular stock is a dud you will notice that it doesn't really go up in value very quickly, and tends to fluctuate around the same point for a long time.

Or goes down in value over the long term, proving that the Dud is particularly bad.

A good example of a Dud stock is Cabot Oil & Gas Corp (COG). During a 5 year period this stock fluctuates up and down, ebbs and flows, but overall continues to go down in value.

Why would anyone invest in a company like COG?

Someone who is a day trader might be interested in such a company, banking on investing one day and selling the next day when it hopefully goes up in value.

Another hallmark of a dud is low trading volume.

Today COG has a volume of 1.35 million in traded shares, but it is noon already... and the average trading volume for this stock is 9.35 million.

Average Trading Volume is calculated over the last 20 or 30 days (varies by source).

What this shows you is that for a $6 billion company COG is on a downwards trend and the volume of trades is dropping.

If a company's trading volume gets too low it becomes difficult to actually sell your stocks, because you end up trying to sell it and nobody is buying.

Now it should be noted that if you look at COG's long term gains over 10 years or more it looks a lot better.

Compared to the value of the stock during the 1990s it is actually doing very well as a company, but if you look at just the last 10 years what you see is some ups and downs and the value of the stock has stagnated.

Observe...

And this is why you want to research stocks before you buy them.

COG would have been a smart buy in 2004 to 2006, when it was on the upwards trend, but anyone really smart should have sold their stocks in 2013 or 2014 when the stock price soared.

Everything after that has been on a downward trend.

The stock was actually worth more in July 2011 than it is in July 2021. Anyone who bought the stock then, and did not sell it in 2013-2015, is probably feeling really dumb now.

Yes, it is still a $6 billion company, but it used to be worth over $12 billion. Five years from now it will probably only be worth $4 billion or less.

So it isn't just a Dud, it is a bit of a loser.

It is paying dividends on its earnings, so that is one upside. A total of $0.30 per share during 2020. During which time it has gone from being worth $21 to $15 per share. So the dividend is to compensate you for the fact the company has lost $6 per share worth of value. Oooo! Peanuts.

In general I should point out that I don't like oil stocks. They're too dependent on oil prices going up, and they inevitably come back down, at which point the oil companies see their own values rise and drop constantly. That might seem like a great idea for someone who is a day trader, but for long term investors it is a bad situation to get into because a lot of oil companies fall into the Dud category.

And as you may have noticed, I am looking for Darling Stocks, not Duds.

Stock Tip - Pay Attention to the CDN-USD Exchange Rate

A VALUABLE STOCK TIP FOR CANADIANS

Only buy American stocks when the Canadian dollar is at par or above parity with the US dollar. (This usually happens when oil prices are really high.)

Let's say you buy $1000 worth of Google stock when the CDN dollar is on par with the US dollar. Then you wait 2 years, the Canadian dollar drops in value by 20%, but Google might go up in value by 20%. You sell it for 1000 x 1.2 x 1.2 = $1440 CDN thanks to the ever changing exchange rate.

So you just got a return of 44% for a 2 year investment in a stock that is pretty much guaranteed to go up.

However let's pretend you did the opposite... Let's say you bought the stock when the CDN dollar was down in value, and sold the stock when the CDN dollar was up in value and on par.

So 1000 x 0.8 x 1.2 = 960 CDN.

See the problem? Even though the stock went up in value by 20%, you still lost money because of the changing exchange rate.

And this is why Canadians should NEVER invest in American stocks unless the exchange rate is in your favour, and you should only sell when the exchange rate benefits you selling for a bigger difference.

Unless of course you like losing money even when your stock goes up. You'd have to be a bit soft in the head to not pay attention to the exchange rate.

 

 

What is a Darling Stock? Three Darling Stocks to consider buying

What I call a "Darling Stock" is essentially one that has a nice upward curve, measured over a 5 year or 10 year period.

Shown here I have picked out 3 stocks which I consider to be "Darling Stocks".

1. Kirkland Lake Gold Ltd (KL)
2. Park Lawn Corp (PLC)
3. WELL Health Technologies Corp (WELL)

Each of these stocks exhibit the things that I am looking for in a stock that I find desirable. That nice upward curve in value.

I can forgive the occasional dip in value (eg. due to COVID pandemic) if the stock recovered quickly from the dip and is still on the upwards trend.

Let's start with Kirkland Lake Gold...

It is a gold mining operation, obviously, but what I like about gold mining is that it is pretty immune to recessions. Whenever there is a recession many people put their money into gold, which causes the price of gold to skyrocket. Thus even if there is a recession gold mining operations tend to be making a lot of money.

Nor is this the only gold mining company I have invested in. I have invested in other gold companies, as well as companies that deal in silver, copper, and the mining of precious minerals usually used for batteries.

I expect battery usage to increase dramatically during the next 25 years so a company like NEO Battery Materials Ltd (NBM) is also a sure bet in my opinion. Go look at the curvature on NBM stock and tell me you don't think it is worth putting at least some $$$ into.

One of the other factors I consider when buying stocks is the issue of potential. A company which mines materials for batteries is increasingly in high demand.

Likewise gold, which is traditionally thought of as being used for jewelry, is also used for making computer chips... And the world is rapidly expanding the number of computer chips it needs, but we only have a finite amount of gold available.

I also have a hunch that at some point we will start using silver (or electrum, which historically is a mix of silver and gold) for making computer chips because the price of gold will be so high that computer chips manufacturers will start considering using silver or electrum to solve their problems instead of pure gold.

Thus a gold mining company like Kirkland Lake Gold with a strong record of increasing in value is a solid investment in my opinion.

Park Lawn Corp is a company that deals with funerals and human remains. Every time someone dies, they need to buy a plot of land in a cemetery and they need to buy a casket. This is essentially a real estate company for the dead.

Babyboomers are currently in their 60s and 70s... And a lot of them are currently thinking about dying and buying up cemetery plots. Some of them will have their cemetery plots purchased after they died, or will delay until they know they are sick and dying.

While there is a blip in the value of PLC stock at the start of the pandemic, it becomes pretty clear that they recovered quickly and their profits continue to be solid as Babyboomers (and people in general) continue to die.

What I am banking on with PLC is the idea that lots of Babyboomers (and people in general) will be dying during the next 25 years, and every time someone buys a casket, arranges a funeral, buys a cemetery plot via PLC then the company is making money.

Now the value of their stock isn't rising as quickly as Kirkland Lake Gold (or the next example below), but it is still delivering with a solid increase in price over time.

I fully expect PLC to continue to rise in value, with stocks being worth at least $75 per share by 2030, and possibly as much as $150 per share by 2040.

Do I feel bad about making money off of people dying? Nope. Because someday it will be my turn to die and I want to enjoy my retirement knowing that I made smart investments when I was younger. What I am really making money off of is the cycle of life and death that happens to us all.

Speaking of life... Let's talk about healthcare.

Or in this case the electronic records of healthcare. Everything is being digitized these days and in recent years there has been a huge upsurge in governments and private clinics outsourcing their digital records to companies like WELL Health Technologies Corp (WELL).

This is another example of how I foresee the future going.

All medical records, dental records, eye exams, etc... They will all be digitized and various select companies will be in charge of those digital records and the cybersecurity surrounding them, as people will definitely want their records kept private.

What you will also note with WELL is that there was only a tiny blip during the pandemic and then the stock soared in value - likely because they were needed to track medical records of people who had COVID tests and also COVID vaccination records.

Even before the pandemic WELL had that nice upward curve, and thus made it a smart buy, but during the pandemic you will notice the price of the stock shot up like crazy.

When the pandemic is eventually over (assuming it ever ends...) my suspicion is that those medical records are going to be needed continuously as governments and people realize that they are now reliant upon the digitization of medical records. There is no going back to paper.

Plus digital records are greener than using paper records, so there's that benefit too.

In my opinion WELL will continue to grow in value. By 2030 I believe it will be worth $50+ per share and will be a massive corporation. Buying it for $7 per share will feel like peanuts compared to what it will be worth just 9 years from now, or 19 years from now.

Let's pretend you have $3000 to invest.

If I were you I would take $1000 and put it into all 3 of these stocks... Then just sit and wait. Don't sell for at least 9 years.

By 2030 I suspect that $3000 investment will be worth $12,000. At least that.

You could leave your money in a bank savings account and let it accumulate interest, but that interest would be peanuts when you look at the interest rates banks are paying you. Complete peanuts. Food prices are going up due to inflation faster than bank interest rates.

Hello Canada! Why aren't you investing in the stock market?

Hello Canada!

Why aren't you investing in the stock market?

Is it because you have no money and/or no knowledge of how the stock market works?

Or is it because the big banks (eg. TD Waterhouse) are charging $9.99 to do one trade, which is a ridiculous fee when you consider that the trade is being done by a computer and not an actual person?

Well, I have good news!

#1. You can skip the fees by signing up for a Wealthsimple account for free

And they only charge 0.5% as an account management fee for accounts under $99,999, or 0.4% for accounts valued at $100,000 or more. Which means that if your account is quite small the fee is actually ridiculously small.

Plus right now if you join Wealthsimple, and use this link, then you get TWO free stocks to trade https://my.wealthsimple.com/app/public/trade-referral-signup?code=I30GVG *

* They don't give you the actual stocks, they give the cash equivalent of 2 free stocks after you deposit $100 into your trading account. The value of the stocks is random, but between $5 and $2500.

When I signed up I got a free Intel stock, which was valued at $69.10 CDN at the time, so for my $100 investment I already made $69.10. You do have to keep the funds in your account for a minimum amount of time in order to be able to cash out with it, but that is actually a silly idea because what you really want to do is invest it in a stock that will go up in value.

Furthermore, for each person who signs up using that link up above, I get 1 free stock too. So you can help support this blog by signing up too, and you get two free stocks, so this is a win-win situation for both you and me.

#2. You don't need to know anything about the stock market...

Because I am going to teach you!

Just subscribe to this blog, bookmark it, keep it on an open tab, and/or come back regularly for more stock tips.

Knowing nothing now isn't that big of a deal. What is important is that you LEARN how to invest in the stock market safely and get good returns on your money.

The Value of Shopify Stocks, 2016 to 2021

#3. Invest in Shopify

Why Shopify? I am going to show you why.

Shopify is a huge Canadian company which simplifies shopping for online stores. Shopping Simplified... = Shopify. How huge? It is a $250+ billion company. That's HUGE.

Every year people go shopping online for Christmas presents, and every year Shopify's stock goes up a lot during the Christmas holiday season - and the time period before and after Christmas.

So the lesson here is that if you want to invest in Shopify, you do it sometime in July, August or September... you wait for Christmas to come and go... and then you sell the stock sometime in January or February, when the stock will be worth roughly 40% more.

So if you invest $2000 now, by January or February the stock will be worth about $2800.

Or do what I do and just use the "Buy and Wait" approach.

The Buy and Wait approach is very simple. You're buying stocks that you think will go up in value over the long term. You buy them... and then you don't sell them for at least 5 years. Maybe 10 years. Maybe 20 or 25 years. You might never sell them. You might leave them to your children or grandchildren in your will.

Another thing I do is that I sometimes buy Fractional Shares.

This is the beauty of joining Wealthsimple. You don't need to pay $2000 to buy 1 stock of Shopify. Instead you can decide the amount you want to spend, as little as $1, and then buy a fraction of the stock. Not all brokerage companies allow you to buy Fractional Shares, but Wealthsimple currently allows people to do this with 14 specific stocks (10 American companies and 4 Canadian companies) which are pretty much guaranteed to go up in value.

The Canadian companies are:

• Shopify (SHOP)
• Royal Bank of Canada (RY)
• Toronto Dominion Bank (TD)
• Canadian National Railway Co. (CNR)

And the American companies are:

• Amazon (AMZN)
• Google (GOOGL)
• Apple (AAPL)
• Microsoft (MSFT)
• Facebook (FB)
• Netflix (NFLX)
• Tesla (TSLA)
• AirBnB (ABNB)
• Coinbase (COIN)
• Nvidia (NVDA)

 So for example, let's say you put $100 into your Wealthsimple account, Wealthsimple awards you with 2 shares - possibly worth about $25 each, and right away you have $150 in your account.

You take that $150 and you buy Fractional Shares of Shopify (SHOP)...

You wait until it goes up in value by 40% (to $210 CDN) and then you sell it and cash out.

Tada! You've made $110 and doubled your money in less than 6 months.

Or maybe you don't cash out. Maybe you wait 10 years and see what Shopify can do in the stock market. Which is my plan. I like the Buy and Wait approach.

I could sit on my stocks for decades and be quite happy to see my wealth grow. If I need to sell some stocks at some point because I want to buy a house (or a boat...) then that is my business. My choice.

#4. I only invest in what I call "Darling Stocks"

What are Darling Stocks?

Well, they're the stocks which have that nice upward curve to them. They're basically guaranteed to go up and keep going up. That is why I call them "Darling Stocks". They're very nice and I like them a lot.

They're keepers. You buy them, you keep them, and you make money off the dividends, and maybe you sell a few once in awhile because you need the money, but otherwise you sit on them and watch them multiply in value.

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