Wednesday, August 01, 2007

The bear [market] necessities

Need a little context for the stock market carnage we've been living through for the last little while?

The money I set aside every month from every paycheque hasn't even come close to offsetting the losses I've undergone in my portfolio. It's gotten so bad that my net worth actually dropped this month for the first time since I started keeping track of it. My non-registered account has taken such a beating that it's on the cusp of going below the threshold value where I don't have to pay any administrative fees. I might have to put some cash into it just to keep it over...

When Finance Minister Jim Flaherty dropped his nuclear bomb on trusts back in October, conventional wisdom had it that income-hungry investors would flock to dividend equities, but would have a hard time getting the yields they were used to. That appears to be changing as there are now plenty of TSX companies yielding more than 5% after the recent sell-off (RUS and ROC to name but two off the top of my head.) Most astonishingly of all? Biovail is now yielding more than 8%. (Full disclosure -- I own Biovail)

So what does it all mean? From where I sit it's looking like bad companies are getting knocked back to where they belong, and good companies are on sale. The one sector I currently don't have any exposure to and am champing at the bit to get into is emerging markets, but I'm still not prepared to jump in at these prices. Definitely on the watch list, though. Two stocks I am contemplating getting into are increasing my stake in BMO, and taking a position in Brookfield. I really like what they're doing in infrastructure and the company's management overall.

What about you? What's in your shopping cart at the moment? You're not being a bad little investor and heading for the hills, are you? Are you afraid of a little old bear?


White Eagle said...

I think it's still too early to get into the banks in a big way but putting a little down on them can't really hurt in the long run.

As for my watch list, here are the stocks I'm keeping a close eye on:

Agriculture (Fertilizer) Plays:
Hanfeng (HF-T)
Migao (MGO-T)

Mining Plays:
Thompson Creek (TCM-T)
HudBay (HBM-T)

Telecom Plays:
Rogers (RCI.B-T)
Telus (T-T)

Water ETF:

Precious Metals:
Silver Wheaton (SLW-T)
Agnico-Eagle (AEM-T)
Goldcorp (G-T)

and if a full-fledge bear market ensues, I might give HXD-T a try.

FourPillars said...

I'm curious to know how much BMO you own as a percentage of portfolio.

I have some BMO (6% of portfolio) and wouldn't be against adding more but I don't want it to have too much weight in the portfolio.


GIV said...

Four Pillars,

I own about $3000 worth of BMO in an equity portfolio worth $20,000.

So what's that -- 16%?

That seems a tad high, but there are two caveats -- my portfolio is small enough that almost everything I hold will represent a huge chunk (I've instituted a policy of $3000 minimum investment to cut down on trading fees) and also, it's a Canadian bank. It'll go down a little bit here and there but I'm hardly worried about being too invested in financials in year 3 of a 30 year investing timeline