Which sector will do best?

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This week I came across this sector performance chart.  I first saw such a chart in 2005 when I was a financial advisor with Edward Jones on the South shore of Montreal.

Sector performance chart

Its main message is that when you have a diversified stock portfolio, it is difficult to predict which sector (i.e. stocks) will do best.  Note the dynamic nature of the various sector returns over the years.  To help me manage my stock portfolio, I use two simple rules:

  • Never have more that 5% of my portfolio in one stock – Protects me from the next Nortel
  • Allocate funds by sector in a manner similar to the S&P 500 index

In order to allocate funds similarly to the S&P 500 index, I use my Stock allocation tool.  By inputting the value of each stock I own, the table shows me if any sector is “due for harvesting” and which sector is below my allocation target.  Such a tool is what the investment industry calls “neutral sector allocation”. Basically, it’s a stock portfolio that follows the same funds allocation as the S&P 500 index.

As the S&P 500 index sector allocation varies from year to year, I revise my tool’s sector allocation to the average of the previous 10 years.

This tool definitely keeps me away from stocks prices that increase too much too quickly.

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Which stock in each sector will do best?  I have no idea.

Actually, I do not worry much about stock selection.  I look for companies I understand, that increase their dividends on a regular basis.

I’m more careful about keeping my asset and stock allocation in line with my targets.

Note that when a stock’s price takes off… I sell part of that holding to buy a stock that is not so popular.

Until next time,

Sale, sale, sale!

Wow… October brings a great stock exchange sale.

When is the best time to buy shares?  When you have cash in your long term savings plan.

Which stock should I buy?  Base your decision using an objective decision tool like the 2019 stock allocation.

I have already completed my October stock shopping.  I will be back at it again in November.  I hope the sale lasts for a while and even gets better.

Happy shopping!

Until next month,

S&P 500 index capital allocation modifications to three sectors

Last week, the S&P 500 index managers decided to move several stocks from both the technology and the discretionary consumption sectors to the newly renamed communication sector.  This change involves 24 stocks.  On this list, are big names like Alphabet, Facebook and Walt Disney.

All this to let you know that my 2018 stock allocation tool has been adjusted to reflect theses changes ahead of my normal year end update.  The bottom line, more money now goes into the communication sector and less money goes to the both the technology and discretionary consumption sectors.

Therefore, to help you and I make investing decisions; I’ve uploaded and posted my Stock allocation tool for 2019.

—————————————————————————————————————————————–With the changes taking place in the stock allocation tool, I now have my eyes on buying shares of Walt Disney in the communication sector.  Its dividend increases regularly, and more importantly to me, I really enjoy its movies and would be proud to be associated with the name.

By the way, my other communication stock holding are AT&T (T-N) and Telus (T-T).

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During the month of September I sold some shares of Pepsi (PEP-N).  The basic consumption sector in my portfolio and more precisely this stock was getting too high in value.  With these funds added to the dividends I received, I added to my shareholdings of Novo Nordisk (NVO-N) in the health sector and Trans Continental (TCL.A-T) in the discretionary consumption sector.

Until next month,

Tech and healthcare stocks are hot!

Over the month of July, my tech and healthcare stocks increased in price.  So much so that my stock allocation was telling me that my portfolio’s share of these two sectors was above their targets.  Therefore, I sold some shares of Microsoft (MSFT-Q), Tecsys (TCS-T) and Novo Nordisk (NVO-N).

I ploughed the proceeds into sectors that were below my portfolio’s targets.  Therefore, I added to the following sectors that were below my sector targets:

– Magna (MG-T) Industrial

– AT&T (T-N) Telecom

– Allied Properties (AP.UN-T) REIT

– Helmerich & Payne (HP-N) Energy

– Mcdonalds (MCD-N) Consumer discretionary

– Nutrien (NTR-T) Material

– TD Bank (TD-T) Finance

With the PCC model portfolio I use, it is easy to sell high and buy low!

Note that these stocks are not recommendations.  They are stocks that I have held for many years.

Please select stocks that meet your criteria.  You are welcomed to use my asset allocation and stock allocation tables to build your portfolio.

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Note that I’ve added a button to allow donations to pay for my blog’s expenses and my time.

Until next time,

Using my margin account

Over the years I have been able to pay back most of my mortgage loan.  Presently I have a condo on the South shore of Montreal.  I am both content and frustrated by this loan situation.  My frustration stems from all the sunk into my condo which seems to increase in value at the same slow rate of inflation.

To tone down my frustration, I have been using a margin account for my taxable stock holdings.  Basically, a margin account allows me to use stocks as guarantee for additional stock purchases with funds I borrow from the broker.  My broker charges me interest on this borrowed money, but since this expense is incurred to generate taxable revenue, the government allows me to deduct this interest.

My strategy is to borrow an amount equal to the value of my condo less the mortgage loan balance.  This means about $140,000.  When I sell my condo, I will simply pay off both the mortgage loan balance and the margin balance with my broker.

I deal with Interactive Broker.  This online broker offers its margin account at an interest rate of 2.72% for Canadian dollar margin and at 3.41% for US dollar margin.  These rates are much cheaper than the 3.95% interest rate my bank charges me for my mortgage secured line of credit.

In the end, I am in no hurry to pay off my fixed rate mortgage loan.

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June is a big month for dividend and interest revenue in my portfolio.  This year, my June revenue is $7,745.  To reinvest this amount, I checked my asset allocation and stock allocation to identify which sectors my stockholdings are below my allocation targets.  At this time, the following sectors are below target; Consumer staples, energy, technology and finance.  Therefore, I added to my holdings the following stocks:

CCL Industries  (CCL.B-T)               Consumer staples

Brookfield Energy Partners (BEP -N)        Energy – this is the American version of BEP.UN in Toronto

Helmerich & Payne (HP-N)          Energy

Oracle (ORCL-N)               Oracle

AFLAC (AFL-N)                  Finance

Until next month,

The importance of discipline in saving for the long-term

Discipline is of primary importance to achieve your goal of long-term savings.  By long-term I mean 50, 60 or even 70 years.  I started investing for the long term 28 years ago at 26 years of age.  I will end my accumulation period in a couple of years and then move on to living off the income from the accumulated capital for the rest of my life.  In my case, while I plan to live off the income from the capital, I plan to leave the capital itself with charities and family after my expiration date.

To me, discipline in long-term savings means:

Regularly depositing a pre-established amount in a savings account, that is once a month or on each payday.  As a result, you adjust your way of life without thinking of the amount of spending you deprive yourselves.

Follow the rules of your savings plan.  If your plan includes buying units of a mutual fund every three months, make it so whether the stock market is up or down.  After all, over the next decades, you can reasonably expect recessions to happen about every 10 years.  So down markets… there will many during your long-term project.

Live below your means.  In our life and time, it’s not very appealing to live less of a life than you can afford.  So, although the amount of money you set aside may appear small as to ask yourself the question why bother?  In the long-term the results will likely me immense.  So it’s important to respect your plan and live below your means.


In May, the value of stocks in the consumer discretionary and REITs has exceeded my model target.  Therefore, I’m selling some shares of Magna International (MGA-T) and Northview Properties (NVU.UN-T).

With these funds I will purchase more shares of stocks in sectors that are below my stock allocation target, namely health and consumer base.  These will likely be Johnson  & Johnson (JNJ-N) and Pepsi (PEP-N).

Until next month,

Hello everyone,

Welcome to my blog where I discuss a very emotional subject… saving money for retirement.  For over 30 years, I’ve been setting aside money for my retirement.  As I have crossed into my 50’s, retirement is getting close.  With a life long interest in savings and the stock market, I’ve developed the skills and patience to grow savings into a money machine.  I want to share this knowledge with you to help you become a better saver.

See you in June,

Philip