Aug 192013
 

Earlier in the Spring I blogged about how undervalued commodity stocks were and hinted that it could be one of the best trading opportunities of the year ๐Ÿ™‚ So I explained how I invested $2,000 into some stocks and plan to sell when I can make at least $1,000 in profit. Well earlier today I sold all those stocks, and made a $1,175 return, exceeding my goalย (ใ‚œโˆ€ใ‚œ)dancing-tweetie-bird

April 19th 2013
Initial Investment: $2,000
Bought: 50 shares ofย  G.TO at $28.84 =ย $1442
Bought:ย 100 shares ofย  SLW.TO at $24.16 =ย $2416
Bought:ย 100 shares ofย  SU.TO at $28.205 =ย $2820.50
Total money spent buying stocks:ย $6,678.50
Had to borrow $4,678.50 on margin

Today, Monday, Aug 19th, 2013
Sold: 50 shares ofย  G.TO at $32.51 =ย $1625.50
Sold:ย 100 shares ofย  SLW.TO at $27.80 =ย $2780
Sold:ย 100 shares ofย  SU.TO at $35.325 =ย $3532.50
Total money acquired from selling stocks:ย $7,938
Dividends earned during swing trade period: $42

Gross profit: = $1,301.50

Expenses:
Commission: 6 trades x $9.99 = $59.94
Interest on $4,678.50 margin loan @4.25%/yr = $66.28
Total Expenses: $126.22

Net profit = Gross Profit – Expenses = $1,175.28 (59% return)

Another successful swing trade is in the can ๐Ÿ˜Ž Woohoo! That was a fun one ๐Ÿ˜€ Let’s analyze…

  • Stock Choices: I wanted to diversified with my swing trade so I chose 3 companies in 3 different industries (oil, gold, and silver) to minimize risk.
  • Higher risk for higher reward: The companies only increased in value by 19% on average during the swing trade period, but leveraging at 3.1x has allowed me to make a 59% return on my starting investment. Borrowing money to make money can be very risky and doesn’t always work out, but in this situation it did ๐Ÿ˜€
  • 13_08_swingtrade7Reason for selling: I based my sell decision on the following factors. I don’t feel like the stocks I’ve bought are undervalued anymore after a double digit appreciation from when I bought them back in April. After a particularly strong rally last week, commodity stocks seemed to have lost their upward momentum today which makes for a short term bearish indicator. Finally my positions in these stocks are heavily leveraged with a $4678.50 loan from the bank. With every passing day that I don’t sell I pay the cost of 54 cents just to hold these companies. The long term risk is just not worth the potential for gains anymore. Don’t want to get too greedy.

 

There’s the chance I will miss out on another subsequent rally. I guess we’ll know soon enough as the week continues ๐Ÿ™‚ But I’m already extremely happy that I turned $2,000 into $3,175 in just several months by simply researching some stocks, realizing they were on sale, buying some of their shares and selling them when they went back up. This is why I enjoy swing trading ๐Ÿ˜† It feels rewarding if done successfully. But that said, I wouldn’t dare speculate more than 10% of my entire stock portfolio. I’m primarily a buy and hold, value investor, but once in awhile I like to have some fun with a small amount of money to try and time the market ๐Ÿ™‚ I’ve heard most people who trade stocks lose more money than they make. I am by no means a stock expert but so far most of my swing trades have been profitable so I’m probably doing something right ๐Ÿ™‚ Maybe it’s just beginner’s luck ๐Ÿ˜• I’ve created a swing trade page to keep track of my swing trading history.

โ€”โ€”โ€”โ€”โ€”โ€”โ€”โ€”โ€”โ€”โ€”โ€”โ€”โ€“
Random Useless Fact:ย The inventor of the Game Boy, was originally Nintendo’s janitor and maintenance man.

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Phil
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Now that’s my kind of math! Congrats! It will be interesting to see how commodities & energies do going into their typical volatile fall season. I’m thinking given how beaten up some have been this past year, we may see early tax loss selling, and then maybe (hopefully) a rise to finish out the year. You may yet have another opportunity to repeat your experiment this fall – Cheers.

$25000 Dividends
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$25000 Dividends

You may want to facture in capital gains taxes in the expense column. (unless this was in your TFSA/RRSP). Otherwise, good job. Now i’m tempted to cash out on Suncor.
I bought Shoppers at $41 a few months back and it’s now around $60. I’m tempted to capture capital gains. What do you think?

Vicky
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Just wanted to point out that since I started at SU, it has increased that much. You’re welcome. ๐Ÿ˜›

Nice work on the trades!

Jenny
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Wow! Very nice! I need to spy on what you are investing in more. XD Congrats!

Gareth @ Investment Road to Freedom
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Gareth @ Investment Road to Freedom

Very nicely done. It’s a good feeling when things work out like these trades!

agentfang
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agentfang

That’s really awesome that you were able to capitalize on those swing trades!! I should have followed suite! I’m still waiting for my swing trades to rebound… still stuck with them.