Jan 212014
 

Awhile ago I started a swing trade with Potash Corporation of Saskatchewan. I used $600 to purchase about $2,000 worth of POT shares using leverage. Unfortunately some time after my purchase, Russia’s Uralkali got out of the potash cartel which sent the price of potash lower, which of course meant all potash producers around the world had their profits squeezed. Potash is an alkaline potassium compound used in fertilizer.

When I initially bought 45 shares, POT was trading at $43.74 CAD per share. It dropped down to about $30 per share when Uralkali pulled out. But today POT has recovered a bit and is trading at about $37. Instead of selling and taking my losses, I’ve decided to double down on it :) So earlier today I bought another 45 shares at $36.90 each, doubling my total holding to 90 shares, wow 8-O

14-01-potstockbuy2

I should have pulled the trigger earlier but I’m just glad I got in today before the price can get any higher :) Thanks to my new trade I’ve averaged down my ACB from the initial $43.74/share to $40.32/share :D

I got the idea to increase my position in POT after reading PC’s post about Potash Corp’s recent performance. It’s risky to invest a second time into a company that is worth less than before. There’s a very real possibility for the price to continue falling and I could lose my new money as well my previous investment (o_o) But risky is my middle name and I like to go big or go home :P

14-01-potbuyswingtrade

With a P/E ratio of 15.2x I feel POT is currently at reasonable valuations. It’s also a low cost producer of nitrogen, phosphate, and other chemicals needed for industrial use. Farmers will always need fertilizer as long as there are people in the world, and I think POT is in a great position to capitalize on that market. Also, the 4.09% dividend yield is a nice bonus :)

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Random useless fact: If you find a lost driver’s license, you can drop it in any mailbox and the Postal Service will deliver it back to the owner.

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 :) 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 goal (゜∀゜)dancing-tweetie-bird

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

Today, Monday, Aug 19th, 2013
Sold: 50 shares of  G.TO at $32.51$1625.50
Sold: 100 shares of  SLW.TO at $27.80$2780
Sold: 100 shares of  SU.TO at $35.325 = $3532.50
Total money acquired from selling stocks: $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 8-) Woohoo! That was a fun one :D Let’s analyze… Continue reading »

Apr 192013
 

Commodity prices are low and resource companies in Canada have lost quite a bit of value recently. But did the world really change that much since March to warrant such a huge sell off? Maybe, I don’t know. The price of gold dropped like a sack of potatoes last week. But even at $1400 per ounce, gold production companies are still making about $600 in gross margin for every ounce they mine and sell, so their bottom line is still good (~_~) Stocks could get a lot worse before they get better again. However if this turns out to be the buying opportunity of the year then I don’t want to miss out(^v^) So it’s time for another swing trade :)

I’ve decided to trade Goldcorp, Silver Wheaton, and Suncor in my margin account. This means the bank will lend me money to buy stocks. In this case they’re lending me 70% of what I buy. But I have to cover the remaining 30% with cash. In other words I only need $30 of my own money to buy $100 worth of stocks :) Earlier this morning I plunked down $2,000 to start a swing trade. This means I can buy roughly $6,670 worth of stocks because the bank is financing 70% or $4,670 of it :)

Initial Investment: $2,000.
Leveraged up to $6,679.
Transaction details below.

13_04_swingtrade7a, swing trade

I chose these companies because they are high quality, large cap stocks with over 50% institutional investors, so there is very little risk of them going down to zero. Let’s take Suncor for example. Here are 3 reason why I think it’s a good stock to buy now.

1) Stock analysts love this company. According to Globe Investor Suncor currently has 16 analysts reporting on it. 14 of which calls it a strong buy. These people spend way more time studying companies than I do. If their professional consensus shows that Suncor is a strong company then that’s probably a good sign :D

2) High price target prediction. Stock analysts often have to come up with 12 month projections for where they think a stock will be. 1 year is a long time and it’s hard to get these estimates right. Some analysts will be bearish while others will be bullish so there will always be a range of predictions. In Suncor’s case, this range is between $36 to $48. That’s a pretty good target, considering where the stock is at today.

13_04_swingtrade7b swing trade suncor

3) Near 52 week low point and strong support. Suncor has maintained a nice technical support around the $27/share range for many years now. Today we are pretty much at that point again. If it stays within it’s 52 week range then there is a good chance it will go up from here.

13_04_suncorswing

I hope my leveraged trading strategy pays off :) My plan this time is simple. Sell all 3 stocks once I make $1,000. Or BUY MORE if falling oil and gold/silver prices drag down commodity stocks even lower. I can lower my average cost of buying and make a profit later on. Will I be $1000 richer at the end of all this or will I lose big time? We’ll just have to wait and see :)

Mar 162013
 

About a year ago I bought some HVU.TO. It was my first time dabbling in the futures market and it was quite risky. The HVU, or Horizons BetaPro S&P 500 VIX, is an ETF that tries to double the gain or loss of the VIX index which is a benchmark for volatility in the stock market. Normally when the stock market is doing really well like right now the VIX index is low because investors don’t think stocks will fluctuate very much in the near future. But in 2008 and 2009 when stocks were low the VIX was high because there was a lot of uncertainly in the markets. Buying into volatility is a way to minimize portfolio risk lest the stock market decides to take a dive.  I bought about 180 shares of HVU in February last year. Total purchase price was worth about $2000.

13_03_hvubuy, swing tradeWhen I bought the HVU back in early 2012 I thought I could make a quick swing trade but instead of selling when I could have made a small profit I decided to wait for it to go higher. Well that was a mistake because soon I was losing money and the price never came back up. By being too greedy and missing my opportunity to sell I ultimately lost out (>_<) I checked my balance today and was less than impressed with how the HVU have performed over the last year.

13_03_hvu_account, swing trade

Apparently it’s lost 98% of its value since I bought it and I’ve lost almost all my initial investment of $1979.19. The reason the quantity says “4″ instead of my original “180″ shares is because it went through a 1:10 split and then another 1:4 split *sigh* (ーー゛). Even if it goes back up 10 folds now it still won’t be worth very much. So earlier today I put in a sell order of all my HVU holding. Since markets are closed today the sell order will automatically be executed first thing on Monday morning :)

13_03_hvu_sellorder, swing trade

Initial Investment: $1000. Leveraged up to $1969.20 by borrowing $969.20 on margin at 4.25%.

Feb 15st, 2012
Bought: 180 shares of  HVU.TO at $10.94/share = $1969.20
Today, Mar 16th, 2013
Sold: 4 shares of HVU.TO at $8.68/share = $34.72
Difference: -$1934.48

Expenses:
Commission: 2 trades x $9.99 = $19.98
Margin interest: $44.62

Net loss after expenses: $1999 (pre-tax)

That’s a 200% loss on investment. Unfortunately this swing trade could have turned out better. Can’t expect to win every time I guess :) Good thing I wrote in my disclaimer that readers shouldn’t take my financial decisions as advice.  I think there was a few key mistakes I’ve made this time that led to the loss. Normally for my swing trades I buy more than 1 name, but this time I only bought HVU so the risk was greater. I also chose to ignore all the signs, like the 1:10 split. That’s usually how you can tell a stock is in trouble, lol. But the biggest factor was that I held on to a losing position for too long. I should have gotten out of the HVU after a couple of weeks at most but didn’t. This was simply due to poor judgement on my part. I even considered selling if I lost 50% but didn’t pull the trigger.  At least a poor performing VIX index is usually a sign of a healthy stock market :D Since I bought the HVU the Canadian stock market has returned over 13%, and my total stock portfolio has made a positive return despite my $2000 loss. I think I’ve learned a n important lesson about trading risky equities :) mainly don’t hold onto to a losing stock, especially if it lacks fundamental underpinnings. On the whole I think $2000 is a small price to pay for learning that experience the hard way. That’s life isn’t it (゜∀゜) Making mistakes is just part of trying something new, haha. I’m glad that I got the chance to learn from my errors now rather than later on when I might have a family and decide to risk a lot more money ;) I might trade the volatility index again in the future, especially since the VIX is at record lows, but if I do then I will definitely have a stop loss to minimize any potential downside, and not hold onto it for so long again (^v^)I believe someone once said good judgment comes from experience, and experience comes from bad judgment. I probably have a lot more experiencing to do then lol (ʘ‿ʘ)

Jan 282013
 

In December of last year I wrote about the Santa Claus rally. It’s this interesting occurrence when the stock market rallies during the holiday season. Based on statistics and historical data the Dow Jones grew 80% of the time during this period, and the S&P500 gained 1.5% on average. Of course swing trading is risky, and there are no guarantees you’ll make money. But if you’ve bought stocks and then sold them during this Santa Clause rally in the past, then 8 out of 10 years you would have made money on the index, for example, by buying the etf DIA, which tracks the Dow :0)  Don’t know about you but that sounds like some pretty good odds to me. So on Dec 21st, I spent about $3000 to buy some Amazon and Bank of America stocks and hoped the overall market would rise and carry my stocks with it so I can make a quick profit :D

After the Santa Clause rally however, the stock market continued to climb. Must be the January effect, which I’ll explain in another post. No point selling on an uptrend they say. But earlier today I didn’t like how my 2 stocks were performing so as I’ve already mentioned on Twitter, I sold both and completed my swing trade. In the end I’ve made $140. Mission complete. This swing trade was a success :0) That’s a 4.6% return in roughly 1 month. Not too shabby.

swing trade successful

Initial Investment: $2975.70

Fri, Dec 21st, 2012
Bought: 6 shares of  AMZN.Q at $257.23 = $1543.38
Bought: 128 shares of  BAC.N at $11.19 = $1,432.32
Total money spent buying stocks: $2975.70

Today, Monday, Jan 28th, 2013
Sold: 6 shares of AMZN.Q at $280.27 = $1681.62
Sold: 128 shares of BAC.N at $11.52= $1474.56
Total money earned from selling stocks: $3156.18

Difference: $180.48

Expenses:
Commission: 4 trades x $9.99 = -$39.96

Net profit after expenses: $140.52 (pre-taxes)

So not a whole lot, but enough to buy another can of sturgeon roe haha. But most likely I’ll use the money to cover the commission on my next 14 trades :0) I think both Amazon and BoA will continue to grow their businesses in the long term, but I’m not sure about the short term risks they’re facing so that’s why I sold. I mentioned my exit strategy going into this swing trade from the start, and I stuck to my plan :) A small profit is still better than nothing lol.

Best part about this particular swing trade strategy is that it’s based on a reoccurring annual event, the Santa Claus rally, which just to be clear is not guaranteed to perform well every single year, but based on historical evidence, does so most of the time (^v^)I’ll definitely be doing it again at the end of this year.

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Random Useless Fact: The surrounding temperature around a person can affect his or her appetite. A person in a colder room is likely to eat more than if that person was in a warmer room.