Recent changes to my Tax Free Savings Account
I sold all 175 units of my BMO Long Corporate Bond Index ETF (TSE:ZCM)
I don’t think long term bonds are a good place to be over the next 5 to 10 years.
Bond yields are so low right now. And if interest rates move higher, existing bond prices will fall.
People also seem to gain weight after a Fed increase. 😀
Next, I sold all 152 units of Brookfield Renewable Partners (TSE:BEP.UN)
I blogged about buying this company back in 2015.
It has performed well. I’m up about 150% total return including new units added via DRIPs.
Thankfully the returns are tax free. 🙂 But I feel like BEP.UN is way overvalued now.
The latest Return on Equity is -5.8%. And it has a forward PE ratio of 83 times, which seems very expensive.
The proceeds from selling these 2 holdings is about $13,000.
I normally don’t sell my stocks, but I think there are better opportunities out there.
My new purchases for October
I have used part of this new cash to buy one share of Constellation, and 50 shares of Copperleaf.
Constellation Software (TSE:CSU) is an international vertical market company and offers services to governments, as well as commercial customers. It’s trading at 35 times forward PE which isn’t cheap. But this stock never is, lol. It has about 125,000 customers in over 100 countries and a proven track record of solid growth. I think Constellation is in a strong position to provide shareholders with great returns over time. 🙂
Copperleaf Technologies (TSE:CPLF) provides asset investment planning and management solutions. For example, BC Hydro uses Copperleaf’s decision analytics software to determine where the best place is to spend money, and locate inefficiencies. This stock just went public last week so not much is known about its financials. But its revenue is growing at 62% a year, and the company boasts a 100% client retention rate. 🙂 It’s certainly a more speculative pick, but it appears management knows what they’re doing. Copperleaf is a business worth keeping an eye on.
This still leaves me with about $10,000 in cash sitting in my Tax Free Savings Account. I haven’t decided what I will do with this money just yet. Holding cash short term isn’t always a bad idea if you want to hedge against stock market risk. 🙂 I do want to buy some Blackrock (BLK) but I plan to do that in my margin account.
Is the correction over?
Earlier this year I mentioned on Twitter that stocks would fall 5 to 10 percent.
The S&P 500 did fall 5% last month, for the reason I mentioned. What I didn’t expect however, was how quickly it rebounded. I do think we’re going to see another dip in the markets before the end of the year. But it will probably be short lived also. There’s simply too many people with too much money right now. An extended period of high CPI will force people to invest their money into the stock market. I still maintain that hard assets, commodity stocks, and fast growing technology companies are the best place to invest right now.
Emerging market stocks and US value stocks are also worth considering, which is why I sold put options on ETFs that track these sector indexes. For example, If the Vanguard Emerging Markets ETF, (VWO) falls about 10%, I’ll have no choice but to buy 200 units to start. 🙂
Random Useless Fact:
You might be overleveraged if you find yourself using one type of credit to cover another.