Core Positions in a Portfolio, Part 2

...continued from Part 1 

Secular Trends

Now that our portfolio contains some defensive minded equities, let's take a look at the second important anchor group, businesses which benefit from secular trends.

Simply put, secular trends are long term tailwinds for businesses taking part in those trends. These tailwinds could be due to a variety of factors, such as, changes in the way we live, or a global emergence, or simply generational trends. For example, two secular trends that have already occurred and shaped the modern day society as we know it are the mass production and adoption of cars in the early 1900s, and the internet revolution of the 1990s. The first made automobiles affordable to the masses, and drastically improved the mobility of the middle class. The second altered the landscape of information exchange and continues to shape modern society in areas such as schooling, media, social, and business.

March Market Update: S&P 500 Breakout?

Mid March was an interesting time for the stock market. We were finally able to cleanly break through previous highs of 2011 around 1370 on the S&P 500. As I type this now, we are sitting at a comfortable 1412.52.

This is a significant step because we saw a similar event in 2010, when markets swooned from May until September.  When the April 2010 highs of 1220 were finally retaken and exceeded later in the year, the S&P 500 marched without abandon to 1345 (10%) before a correction occurred.

Am I saying we will move 10% from 1370 to 1500 this time? No, but there is certainly the possibility. I think we may have already seen the minor correction in early March, when the market dipped as low as 1340 from 1375 before rebounding.

Core Positions in a Portfolio, Part 1

Core positions, or core investments, are critical to the long term success of any portfolio. In difficult times, when the stock market drops 1000 points in a single day, they help maintain your sanity, conviction, and steer your portfolio through choppy waters.

For a person who is just beginning to take control of their own portfolio, deciding on which investments will make up the core of  your portfolio will be the first major decision. As a young investor, these investments should be that ones that help you begin your journey. If you are an older investor, these investments will form the backbone of your portfolio. In both cases, in the long run, the investments and businesses need to be ones that you can trust in, and believe in.

How do we construct this core then? How do we decide which investments will make it into this list?

Making Your Money Work For You

"'Every gold piece you save is a slave to work for you. Every copper it earns is its child that also can earn for you"

As outlined in an earlier article, the 3rd and final step to financial freedom is allowing your money to work for you. The biggest question many people have will be, how? How do I make my money work for me? To find the answer to this question, you need to understand the fundamental purpose of money in society.

Getting Started, Part 3

continuation from Getting Started, Part 2


Registered Retirement Savings Plan (RRSP)

The RRSP is the center of Canadian retirement planning. This program was introduced in 1957 and is a very popular program in Canada.

The general idea behind the RRSP is to defer taxation from peak earnings years, where marginal tax rate is high, to retirement years, where marginal tax rate could be lower. It is important to note that the RRSP does not reduce your taxes, it simply defers them to what we hope is a time period where our marginal tax rates are lower (retirement) than originally (when we make the contributions).

Looking Back at 2011 Decisions

I was just reviewing my transactions in 2011 and early 2012, and reminiscing about mistakes, missed opportunities, well timed transactions, and such. Fortunately, hindsight is 20/20, so here are some good, bad, and unmade decisions from the past year


Bank of Nova Scotia

- I bought 35 shares above 57 in late April. turns out this was near the top of last year's range. I probably got a bit overzealous on this one
- I bought another 40 shares in mid August at 50. this turned out to be a pretty decent purchase, as the stock has moved up since then. I could have gotten it at a better price a few months later (48), but 50 is not bad.
- Grade: C

Know Your Investments

One of the most important aspects of investing is to "know your investments", but what does this phrase actually mean?

I like to think of investing not as the buying and selling of stocks, mutual funds, bonds, etc, but as being long term part owners of a business. In this way, the phrase 'knowing your investments', becomes, 'knowing your business'. All of a sudden, the sentence has a whole different meaning.

Getting Started, Part 2

So we've finally gotten off our butts and decided to take action, and start down our path to financial freedom. There must be a thousand questions you want to ask. Now what? What do I do? What do I buy?

Why not begin by going over the different types of accounts you can use to invest with.

Today, I'll go over the best investment vehicle account in Canada, the Tax Free Savings Account (TFSA)

Dividend Growth Portfolio, March 2012

Before I go into depth for the Portfolio Series, I will outline my personal dividend growth portfolio.

The purpose is mainly to use as reference and to track the income growth of this portfolio. The goal of the portfolio is to build an asset base that will produce an increasing stream of income which out paces inflation.

Getting Started

The most important, and often most difficult, step of the path to financial freedom, is getting started. Fear of the unknown is often enough to persuade people to stay put, avoid change, and keep going down the same path.

So, how do we get started on our own paths to financial freedom?
The goal can be broken down into various stages, or tasks.