I have previously built up two portfolios before liquidated them for one reason or another (normally school tuition and associated living expenses). My investment goals are 50% long term, 40% medium term and 10% short term - meaning I'm a risk averse investor. Therefor, 10-15% of the portfolio is in growth stocks, 25% in medium risk stocks and 60% in low risk companies. In this type of portfolio, 40% of total equity should be in Bonds and GICs. However, having found equities more interesting, I’ve been ignoring that investment convention. My investment strategy traditionally is investing in “what you know” and “avoiding pain.” Meaning, I research a company before I buy it, and sell companies that are either underperforming relative to their peers, or have released negative news. I aim to hold between ten and thirty positions, and rebalance every few months.
I began with a core of safe, blue chip companies with consistent dividends. Specifically, the Canadian Banks (RBC, CIBC, BMO, TD, BNS) Tom Hortons (THI), Talisman Energy (NYSE:TLM) and Enbridge (NYSE:ENB). I then added companies with high growth expectations. In 2010, this included Silver Wheaton Corp (SLW), and Pan American Silver Corp (NASDAQ:PAAS), Goldcorp (NYSE:GG), Cheniere Energy Partners (NYSEMKT:CQP) and Capano Energy (NASDAQ:CPNO). In 2011, it included Uranium One Inc (NYSEMKT:UUU), MeadWestvaco Corp (MWV), Hecla Mining (NYSE:HL) and Randgold Resources (NASDAQ:GOLD). (One should note I lost a fair amount not selling out of UUU quickly enough after the Japanese tsunami).
Diversifications occurs primarily through ishares. The iShares MSCI Singapore Index Fund (NYSEARCA:EWS), iShares MSCI Brazil Index ETF (NYSEARCA:EWZ), iShares MSCI Australia Index (NYSEARCA:EWA), and iShares Dow Jones U.S. Medical Devices Index (NYSEARCA:IHI) are some of my favourites. Also, Power Shares (QQQQ). They are a great way to gain exposure in emerging markets, that would otherwise not be accessible given my lack of sophisticated knowledge of these regions or industries. Consumer companies, including Estee Lauder (NYSE:EL), Johnson & Johnson (NYSE:JNJ), Bristol-Myers Squibb Co (NYSE:BMY) and Costco Wholesale Corp (NASDAQ:COST) were also bought.
Annualized returns for 2011 were just under 30%. 2012 faired less well, with only 5% gains before liquidating the account.
This year, I am trying something new. It is called contrarian investing (I’m also starting with a lot less money - but an invaluable business education and a year abroad in England).
European banks will “muddle through” whatever happens with the Eurozone crisis. Given weak banks have already been destroyed (bankrupt), and those that remain appear undervalued, it seems like the perfect time to invest in them. This is true especially since the ECB offered European banks unprecedented levels of support early in January. So far, this new strategy is working well. Since investing in them, BNP Paribas is up 1.8%, Deutsche Bank is up 1.17% and Societe Generale is up an impressive 4.53%. Lets hope this continues!