I hope all is we'll for you guys. I've been quite busy lately working, saving and doing a little bit of investing. And no... I haven't developed any kind of "strange obsession" with anyone as of late -- well since forever I might add. (don't get me started!) ;-)
I have been tweaking my investing strategy though.
Like I've hinted in the past, I have made a few moves to developed a mix strategy between a dividend growth and a Index one. I know some of you are already doing this. Congrats! I also know some of you will be sticking forever with the same strategy, namely a Dividend stocks approach. Both strategies are sound in my opinion. This is why I picked both!
Like I said numerous times in the past, I don't have time (nor the passion) to monitor closely more than 20 stocks. Heck, I barely find the time to do 20 push-ups... So I thought about allowing a certain percentage of my portfolio to Index Investing. This meant I would also cut on the number of stocks I would hold since I had 22 as of late. I say "had" because I now hold only 17 individual stocks.
Since the beginning of the year, I have made more than 26 transactions. This is a lot, I know. If you do you share of reading, you probably know that when it comes to investing the less you do is the better. But I had some tweaking to do and I thought that I would be better off doing this after a 7 years bull Market than before all Hell break loose. Call it Market Timing if you want. I call it necessary changes.
All the 13 buys I have made since January 2016 have been in stocks I still hold today and will be holding for a long time.
My new Big Five holding consists of : Johnson and Johnson (JNJ), Power Corp, (POW) Bank of Nova Scotia (BNS), Royal Bank (RY) and Canadian Pacific (CP).
Unfortunately (or fortunately in some cases), I had to let go of some companies.
I said goodbye to : Transcanada Corp (sadly, but I prefer Enbridge), Barrick Gold (good frickin' riddance!), Suncor (only sold some shares in my RRSP), COP (dividend cut = adios muchacho and thanks for the good memories), PJC.A (short-term intense romance) and POT (second time around wasn't a charm after all).
That leaves me with 17 stocks. (I will
Finances (4) : Power Corp, Financial Corp, Bank of Nova Scotia, Royal Bank.
Industrials (2) : Canadian National Railway, Canadian Pacific Railway.
Consumer Staple (3) : Kraft Heinz, Mondelez, Alimentation Couche-Tard
Energy (4) : Suncor, Enbridge, ATCO, Fortis.
Telecom (2) : BCE, Verizon.
Healthcare (1) : Johnson and Johnson.
REIT (1) : Cominar.
I also purchased some new Index Funds:
- Vanguard Canada All Cap Index ETF (VCN);
- Vanguard FTSE Developed All Cap ex North America (VIU);
- And Vanguard short-term Canadian Bonds (VSB).
Check out my leaner portfolio here.
I also still hold two Index Funds from RBC. These funds enable me to purchase on a regular basis shares of the funds without commission. So, twice a month, I buy new shares without really care if the Market is up or down. Eventually I will sell parts of these funds to buy new shares of my Vanguard's funds.
I find that the most important aspect of my strategy will be the balancing between my bonds % and my stocks %. This is key. Right now I have set this balance to 80-20 in favour of stocks, of course.
This means that, once or twice a year, depending on how the Market performed, I will rebalance everything.
Say, for instance, the Market had a poor year and my balance is now 65-35. This means I would only have to sell shares of my bond funds and allocate new capital to my stock funds (or my individual stocks). I could also simply allocate new capital to my stock funds to find my initial balance.
Or for instance, say the Market has performed too well and my allocation is now 95-5. Well I would then sell some shares of my stock funds and allocate the new capital money towards bonds. Simple as that!
Right now, I hold more cash than normal. I might add a Vanguard US Fund in the coming months. Not sure which one. I'm hesitating between a US currency one and a Canadian one.
But you get the gist of my strategy. It's very simple. The bonds simply act as a security cushion that enables me to balance my portfolio.
Eventually, stocks wise, I would like to get a parity between my individual stocks % allocation and my Index Funds % allocation. This means, most of my coming buys will be in my new funds. However, I swill till keep money aside to grow my actual individual stock holdings if opportunities arise. (Like Verizon)
I realized this is a bit of a long post. I will shares my other thoughts on this new approach in coming weeks. Stay tune.
Meanwhile, let me know what you think. How do you like this hybrid strategy ? It is too passive for you?