What I learn so far from margin investing during the August 2011 stock crash

For the past couple days, I notice some technical difficulties with TD Waterhouse trading platform but nothing major. I had written about some of them previously. But tonight, I won’t have to wait until tomorrow morning to access my Balances Data. TD Waterhouse has updated everything and it’s currently 12:51AM Eastern Time on August 10. Way to go TD Waterhouse! Please continue that way. I need you to be working properly. Especially at this time. Don’t make me calculate myself my margin value.

For August 9, 2011:

Non-registered portfolio value: 103 443$

Money used on margin: 40 470.31$

Money left on margin: 16 938.86$

Today data were much more better. At a certain point of the day, my portfolio hit the 103 929.61$ and when it happen, I was very very very happy and of course, when it happen, I post the great news right here on my blog.

I want to believe that the worst is behind, but so far during this correction, I learned that investing on margin can be quite stressful. A usual market volatility is easy to handle. But a stock crash is not. However, I am getting through it so far, but it’s not because I am a good stock picker, it’s a matter of being extra lucky and also because my portfolio is diversifies in all sorts of stocks. If a lesson can be learn from my experience with margin investing well, it will be a “try to avoid” because margin investment is difficult.

At first, I was supposed to use my margin money at an interest rate of 4.25%. I did, but a big part of the margin went on stocks, to satisfy a maybe too in deep taste for adventure. This being said, I do not regret my move and I totally assume what I am in right now. It was my decision to invest on margin, no one else. But I will no longer invest on margin, just on my own money. The lesson learn was good, wasn’t? But this was needed in my case.

Let’s hope for me please that the Maple Group deal for the TMX Group (X) goes through so I can cash in more than 5k and that way, decrease my margin usage. Please.

Oh waittttttttttt.......

My non-registered portfolio is at 103 929.61$.

The TSX pushing today session at 12 108.09 points

This morning, I cannot tell the happiness I felt after seeing that the TSX had gains some points. This is greatly helping to stabilize my margin account situation. The past couple of days had been quite rough. I usually like to follow the market, but I had reached my limit of what my nerves can handle. I never doubt about my capacity to handle the margin, but while the market is in bad shape, there’s a limit of what I can handle, I cannot do miracle. I need to have the market on my side. I did not give up on the market and the market did not give up on me...

But here what it was like for the closing of yesterday August 8, 2011:

Non-registered portfolio value: 99 409$
Money used on margin: 40 481.52$
Money left on margin: 14 817.55$

Yesterday data were looking quite ugly. To see my non-registered portfolio stuck under the 100k was absolutely terrible. To response to the emergency situation, I wanted to sell my US investment and transferred the money into my Canadian non-registered account. I also wanted to transfer the investments hold in my TFSA to my non-registered account. But I did not proceed, because I had faith of being able to go through without having to transform my portfolio. A stupid damn faith in myself! LOL. I didn't want to have to call TD Waterhouse anyway.

Yesterday, I stay up late because even at 2AM, TD Waterhouse Balances sheet was not updated. I could have calculated manually the value of my margin, but it would have taken me a while to complete. So I went to bed at 2AM without knowing how was doing my margin account. However, I knew I was doing ok on the margin, it’s just I didn’t know how much was left on it. So I transferred back the 6k on my credit lines in order to avoid the high interest rate and the rest well...

On August 9, so far for today, my non-registered portfolio is at 103 630.72$!

Its been tough but I am doing ok on my margin.

A lot of this investment game is only base on psychology. Holding was necessary and in my case and it was a benefit. I am just hoping for the best. These past days had been difficult to handle. May the worst be behind. As always, my portfolio is rocking the place. Good you have me to read. Lucky you are ;0)

My non-registered portfolio is now at 101 243.16$!

Just wanna let everyone know!!!! My margin is safe for now and I am in heaven. Bye for now.

For Gordon Pape, it's decision time

My non-registered portfolio is now at 100 324.62$. What I expected is unfortunately happening. for Gorgon Pape, it's clear that we are into another recession and that investors have to choose between being out there or not to invest at all. For Rob (a reader), this is the continuity of 2008 recession. Some we'll say that the recession of 2008 simply continue. But as a believer, I wanted to be in a different time. For me, we were in better shape, it was getting better. Some of my companies like PGF, KBL ect. are still performing well in this current market condition.

At this time, I won't be selling my investment portfolio. I will be able to make today without a margin call I will transferred my TFSA investment into my non-registered Canadian portfolio. Selling at this time could be catastrophic. I always been in for the long run and on top of that, some very good companies are being offered at a cheap price. The same Rob reader says it will be difficult for me to make money out of my portfolio. It can only be a dumb broker or a Quebecker to have this kind of words for me. Is your portfolio has gain in value lately? I am very sure that the answer is no and it's ok. While facing difficult events, this is how any portfolio reacts. What will make the different at the end: will you be strong enough to HOLD?

While being fully invested like I am, the only solution is to hold the current asset. Another one could be to sell part of the asset and reinvest in gold or silver but it's not something I am really at right now. I want to add titles I never find attractive - quality stocks paying very little in dividend - you see the kind? I will be proceeding in my first of the kind investment in a couple of days.

Susan came with the idea to apply for another credit line - it's something I need to do NOW. I wait late, but as was optimist that the bottom would had been reached by now but it did not.

Since I am already in, I will continue what I had been doing for the past couple of years, I will continue to invest. We need to reach the bottom of it so the TSX can begins to gain points again. this time is harder than 2008, there's no way to figure out if we have reached the bottom of it or not. This is the most difficult part to deal with. To figure if the TSX can go any lower.

Time for retail investors to be warrior and invest for the long run in high quality stocks. It's not anytime soon that I will give up.

My only concern is my margin account of course, but I totally assume and so far, well, so good. My portfolio is strong enough to stay over the 100k. At least for now.

The Toronto Stock Exchange is about to lose its pants

I knew that the TSX was about to hit hard this morning. The TSX opens at 12 159.67 points, with a loss of 2.5%. Not too bad I taught... but very soon, the TSX recorded a loss of more than 5%. So far, the lowest the TSX has reached was 11 761.31 points. This was about to happen knowing that on Sunday evening, Asian stock markets has drop of hundreds of points. And TSX react to the drop worldwide buy dropping too. However, the day is long and things could change or at least improve.

Sometime, live is hard. I was in vacations during the last 2 weeks of July. Following what, when I came back home, I taught everything was going to be ok. There was still no agreement for the US default payment at that time, but I was confident that the US wouldn’t let a default payment happen. I was right, but I wasn’t ready for what was going to happen next: a major stock market correction. Nothing is really easy in my life. Facing the events of the past weeks had been absolutely awful.

I never have any doubt on what I was doing while investing in stocks. I must have read Derek Foster books so many times that now I am totally brainwashed... lol... I started investing after I began to work full-time. That was back in 2005. I did not start right away in stocks, that was only in 2008. The period of 2005 to 2008 wasn’t a real lucrative one. After reading Derek Foster The Lazy Investor, I realize I could do much better in stocks. And I did. But will I ultimately regret my decision?

Well, my investment journey is not about to take a drastic turn anytime soon. My non-registered portfolio is now at 104433.62$, which is not that different of last Friday closing result. However, there’s a 20 minutes delay. That 104 433.62$ worth is not being deliver in real time by TD Waterhouse. I think I will be ok for today, even if the Toronto Stock Exchange faces another rough day. I transferred 6k over my margin account. I think that will be enough – at least for now. And if you want my point of view, I don’t think the TSX will drop significantly today all day long because the market chickens are all gone, they all sell last week and they have nothing left. Now, time for the market warrior to rebuild health on the stock market and that include me who will be investing 1 000$ in TransCanada Corp (TRP).

I did not blog this weekend about my top performers because I had enough of thinking about my stocks and wanted to take a break – at least for 2 days.

OK... my non-registered portfolio is now at 99 340.22$.

Now I am 100 153.68$. I am going to stop watching this if not I will get a heart attack.

My austerity plan: bread, peanut butter and black coffee

I just received my Just Energy dividend. I almost reached the 700$ in dividend income for the month of July, which is good, despite the fact that my portfolio seem to have reach the bottom line.

I transferred back a 5 000$ on my credit line. This leaves me like this for August 5, 2011 session (before the 5k deduction):

Non-registered portfolio value: 104 434$
Money used on margin: 35 481.52$
Money left on margin: 22 675.66$

I am under the 20k mark on my margin account (after the 5k deduction) and it seemed like my worst fear is slowly taking form: the TSX is losing points trading day after trading day. The US recently lost their triple A credit rank. Next Monday session will probably be very ugly, but I prefer not to think about it for now. Before Monday session start, I will again apply applied 5 000$ on my margin. But that time, it could not be enough.

I am seriously thinking about transferring my TFSA asset into my non-registered account. I am kind of froze in the moment and I find it very hard to go through this. It’s something very difficult to live. However, I always did what I wanted all the way, I don’t have any regrets – at least for now.

Another rough day for the Toronto Stock Exchange

I left home around noon and at that time, the TSX was under the 12 000 points, loosing, I could simply not believe my eyes, another 400 points being lost! I had enough of the stock market disaster. I had some free movie tickets left, so I took one and went to see Simple 8. It was very entertaining. Once I log in back to my laptop, the TSX had gained points, establishing itself over the 12k points. Currently, the TSX is at 12 164.23 points, a loss of 215.90 points. Not so bad, but what I anticipated happen. The TSX keep losing points, the bottom line has not been reached and that’s very scary and we are facing right now one of the most powerful, horrible events of our modern time, this being of course, speaking exclusively about money. But money is not anything and I am just very glad to be able to through this without too much problem. This being of course at this time. Because it’s a day-to-day situation and I am holding like ever before.

My non-registered portfolio is at 105 029.81$. There’s less than 15 minutes before the market closed. I am going to be ok with my margin, at least for today. But the question remains for the long term.

Finally, my sell order goes through. Remember yesterday, I was trying to set myself a sell order at a limit price of 8$ per unit for Horizons BetaPro COMEX Silver Bear Plus ETF (HZD) and it wasn’t working? Well, I just place the sell order a couple of minutes ago and it finally go through. Whenever HZD reached the 8$ per minute, I will be selling all of my units. Other than HZD, I do not plan to sell any other investment. I had been patiently waiting to sell my HZD units for quite some time now. I hope my sell go through. It will help me to decrease my margin usage.

At this stage, I am not under panic. As a small investor, I know that my future financial success will depend on the action I take in those crucial times. Some of my investments are going extremely well, some other don’t. I will have more time this weekend to discuss about my investments that had performed well, and those who did not performed too well. Personally, I don’t think a portfolio can be compose of only winner picks, unless being a very good stock picker. In my situation, I will be considering myself extremely lucky if I can go through this without too much loss. I am not freaking out because I am confident the situation will sooner or later stabilize. I mean we still need natural gas, pipeline, and electricity right? This is not the end, it’s the beginning of a new capitalist and no matter what happen, I will obey to Wall Street gurus: I will continue to buy stocks as much as I can, but this time with real money, no more monopoly margin account money... Despite the situation, opening a margin account had been a great opportunity to test my investment abilities. We’ll see what happen next.

I am patiently waiting for my next week pay check to invest in TransCanada Corp (TRP). It will only be a 1 000$ worth investment which should allow me to buy more or less 25 stocks of TRP. TRP has a good chart and I think adding some stocks, even only 25 stocks, could be of a great benefit. I don’t have too much money to invest at this time. I may only be able to invest 1 000$ per month in stocks. It’s a good time to invest in TRP because they had announced lately a dividend distribution of 42 cents per share for stocks own at least 3 business days BEFORE September 30, 2011. So that’s currently the project.

But I have to admit, I am still thinking about the Sprott Strategic Fixed Income Fund (SFI.UN) and its 6% dividend. SFI.UN closed today session at 9.97$. At TD Waterhouse, SFI.UN has a margin loan value of only 25%, and TRP, has a 70% loan value. So for the benefit of my margin, I will probably invest in TRP, knowing the cash will be real and, on top of that, 700$ will be add to my margin account value - more or less. Got the picture? And don't forget that 10$ dividend coming soon :o)

My non-registered portfolio is now at 105 121.38$.

My non-registered margin portfolio had gone through a TSX 435.90 points lost without any problems... go baby go

When I left home earlier today to go to work, the TSX had already lost more than 300 points. Little did I know, but it didn’t stop there. On August 4, 2011, the TSX lost not 300, not 400, but 435.90 points. While facing the devastation, I did not feel anything, just like if I was totally disconnected in front of what was happening. I did not feel sad, I did not cry. I just look at the numbers, trying to understand the unthinkable. But this is real. Remember earlier today when I transferred 5 000$ from my credit line to my margin account? Well, the money had remained there.

This is how my non-registered portfolio closed August 4, 2011 session:

Non-registered portfolio value: 105 958$
Money used on margin: 35 481.52$
Money left available on the margin account: 23 471.56$

Even if the TSX lost more than 400 points today, I made it without a margin call or without having to deal with asset being sold automatically by TD Waterhouse to compensate on my margin lost. My non-registered portfolio might look crazy while looking at it quickly BUT I strongly believe that my diversification is what saves me today. I would have been able to go through August 4, 2011 stock market condition even without the 5 000$ that I brought in from my credit line to my margin account. Very good, but what if the TSX continues to lose points? I still have resources. I won’t let the Toronto Stock Exchange beat me. I will beat the beast.

The 2008 stock crash was much more easier to handle. Why? Well, it’s because once the stock market crash, it had reached the bottom line very quickly and following what, the TSX slowly gains points. This time, we are not facing the same thing.

The TSX had lost points on a regular basis for quite a long time now. Yesterday, the TSX rebound a little. And today, we had the crash that we now know. This time, no one can really say if he had reached the bottom or not. And the TSX could lose more points. And if it does, I will have to consider my options. Some analysts said that we could face a down market for the next 6 months or so. Does it mean that the TSX will lose points on every single trading day? We’ll have to live it to find out.

I still remain on my HOLDING position for many reasons. Many investments I hold inside my portfolio are still strong despite facing some major lost today: Bank of Nova Scotia (BNS), Methanex Corporation (MX), Fortis (FTS), Pembina Pipeline Corporation (PPL), Just Energy Group Inc. (JE), Pengrowth Energy Corporation (PGF), Enbridge Income Fund Holdings Inc. (ENF), Corby Distilleries Limited (CDL.A), Davis + Henderson Corporation (DH), EnCana Corporation (ECA), iShares S&P/TSX Capped REIT Index (XRE), Horizons Gold Yield Fund (HGY.UN), Canfor Pulp Products Inc (CFX), Exchange Income Corporation (EIF), TMX Group Inc. (X), K-Bro Linen Inc. (KBL) and First Majestic Silver Corp (FR), to name a few.

I am an eternal market optimistic no matter what and I still want to continue to invest. But this time, exclusively in blue ships, quality stocks. Right now, stocks like TransCanada Corporation (TRP), Canadian National Railway Company (CNR), and Enbridge Inc. (ENB) among other, stuff I talk to buy a little while ago. You know, all those quality stocks that pay very little in dividend? Well, it’s time to BUY a bit of each of them, even if it will be just by lot of 25 stocks. Basically, I plan to do the same thing I did following the 2008 stock crash: invest in stocks whenever I can, whenever money is available. And of course, I hope the market will eventually recover and that my worth will increase not to say explode in value, just like it did following the 2008 event.

I still believe in the market and it’s not anytime soon that I will give up.

I went through an interesting reading coming from the Globe and Mail: What investors need to do as the markets plunge. I really appreciate what John Stephenson, senior vice-president and portfolio manager at First Asset Investment Management Inc. has to say about the actual market situation. According to John Stephenson, dividend investment is still the way to go. Investors don’t have to go exclusively in GICs because of the rough market we are in. Gold and silver are a top value. John Stephenson had named TransCanada and Enbridge as strong value, etc. etc. I just hope he’ll turn wrong when he said that the market could go down to the 9 000 points... I mean, come on, we are in Canada, some of our companies, like PGF for example, are performing very well. COME ON CANADA. I am not giving up on you, don’t give up on me.

I think retailer investors have a role to play, even if it’s a small one. We need to HOLD in order to create HEALTH.

Tomorrow will be a decisive day as data regarding jobs will be available before the market opening. This time, I promise, I will try to wake up on time. ;0)

Facing the stocks market crash correction and a massive wave of sell on August 4, 2011

My best advice: HOLD tight. Everyone should be holding instead of selling and facing capital lost.

For the past couple days, the TSX lost points almost every single day, at the exception of yesterday. As an eternal optimistic, I taught that today, the market will have open on a happy note, but it’s totally the opposite that is currently happening. Today, retail investors like registered investors, small like big ones, we are facing a market crash, an in deep correction that made the TSX lost more than 300 points on just one day, at least so far. But a great news being, the day is not over yet, the market could rebound. But for the way it look so far, the market will face some major lost today.

My non-registered portfolio is at 107 073.80$. Considering what’s going out there, I find this amount being strong and of a good result. I previously wrote in previous post about what I will be doing if the market continues to crash. It’s a real day-to-day situation. At this time, I transferred 5 000$ on my margin account. That money is coming from my credit line. I think that transferred will be enough for now. And before midnight, if I see everything is ok, I will transferred the 5 000$ back on my credit line in order to avoid the interest. My non-registered portfolio just jump to 107 219.81$.

Today August 4, 2011 mark a very sad day. Anyhow, I always saw my investment adventure for the long run. A stock crash is something I can go through, but still, I have doing so well, and now, this crash is destroying my hard work. I plan to hold without selling anything for now, at the exception of HZD. This may be a good opportunity for me to finally sell at profit Horizons BetaPro COMEX Silver Bear Plus ETF (HZD)... at least something positive may happen from this stock crash. But even my sell order at a limit price of 8$ does not want to go through. It’s the first time one of my order limits do not get accept by TD Waterhouse. When I try to set a sell at 8$ per stock for my 400 stocks of HZD, I get this crazy message:

“Error: your order request cannot be processed.

Your limit price is too far off the current market price. Please re-enter or contact your local TD Waterhouse office for assistance.”

Thank you TD Waterhouse!

I am doing just like usual you know! But it’s this situation that is not usual. Currenlty, HZD trades at 5.04$. I want to enter a sell order so my units get sell at 8$. But seem like I cannot place my order. I guess TD Watrehouse has modified their trading structure because of heavy transactions. A lot of people are selling their stocks at this time. But myself, I just want to sell HZD. Just that one. I don’t think HZD will be reaching the 8$ today. Maybe tomorrow or another if the market continues to crash.

My non-registered portfolio is now at 107 068.91$. I have to get out of here get some fresh air.

... my non-registered portfolio is now at 106 998.24$ ...