I want to make a public disclosure to readers and investing peers.
Over the past two and a half years my Value Portfolio has enjoyed some considerable gains and as of September 2008 it had boasted a CAGR of over 60% since inception. I spend a considerable amount of time studying stocks, running screens and enjoyed myself thoroughly throughout this experience as I wanted to see if I could commit an investing strategy from paper to real life and I succeed. Not all my stocks were winners, but I protected myself from losses and took advantage of opportunities when they appeared.
Over the past two weeks I have liquidated my holdings in the Value Portfolio even though YTD my return was well above 40%. The simple explanation I can provide is that when I put ego aside, the portfolio took a big time commitment and anyone knew that. In the future my time will be needed for more important activities (family, work & life) and if I can’t go 100% then I’m playing with fire for the stocks I was invested in and tracking. The other motivating factor is the current market decline, but I did not sell because I feared the market; I sold because of the clear opportunity the market presents me. At twenty-seven I need to be conscious of long-term opportunities and this market decline is currently a monster after seeing most major markets decline across the globe in excess of 20% in a very short period of time.
At my current pace the capital gains inevitably would cripple my plan and the time & effort put into those activities would escalate. Instead what I decided to do was look to this current decline as an amazing opportunity to put the proceeds from my Value Portfolio to good use as my new recent focus has been on quality rather than quantity. Over the next few months I’ll be transferring assets into my non-registered account and RSP to increase the cash available to buy more shares in stocks I already own. Many of these are what I consider to be “on the cheap” with a view of a long-term investor and present excellent opportunities to increase my wealth in the future.
I’ll continue to post analyses of value stocks, give insights into my Value Rules and contribute lessons on varying aspects of value investing, but my focus will be on a more conservative approach to investing over the long-term. I accomplished something in a short period of time that I had always wanted to try and I’m glad I gained this experience. But now is a time for an investor to be rational and I see greater long-term value in my high quality dividend investments than where I was investing recently in my Value Portfolio.
Investing is about balance and interpreting the right change to benefit your situation over the short and long-term. I’ve learnt a lot in a short period of eight years and I’m positive I have more to learn in the future. Instead of spending my time investing behind a closed door I can likely help others in a broader sense to benefit from what I’ve learnt.
In two weeks I’ll be posting insights into my Canadian dividend growth portfolio (DivG) including my decision criteria, portfolio construction and the complete holdings of my portfolio.
For those interested on Friday I increased my positions in Bank of Nova Scotia (BNS), Canadian National Railway (CNR), IGM Financial (IGM), Manulife (MFC), Power Financial (PWF), Russel Metals (RUS), TD Bank (TD), Sunlife Financial (SLF), Husky Energy (HSE) & Royal Bank (RY).