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Investment Review – 2010

In retrospect and review 2010 to a large extent was more about my maturation as an investor than anything else. Each year in review of my investments I look critically at not only the individual investments, sector allocations and income growth but what I’ve learnt during the previous 12 months that allowed me to grow and learn as an investor.
2010 brought a lot of change in my life that affected both investing and, noticeably by readers, this blog. While the amounts of posts and frequency certainly changed I don’t look at that as necessarily a bad thing. It would be if I’m attempting to be a leading source in the investment blog community but anyone that knows me personally or professionally know for me this blog has always been about quality and not quantity.

I do apologize to readers who have expected more but the amount of comments and questions this year versus others was way down. Actually…there wasn’t a whole lot that was worthy to write about pertaining to investing that saw conversation volume on forums, in the media and other blogs drop. A much bigger focus was on personal finance topics likely because there wasn’t much going on with corporations, dividends or catastrophic bank failures like in 2008 & 2009.

That in combination with my wedding, a new career path and a better understanding that there is more to life then stocks, bonds and dividends helped me to refocus my investing style towards what I do best; value & dividends.

2010 was about dividends and building cashflow; plain & simple. To be honest there wasn’t a whole lot of value in 2010 other than a few significant drops in specific stocks (Shoppers Drug Mart comes to mind). My investing activities focused on making regular cash contributions to my portfolios, buying when necessary and rebalancing as I went along. Monthly investing decisions were made by simply picking the position with the lowest current allocation and deciding if I wanted to add or if something fundamentally had changed and I wanted to sell. More often than not I was entering a bid close to the market price and not really worrying about capturing the absolute best price. Focusing on cents rather than dollars made my investing strategy that much simpler. Rather than worrying about if I paid 5¢ more or 25¢ less for a stock I instead focused on the dollar(s) that new addition would bring to the monthly cashflow of that portfolio.

As an example I increased my monthly dividend income in my Canadian Dividend Growth portfolio (DivG) from approximately $500/month to over $750/month. Now I added new equity along the way and hopefully at some point next year (2012) I may be able to hit $1000/month in that portfolio. That would constitute roughly 0.5% of the current portfolio being paid out in dividends each month adding to my ability to generate more monthly cashflow.

If the market doesn’t yield any significant value in a 6 or 12 month period than building cashflow allows me to pay off my investment line of credit and buy more shares quicker.

Here are the yearly returns for 2010:

Canadian Dividend Growth Portfolio (DivG): 23.52%

RSP US/International Stocks: 13.02% (in USD)

RSP Fixed Income: 16.71%

* Returns adjusted for capital injections and are pre-tax

What was most interesting was the performance of DivG and the RSP US/Int portfolios when you compared them to their 6 month return and 12 month returns. At the end of June DivG had returned just over 3.5% while the RSP portfolio was breaking even (0.6%). Returns in the second half of 2010, without any significant change to the portfolios, were significantly better.

The return from the fixed income component is a little misleading for readers who don’t know the fixed income strategy of that specific portfolio. Back in 2009 I developed a bit of an aggressive strategy with respect to depressed preferred shares in the US & Europe as well as investments in a collection of CorTS’. The 16.7% return in that portfolio largely represents selling at par when some matured and the initial high yield on those investments based on cost. I continue to cold approximately 40% of that portfolio in TD Canadian Bond Index (e-series) with the intent to start creating a bond ladder strategy in the next year years. That portfolio holds a little bit of CEF.A (Central Fund of Canada) which acts as a currency hedge.

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{ 6 comments… add one }
  • Robert January 10, 2011, 3:33 pm

    A new career path???

  • Nurseb911 January 10, 2011, 4:41 pm

    I'm not working fulltime as an Emergency Room nurse. I accepted a position at a private fertility clinic in London as the business manager and nurse. More flexible hours and better personal life although I miss the additional days off (due to shift work). Definitely something I enjoy; the combination of nursing and my business skills (as well as blogging).

  • Steve C. January 11, 2011, 11:41 am

    Congrats on the new job. That sounds great.
    Any major changes to DivG? Haven't seen you much on FWF lately.

    Have a great 2011.

  • Susan January 11, 2011, 3:28 pm

    Best of luck in your new job and thanks for such a quality blog!

  • Nurseb911 January 11, 2011, 6:24 pm

    Steve; no major changes to DivG since I posted that detailed breakdown last year. Just been adding to positions, doing some rebalancing and generating dividends. Still lurking on FWF but a lot of the conversations haven't really been that great to participate in.

    Susan; thanks!

  • Andre DesRoches January 13, 2011, 7:41 pm

    New to your blog. Nice read.

    Andre

    http://valuevestor.blogspot.com/

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