2014 Portfolio Update

The deed is done, the numbers are in. My portfolio is re-balanced and I’ve managed to follow my rules to a great extent. Reviewing previous posts on the subject, I have to admit to a bit of a chortle, especially here:

Since first implementing my DOGS strategy in 2002, I can honestly say that this has been the toughest time that I’ve had in the markets.

With the benefit of hindsight, looking back at the pain that the financial crisis caused, and now having re-balanced just prior to the thrashing that oil stocks have suffered, I feel like I should edit most of the silly things I’ve committed to history. You know, before others chortle.

But, back to the update. A year ago my assets consisted of a RRSP (Registered Retirement Savings Plan) with a collection of Dogs (explained here) referred to as DOGS-1 in the chart below; a non-registered, self-administered trading account, also with a collection of Dogs referred to as DOGS-2 and a US-dollar account containing my Dividend Champions referred to as DGI – Dividend Growth Investments. DOGS-1 and DOGS-2 are different by dint of anniversary date: my RRSP is re-balanced in May, and DOGS-2 were purchased in November.

By the time last year’s binge was complete, my non-registered portfolio looked like this:

DOGS

BCE
Bank of Montreal
CIBC
Potash Corporation
Shaw Communications

Dividend Champions

Coca Cola
Chevron
HCP
McDonald's
Walgreens

At the time of this year’s rebalancing, BMO, CIBC and Shaw were out of the top five positions. If you’ll recall from my rules, I sort the TSX 60 constituents in descending order by yield, stripping income trust conversions and miners; from the remaining issues, I exclude the top yielding because of the variety of issues that have likely pushed it to the top – this year it is TransAlta (and what a freaking basket case that is) – and balance across the next five stocks. Almost.

Within the next five lurked Talisman. Talisman used to be a powerhouse in the energy sector, much like TransAlta, and has struggled with non-performing assets for years and a failed buy-out by Spanish Repsol at $12. As I’ve already learned my lesson(s) with TransAlta, I was loathe to step into another pile of shit for the sake of “The Rules”, so I skipped it. Instead, I picked up Rogers, Cenovus and Husky. Obviously, time will tell how this works out … Update: At the time of this entry, Repsol has come back and snapped up Talisman at “a hefty premium” – $9/share, that is 25% less than the July offering. Seriously, who writes this crap, or is July so far back that fact checkers struggle?!?

On the US side, with much pulling of hair and gnashing of teeth, I sold McDonalds and Coca-Cola, picking up GE and Philip Morris instead. As I’ve mentioned previously, likely many times before, re-balancing the US side causes me much more grief. The rationale is much less clear, and yet much easier to define based on the mood of the day. I.e “this is not their first rodeo” vs “remember Kodak, Xerox, etc”.

As of 21 November, 2014, my portfolio now exists of the following:

DOGS

BCE
Cenovus Energy
Husky Energy
Potash Corporation
Rogers Communications

Dividend Champions

Chevron
General Electric (GE)
HCP
Philip Morris
Walgreens

And without further ado as they say, here are the numbers for the year past. For an ongoing frame of reference I also offer the performance of my RRSP Dogs; as you can see, it does in fact matter what you purchase and when. In fact, my non-registered Dogs (DOGS-2) went from 26.3% to 11.5% in the span of 2 weeks based on the current gyrations of oil.

Portfolio Update: 2014

1 Year 3 Year 5 Year 10 Year Inception
TSX60 12.1% 8.3% 6.7% 5.4% 5.7%
DOGS-1 11.1% 13.7% 13.3% 13.9% 12.8%
DOGS-2 26.3% n/a n/a n/a 24.2%
DGI 19.9% n/a n/a n/a 19.5%

For the final word, I’ll turn to Steve Sears:

You will know that we hit bottom when you feel like vomiting. It’s a simple as that. When it happens, buy. —@sm_sears

Thanks for reading and stay tuned…

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3 thoughts on “2014 Portfolio Update

      • Just transferred half of my TFSA into a self-directed (the rest is GIC locked). Thinking of buying BCE & CIBC on drip plans and forgetting about them. Your take on this strategy, not necessarily my picks?

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