On December 22, 2017, we said the following of Bitcoin:
Below is an updated review of Bitcoin and our thoughts for the price going forward.
Posted in Bitcoin, Edson Gould
Below is the performance of the January 22, 2017 Canadian Dividend Watch List:
| symbol | name | %change |
| MRU.TO | MetroInc. | -1.41% |
| SJ.TO | Stella-Jones Inc. | 24.32% |
| FFH.TO | Fairfax Financial Holdings | 9.39% |
| PJC-A.TO | The Jean Coutu Group | 19.95% |
| ACD.TO | Accord Financial Corp. | 2.22% |
| EMA.TO | Emera Incorporated | 0.91% |
| ET.TO | Evertz Technologies Limited | 6.65% |
| BCE.TO | BCE Inc. | -1.58% |
| CUF-UN.TO | Cominar REIT | -0.48% |
The average gain for the watch list was +6.66% while the gain for the Toronto Stock Exchange over the same period was +4.98%. When broken down to the respective fundamental categories by only choosing the top three stocks, we get the following returns:
| high p/b | 1.22% |
| high yield | 1.53% |
| high p/e | 2.91% |
| low p/b | 3.71% |
| watch list | 6.66% |
| low p/e | 8.69% |
| low yield | 10.77% |
| TSX | 4.98% |
As we said in our December 13, 2017 Dogs of the TSX posting, “Note that all of the low categories performed better while all the high categories performed the worst. This has been borne out in the few Canadian Dividend Watch List performance reviews that we’ve done so far.” It appears that anyone buying Canadian stocks using the high yield methodology is underperforming when there are better alternatives.
Below is the January Dividend Watch List along with the our update on the Dogs of the TSX 60, the results are instructive.
On January 16, 2018, we executed the following transaction(s):
Posted in Transaction Alert, VFC
This is a lesson on compound interest. Look at the table below to see what happens when a person puts away $2,000 a year for 7 years ($14,000 in total) and nothing more after that compared to a person who puts away $2,000 a year in the 8th year and every year after that for 42 years ($84,000 in total).
With the goal of getting to $1 million dollars, the amount of work that is needed by the late investor is more than obvious. Notice that it takes the late saver (Investor A) 34 years (age 59) and $68,000 to exceed the growth of the early saver (Investor B). Also look at the very bottom where it says “Money Grew”. The late saver saw their money grow almost 12 times while the early saver saw their money grow by more the 74 times.
Where to Generate returns of Greater Than 7%:
Posted in compound interest
We've started the new year off to a strong as the bull market hasn't skipped a beat. This has made finding investments challenging. However, it hasn't slowed us down and we have taken our equity exposure to the highest level yet. The number of companies below is a good place for anyone to start their research for a long idea. Continue reading
Posted in Dividend Achiever Watch List, Dividend Achievers, Dividend Watch List
Tagged members
On January 12, 2016, we took a position in Helmerich & Payne (HP) at $47.41. At the time, HP was coming off of a high of $118.29.
According to Dow Theory, an investor should only expect one half of the previous move. With this in mind, we charted an upside target of approximately $79.16 as the likely point for selling the stock as outlined in our July 2, 2016 posting.
On January 13, 2017, we sold our holdings in HP at $78.31 for a gain of +74%. For reasons unknown, HP declined from $78.31 to $43.02 by September 1, 2017, a decline of –45%. An outline of the change from February 3, 2014 to January 12, 2018 is charted below.
The Rationale
Naturally, this is the most ideal transaction that we could engage in. Below we will lay out our observations on how we accomplished this task.
First and foremost, Helmerich & Payne is a high quality oil and gas driller that survived the crash that was experienced after the 1970’s. In our view, if a company can increase their dividend over many years and survive a period that put a lot of competitors out of business, then you’re dealing with a good management team. What follows are the details that we are looking at.
Posted in 50% principle, Dow Theory, Helmerich & Payne, HP, seeking fair profit
Tagged members
On January 11, 2018, in an article titled “Behind the Duck: Former Aflac Employees Allege Fraud and Abuse in Nearly Every Aspect of Company” published by The Intercept, it is alleged that Aflac (AFL) “…has exploited workers, manipulated its accounting, and deceived shareholders and customers, according to nine former employees.”
These allegations have had a material impact on the stock price of Aflac on January 12, 2018. Currently, the stock is down –7% on the day. Below are the downside price and timing targets of AFL based on the Speed Resistance Lines since the 2009 low.
Charles H. Dow says companies with wide moats are difficult to duplicate
“It will always be easier to duplicate an industrial plant than a railway plant, and on this account industrial profits cannot be quite as stable as railroad profits (Dow, Charles H. Wall Street Journal. Review and Outlook. October 12, 1900)."
Who was Charles H. Dow?
“Charles Henry Dow was an American journalist who co-founded Dow Jones & Company with Edward Jones and Charles Bergstresser. Dow also founded The Wall Street Journal, which has become one of the most respected financial publications in the world. He also invented the Dow Jones Industrial Average as part of his research into market movements. He developed a series of principles for understanding and analyzing market behavior which later became known as Dow theory, the groundwork for technical analysis (source: Wikipedia.org).”
Posted in Dow's Value Theory
Below is the 5-year total return performance of our Dividend Watch List from January 11, 2013 to January 11, 2018, as compared to the Dow Jones Industrial Average.
Below is the 2-year total return performance of our Dividend Watch List from January 10, 2014 to January 9, 2018, as compared to the Dow Jones Industrial Average.
Below is the 2-year total return performance of our Dividend Watch List from January 8, 2016 to January 8, 2018, as compared to the Dow Jones Industrial Average.
Below is the 8-year total return performance of our Dividend Watch List from January 8, 2010 to January 8, 2018, as compared to the Dow Jones Industrial Average.
Saw this headline and almost did a spit-take.
Fortune Magazine claimed to “fact check” whether history shows that this was the fastest 1,000 points.
Sadly, Fortune never actually compares the current +4.17% gains to any other in the 122-year history of the DJIA. You have to wonder if Fortune included the 15 years after 1972, when the Dow finally crossed over 2,000.
To their credit, Fortune does say, “…the Dow has grown larger over time, meaning a 1,000 point move today is less significant percentage-wise compared to such a movement 20 years earlier.”
Again, for the Dow Jones Industrial Average (DJIA), going from 24,000 to 25,000 is equal a +4.17% change. As noted in Fortune, on a percentage basis, +4.17% isn’t much. However, we have listed the gains above +4.18% that took less than 34 calendar days since 1896. Although there are too many to show, we’ve only relegated this to the last 45 incidents from the lowest percentage gain excluding multiple events in the same year.
| Date | DJIA % change | days |
| July 21, 1897 | 4.21% | 10 |
| June 29, 1938 | 4.21% | 1 |
| November 27, 1905 | 4.22% | 1 |
| April 5, 2001 | 4.23% | 1 |
| November 30, 2011 | 4.24% | 1 |
| March 4, 1926 | 4.38% | 1 |
| December 24, 1902 | 4.43% | 8 |
| November 1, 1978 | 4.46% | 1 |
| November 2, 1904 | 4.50% | 7 |
| November 26, 1963 | 4.50% | 1 |
| January 15, 1934 | 4.52% | 1 |
| January 17, 1991 | 4.57% | 1 |
| February 9, 1931 | 4.62% | 1 |
| June 19, 1930 | 4.63% | 1 |
| May 29, 1962 | 4.69% | 1 |
| October 28, 1997 | 4.71% | 1 |
| October 9, 1974 | 4.71% | 1 |
| June 12, 1940 | 4.73% | 1 |
| February 11, 2010 | 4.75% | 3 |
| August 17, 1982 | 4.90% | 1 |
| March 16, 2000 | 4.93% | 1 |
| November 16, 1933 | 4.93% | 1 |
| November 12, 1896 | 4.93% | 8 |
| September 8, 1998 | 4.98% | 1 |
| May 17, 1915 | 5.02% | 1 |
| May 27, 1970 | 5.08% | 1 |
| October 16, 1903 | 5.11% | 1 |
| January 27, 1899 | 5.36% | 20 |
| August 17, 1898 | 5.41% | 12 |
| August 11, 1909 | 5.43% | 22 |
| December 22, 1916 | 5.47% | 1 |
| November 22, 1920 | 5.51% | 1 |
| February 5, 1917 | 5.77% | 1 |
| October 20, 1987 | 5.88% | 1 |
| October 20, 1937 | 6.08% | 1 |
| January 19, 1906 | 6.08% | 14 |
| October 7, 1929 | 6.32% | 1 |
| July 24, 2002 | 6.35% | 1 |
| May 10, 1901 | 6.37% | 1 |
| March 15, 1907 | 6.69% | 1 |
| March 23, 2009 | 6.84% | 1 |
| January 6, 1932 | 7.12% | 1 |
| November 10, 1911 | 8.27% | 14 |
| January 14, 1908 | 8.61% | 11 |
| September 5, 1939 | 9.52% | 1 |
Posted in DJIA, Dow Industrials, Rank
The Dogs of the Dow strategy was first published in 1991 and made popular in the mid 1990s. The strategy is simple, buy 10 companies from the Dow Jones Industrial Index starting with the highest dividend yield. As we have alluded in our past writing on this topic, these companies have the tendency to reappear on the list year-after-year due to the nature of their business and dividend policy.
Alternatively, we've attempted to alter the strategy to fit our thesis of buying at or near the low. Strategies to purchase the 10 companies from the Dow Jones Industrial Index trading closest to the 52-week low. For this strategy, we call it the Dogs of NLO.
Over the past 5 years, we have been back testing this strategy by making comparisons against Dogs of the Dow, S&P 500, and Dow Jones Industrial Average. Of the 5 years, Dogs of NLO outperformed Dogs of the Dow 60% of the time (3 years). The tables below show the result since 2013 - 2017.
We can't claim any victory based on these findings but we believe that buying at or near the low should be a factor when purchasing a long-term asset as displayed by the gains achieved from 2013.
Posted in Dogs of the NLO