I’m taking a small break from longer articles today as we announce the results of our stock picking competition for the third quarter of the year.
At the beginning of the year, a bunch of financial bloggers got together and picked 4 stocks (Canadian or US, ETF included). Each quarter we post our results. Dividend are included in the investment return calculation.
This is obviously the reason why I’m still in the cave for this year’s contest. I’ve bet on the fact that VNP has a strong history in its field and that it is a dominant player. Unfortunately, they bought a company that was way bigger than them last year…. And this company is based in Europe! With the current crisis, they saw their profits going bust and so the stock plunged. It is slowly recuperating but it won’t be enough to finish in the positive side L. I was hoping that a company would buy them out early in 2012… that was before they posted terrible financial results L.
This was a logical and safe pick. In fact, National Bank stock has been the most profitable Canadian bank for an investor for the past 10 years. They continue their aggressive growth by acquisition strategy and they are definitely on the right track to continue. I’m confident that NA will continue to rack up some good profit in the future.
Everything was going well for INTC until recently. The global economic slowdown forced them to cut their 2013 outlook at the beginning of September. The stock automatically dropped by a few dollars. It was enough to bring INTC in negative territory year-to-date. On the other side, good financial results in the next quarter could easily push back INTC on the positive side. Techno stocks tend to fluctuate these days.
With the recent announcement of QE3, the oil barrel went up and so does CVX. The market hopes that this new round of quantitative easing will boost up the economy and Chevron will definitely part of the companies that will benefit the most from this impact. CVX is a solid company posting constant financial results. I can’t say that I don’t appreciate their dividend either!
The best stock in our competition is Apple (APPL). 2 bloggers hold it in their portfolio and they are occupying the #1 and #2 spot in the competition. What a surprise, huh? I’m holding the second worst pick (VNP), Beating the index is holding the worst pick (SCS with -65.78%). No wonder why we are sitting on the last two spots of this competition! As you can see, when you only have 4 stocks in your portfolio, 1 stock is enough to bring you to the top or drag you to the bottom!
You simply have to click on the blogger’s name to see his pick and read his post. :
Where Does all My Money Go 21.99%
Intelligent Speculator 17.52%
My Traders Journal 10.67%
Dividend Growth Investor 10.39%
Dividend Mantra 5.32%
Million Dollar Journey 4.49%
Wild Investor -2.21%
The Financial Blogger -11.04% (ouch!)
Beating The Index -13.77%
I’m actually doing a lot better with my dividend stock pick in my own portfolio! This is why I’ve recently launch a dividend growth book focusing on 3 major concerns:
#1 How to build and manage your portfolio with simple and practical strategies
#2 How to invest in foreign stocks considering tax implication and investing account types
#3 How to buy & sell stocks at the right time to cash your profit
You can check here to get the table of content : Dividend Growth
|Click here to Download||Click Here to Download|
Wow…. Q2 was far from looking as good as Q1 on the market, huh? It’s interesting to see how fast the market can move based on a few bad news. I know… bad news coming from Europe are pretty bad. But still, most companies are making good money right now. Their value is still going down for no specific reason…
I’m getting dragged down by one of my pick after a disastrous first quarter; VNP continues its plunge to Neverland (as I’m never taking another gamble on the stock market!). Here’s the resume of my four picks:
National Bank is, once again, posting strong results during their last quarter. They also announced a dividend increase along with a repurchase program. In addition to that, they have been ranked 5th world most secured bank by Bloomberg. It’s definitely I truly feel that NA will be a good stock to hold for many years. It’s not doing much lately as the market is pretty bad. However, the dividend helps to be patient while the fundamentals are definitely there. National Bank is also showing the smaller P/E ratio among other Canadian banks :-D.
Argh! After a bad quarter, the management thought it would be a good idea to dilute shares with a new issuing. It had a catastrophic impact on the stock and we are now down by more than 50%! At least, their first Quarter of 2012 was showing positive earnings. They went from losing $0.54 per share to making $0.07 per share. Let’s hope that the next financial reports will be positive!
Another solid pick to go through the stock market storm as INTC is reporting strong results and steady dividend growth. I also like the fact that they are gradually entering into more partnership linked to tablets and Smartphone. This was their Achilles’ Heel as they are very strong in the computer environment. However, the growth is now coming from smaller gadgets J.
Chevron is suffering from the oil barrel roller coaster value. Nonetheless, they continue to post strong financial results and dividend raise too. Can you the pattern with my 3 picks that are keeping their heads over the water? they all pay strong dividend. In a highly volatile market such as this one, it’s definitely the best place to invest!
Just click on the blogger’s name to read his article:
Where All Does My Money Go 13.34%
Intelligent Speculator 12.25%
Dividend Mantra 6.78%
Dividend Growth Investor 4.89%
Million Dollar Journey 0.69%
My Traders Journal -1.37%
Passive Income Earner -5.65%
Wild Investor -7.73%
The Financial Blogger -13.15%
Beating The Index -26.55%
Disclaimer: I’m long NA, VNP, INTC & CVX.Comments: 3 Read More
A few weeks earlier, my partner sent me an email telling me how interesting it would be to write an article about the difference between dividend investing and making money online. He thought it would be fun as I’m a big fan of both dividend stocks and making money blogging. But there is a law out there that says that great minds think alike. Well if I’d do my post today ignoring this law, I would have to ignore Dividend Ninja’s guest article on Young & Thrifty: Website Income Vs Dividend Stocks: Which One Come Out On Top?
I was stunned that someone had the same idea but was 10 times faster than me to write an excellent article ;-). My comments on the site were that I thought it would be easier to make money through dividend investing than through a website. But this is for Mr and Mrs anybody. But what I didn’t say is:
If you know what you are doing; you will make a LOT more money through websites than through investing!
You want to know why? Here are a few reasons:
The growth potential with a company is usually pretty limited compared to the growth coming from a website. The main reason is that the company being listed on the stock market has already grown for several years before issuing its first IPO. Therefore, you are buying a company that has already gone through its most beautiful growth years. For example, private investors that were able to invest in Google in Year 1 or 2 would have made 100000% on their investment as compared to those who got into the stock after its first IPO. The same story is about to repeat with Facebook in a few months. I doubt that FB will see such incredible growth in the upcoming years. Now, you can expect a double digit growth (that is still interesting) but you’ll never see triple, 4 or 5 digit growth as it has in the past.
The potential growth is usually even worse for dividend stocks. In order to be able to pay dividends, a company must be stable and also willing to sacrifice a part of its growth potential since it is distributing cash flow to its investors instead of using this money to grow even faster.
On the other hand, a website is usually a very small property. And what do all small properties have in common? They have a huge potential for growth! So this is whyUSgrowth is slower thanChina’s. This is also why my son learns more things and learns them faster than me ;-). Websites have this potential to grow by 20% each year for several years. Just take my company’s revenue since I started:
2009: $33,412 (+253%)
2010: $74,854 (I’m excluding important sales in this year) (+124%)
2011: $114,158 (+52%)
I’ve recently mentioned that you can buy a major website for 36 times the monthly income. Some people told me that I was a nutcase. Fine. But when you think about it, this is some incredible return on investment! Forget the blogger’s or pity individuals’ perspectives for a moment and focus on an investor point of view: You have $50,000 to invest. Your first option is to buy a stock (or a group of stocks) paying a 4% dividend. This will generate a $2,000 dividend payout each year + the potential of seeing your portfolio grow over time. If you are a top notch investor, you will most likely get a 8% investment return over the long run (4% dividend + 4% in capital gains).
Why do I count only 4% in capital return? Because, historically, the stock market shows an investment yield of 9% (before fees and taxes). So unless you are the next Warren Buffet, you won’t be able to score over 8% after a period of 5 – 10 years. The main reason why you can’t score higher is due to the lack of information and comprehension. You are limited to your own little brain reading financial statements. You are not in the company, not managing the business and don’t have the feel of the company.
Now, consider a second investment proposition and look at a blog or a group of blogs to be bought for $50,000. At 36 times the monthly income (and you are not getting a deal at that price!), you will get a yearly dividend of $16,666. This is more than EIGHT TIMES your dividend investment. The best part is that you can expect a much higher growth from the value and income generated from the same sites due to the reasons explained in point #1.
The only thing to consider is that you need to spend time to manage the website. But technically, a minimum of 5 hours per week would be enough to keep the revenue as is. Therefore, if you “pay yourself” $25/hour, you are now down to a “dividend” of $10,166 per year. This is the same as a 20% dividend yield. Even better, if you are smart enough, you’ll find someone that you will pay $125/week to manage the site for you. I can send you a few names of good bloggers that would be glad to it ;-).
As I previously mentioned, you don’t get hold of every single little detail about each stock you own. You can read the financial statements but you can’t get in touch with every CEO to know what is truly going on within the companies’ walls.
This is something you can do when you own your site. You get access to all the stats and can see in a heartbeat if there is any problem with it. Better knowledge leads to better risk assessment. On the other hand, if you don’t know what you do with websites, this can be highly dangerous too! Always invest in something that you understand, says Buffett!
I’ve been telling you that investment sucks during the whole article but it doesn’t mean that I don’t invest in the stock market. In fact, I’m maximizing my RRSP account each year because I think it is good to have a great diversification across all your assets. But to be honest, my RRSP account is my “B plan” along with my company shares. So if I have another $10,000, guess where I would put it ;-). But what about you? What would you do with $10,000?
Comments: 32 Read More
I know, you told me already from my previous 2011 best stock pick update; I should have sold RIM! I actually did it in my portfolio, but this stock picking contest doesn’t allow you to make trades during the year. In fact, it’s pretty basic. We all picked 4 stocks at the beginning of the year and then we try our best to smile throughout the contest.
Without RIM in my portfolio, I would be among the leaders… but it’s easy to say that and others could take off their worst pick as well ;-). However, having a stock plunge by almost 50% in your 4 stock investment portfolio is pretty hard to swallow ;-).
Highly Speculative Choices
This year, I chose 4 highly speculative picks. I thought I would place either very high or low in the overall rankings. Mike from Money Smart Blog actually did the same thing last year betting on the drop of the price of gold… well he finished where I should be finishing this year! Hahaha!
RIM was my baby until not so long ago but I knew this stock would rock it up and down during the year. I just didn’t expect to see such poor results!
CVX will, naturally, follow the price of oil pretty closely. Since the commodity is on a downtrend for the past month or so, so is the stock! I don’t mind since it’s paying a healthy dividend and the price is still up more than 8% this year. It was also a great fit in my own portfolio (I do own shares of CVX).
I also bet on the rise of the Silver Surfer ;-). However, speculation has brought down the stock to a “normal” return (while I was up more than 50% at one point this year!). Here again, it could also gain or lose 20% during the next 6 months J.
Finally, Potash was picked on the same assumptions: there should be some speculation around it. The stock is up slightly but if rumors of mergers or acquisitions arise again, it could fire its way to the top in a few months!
As you can see, this portfolio is not… a real portfolio! This looks more like gambling than investing… but that’s the purpose of this game ;-).
Intelligent Speculator 9.35%
Dividend Growth Investor 8.89%
My Traders Journal 8.67%
Million Dollar Journey 8.06%
Where Does All My Money Go -1.01%
The Financial Blogger -3.74%
Money Smart Blog -5.72%
Wild Investor -7.69%
Beating the Index -12.01%
Robert @ The College Investor 14.41%
Financial Cents 2.50%
Jaymus (RealizedReturns) -0.20%
Passive Income Earner -0.39%
Steve Zussino -1.80%
Kevin @ Thousandaire.com -2.39%
101 Centavos -17.88%
Stock Glory -29.73%
Financial Uproar -44.22%
What will be the best stock picks for 2011? I don’t know yet but I can tell you that I didn’t make the right choices in 2010 for our stock pick competition! So before I write about my best stock picks for 2011, I’ll review what happened in 2010 with my stock picks…
When bad news comes in waves
I still believe I had good picks for 2010 and that, over the long run, those companies will perform. The proof is almost there as my 3 loser picks (RIM, MFC and GS) had grown in dramatic fashion over the last quarter. Too little, too late, I’m stuck with a losing hand for 2010!
RIM was hit big time as Apple entered in the smartphone ring with a huge uppercut. Bad news and rumors are now driving down RIM stocks towards the bottom of the pile. Fortunately, the company showed positive results and the stock is now back up.
When I first wrote about my best stock picks, I thought Manulife’s problems were over. I thought 2010 would be a great year for them and that the management team was strong enough to overcome their maelstrom…. Bad move, Manulife got hit by more bad news and was eventually downgraded by Moodys.
My last bad news bearer is one of the strongest investment banks that survived 2008 credit crisis; Goldman Sachs. If the SEC didn’t fill a lawsuit against them, they would have been pretty good in 2010. The stock is now back to where it was at the beginning of 2010, so just a small loss for a great stock pick…
And the Winner is….
Here’s the final result of our 2010 stock pick contest. If you click on each name, you will get their latest post on the stock pick competition. Wild Investor is winning our stock competition this year but one of my reader beat all of us: Brian end-up with 94%! (here’s his picks: RHIE, ISCO, BTIM, ACTC)
Intelligent Speculator -0.45%
The Financial Blogger -1.64%
Wild Investor 27.15%
Million Dollar Journey 3.79%
Where Does All My Money Go 26.56%
Four Pillars -35.25%
Zach Stocks 20.87%
My Traders Journal 10.39%
Dividend Growth Investor 26.08%
HUZ – Silver ETF, There is a problem with gold
I’m not a big fan of commodities. Why? Because they are based on pure speculation…but this is also the goal of our stock pick contest, isn’t? I’m taking a Silver ETF because I think it is undervalued compared to gold. The price of silver usually follows gold by 1/16 and now we are at…. 1/46! So either the price of gold is too high, or the price of silver is too low. I’m betting on the latter.
RIM – Research in Motion Strikes Back!
I still believe RIM is a good stock pick. And I think that it will be one of the best stock picks in 2011. RIM is the best player in emerging markets and now that the economy is restarting, they should increase their sales. At least Apple shouldn’t be able to play in this market for now as the iPhone cost and network coverage are too expensive for emerging markets for now.
CVX – Chevron, For those who are scared
I am slowly converting to dividend investing with my latest buy; The Dividend Guy Blog. I have a Chevron stock analysis over at this blog and I think this will be a good stock pick to stabilize my gambles. I think that Chevron will continue to pay a good dividend and the stock should be stable throughout the year. Therefore, it will be a good pick if silver or RIM fail at some point ;-).
POT – Potash, once investors are converted to believers, it will blow!
In 2010, we almost lost the biggest potassium producer in the world with the hostile bid by BHP Billiton. While this event helped Potash to be one of the best stock picks in 2010, its value will increase as the commodity will continue to rise. Potash seems like a good bet for such a competition.
Here’s the chart with all the participants. If you click on each name, you will get more details on their stock picks (more to come in the upcoming days 😉 )
Last year, a few readers posted their picks, I want to encourage you to do it and I’ll offer a prize to the winner if you can beat our group of bloggers for the 2011 Best stock pick contest. If you want to participate, you simply have to put your 4 stock picks in the comment section and use the tweet box on the top of this blog (or the following: Best Stocks Picks 2011 Contest @FinancialBlogr : http://bit.ly/gooxCw. Enter your 4 stock picks in the comment section to be in!) . I like Apple products, do you?
disclaimer: I do hold RIM in my portfolio (and Chevron is on it’s way!)
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