Wednesday, December 23, 2015

My Biggest Hits & Misses of 2015

As a kid, I loved listening to radio stations on new year’s day when they played their countdown of the biggest hits of the year. With a week left in 2015, I thought it would be a fun to take a look back and recap my biggest hits and misses. Why include my biggest misses? Simple, I learn more from the misses than the hits.

Hit: The Canadian Dollar Depreciating Relative to the US Dollar

The Canadian dollar has fallen about 17% against the US dollar since the beginning of 2015. On the downside, the weak Canadian dollar has made it more difficult as a Canadian investor to find US stocks with an adequate margin of safety. On the flip side, since about a third of my investment holdings are in US companies, a more expensive US currency has boosted my portfolio value and led to a higher inflow of dividends from my US holdings.  Although I don’t see the Canadian dollar depreciating by another 17% in 2016, depending on the price of oil, the level of interest rates on both sides of the border, and the performance of the Canadian economy, our dollar could very well fall further.

Miss: Kinder Morgan

When Kinder Morgan’s management cut their dividend by 75% earlier this month, I felt like the biggest loser on the block. My dividend growth rate for 2015 went from 8% to 4%, my forward dividend income decreased by a material amount, and my faith in management of all corporations (particularly that Kinder Morgan) was lost. Even worse, I added to my position in Kinder Morgan during the first week of November, when I should have known better. Now, I continue to hold my shares in Kinder, as I process the dividend cut, and try to determine my course of action.

Hit: Opening a Registered Education Savings Plan Account

Had I done a hits and misses list for 2014, my biggest miss would have been failing to get my act together and open a Registered Education Savings Plan ("RESP") for my son. All it took to receive a risk-free $500 grant from the Government of Canada was an hour of paper work, scanning some identification documents, and mailing a cheque for $2500 off to my brokerage.  Even though I managed to take over a year to complete the required submission, I still received that 20% return on the deposit toward my son’s education this year. Now I just have to figure out which ETFs to invest in, and I'm off to the races!  I’m a big fan of free money, and since I don’t expect as much of it from the new Liberal government, I’ll be happy to keep accepting the $500 grant yearly on behalf of my son.

Miss: PHX Energy Services Corp

As I wrote about in my most costly stock picking losses entry, I bought a position in PHX in September 2014, and held onto the oil well driller through 2 dividend cuts and increasing scary financial results before finally selling it in August 2015. Although PHX represents a big miss for me, learning to always have an exit plan when speculating on a security will help me in the future. As will my plan to only make short-term purchases in companies I don’t mind holding for the long-term.

Hit: Sticking to My Plan

One of my goals for 2015 was to transform my portfolio to make it more tax efficient and easy to manage. By shifting my position in H&R REIT into my TFSA, moving holdings in Canadian companies from my RRSP to my unregistered account, and decreasing the number of companies I own, I stuck to my plan. Although there were temptations to add shares in other Canadian companies in the bear market of 2015, I’m happy to have held a steady course and should reap the benefits come tax time next April. 

Miss: Not Holding Onto Suncor

This one might sound odd given the current depressed level of oil prices, and my plan to decrease my number of investment holdings, but I regret not holding onto my Suncor shares during the 4-times I bought and sold it during 2015. When oil prices eventually recover, I’d love to own a position in Suncor to act as a hedge against gas prices. I drive past a Petro-Canada station (Suncor’s retailing arm) five days a week taking my son to day care, and my main observations are that there are always cars at that station, and that their gas price has remained stubbornly high.  Even though I consider the current price of Suncor’s shares expensive, it remains a company I'd love to hold for the long-term.

Now that my Casey Kasem inspired hit (and miss) list is complete, it’s time to relax and enjoy the holidays.  Here’s wishing everyone a Merry Christmas and Happy New Year!


What were your biggest hits and misses of 2015?

4 comments:

  1. Thanks for sharing your hits and misses, DIH. Those are some interesting lessons to learn from the years hits and misses. In my case, I invested heavily in US equities when the C$ was on par and now my portfolio is holding up pretty well thanks to the sinking Loonie. That is a big hit for me too.

    R2R

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    1. Glad to hear you made out well on the rise of the USD against our petro-dollar as well ;-) Here's hoping you're having an easier time picking US stocks given the current exchange rate than I am.

      All the best to you and Mrs. R2R in 2016!

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  2. We both share a lot of the same hits and misses. But when you think about DIH, you are still doing a way lot better than most people you know (and do not know). So I say you are doing ok my friend. More than OK, you are doing fantastic. As for Suncor, this is, as you know, of my main holdings. I have been a shareholder for more than 6 years now. A lot of ups and downs. Fortunately, this integrated oil company has had a pretty good run dividend wise. But, like you, I sold some shares along the way. I now have 220 and it should stay like that for a while. But I find the price not too expensive. My average cost-basis is not that much lower than its actual price... Joyeux Noël et Bonne année! ;-)

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    1. Comme toujours, tu as raison Monsieur Dividende. Je suis vraiment content avec ma vie et mes investissements.

      I'd really like to buy and hold Suncor around $33-$34...it's getting close to that tempting level. The dividend record and free cash flow generation (even now with oil prices so low) show it's a fantastic company.

      J'espere que tu as passee un Joyeux Noel et je te souhaite une bonne annee aussi!

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