Monday, January 30, 2012

January 2012 wrap-up

January is done and it looks like things are once again resuming an upward track.  Here's my quick summary of the influential world events that transpired and how I reacted to them.

The world markets have had a bit of a chance to make sense of the European debt issues and have realized that the world wasn't ending.  On the other side of the coin, that made for a great buying opportunities in October/November.  I did buy a few things, but I was too chicken-shit to go-big/go-home.  Emotions are a hard thing to ignore but at the same time a great way to moderate your impulses.  I'm still learning to control mine when it comes to investing.

The US FED announced it would be holding interest rates at the same pathetically low level until at least 2014, AND that a future round of Quantitative Easing (money printing) were not off the table.  The Bank of Canada also announced they weren't going to raise rates any time soon either.  (But they never say for how long and update every quarter)

Natural gas has hit 10-year lows and some folks think it can go even lower.  But this to me says it's time to start buying nat-gas producers/pipelines.  PM Harper recently announced that there will be few regulatory hurdles for future pipelines to get our petroleum to markets both in the US and Asia.  Which means to me is that the Federal government is going to buy off a lot of first nations peoples to get the land rights they need to build the Northern Gateway pipeline.  (Enbridge will be the beneficiary of this good fortune).

I've started to accumulate some SMALL-CAP nat-gas producers.  Some which pay out a lovely dividends and some which should be bought out.  I'm expecting to double my money on one of my holdings.  But I'm not expecting it to get bought out for the next 2-3 years.  A pipeline to get the stuff off the continent will have to be under construction before this will happen.

Since the end of December until now, the TSX is up about 5.5%.  My net worth has increased by 10%.  2% of that can be attributed to the take-over of one of my holdings by a larger company.

Future: I'm anticipating some slow, slow growth for 2012.  Dividend payers are the place to be.  There might be a few burps here and there due to sovereign debts,  (like if the US bickers again about the debt-ceiling) or a few oil price explosions.  (If Iran decides to pick fights).

Saturday, January 28, 2012

10% and setting goals

I've recently hit a milestone in my investment career!  I'm now able to cover about 10% of my family household expenses all on my monthly dividends.  I'm currently re-investing everything though so it's not helping me out during my frequent spells of little work.

So I'm going to go public with my goals for this year:

1> Grow my holdings 25% (through re-investments, trades, and any additional contributions I can add)

2> Grow my dividend payouts to be enough to cover 20% of my monthly budget.

Both are ambitious...  I'm very confident about (1), but not so much about (2).

I'll let you know!

Sunday, January 22, 2012

Taking over the business

So, it finally happened: one of the companies I have held, loved, extolled, hated, feared, and gradually warmed back up to again has had an offer by a larger company to buy it out.  Dundee REIT has agreed to buy Whiterock REIT for a 20% premium of the previous 20-day average price.

Since the deal has yet to be ratified by the shareholders the price for shares of Whiterock have only jumped 18-19% ish.  Some people sold off their holdings expecting the deal to collapse and hopefully buy back in after the price returned to it's previous value, while some investors jumped in hoping to exploit the small difference between the current market price and the offer price, while some very optimistic investors are either holding, or jumped in awaiting a potentially superior offer from another company.

As I see it, there aren't any other REITs in Canada that would be large enough to be able to comfortably absorb Whiterock.  So if the shareholders like the 20% bonus then I suspect they will all vote in favour.

I'm still undecided.  I liked Whiterock because they always did carry a bit of doubt since analysts couldn't agree about various operational aspects of the company so there was always a discount and thus a very high yield.

Since I had liked Dundee too (with aspirations to buy some in the future when my portfolio was bigger) I get the feeling that I'm just going to vote in favour and take the shares rather than take the cash buyout.  This will at least save me from a little capitol gain when the units get absorbed.

Now how does this help you?  (I can hear you shaking your heads)  If you had been following my posts and perhaps had a few shares of Whiterock then my gain would have been your gain.  If you haven't been following my advice then this little windfall might finally give you the kick in the pants you need to start yourself down the DIY investment path.

Or not. 

Full disclosure:
Approximately 9% of my holdings were in Whiterock REIT.  (Before the announcement)  Now that Dundee has agreed to buy it out at a premium, my new valuation puts it to about 12% of my portfolio.  Once the dust settles, I'll re-balance my holdings to get this back down below 10%...  Ideally 8-9% and no more. 

Disclaimer: I'm writing this article to HELP you.  If you do something stupid based on my advice without thinking it through yourself, then you have only yourself to blame.  Plus if you try to sue me for bad advice I don't have any money either, so good luck with that.  Seriously people, stop making your lawyers rich... they don't need the cash!  WE DO!  If you get burned a couple times, it's a learning experience.  Just try to remember to NOT fall in love with your holdings.