Ask me what Suncor does to make money and I wouldn’t be able to explain it to you in detail. To be honest I don’t think I could do so with the Canadian banks either. What I do know is that Suncor is one of the biggest Canadian companies, considered a safe investment and Berkshire Hathaway recently acquired some shares. I’m sure Warren Buffett or his team did the required due diligence so I wouldn’t have to.
After selling the rest of my Canopy Growth shares in my pension portfolio it freed up a lot of cash. My aim for this portfolio is to have it appear respectable — meaning no penny stocks or any of their relatives. Currently, there’s more money in cash than there is in stocks. Suncor is about 2.5% of the portfolio.
Suncor offers a dividend of just over 3% which is decent but I’m not too excited about the stock appreciation potential. Compared to many other stocks or even the S&P 500 index it has lagged significantly over this 10 year bull run.
My purchase price was $43.93. Back in December I could have picked it up at $36 but I pussied out. At the market bottom on Christmas Eve I only bought $6000 worth of other stocks. Better than nothing but you need to capitalize on the dips for a better tomorrow. This was all before I sold out of Canopy Growth though. That’s the excuse I tell myself to make myself feel better.
The stock price of Canadian energy, gas and oil stocks were said to be low. A BNN Guest, Eric Nutall, one who may be perceived as a stock expert in this field had been recommending Trican Well Service for months even as the stock price kept falling. To him it was ridiculous how low many of these stocks in the sector were.
Because I had just clocked in some easy money I thought I’d foolishly put it to work. Since Eric was so adamant about Trican’s outlook I decided to pick up some shares. It sounds like I’m blaming him but it’s more that I’m disappointed with myself and I’m using his face for my imaginary dartboard.
Throughout the year after I bought the stock it kept falling and Eric confesses one day on BNN that he had sold the stock since his last visit. It’s like your wife telling you she loves you to death and 5 months later you come home to your bed sheets that hold the smell of a musky man.
Another stock that would have broken my new rule: Would I tell my friend to buy it? I definitely would not have. Maybe this serves me right for investing in a company that fracks. By the looks of the chart the only thing the company is drilling for is zero.
The S&P 500 index could be referred to as the benchmark for investing returns. In order to justify managing your own money or paying someone else, your returns have to beat this index otherwise you’re better off putting your money in a low fee S&P 500 index fund(Vanguard, Spyder).
The chart below indicates if you had put your money in at anytime in the last 90 years(except in the last couple months) you would have seen a return from your investment. There were better years than others but as long as you held you would have made money.
Although it’s next to a sure thing that you will make money if you’re in it for the long term you probably wouldn’t want to pile in all of your money at once unless if the market has took a huge beating like in early 2009.
If you had piled in all of your money at the peak of the tech boom in the year 2000 you would have seen your investment get cut by close to half at the bottom of the tech bust the following year.
That decade wasn’t the best for a long term investor due to the Great Recession that followed in 2008. The index rose back to its high after the tech bust only to get slammed even worse. It’s like falling madly in love only to get heartbroken and then have it happen all over again soon after you recovered.
If you weathered the storm until today though you’re in love again. In 2001 the index at its peak was at around 1500 points and in 2018 it’s been in the 2500-2800 range.
Instead of piling in all at once a more prudent strategy would be to put smaller portions every month so that you hedge against having all of your money invested at the top. Sure, if you go all in at once you’ll more than likely see your investment above water one day but in the case presented above you would have had to wait until 2013 to see a gain from your 2001 investment. That sucks.
If the index has taken a bad beating already though it’s probably a strategic move to put in more money than you usually would. Buying at the bottom is how you get the largest returns.