Smith Manouevre Portfolio August 2009 – Where is the Correction?
Hey guys, for those of you just joining us, below is my portfolio that is leveraged with money borrowed from my home equity line of credit (HELOC). As the money borrowed is used to invest, the interest charged is tax deductible. I write an update every couple months or so to show new positions added along with any market gains/losses. For more details, check out my modified smith manoeuvre strategy.
I’m very surprised that the rally has lasted this long into the summer as it hasn’t let up since the market lows in March. I’m still patiently waiting for a correction so that I can buy more equities but I’m not sure if stocks will ever get as cheap as they did a few months ago. In hindsight, perhaps I should have bought more during that time, but hindsight is always 20/20.
Transactions wise, my portfolio has seen very little action due to the appreciating market. Right now, I don’t see any attractive valuations besides perhaps a few of the utilities. I did manage to sell of my last bit of Teck Comminco, but looking at the continuing rally, I should have held on for a bit longer. To look at the positive though, I’m lucky to have held onto half my position during the rally as I was tempted to sell all my shares @ $4 when they announced their dividend cut.
Speaking of dividend cuts, Manulife has announced that they have cut their dividend in half due to capitalization issues with their variable annuities products. This is actually very disappointing news as Manulife has been a strong dividend stock for some time now. I wonder if any other of the insurers are considering a cut in their distribution? In the mean time, I will be holding onto my shares as I still believe that MFC is a strong long term company.
The Portfolio as of August 2009:
|Stock||Symbol||Shares||Avg Buy Price||Total||Div/Share||Yield|
|FTSE RAFI US 1500 Small-Mid ETF||PRFZ.US||20||$51.50||$1,029.99||$0.42||0.82%|
|AGF Management Limited||AGF.B.T||50||$22.71||$1,135.49||$1.00||4.40%|
|Bank of Montreal||BMO.T||25||$44.17||$1,104.24||$2.80||6.34%|
|First Capital Realty||FCR.T||100||$15.75||$1,574.99||$1.28||8.13%|
- Total Cost Base of Equities (inc. fees): $40,711.96
- Market Value of Equities (Aug 7, 2009): $40,092.50
- Total Dividends / Year: $1,700.50
- Portfolio Dividend Yield: 4.18%
Sector Allocation (based on market value)
- Financials: 57.71%
- Utilities: 16.95%
- Energy: 18.68%
- Resources: 0.00%
- Real Estate: 4.41%
- Other: 2.25%
Leveraged Investing Disclaimer: There have been a lot of readers who have mentioned that they are interested in a leveraged portfolio. Over the long term it may be lucrative. However, over the short term, equities are volatile and can put the portfolio deep in the red. My portfolio is a prime example of what can happen. If you can’t stomach losing 20-30% in the portfolio in any given year, then your risk tolerance isn’t suited for leveraged investing.