Stocks are Falling: Buy, Buy, Buy!

Oh I love to see these sudden market drops! There really are no words for the feeling of joyful glee with which I rush to put in my orders. Buy! Buy! Buy! TD is on sale! BMO is reduced! BCE is at a discount! ENB is marked down! Time to dig the annual RRSP and TFSA money out from under the mattress, dust it off, and spend, spend, spend!

Photo of Indigo Bunting Bet Crooks

How to Deal with Markets that Just Keep Falling

The trick is once you buy DON’T look at the market for a few days. You should pick a price you think is reasonable to pay, buy if you get a chance at that price, and then get back to work making money in other ways that don’t involve the stock market.

The market may well continue to plummet AFTER you fork over your hard won cash. It’s kind of sad to realize you could have bought at an even lower price. So don’t look! Once you’ve invested, it’s done. Go away and let the market bubble along without you.

Best of all, get outside and do something real. Play softball. Take a bike ride. Wing a Frisbee for a dog. Swim across a bay. Not only will all those things remind you that money is abstract and you could actually live reasonably well with less of it, these activities will also improve your health. If you drop dead from inactivity caused by staring at your computer screen all day, every day, what good was saving and investing?

Even if Market Values Collapse Often Dividends Don’t

You’ll notice that the stocks I’m chanting about are all blue chip, large cap Canadian stocks. They’re companies I would feel comfortable holding for 3-10 years or longer providing they don’t get into any significant shenanigans during that term. I’m not buying them expecting to make a killing of a capital gain. On the contrary I’m buying them primarily as income stocks. They pay a steady comfortable dividend of between 4-6% at these discounted prices. That’s what I’m primarily after. If there is a long-term capital gain: bonus!

Don’t Invest Everything in Stocks

Everyone says this. I’m one of the few that does this. I don’t have all of our money in stocks. In fact, I don’t even have most of our money in stocks. We sleep well through all the market gyrations because we have investments that are not in the market at all.
I recommend the same.

Have a sturdy solid base of money that is not in the market. Yes, it is not earning much interest. Yes, it may be losing value against inflation. Tough, isn’t it? I figure I can earn enough off the portion that is in the market to cover inflation. If I’m wrong, I’ll just have to cry myself to sleep as I live off my 6-figure cash assets. Something tells me I’ll survive. I actually like beans.

Investing Can Be Fun!

Take some joy in your investments. Everyone seems so depressed all the time. Why? It’s only money! Ask anyone in a palliative care facility if they wish they had agonized more over every financial decision. I guarantee they will look at you blankly. Make the best investment decision you can for today, then get out there and Live! Love! Prosper! Those Vulcans know a thing or two.

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Join In
Are you enjoying the current market swoop? Have you taken a refreshing plunge into the market and risen up from the swirling wild waters with a pearl? Please share your experiences with a comment.

My Dividend Just Doubled for CU! Or Did It? Stock Splits and BMO InvestorLine

I’m currently undergoing yet another stock split in my BMO InvestorLine account. I’m watching closely because I want to make an obscenely huge profit for no effort. (True, I probably won’t: I said I wanted to, not I expected to!) It’s frankly a bit of a mess out there in InvestorLine land this morning. Here’s what I found when my CU stock split.

Massive Dividend Increase Over night!

When I opened the Quotes+ screen for Canadian Utilties, CU, the first thing that greeted me was the awesome news the yield was now over 5%. That was a bit surprising as it was around 2.5% last Friday. It’s almost as if it doubled over the weekend after trading stopped. Strangely, that’s about the same time the stock split. Hmmmmm.

Yes, what I’m looking at is that InvestorLine has updated the price of the stock to the split-adjusted price. But it has not yet updated the Indicated Annual Dividend. So it’s dividing the non-split dividend with the split stock price.

Sadly, there is no increase in dividend. Eventually BMO will correctly halve the indicated dividend and the yield will drop.

I sincerely hope, however, that anyone buying the stock this morning is aware of this error. It might be a big shock to buy a stock at about $38 expecting to get $1.94 per year per share and find you’re only really getting $0.97.

Huge 52-week Minimum and Maximum Gap!

Similarly, the minimum 52-week price has been updated to the lowest post-split price. The maximum 52-week price, though, has not been adjusted for the split. So it looks like the stock has bounced between 31.56 and 75.80 in one year. Not!

Should I Sell Half My Shares Immediately?

This is another place where InvestorLine makes me irritated. According to My Holdings, I still only have my original pre-split number of shares. I could put in a request to sell half of what I should have but I’d be in suspense for a while to see what happened. Would the other half of the split eventually show up credited to my account? It should, as the split was based on a date of record of over a month ago. What would happen to InvestorLine’s calculation of my gain or loss on the shares?

Speaking of which, right now it’s reporting I have a huge loss on my shares! That’s because it is using the non-split-adjusted purchase price as my cost, and the split-adjusted price as my current market value. Silly InvestorLine!

Should I Buy More Shares and Ride the Post Split Surge?

It’s always tempting when a stock emerges still gleaming and fresh from its shell after a split to buy more and try to catch the wave of a sudden increase in value. So I logged in at the start of post-split trading this morning to consider the possibility.

However, in the first half hour of trading, the stock had already surged up 99 cents per share. That’s a 2.7% increase in the price of the shares in less than an hour!

The problem is I missed that wave. Do I think it will continue to climb rapidly? This is a very conservative utility stock. If you take the time to figure out the correct dividend, it’s yielding about 2.5% and that’s shrinking each dollar the shares go up.

Hmmm. How gullible are the buyers? Have they checked out the correct dividend? Are they all trying to make a quick buck off the split? Can I buy and dump for a gain of $1 or more a share within the month?

On the other side, this is a perfectly respectable stock to hold. If I buy and it plummets, I could always wait 10 years before selling. Although a 2-2.5% yield is rather low, CU does increase its dividends fairly regularly. It could improve gradually.

Oh the terrible temptation to play the market rather than invest! I can rationalize this six ways to Sunday if I try.

What Would You Do? Or, Perhaps, What Would Warren Buffet Do?

What about you? Would you buy some CU and try to catch the wave? Would you laugh maniacally and stick like a limpet to your ‘whole market’ index fund ETFs? Please share your opinions with a comment.

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