The TSX Is In Freefall: Time to Buy!

Oh, boy, Santa came early this December! Based largely on fear and possibly on eggnog overdose, the TSX is diving for the deeps today. And, lucky me!, I have new money to invest! But what to buy? Enbridge just raised its dividend to within 2 cents of TD and ENB has dropped more than $2.50 today to bring it back down from the artificial high the announcement created. TD itself is still smarting from the effect of investors who weren’t happy they increased their profits because they didn’t increase their profits enough. But perhaps the best bargain of all is the entire TSX is down to bringing things like the index-fund ETF XIC down more than 65 cents to $22.20 (so far.) So what should I buy now the market is falling?

Should I Buy More Dividend Paying Stock?

I have some of our money invested into individual dividend paying stocks. The ones I’ve picked in the past are not expected to make any significant capital gains. Instead, they are expected to withstand market drops without losing huge amounts of capital and to keep their dividend payments steadily rolling out even during the lean years.

By accident, since all stocks took a hammering in the 2008/9 zone, all our dividend stocks have actually made substantial capital gains on paper in the few years we’ve owned them. But we only track whether their value has stayed above their purchased cost plus inflation. We don’t count on ever realizing that capital gain because we don’t expect to ever sell them unless the companies themselves become a bad risk. And if that happens, we’d expect to lose not only the capital gain but probably the initial purchase price.

Instead, what we watch with curiousity is the growth in the dividends. So far, it has been growing at a rate much greater than inflation. That’s necessary if we are to find them a good long-term investment. If the dividends lose ground to inflation we would have to sell part of our position to generate income in retirement, something we are hoping to avoid.

We are looking on these stocks as surrogates for long-term bonds or GICs. They are much MUCH riskier! However given the low rates offered for fixed income investments for the past few years we felt we had to start putting some money into equities.

So what about today with this pullback? Should I put my new investment money into more of these defensive dividend stocks? Or ….

Should I Buy More Units of a TSX Index-Mirroring ETF?

I like XIC. It’s the iShares S&P/TSX Capped Composite Index ETF.  It tries to replicate the performance of a lot of the TSX. It has almost 2 billion dollars invested in it and it has a MER of 0.27%. It pays a distribution of about $0.45-0.55 a year depending on what goes on with the underlying companies. Morningstar predicts that means it has a 2.25% yield. (TD and ENB, by the way, currently have a yield of over 3%.)

There are other index funds that track the TSX. Some have lower MERs. Some are not capped. VCN from Vanguard, for example, has a MER of 0.05%. I’m not recommending XIC I’m just saying I happen to own some of it. In fact, my current position in XIC is suffering from a non-realized capital loss. It’s the only thing I own that’s in the red.

What are some of the benefits of buying an index fund with my new money during this slump? Well, it ensures I’m buying a portion of whatever is down in value that shouldn’t be. (because I do believe that the market doesn’t deserve to be down and that it will rebound.) It does pay that tidy annual distribution so I won’t be left with buyer’s remorse if I buy just before the market really goes down and stays down for a few years. (Getting a distribution or dividend makes it easier to hang tough and wait out dips.) It decreases the risk that I am putting all my money on a lame horse. And it will not upset MjonM. (Although he might question why XIC.)

All excellent points to consider.

And the Winner Is–

Well, fortunately I’m expecting to have some more money to put in later this month. And I still have some free trades in our non-registered account. So for now I pick: XIC.

But if ENB goes back down to where it should be, I might just wander by and buy some more with my next infusion of cash. That dividend increase is very attractive to an income investor. Or I might want some more TD. Or…..

Related Reading

Join In
Are you enjoying some early Boxing Day sales on your favourite ETFs or stocks? What stock do you hope to find stocking your stocking this month? Please share your gloating with a comment.

How to Buy Shares of Stock or Units of ETFs Using the BMO InvestorLine App

As I mentioned, I recently decided to re-invest the dividends and distributions that have accumulated in my TFSA and I decided to take advantage of the free trades InvestorLine is offering for using their new App. I downloaded the InvestorLine App and now I have to set it up and then execute a trade to buy some stock or an ETF: here’s how it works and a few quirks including a couple of insecurity things that irritate me.

How to Get In to Your BMO Banking and InvestorLine App to Use InvestorLine on an iPad

  1. Tap on the BMO icon.
  2. Tap on the InvestorLine button.
  3. In the User ID or account # field, type your InvestorLine userid or the account number for the account in which you want to execute ALL of your free trades.
    (NOTE: You cannot use the trades in multiple accounts, unfortunately.)
  4. In the Password field, type your InvestorLine password.
  5. Tap on the SIGN IN button.

What’s on the Home Page for the BMO InvestorLine App?

If you choose to login with your userid and if you have multiple accounts at InvestorLine, you will see the accounts listed on the left side of the screen. It will list the current value of the account in Canadian dollars and it will list how many open orders are waiting to fill.

On the right side of the screen you will see your

  • total securities
  • total cash
  • total account value
  • unrealized gain (or loss) for the total account
  • order status info, if any
  • and some details including, if applicable, the amount and percentage of your portfolio invested in cash, equities, cash equivalents, etc.

Geez, I wish I’d put everything into CNR back in 2012. Who knew it would double in value before the end of 2014? Still it’s nice to see some green glowing numbers. (PS Don’t consider this a recommendation to buy CNR now: a lot has changed including the price has run-up dramatically!)

Anyway I can see the cash waiting for me to re-balance my TFSA holdings.

The bottom line of the screen is flickering: Turns out it is streaming the Market indices. Bad day to buy, the TSX and NYSE are both up.

Now to find where I can enter a Buy!

Can I Be Signed In to InvestorLine via the App and via a Computer at the Same Time?

OK first I’m going to try another trick: can I simultaneously login to InvestorLine on the computer?

Interesting: Yes, I can. That’s a bit of a security gap in my mind.

Anyway, let’s try to find the Trade screen on the iPad.

Executing a Trade to Buy More or Sell a Current Holding of a Stock or ETF Using the InvestorLine App

I can see how I can tap on the Trade button beside any of my current holdings. So I’ll start by using that to sell some units in AAT770.

  1. Beside the listing for AAT770, tap on the Trade button.
  2. From the Action: drop-down list, tap on the downwards facing arrow to select Sell.
  3. From the Amount: drop-down list, tap on the downwards facing arrow to select Dollars.
  4. In the C field, type the amount in Canadian dollars and tap on Return.
  5. On the right side of the screen, check all the details. If they look good, tap on Submit order.
  6. A window pops open
    * In the Primary # field, type your phone number.
    * In the Extension field, if necessary type your phone extension.
    * In the Trading password field, type your InvestorLine password for this account.
    NOTE: This is typical of what I hate about iPads: it shows each character in your password briefly as you type it. Be wary about where you type your passwords! Know if anyone can see you.
    (My husband is always trying to sneak a peek at mine so he can go in and dump all my holdings and put all my money into Venezuelan Beaver Cheese.)
    * Tap on Place Order.
  7. Review the Order Confirmation for mistakes.

Ah, here’s something I don’t like much. I’m used to copying and pasting the confirmations into a Word document and saving them to a stick. Not so easy on an iPad. Ah well, such is the cost of “convenience.”

Where is the Trade Screen on the InvestorLine App? Or: What Are These Weird Icons on the Left Side of the InvestorLine App?

Now on to try to find the way to get to the Trade screen from the home page. Or for that matter how to get back to the Home page!

Let’s try some small icons arranged down the left side of the screen.

Ah.

  • The weird
    off-centre Omega symbol with 3 horizontal lines beside it icon
    is actually the icon that leads you to the Home or My Portfolio page if you tap on it.
  • The
    almost-colliding arrows icon
    is the link to the Trade screen.
  • The
    magnifying glass icon
    is actually the link to the Quotes screen.
  • The
    climbing zigzag line graph icon
    links to the Markets and Research screen.
  • The
    envelope icon
    links to the Message Centre. (Note MyLink doesn’t work yet in the App.)

The funny thing is the last thing currently showing in my Message Centre is a link to an “Orientation video.” By the time I found it, I was already oriented!

Ah, but then I realized that there are two choices for the Message Centre, so I selected the second one:  “Offers.”

Nothing about the free trades. Huh.

Ok, let’s tap on the colliding arrows and make a trade.

How to Buy Shares of a Stock or Units of an ETF Using the BMO InvestorLine App

  1. Sign in to the App for the account in which you wish to make the trade.
  2. To open the Trade screen, tap on the Almost Colliding Arrows icon.
  3. In the Search field, type the ticker symbol for the investment you wish to purchase.
  4. In the Symbol search popup, either type the ticker symbol or search for it.

Take a look at the info on the right side of the screen which includes

  • the real time price
  • the Bid
  • the Ask
  • the Volume
  • the day’s price movement up or down as a dollar value and a percentage

You can tap on the blue Refresh Quote link at any time.

If you’re ready to trade, on the left side of the screen

  1. From the Action: field drop-down list, tap on the downwards-facing arrow and select Buy.
  2. In the Quantity field, type how many shares or units you wish to purchase.
  3. From the Order type: drop-down field, tap on the downwards-facing arrow and select the type.
    For example, I selected a limit order by selecting Price Limit.
  4. If applicable, in the Price Limit field, type your price.
  5. From the Settlement funds: drop-down list, tap to select Canadian or US as appropriate.
  6. From the Good until: drop-down list, tap to select a different choice than Today only, if preferred.
  7. Review your order details on the right side of the screen. If they look correct, tap on Submit order.
  8. A window pops open
    * In the Primary # field, type your phone number.
    * In the Extension field, if necessary type your phone extension.
    * In the Trading password field, type your InvestorLine password for this account.
    * Tap on the Place Order button.
  9. Review your Order confirmation to make sure it’s accurate.

Wait for your trade to fill!

In my case I could be waiting all day (I always bid low) so I’ll try to figure out how to sign out. (Note it will time out if you leave it alone too long.)

Where Do You Sign Out of the BMO InvestorLine App?

I returned to the Home page by tapping on Omega 3 Lines. It now shows I have 2 orders and it shows the details of the Buy. If I tap the square with two arrows inside implying they are stretching the box icon, it opens a window to show me the details of the two trades.

Well the Scales icon just opens the Legal stuff, so that’s not how to sign out.

Tapping on my name does nothing.

Tapping on the account number just shows me my other accounts.

OK,
To sign out, tap on the 3 horizontal lines on the upper left of the screen. Then tap on the Sign out button.

Phew. So that’s done. And hey, I don’t have a cache to empty or a browser session to close!

To be honest, I think I prefer my computer-based InvestorLine interface. But then I don’t own or regularly use an iPad so it’s probably just lack of skill on my part. To save $9.95 it was worth a bit of effort.

Related Reading

Join In
Do you use the InvestorLine App? Do you think that your six-year-old child could have invented more meaningful navigation icons? Please share your views with a comment.