For those of you new to this website, in this post, I discuss the recent changes I made in my dividend portfolios and also discuss about my portfolio diversification strategies.
Canadian stocks moved again into bear market territory in early February and rebounded sharply in last few weeks.
Guess what?
I scooped up few stocks few high quality stocks at bargain price while they were cheap.
I spent more than $16 000 for the asset purchases. I used my Canadian margin accounts at the interest rate of 4.25% for most of the purchases. Rest of the money came from my savings and last month dividend income.
Yes, I borrow money to invest if I find bargains in the stock market.
Even though this leverage investing strategy works well for me as market moved high recently, it is not recommended approach for everyone.
It is very risk –YES VERY RISKY. You may end up losing more money than you put to work.
U.S market was also in correction territory, unfortunately I didn’t make any purchase in U.S stocks due to the unfavorable currency exchage rate; however, we could see some improvements recently in the Canadian dollar against U.S dollar.
I hope the trend will continue so I could diversify my portfolio by adding some U.S and International stocks in my portfolio.
Now let’s see the recent changes in my dividend portfolios in February 2016.
Please note this is not an investment recommendation website and I am not your financial Advisor. I am just sharing my personal financial journey with this website readers. I strongly recommend you to discuss with a financial professional before make any investment decision.
The changes made in Canadian portfolio in February 2016.
- initiated 50 shares of MTY at $28.99 – price dropped further down after I made the purchases, then rebounded above $33 in last few days.
- added 35 shares of FTS at $35.75 – price moved above $40 within two weeks
- initiated 100 shares of AQN at $10.52
- added 15 shares of RY at $64.72- averaged down my January purchases
- added 25 units of BIP.UN at $46.92
- added 25 shares of ALA at $29.89
- initiated 100 units of MST.UN at $16.15
- initiated 100 units of MRG.UN at $11.12
- initiated 100 units of BEI.UN at $45.65
- SOLD entire position of COS and bought 25 shares of SU at $28.92
You may have noticed that almost all my recent purchases have rebounded sharply 😀 .
And, no changes have been made in U.S dividend portfolio in February 2016.
I have updated the portfolio pages with these changes.
Now, let’s look my portfolio diversification.
Portfolio diversification
Again and again, I will be the first to admit that a significant portion of my portfolio is built with Canadian dividend paying companies – most of the companies and their services I use or experience in my daily life.
But, when it comes to diversification I’ll be the also the first to admit that my portfolio is very poorly diversified – geographic wise and sectors wise.
More than 80% of my investments are in Canadian based companies. I am still keep adding more Canadian stocks to take advantage of recent market drops.
I have created a diversification strategic for my portfolios to minimize the investment risks, but I am not following my own strategic as I am still in asset accumulation stage 🙂 .
Recent changes in my diversification strategic
January 2016 – I have included my employer pension into fixed income category. The contribution I make into ,my employer pension plan is part of my assets, and it will definitely fit into the fixed income category.
Portfolio Geographical Diversification
| Country | Target asset allocation | Current asset allocation |
| Fixed income (bonds and pension) | 15% | 2.72% |
| Canadian stocks | 40% | 82.00 up from last update |
| U.S stocks | 35% | 13.87% down from last update |
| International stocks | 10% | 1.41% |
My Canadian portion of my investments have increased a bit from my last update due to the recent purchases I made.
Portfolio diversification – sectors & fixed income
Actually, (I guess) there are only 10 sectors, but I have divided my dream portfolio by 15 sectors including fixed income/bonds/employer pension.
Please note this is not the way professional fund managers or experts diversify their funds. This is my own diversification strategy.
| Sector | Target asset allocation | Current asset allocation |
| Fixed income (bonds & Employer Pension) | 15% | 2.72% |
| Finance | 10% | 19.56% |
| Industrials & Infrastructure | 5% | 8.20% |
| Consumer Staples | 10% | 6.92% |
| Energy & Materials | 5% | 4.38% |
| Utilities | 5% | 14.39% |
| Pipelines | 5% | 13.07% |
| Consumer Discretionary | 5% | 2.91% |
| Health care | 5% | 0.0% |
| Information technology | 5% | 0.08% |
| Telecommunications | 5% | 6.67 |
| Real-estate | 5% | 8.34% |
| Miscellaneous & Preferred shares | 5% | 4.92% |
| Transportations | 5% | 6.45 |
| International & Diversified ETFs | 10% | 1.41% |
From the above table, you could easily see my poor portfolio diversification. Finance, pipelines and utilities are almost 50% of my total value. It is very risk approach!.
It is a big mistake I make now. But I have no choice as I am unable to move my Canadian dollars into U.S market to diversify due to the currency exchange rate.
However, I won’t sell holdings from over weighted sector and buy in under weighted sectors. But, I will try to balance my holdings by adding new units in the under weighted sectors.
This is the first strategy I developed for my portfolio diversification. It will evolve over time with the world economic conditions and my risk tolerance.
I will update my progress every month under the portfolio updates category.
Do you have any diversification strategy? And how often you balance your portfolio?
Kudos on the site….I’ve read the entire thing…all updates.
I’ve done almost the exact same thing now. And just like you mentioned, some of the great deals I was getting are no more. Good capital gains, but not as many buying opps. Based on your experience, are there always buying opps for this type of investing if you have your eyes open? How long are the gaps where you have just focused on debts? I think I should just work on getting the leveraged debt down a bit. Thoughts?
Hello Justin,
Thank you for stopping by,
There are always buying opportunity out there. If you are focusing for long-term, then current prices are not a big deal. Just imagine if you could go back and purchase TD or ENB in year 2000. How much capital gain and dividend you would have gained? 😀 . It is impossible to go back 15 years, but we could always plan for next 15 years. 🙂 . Honestly, hard to time the short-term market movements. But, for long-term investors there are so many opportunities.
Actually, I’m just reducing debts to improve my purchase power. No idea to pay down all the debts.
Please understand leverage investing is very risky if you use it in a wrong way.
Best Regards,
Hi, there are too many uncertainties in Canadian and Global economy. You are taking too much risk by buying stocks on margins. A small crash will wipe-out your entire fortune. Good luck!
Hello Steve,
Thank you for stopping by and your comments,
I totally understand that leverage investing is risky, but I just took advantage of the market drops and hunted few high quality stocks for bargain price.
Cheers,
Just curious as to when or how you plan to pay back the $ you borrowed from your margin account? Will you make montly installments or will you sell some stock once you have made a profit to pay it back?
Hello Craig,
I may do both. Paying down my debts using my saving from day job and selling few high risk sectors like energy once they recovered. I have no idea to sell those low risk dividend growth stocks unless they grow rapidly and become huge percentage in my portfolio.
Cheers,