Tuesday, March 22, 2011

Playing the Toronto stock market

If you have savings that are not tied up in residential properties, and have no debts, the logical thing to do with it is to invest it in the stock market. If you don't, your money will be eaten by inflation, as interest payed by Canadian banks is ridiculously low, and does not even match inflation. Here I document what stocks I bought and why, so that for future reference I can look back on my mistakes. I thought I would do it in public, so others may learn from the mistakes I made as well. I trade my stock at Toronto, because that is cheapest for me, and I avoid the bad currency conversion rates that RBC is prone to offer you.

So the first stock I bought after opening my trading account was a boring stock, just to test the trading portal, and see how buying stock works. The stock was RA or Royal Bank of Canada, as I figured it would be reasonably stable due to its size and steady operations. I bought this for 61.40 on march 9, and so far lost a few percent on it.

The next purchase I made was triggered by the Japan earth quake. In its wake, the markets fell, and the largest losers were nuclear energy related stocks. On Toronto, Uranium One (a large uranium mining company) fell hard during a couple of days. My common sense told me that the price drop was far too large to reflect the actual change of value of the company. This is why I bought UUU for 3.81 on march 15. This turned out to be a golden decision so far, as I bought it at almost the lowest point, and the stock shot up just as hard as it fell: so far a tidy profit in just a few days.

Next up were some utility stocks. I live in Vancouver, and see how much electricity is used here to heat and cool buildings. Frequent harsh winters and frequent hot summers, coupled with the ever expanding city makes me believe the demand on electricity will rise. Even though hydroelectricity is produced cheaply here, it is sold at really high rates to the consumers (you should see the energy bill I had on a 2 bedroom Beach Avenue apt). To find the stock, I typically look for bargains. I want to see healthy business for low price-to-book ratios, with low debts. This brought me to the renewable energy producer Boralex. I bough BLX for 8.46 on march 22. Boralex does hydro and geothermal. I also bought a solar energy technology company Arise Technologies, APV for 0.15 on march 22. With the advent of electric vehicles, electricity should become a hot commodity.

My friend tipped me on the growth potential of companies that work on 3D printing. On Nasdaq, there are Stratasys and 3D Systems corp. Both have sky high price to earnings ratios, so I will hold off for now. But would they ever crash, it could be time to scoop them up as they are potential supergrowers.

So, what are your ideas on the market? I would love to read them, so leave them in the comments. Let me conclude with a warning: never invest with borrowed money, only invest what you can spare.


Anonymous said...

Hi Bram,

where do you get this:

I also bought a solar energy technology company Arise Technologies that brought out new solar panel technology and got it certified for use in UK.

Can`t find anything about this.

Thx and best Regards

Bram said...

At Roman: oops, I got them confused with a press release from Day4. Sorry.

Bram Stolk said...

Als de aandelenmarkt de logische wetten zou volgen dan kan je wat bereiken met een wetenschappelijke benadering. Helaas valt er door de snel wisselende situaties door computer trading er geen touw meer aan vast te knopen.

Geld over...? koop van die veilige 5-10 jaar deposito's

jacco said...

How are your stocks doing on today's news? Political upheaval is usually not good for stocks.

Looks like those program cost increases of the F-35 "JSF" are causing both our governments a lot of headaches! Perhaps we should have bought those planes off the shelf, or the Swedish Gripen or stick with the F16...

Bram said...

Stock is pretty flat lately. Not much up or down. JSF is a big waste of money, soon fighters will be unmanned anyway, as human bodies can only take so much strain. I hope Harper will have a majority after the election.

Bram said...

Update: since then, I have also invested in Gennum Corporation (GND) bought for 7.72 and Talison Lithium Limited (TLH) for 5.48. So far, I have lost 1.67% of my money on the Toronto Stock Exchange. Uranium One has been an earner, but the other stocks wiped out that gain, and then some.