Welcome to the April edition of Money While You Sleep. April brought very different emotions to me vs. March. I mean the market performed amazing in April but my personal instincts are telling me that its a trap. I will get into that later.
Here are a few highlights from this month even though we have been isolating.
- April was a month that you get into some kind of routine, understanding your kids a bit more as we continue to work from home.
- Z is officially on two wheels and it took a whopping 20 minutes, impressive!
- Rebuilt the deck stairs and handrails (Item off goal list)
- Z is doing her school work from home and reading 30 minutes a day. Her reading level is off the charts and now we are working on Mathematics, which in my mind is one of the most valuable subjects that help you in the future.
Well as the market went up in April we were upping our cash position. Therefore this month was quiet and not one buy or sell occured. I will get into why later in the post.
Dividend increases and decreases
- No Raises
- CSH cut 50% from $0.07 to $0.035 (0.8% portfolio position)
- FRU cut 71.43% from $0.0525 to $0.015 (0.6% portfolio position)
- CHR cut 100% from $.12 to $0 (2.1% portfolio position)
Due to the small % of portfolio this should not affect it too much
2016 – 2017 – 2018 – 2019 – 2020 Dividends and Rebates received
April was a record setting month for a non quarterly month with a year over year increase of 134%. Very happy with the growth over the past couple of years. The DRIP is turned on so we accumulated quite a few shares this month.
Dividends received in TFSA 1
Dividends received in TFSA 2
Dividends received in RESP
My thoughts moving forward
If April taught us anything it is that there really is no stability in the current market. Stocks are trading up and down on a daily basis. So here is my thoughts:
Right now more than ever it is very hard to value a company. For example looking at a PE ratio doesn’t mean anything as this number is based of last quarter earnings, which if your watching what’s going on globally we know that most companies will be impacted by COVID19. There are many people in the market chasing sectors with the biggest impact from COVID19 but based on what I’m seeing they really aren’t going through the financials of the company and are blind folded investors. This use to be me! For example if a stock dropped 50% I would start looking at that in particular company for all the wrong reasons, with the mind frame what goes down must go up. I learned the hard way many years ago and won’t make the same mistake. Some sectors I’m referring to are Airlines, Cruise lines, Oil and Gas and Restaurants.
So what I’m doing is stock piling cash while I evaluate companies for the next 6 months to possibly 18 months. I will be adding to the portfolio by purchasing companies in 1/3 or 1/4 positions at a time. Like many I work hard for my money and I want to ensure once its deployed into a business that it has a high possibility to do well. We are seeing dividend cuts/suspensions all over the place, on the TSX alone i believe we are over 59 cuts in the past month with many more to come. In the meantime i will be adding to positions in the silver and gold market to hedge against the dollar when the time is right, looking at past recessions gold and silver outperform the market during this time, so a 10-15% piece seems acceptable.
The amount of jobs lost and the amount of layoffs are insane and still climbing, the market over the past month has not factored that in. Let’s give an example:
John Smith when the world is normal had been bringing in $8,000/month. John has a mortgage, a vehicle payment, a stay at home wife and two kids. In Mid March John was laid-off. John applied for EI which will bring him $2,000/month. John has very little savings/investments and will have no choice but to negotiate with lenders by deferring payments so he can get through this difficult time. John is at home and watching every single penny and only buying what he actually needs. John goes back to work 6 months later. How long will it take John to catch up on all the payments? How much debt did he have to take on during that time? When will John take a vacation? Will he stock up his savings account so that he never gets put in this position again? Will John take his family on the annual vacation in 2020? Come next year at tax season how much $ will John have to pay due to the $2,000/month being taxable.
The scenario above is real for some people and the questions are difficult to answer. The reality is something like COVID19 has a big impact on the economy and this is why I believe we haven’t seen the worst of it as of yet.
Sectors that should do fine during the slowdown would be Utilities, Grocery Stores, Technology, Telecom Services and Railroads to name a few. Although all sectors probably won’t perform as planned 3 months ago.
As Warren Buffet would say:
“THE STOCK MARKET IS A DEVICE FOR TRANSFERRING MONEY FROM THE IMPATIENT TO THE PATIENT “
Invest in yourself
Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. Please ensure you do your own research.