A few months ago I wrote an article about how oversold stocks have become so I started a swing trade with two of my favorite companies, Suncor and Silver Wheaton. Well if you follow me on the Twitter you may have seen my tweet earlier today when I sold both my holdings and made a 34% gain. Mission complete. This swing trade was a success.
When I first purchased these stocks I received a lot of positive feedback from readers…
“That’s awesome that you’re confident enough in your investing to take out a loan from the bank. ” ~Jeremy
“Awesome !!! Your $1000 is a coming :D” ~Amanda
“Very solid buys!” ~PC
Wow, with that kind of support how can this swing trade possibly go wrong? (^_~) Okay, details below.
Wed, Jun 6th, 2012. (my original post here)
Initial Investment: $3,000, from savings.
Leveraged up to $5,810 by borrowing the extra $2810 from TD bank on a line of credit at 5.25% interest rate.
Bought: 100 shares of (SU.TO) at $29.02 = $2,902
Bought: 100 shares of (SLW.TO) at $29.08 = $2,908
Total money spent buying stocks: $5810
Today, Thurs, Sept 13, 2012.
Sold: 100 shares of (SU.TO) at $32.93 = $3293
Sold: 100 shares of (SLW.TO) at $36.23= $3623
Total money earned from selling stocks: $6916
Difference: $1106
Expenses:
Interest on borrowed money: -$39.20
Commission: 4 trades x $9.99 = -$39.96
Net profit after expenses: $1026.84 (before taxes)
So after paying back the loan on my line of credit, and all associated costs I’m left with about $4027. Considering that I started with $3000 of my own money, a 34% return on investment isn’t too shabby. I could’ve made more money if I sold later in the day but when I started this swing trade I stated very clear that my goal was to make $1000. I’ve reached it and I’m happy with my results. I can’t lose money by making a profit after all. I was too greedy in my previous swing trade (round 3) and held on too long >_< Not making that mistake again this time lol.
This strategy of buying high quality, industry leading, large capitalization stocks when markets are depressed, and then selling them when they go back up has worked for me 3 out of 3 times so far, maybe it’s beginner’s luck? Using leverage has also helped because for every 1 percent increase in the share price, my investment returns almost 2 percent :0) My other strategy of timing the volatility index on the other hand, is failing miserably haha. But now I’m a better investor because I know what works for me, and what doesn’t.
Disclaimer: I’m not a professional anything. Trading stocks is very risky and I could’ve easily lost all my money had I been unlucky or something.
i think i will do the same with intel, i think it’s underevaluated at the moment.
Great company. It has all traits of a market leader. At less than 10 times earnings I would agree that they are undervalued right now. Maybe wait for some positive indicators before going in. I have INTC in my RRSP. The 3.8% dividend yield makes it an attractive buy-and-hold part of my retirement plan :0)
don’t know if you’ve done it yet but I would highly recommend Dividend Monks new book, bit pricey at $16 but he does a great job of showing you how to identify “cheap” dividend stocks. I’m slowly (at 200 pages quite a bit to work through) working my way through it and hoping in the new few weeks to analyzing stocks on my blog.
Rob
Sadly the one blogger who did follow his methods Optimistic Amateur is no longer blogging :(:(:(:(
I’m hoping someone will pick up the mantel (hint hint anyone) Take a look at his blog you’ll see what I mean.
Finally bought today at 23.03$ 🙂
Nice. The dividend alone will make it worth while in the long run.
Hi there, I wish I had the knowledge you do about finances. Maybe I would not be in the boat I am in! 😉
I love your website and plan come visit often!
Oh stop it, you （⌒▽⌒） I’m learning just like you are. Let’s try to learn as much as we can about the expansive world of personal finance 🙂
Congrats! 34% in 3 months is amazing I think I’d be happy with 6-7% per year overall
Thanks Dave. QE3 was really the last thing that was needed to boost the markets into multi year highs yesterday :).
I shadowed your SLW and SU trades as I also like both companies. I held out until today and saw 34% out of SLW and 15% out of SU, didn’t want to get burned by being greedy. Thanks for being transparent and upfront about your decision making process for these swing trades, would love to see more!
Smart move Adam 🙂 you are a better technical trader than me. I think you made the right choice selling today, because holding on longer would not be worth the risk. If you’ve bought them around 3 months ago like me then you must have also received a quarterly dividend distributed from both these companies. Mine was $23. It’s like an extra bonus for us!
Question, why those two particular companies?
Three companies you may be interested in Enerplus (ERF) TransAlta (TA) and Penngrowth (PGF) all three are dividend stocks that have been massively beaten down all for the same reason, fear of a dividend cut.
My impression is that the stock keeps dropping till the dividend gets cut as which point it begins to trade sideways and over the course of 4-6 weeks sellers start to show up, it’s at that point that it starts its climb up.
The key is to pick it up just after the dividend cut is announced.
Planning on doing a blog post on this weekend and hope to get it out Sunday evening
rob
I’ve heard of TransAlta. Not too familiar with them though. Would be interested to read your strategy on picking dividend stocks :). I picked Suncor because it’s the largest oil and gas company in Canada, plus it’s has an integrated business on the retail side, this makes it unique because it’s value will fluctuate with energy prices globally, but the chance of it going bankrupt is less than almost every other oil company in Canada, because it has that market diversification and economy of scale. I haven’t found another company that offers this kind of safety net, yet still increases earnings year after year. I chose Silver Wheaton because they stream silver from a number of different suppliers, so they don’t carry the risk of mining. Combined with the fact that they were trading at something like 30% below their average P/E ratio, I believed it was only a matter of time before they would out perform again. Also, they are headquartered in Vancouver, which is where I live, so I like the feeling of supporting a local firm.
I got more details on my blog now, but basically I looked at them because they were DRIP stocks that were really beaten down due to dividend cuts
Congrats on the nice profit. Not too shabby for 3 months. Next time we play tennis I might have to let you win so you can dish out more of your swing trading tips lol.
I’m sure you’d get the concept right away 🙂 Although a lot of it is experimentation for me. I’m not sure how long this track record could go.
I need to read up more about stocks. Looks like you are doing awesome! Congrats!
Thanks. I would start by doing some research into stocks in the pharma and health care industry. Should be areat investment over the next decade or so ^_^.
I’m not a huge fan of investing in individual companies b/c I think the risk-reward trade-off isn’t there. I am invested in a total stock market fund(VTI). It returned 14.59% over that same period, which leads me to believe the increase in these stocks is more based off the market’s returns rather than the individual companies doing anything special, do you agree?
The VTI is a great index fund. It tracks the S&P 500 very well. I agree the alpha I added was not significant to the success of this trade. The main reason my 2 stocks returned 19% on average is because of quantitative easing 3, and the overall upswing in the market during the last few months. Anyone could have picked different stocks over the same time period and likely made a profit too :0)
🙂 Thanks for the response, good analysis btw.
GOOD GOING !!! Was there any doubt 🙂
not even the slightest 🙂