Working a 9-5 job isn’t going to help me meet my financial goals in time. I need something more. I know I can do more. In an attempt to grow my finance and knowledge, I began studying about investing and trading.
With my gains in April, I have entered a dangerous mentality. I was slowly becoming less and less aware of the risks and more drunk on the imagination of success.
Bought 100 shares of REI.UN @ 14.84.
Bought 670 more shares of REI.UN @ 14.70.
At this point, the 14.xx range seemed like a decent deal. There dividend payouts are pretty great at around 10%. From their financial statements, they are sitting on a pretty good sum of cash and capable of weathering out the storm. Whether I keep this long or short-term, I think it will work out either way.
Later during the morning, the price goes up to $14.90. I doubt there’s a good reason for any positive speculation and think it will eventually drop again, so I sell 770 shares @ 14.90 for a $140 profit.
I thought I was making decent decisions that would be able to net me small gains that accumulate over time. What if I did often enough to net me couple hundred dollars a week?
Maybe, but to be honest I still didn’t know what I was doing. The market is quite volatile and it’s just really risky to do stuff like this, as I will learn shortly.
I noticed that for the past couple of mornings, there were usually huge fluctuations in the stock price. Mornings are pretty volatile, and my earnings from yesterday were coming from the morning trades as well.
I decided to try again, just like yesterday, to buy first thing in the morning and sell shortly after.
I bought again 700 shares of REI.UN at $15.35.
The stock did fluctuate, all the way up to $15.70. That’s a 2.28% gain. Not bad for a daily win.
But was I there to take advantage of it? No. This dumb butt got caught up at work and missed the time window.
![REI.UN.TO May 5 2020 Investment Plan](may 5.png)
Guess what happened after? The stock dropped, never to see the light of $15.35 again until May 27.
![REI.UN.TO May 5 2020 Investment Plan](after may 5.png)
But this is a good lesson. I admit to myself that I’m not in a good position to be doing these silly gambles.
There is a company that has had my curiousity, but with their earnings call coming up, they now have my attention.
Here are my points on why I think they are so interesting
- their balance sheet is solid. They had a pretty good revenue growth of 10% reported on Dec 2019 for 2020 Q3 as well. They are on the way up. ![Aritzia financials](aritzia financials.png)
- their brand is pretty positive among females. Seriously, ask any females around you, and more often than not they will have a positive view of the brand
- since their last conference call, they announced a plan to have 25% of net revenue come from online sales. Declaring a goal like this, pre-COVID? This is great! With their healthy cash standing they can definitely explore ways to lure more customers online and solidify their online infrastructure.
- BC has kept COVID pretty low, and stores there were planning to reopen.
- decent news like this https://twitter.com/ARITZIA/status/1261337636423102466
- in the COVID-era, smaller businesses and businesses without a good cash balance to fall back on will face perils, and may get eaten up by bigger brands like Aritzia.
Some of my concerns:
- there weren’t any plans to explore markets outside of US or Canada.
- there wasn’t a strong indicator that Aritzia would be the one to eat up the smaller businesses that do not make it through COVID
I was getting pretty convinced that Aritzia is a good hold. Either short term (sell after the earnings call) or long term.
I buy 600 shares of ATZ @ 15.74.
Dividends are coming up. I was waiting for prices to drop lower but I fear that if I wait any longer the prices will end up going up before the dividend payout. Other investors will be running in to get their dividends as well last-minute.
I buy 340 shares of REI.UN @ $14.62.
I buy 790 shares of TNT.UN @ 5.34.
As expected, stocks go up a bit in the coming days.
![May 21 2020 REI-UN.TO Rally](may 21 dividend rally.png)
From what I understand, two reasons for the rally:
- There has been what a lot of investors speculate as good news based on a number of earnings calls, and these spilled out into a rally in the general stock market.
Now, here are the questions I asked myself:
If the stocks go up enough so that I will end up making more money by selling than from dividends, will I sell?
- After some thought, I decided to take a different approach than April and say no. The reason was that I didn’t want to feed my desire for “timing the market”. I wanted to practice self-discipline. Find out my principles and stick to it. It’s okay if I won’t make as much money. I’m a novice, and I don’t want to pick up dangerous habits that will cost me BIG in the future.
News is out that there were a bunch of people not practicing social distancing across Canada. 2nd wave, see you in two weeks? I’m going to be wary of holding my stocks through the dip. I’m going to be keeping my eyes peeled for any opportunities to sell in the first week of June.
The day before dividends on REI.UN and TNT.UN. My goodness, the rally has driven them up enough such that I could just sell them all and make more profit than I would from dividends. It’s really tempting to just sell them first, but hey, I’m not trying to time the market here. I’m not doing all this to “get lucky”. Everything I do here is part of my long-term trading journey. Stick to self-discipline. Finding good principles will be much more valuable than my gains at this point in my journey.
But… there’s Aritzia. It’s been going up with the rally as well. The temptation to close my positions are pretty high, not gonna lie.
Hola ex-dividend date. Hola my dear dividends.
1040 REI shares with $0.12 dividends / share = $124.8 dividend profit.
790 TNT shares with $0.0495 dividends / share = $39.105 dividend profit.
I made enough to cover my LOC interest payments. Phew.
An of course, the prices of these stocks go down to adjust for the dividend payouts. I’m thinking of holding these and maybe closing on the positions around the first week of June.
And there is of course, the quarterly earnings call for Aritzia.
A lot of good expected news.
- reveneu and sales increase, but that’s expected. I’m more worried about their plans for COVID
- increase in the amount of cash. Good.
- a good decrease in liabilities. 9.54% drop year over year. Increasing sales and cash while dropping liabilities? This is really good.
- ecommerce revenue looks pretty strong, as expected.
- entered into a strategic partnership with SAP to boost ecommerce experience. Company says that ecommerce should complement, not just replace, in-store shopping. Yada yada yada. Good news. Didn’t expect this. I think this is a great investment for the way forward. To succeed through COVID, organizations must restructure, not just simply burn cash and wait it out. This partnership indicates that Aritzia is definitely aligned in that approach.
- this is complemented by the fact that they introduced a new POS system back in 2018 that gathers some pretty good data on their clients.
The stock price didn’t go up as high as I expected it to be. Part of the reason is because the market in general went down a bit on this day. I think it’s going to take a little more time for the market to price Aritzia correctly.
At this point, I am thinking Aritzia is a really good hold, and that I could keep these holdings long-term. Maybe through a couple of quarters… Or even years!
- will the reopening of the economy go smoothly?
- will the development of the vaccines proceed smoothly?
- will the government continue to introduce stimulus into the economy to support cash flow?
I’m expecting some hiccupes for the first point. There were a bunch of people not conforming to social distancing during the long weekend and I doubt reopening will go so smoothly. I mean, have you seen how the reopening went in South Korea?
Thus, I’m leaning towards closing my positions during the first week of June.
- realized profit: $140.00
- dividend income of $163.905
- interest payments on my LOCs: ($58.33)
- net income: $245.575
- 600 shares of ATZ.TO @ 15.74
- 1040 shares of REI-UN.TO @ 15.111
- 790 shares of TNT-UN.TO @ 5.34
- Trying to analyze a company’s finances before buying shares.
- Trying to find good principles that will help me ride the waves.
- Coming up with some trading plans before buying shares, so that I know what I’m going to do in case of a dip / rise.
- Not making emotional investments (“ahhh I should sell now… right… right?“)
- I think I could have made some extra cash by selling covered calls.
- After a discussion with a friend, it turns out I didn’t know the basics of what a REIT is, or how they operate. Not knowing the fundamentals is a pretty big error. I should try to study the fundamentals in the future.
- There’s a long way to go for me to properly analyze a company’s finances. I’m looking at all these quarterly reports, annual reports, supplementary information, letter to shareholders, and news but there’s just so much information. There’s too much. I don’t know how to narrow it down. I feel like I’m looking at the trees, but not seeing the forest.
I’m pretty nervous for June. I know I shouldn’t bet, but I can’t ignore all the news about people not adhering to social distancing recently, which will cause a huge boom in reported COVID cases. I’m expecting some rally to happen in the first week of June, so maybe I will sell my shares then.
But what if it keeps going up after, despite concerns of COVID? Money printer broom broom.
My rough plan in that case would be to find some stable dividend stocks and make money off of dividends & options. Just hold.
Given my background in tech, I would also like to start exploring some tech companies.
That’s all. Hope it was a fun read. Happy trading!