Strategy of the Week & 3 Stocks that meet that Strategy

I hope those of you near Vancouver or Calgary will join Michael Campbell, host of MoneyTalks, and I for an evening discussion of the market and how I approach it. For those who are not familiar with MoneyTalks, it is an excellent financial radio show that is broadcast in most markets in Canada. If it is not broadcast in your city it is available for free download from iTunes as a podcast.

Past MoneyTalks events have been sell outs and we expect this one to be no different, don’t wait too long to purchase tickets.

The following link has some great information on what the night will include:

Evening with Michael Campbell and Tyler Bollhorn, Calgary Oct 29 and Vancouver Oct 30

When do you buy an ugly market? I discuss in this week’s Market Minutes video. You can watch this week’s video on Youtube by clicking here. To receive email alerts any time I upload a new video, subscribe to the Stockscores channel at www.youtube.com/stockscoresdotcom.

Here is an excerpt from my upcoming book, The Mindless Investor, How to Make Money in the Market by Overcoming Your Common Sense. This piece is from the chapter, Trade Less:

Be Selective
It’s better to miss a good trade than to take a bad one. Missing a good trade doesn’t deplete your capital-it only fails to add to it. A bad trade will not only reduce the size of your trading account, it will eat up emotional capital and your confidence. A losing trade is not a bad trade, it is one that doesn’t meet your requirements. Bad trades come from working hard to see something that’s not there, guided by your need to trade rather than the market offering a good opportunity.

I have read very few books about the stock market, but one that I’ve read more than once and that I think is a must-read for every investor is Reminiscences of a Stock Operator by Edwin Lefevre. Here is a wonderful quote from that book that captures the essence of what this chapter is about:

What beat me was not having brains enough to stick to my own game-that is, to play the market only when I was satisfied that precedents favored my play. There is the plain fool, who does the wrong thing at all times everywhere, but there is also the Wall Street fool, who thinks he must trade all the time. No man can have adequate reasons for buying or selling stocks daily-or sufficient knowledge to make his play an intelligent play. 
-Reminiscences of a Stock Operator

I advise all my students that they will make more money by trading less, at least so long as trading less is the result of having a high standard for what they trade. If you tell yourself you’re limited to only making 20 trades a year, you’re probably going to be very fussy about what trades you take. With less than two trades to be made each month, only the very best opportunities will pass your analysis. All of the “maybes” or “pretty goods” will get thrown out.

We take the pretty good trades because we’re afraid of missing out. It’s painful to watch a stock you considered buying but passed on go up. You remember this pain and the next time you see something that looks pretty good, you take it with little regard for the expected value of trading pretty good opportunities. Pretty good means the trade will make money some of the time and lose some of the time, and the average over a large number of trades may be close to breaking even. The fact that one pretty good trade did well is reasonable and expected. In the context of expected value, taking those pretty good trades many times will lead to less than stellar results when the losers offset the winners.

You shouldn’t judge your trading success one trade at a time. You must look at your results over a large number of trades. To maximize overall profitability requires you to have a high standard for what trades you make. Maintaining that standard will be easier if you take the trades that stand out as an ideal fit to your strategy, not by taking those that are marginal and require a lot of hard work to uncover.

The US is printing money and China’s economy appears to be stable and improving. Combined, these point to an improving commodity market which will benefit the Canadian stock market. With that idea in mind, I set out to find some Canadian dividend paying stocks with a good potential to move higher. I did so by filtering the market with the Stockscores Market Scan using the following filters:

Exchange = All Canadian
Yield > 4%
Pays Dividends
Sentiment Stockscore >= 60
Number of Trades > 500

This found 29 stocks, here are a few that have decent charts and good historic yields. I recommend verifying that dividends will continue at the same rate as what has been paid recently.

1. T.VSN
T.VSN has paid dividends to give it an historic yield of 7.59%. The stock has been slowly building optimism and looks like it can continue the long term upward trend that began in 2009.

2. T.ERF
T.ERF was punished by the market because of its emphasis on natural gas. Its historic yield is 6.49% and the stock has an improving chart as natural gas prices improve. Appears like it has more upside in the months ahead.

3. T.HSE
T.HSE has been paying out 4.39% but the stock has not done well over the past number of years. It is up for 2012 and starting to show some optimism. Has good potential to move to $30 where it will find some resistance.

If my evening with Michael Campbell is not broadcast in your city,  it is available for free download from iTunes as a podcast.

In these evenings I plan to highlight some of the lessons from my new book, The Mindless Investor. This book is not yet available (it is being printed right now) and those who attend this event will be the first to receive one of the first 1000 copies of the book. Attendees will also receive:

– Attendance at the event
– Two months of my daily newsletter (value $118, new subscribers only)
– One month access to Stockscores.com (value $29, new subscribers only)

Some of the important lessons from my book:

– You must think like a trader to invest in the stock market today
– Diversification is a dangerous way to manage risk
– The stock market is not fair
– You can analyze any stock or market in 10 seconds (I will show you how)

Past MoneyTalks events have been sell outs and we expect this one to be no different, don’t wait too long to purchase tickets.

For more information, click on the appropriate link below:

Evening with Michael Campbell and Tyler Bollhorn, Calgary Oct 29 and Vancouver Oct 30

To get 20% off of the ticket price, use the special offer code SSTB2013 at checkout.

References

• Get the Stockscore on any of over 20,000 North American stocks.
• Background on the theories used by Stockscores.
• Strategies that can help you find new opportunities.
• Scan the market using extensive filter criteria.
• Build a portfolio of stocks and view a slide show of their charts.
• See which sectors are leading the market, and their components.

  Disclaimer
  This is not an investment advisory, and should not be used to make investment decisions. Information in Stockscores Perspectives is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The writers and editors of Perspectives may have positions in the stocks discussed above and may trade in the stocks mentioned. Don’t consider buying or selling any stock without conducting your own due diligence.