As I mentioned before, I started investing in Mutual funds when I was in high school. I didn’t know a lot about them at the time, or even how they really worked, but I bought them because my Dad said it would be good for my future.
Fast forward a few years (or 10), now I research personal finance and stock trading/investing in my free time. What is my investment plan moving forward? The plan is to continue making monthly contributions to my RRSP, my wifes pension, a bit to a vacation fund, and the rest into a non-registered stock portfolio. My non-registered stock portfolio is where I hope to gain substantial growth through short and long term stock trading/investing.
Right now, my RRSP mainly consists of mutual funds and Canadian Blue Chip dividend stocks which automatically reinvest when dividends are paid out. My non-reg portfolio consists of 70% dividend paying stock and about 30% stocks that I short term trade with (2-4wk holding time). I’ve been using the short term/swing trading strategy for the past 6 months now and so far i’ve been winning more than i’ve been losing (knock on wood).
I typically buy and hold a stock for as long as the momentum keeps chugging along which usually lasts around 2 to 4 weeks. I’ve been picking which stocks to watch based on fundamental analysis, but buying and selling them based on technical indicators. I learned a lot about technical analysis from the StockCharts.com education centre along with studying various charts and how they react under various technical indicators.
I learned how to fundamentally analyze companies based on cash flow and other value ratios through reading books like “One Up On Wall Street” by Peter Lynch, “The Intelligent Investor” by Ben Graham, “The Warren Buffet Way” by Hagstrom and “The New Buffetology”. I also learned a significant amount from Tom Gardner’s site fool.com.
As “sexy” as short-term/swing trading may seem, I think that it is fundamental for a stock trader should know how to read a financial annual report and analyze balance/income/cash flow statements. So if you’re just starting out, pick up the books I mentioned above and start reading!
We plan on moving to a larger house in the near future. When that time comes, I will sell off my non-reg portfolio, put it down on the house and obtain a re-advancable mortgage. From there, I will hopefully use the Smith Manoeuver to it’s fullest. When that time comes, I will most likely reduce my short term trading, and invest in mostly blue chip Canadian and American companies.
Hope you’re all enjoying reading about my financial life. Happy Holidays!