Plans For 2010

My last post was prepared in a bit of a fog on the Monday morning following the festive season. Since then, I've looked into things more closely and discovered some interesting numbers.

My portfolio has three main components. The largest is an account with a fund company which includes just two funds, both of which I've previously mentioned, the Canadian Resource and Endeavour Funds. The next account is a basket of five seg funds with a life company. It's one of those guaranteed income accounts...if I live long enough. Finally there's my trading account which a self directed RSP with a discount broker. As mentioned before, this is my smallest account and I have the most fun with it.

The value of my trading account increased by 56% in 2009! Whoopee! I started the year with six stocks in this account...four of which were still there at year end along with five new ones. Additionally, there were a couple that I bought and sold during the year. I completed eighteen trades in 2009. Not nearly enough to qualify for discounted active trader fees but at least I feel that I'm moving away from that passive mode. Taking charge...sort of.

One of the stocks I bought and sold within the year was Canadian Hydro Developers (KHD) which was taken over by Transalta (TA). I wanted to buy it when Transalta made the initial offer but had no cash in my account. Their offer was 4.55 but the shares quickly went higher as the market anticipated an increased offer to come. By the time I sold something the Canadian Hydro shares had risen to 5.00 which I paid. I was rewarded a couple of weeks later when Transalta revised their offer to 5.25. I was pleased with a 5% gain in a very short time. Had I been in a position to buy sooner I could have done much better. The lesson...keep some liquidity in the trading account for great opportunities when they arise.

My large fund account was up 34% thanks to rising commodity prices and strong performances by Canadian large cap companies. This account makes up more than 50% of my portfolio and the Resource Fund was a full 75% of this. I was in love with this fund when oil reached $147.00 per barrel. Not so much when oil fell to $33.00. Now that oil has recovered to the $80.00 range and the unit price has responded accordingly I felt it was time to make an adjustment. I rebalanced this account to divide the holdings 50/50 between the Resource and Endeavour Funds. My next step will be to source out a third fund for this account. I’ve done well with all the eggs in two baskets but wonder if a little diversification is in order.

My seg fund account increased by 18% in 2009…but not before going down 40% in the final six months of 2008. We’ve got a long way to go baby! Canada’s two largest players in the seg fund business suffered in 2009 as their balance sheets went out of whack because of the difference between the seg fund guarantees and the actual value of the funds. Not my problem, they’re the ones who provided the guarantees. My plan for this account id to get out of it sometime in the future when the Deferred Sales Charges are fully paid and value of the holdings equals or exceeds the guaranteed value. Guarantees are nice but 5% annual is pretty easy to beat in a normal market…and we all hope for a return to a normal market….right?