Portfolio Update: November 2010

Heres the monthly portfolio update for the BTI portfolio which consists of 2 accounts: a TFSA account and a Non-Registered account.

The TFSA is currently holding the following stocks (November 30 closing prices):

(A Tax Free Savings Account is an account where your capital gains are exempt from taxes)

Market Value: 13,317.50 + 339.26 in Cash = $13,656.76

The Non-Registered account is currently holding the following stocks:

Market Value: 14,005 Margin Used: 6,112 = NET: $7,893.00

BTI Portfolio Value: $21,549

YTD Results from January 1 2010

TSX at start: 11,866 @ November 30: 12,953 Change: +9.16%

BTI at start: 12,936 @ November 30: 21,549 Change: +66.58%

M/M Results from November 1 2010

TSX at start: 12,676 @ November 30: 12,953 Change:?? +2.18%

BTI at start: 19,170 @ November 30: 21,549 Change: +12.41%

HELOC Portfolio Performance

The HELOC portfolio is basically a non registered account with money borrowed from my home equity line of credit. *Please take note* that this is money I can afford to lose. The impact of losing this money would be equivalent to skipping a lump sum payment on my mortgage for 1 year. I will use the banks Performance tool for the monthly results because it takes into account deposits and withdrawals. Now that youve called me crazy and shook your head, on to the results:

For the purists amongst you, heres my sector diversification:

For the record, my outstanding balance on the HELOC is still $18,500, so basically I am up about +8561$ so far if I sell everything at the closing prices above. This is the peak for the number of stocks held in the HELOC portfolio as it will start winding down when my 4 non dividend stocks hit their target prices and get sold.

Monthly Review

I am more than happy with Novembers results as 3 mines could have scuttled the market: Elections, QE2 and Employment numbers. These events came along as or better than expected which helped markets keep some sort of stability until the European debt came back on stage.

The good news in November is that the onset of cold temperatures is slowly heating natural gas prices. Its a matter of time before my gassy stocks move along nicely (DEE, CQE, PMT). Another piece of good news came out in the form of 2 quarterly numbers: Chinese GDP grew at 9.6% and Indian GDP grew at 8.9% in the July-September period. Why do you think oil prices are still holding ground above $80 given the European debt storm? The oil variable carries a lot of weight in the equation of growth, it is an international commodity and as long as the world economy doesnt come to a sudden stand still it will be in strong demand regardless of all the drama in Europe.

The BTI portfolio registered strong growth this past month even as 2 stocks weigh it down heavily with paper losses, Perpetual Energy and Reliable Energy. Why not sell the losers you ask? Well Perpetual has been abused by the market because of its natural gas weighting, so it would not make sense to sell now that natural gas is turning around and another reason would be no change in company fundamentals. I like the management at Perpetual and strongly believe that they will turn the ship around and adapt, whats the point of doing due diligence if you dont want to stick to your findings right?

As for Reliable Energy, before I convince myself that all is well I need to call the CEO and have a chit chat with him. I am suspecting that one of the fracced wells produced disappointing IP flows. Me being in Quebec, I just cant take the car and drive down to see how the well is doing for myself but others in southern Saskatchewan can do just that and they can sell their holdings following a personal inspection of operations on the ground. If its only 1 well out of the 4 horizontals that that they drilled thats fine and the share price will recover as the other wells are completed and brought on stream. Reliable has been plagued with wet weather and delays in getting fraccing crews, hasnt had any smooth operations lately unfortunately. However, Q4 and Q1 are typically when a company carries a lot of drilling so I just might want to give REL a chance here.

My banks low commission special ended officially yesterday in my HELOC account. Transactions are now priced at a rip me off price of $30. I would have liked to clear the margin and sell the non-dividends before the deadline but its just not that simple knowing why I invested in these stocks and what my expectations are in terms of price targets. I will discuss the HELOC experience and portfolio in detail tomorrow.

1 more month and we get to the year end results. This years numbers might turn out to be outstanding in all 3 accounts I am managing. However, I need to remind you and me that past performance is not an indicator of future results. This means any emotions such as feeling too confident and underestimating the market should be avoided at all costs as it precedes the fall. Keep the discipline, stay focused and kill any emotions as soon as they appear.

I invest a lot of time in planning my trades and executing them. So far, this formula has proven very successful especially in 2010 as in 2009 anyone would have beaten the index. I do not question the fact that luck has a role in all of this but I wonder if it carries more weight than skill in this equation. Coming from an engineering background, I need to assign numbers to everything. However in this case, I doubt anyone was/will be able to assign an accurate number for the ultimate variable Luck!

How has your portfolio done so far this year? Do you think we will get a Christmas rally this year?