Portfolio Update: September 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 (September 30 closing prices):

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

Market Value: 11480 + 27 in Cash = $11507

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

Market Value: 10815 Margin Used: 4226 = NET: $6589.00

BTI Portfolio Value: 18096$

YTD Results from January 1 2010

TSX at start: 11866 @September 30: 12368 Change: +4.23%

BTI at start: 12936 @ September 30: 18096 Change: +39.88%

M/M Results from September 1 2010

TSX at start: 12003 @ September 30: 12368 Change:?? +3.04%

BTI at start: 16568 @ September 30: 18096 Change: +9.22%

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 (pun intended):

For the record, my outstanding balance on the HELOC is still $18500, so basically I am up about +3897$ so far. Of course I have sinned by buying WestFire Energy on margin using borrowed funds. In hindsight, I did the right thing since it has increased more than 10% since my purchase on September 20. I just could not ignore my due diligence on WestFire and had to take a position.?? Profits will be locked at what I perceive to be the appropriate time.

Monthly Review

Another month, another victory scored against Mr. Market (feels good to write!). As much as I am satisfied with the results so far, both feet remain firmly grounded. September turned out to be surprisingly green (pun intended) but there are no guarantees for October or any of the coming months thereafter. The recovery is still fragile and markets might hit sudden air pockets any day.

I am still optimistic for the end of the year results and keeping a very close eye on the economy. If sentiment turns sour WFE will be the first to be unloaded which would wipe out the margin in use. Add to that I have at least a $3000 cushion before a light market correction reaches my own HELOC money. Of course any fat fingering would wipe out my 3 months gains in mere minutes.

The HELOC portfolio is currently morphing into pure dividend payers as the $6.95 per transaction promotion deadline gets closer in November. The plan is to simply use the banks money and have Mr. Market pay for the interest and the principle so it wont really be part of BeatingTheIndex mandate come 2011. For October I am expecting $75 in dividends from DAY/PMT/AVF and the amount should rise steadily as the end of the year approaches. The objective would be to keep the portfolio around $20k in value while the HELOC goes significantly under $15000 if possible. This will happen as profits are locked on the non-dividend stocks.

Most of the action has been in the HELOC account as several transactions took place. GPX got acquired by Avenir which is great since it pays a dividend and I will be converting all my shares to Avenir shares. This will bring the total number of AVF shares to 1320 in my HELOC account. With AVF, my dividends for January will be at least around $104 per month. My last interest payment on the HELOC was $44.

MEL recovered nicely and I missed some potential profits since they released an operational update not long after I sold. No hard feelings as I really do not have enough money to get into all the opportunities I come across, or else, I would have held onto MEL longer, same applies for Torquay Oil. I would have also have bought tons more, I wish I had $100k more to invest with.

Palliser O&G hit a low of $0.60 this week after I had to buy my second lot at $0.68 1 day earlier. I find this company severely undervalued and would have picked up 10k more shares if I had any reserves to deploy. In my opinion, I am able to identify correctly the fundamentals of the company but fail to technically pick the lowest price for starting a position. No matter, I keep on repeating to myself: market timing doesnt work!

If you are still wondering why I am so aggressive with my HELOC account I will be discussing this in the near future.

Which non-energy high dividend paying stocks/ETFs would you suggest for my HELOC portfolio?

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