Someone was asking what my 5% rule was, so let me explain.

Actually there are two rules; but like any rules, they are not hard and fast, but guidelines.

The first is, don`t buy a stock until it has had a recent 5% increase; until it has shown you it is headed in the right direction.

The second is, if a stock falls more than 5 %, sell.


The first rule instantly makes a lot of sense to most people, but they are quick to point out that by following this rule you will miss out on quick moving opportunities. That is true, but it will also protect you from loss and capital stagnation.
I have watched Goldcorp and oil stocks for several years. I think I know them pretty well. I know there trading ranges and what to expect. I bought both Goldcorp and various oil stocks on their lows, without waiting for a 5% increase. I did quite well with the oil stocks, but suffered a loss with Golcorp. So, is it worth the risk? Probably not.



The second rule, if a stock falls more than 5 %, sell, people have a much harder time embracing, but it, or a version of it, is very important. A friend of mine complained that by doing this all you are doing is admitting you were wrong and locking in your losses. That is one way of looking at it. Unfortunately that is the wrong way.
Really what you are doing is locking in any unrealized gains, and preserving capital.
Think of it this way; If a stock falls 5%, it can get back to where it was quite easily. But what if it falls 10, 20, or even 50%? A drop of 20% requires a rise of 25% to get even. That is not unheard of, but not common. A drop of 50% requires a rise of 100% to break even. Again, not impossible, but highly unlikely. And anyway, what would you rather have; a double getting you to break-even, or a 95% return?

My portfolio performance since buying more oil.

Contrary to advise from other investor friends I have piled  back into oil. I have bought some suncor, arc energy, can oil sands, royal dutch shell, and baytex. I didn't buy much baytex, but enough if it recovers.

My rationale; Everything was so low anything was a good deal.
 Oil is around $40 u.s. a barrel. An increase to $50 a barrel (which I think is quite possible, even by the end of the year ) is an increase of 25%. That must translate into higher stock prices.

I just bought a small position in Toronto-Dominion Bank TSE:TD 49.52 (-1.51%)
My reasoning is this;
TD actually has about half its branches in the u.s., but reports earnings in can. dollars. If TD does nothing, but with the can. dollar down 30%, it should still realize 15% earnings. Also, it pays a dividend, and is very safe.

This year has certainly not been as good for investing for me as last year. The market is down 5% this year but my problem is my morbid fascination with Goldcorp.
Yes, I bought more without telling you.
Yes, I didn't follow my own rules.
Yes, I am loosing money; lots.