RE:RE:RE:RE:Portfolio insuranceHey CSC
First off, WOW on the $9.8M. A big congrats on that.
Thanks for sharing such personal info.
This is one of the most interesting topics as it really gives an insight into the deifferent strategies that people use. We're similar to you except we never try and time the market at all. We are long term buy & hold so the ony time we might sell is if something big changes with the company or sector.
Our portfolio is nowhere as large as yours but we do generate 2.5x the dividend income we need to live off. We only hold 20 TSX listed dividend income/growth stocks and 2 ETFs in 5 sectors only - banks, utilities, midstream, REITs, and telcos. We don't have any fixed income, private equity, or anything else.
I didn't even bat an eye or lose a second of sleep during the Feb-Mar 2020 crash and of course, didn't sell a thing. Here's an interesting post I made on the ENB board on Mar 12, 2020. If you look at it, it says the exact same thing as I say now - no worries, the market will recover.
https://stockhouse.com/companies/bullboard?symbol=t.enb&postid=30801433 To me the single biggest problem with trying to time the market is that I think people only get it right 1 time out of 10 and in the end even though getting that one right, they actually lose more in the long run that what they would have just holding on.
Take her easy
Sarge
CanSiamCyp wrote: All excellent comments by Bossu, Marketsense and Capharnaum! Thanks to all for sharing many common sense points!
In that same spirit of sharing, I agree with the major points made of:
a) having enough income generated by your portfolio so that the "unrealized capital losses" due to a downturn remain on paper while you wait for the market to recover,
b) keeping some "powder dry" in terms of free cash so that you can buy discounted stocks during the downturn, and
c) having a portion of your portfolio in private equity/alternative investments.
In our case, total portfolio performance was:
1) From 1 Jan to 31 Mar 2020, a decline of approx. $1.9 M (-22.4%)
2) From 31 Mar 2020 to 31 Mar 2021, an increase of approx. $2.8 (+42.7%)
Income dropped by about 7% during the downturn - primarily as REITs readjusted their distributions to protect against perceived rent shortfalls.
Out of 55 or so individual holdings (of different magnitudes), including Commons, Prefs, REITs, and Private Equity - only 3 were considered by me to be "mortally wounded" by the Wu Flu pandemic, and were liquidated after at least a partial recovery during the market upturn. These included CGX (Cineplex), HOT.UN (American Hotel Properties), and VET (Vermillion Energy). Capital losses realized by selling these will be used to offset capital gains in future years. Funds generated by the sales were re-deployed into entities which were excessively hammered during the Wu Flu panic but which I considered would have higher potential for recovery (such as ALA, SOT.UN, HR.UN, CHE.UN, etc.).
And my 20% (maximum) holding of Private Equity really did help to take the sting out of the market swings - as the NAV and monthly distributions were stable. So mathematically, this component reduced the %age gyration of the total portfolio.
At present, the Total Portfolio is approx. $9.8 M with less than 7% in Cash and Equivalents. It generates approx. $504k in Annualized Income. Due to the high proportion of Dividends and Return of Capital in taxable income - we paid CRA 11.1% of cash income in taxable accounts last year. Approx. $900k of Unrealized Capital Gains has accrued in taxable accounts.
Cheers!