So let's look at the risk of volatility. My SSP portfolio has been as high as +17.5% and a low of -20% (current -16%) during the last twelve months.
My US Options portfolio has been high of +36% and a low of -29%. Did I ever get hammered during Dec/Jan. I got hit by an added bonus - a 22% taxable profit for 2015 while I sit on an unrealized loss. In case Argentina is crying - -25% current so there is 'improvement.'
My dividend portfolio peaked at +11% and dipped to 9%. This is my equivalent to ETFs and allows me a little sleep at night.
To be honest there are a few ETFs lurking in that portfolio. No surprise that it tends to drift close to the market.
To be doubly honest, the stocks in my dividend portfolio are often featured in ETFs. Good stable companies that pay regular dividends. The proverbial widows and orphans stocks. They also tend to be larger companies and they are the "market" so there is no surprise that they get returns close to market. My computer can pick these stocks without the need for a management fee and very few ETF or mutual manage to outperform the market by more than their fees.
A few quotes: "You are not as smart as you think you are when the market is going up, nor as stupid when the market is going down."
"Most Canadians are futile savers."
http://www.straightgoods.ca/ViewFeature3.cfm?REF=627&Cookies=yesPay particular attention to the last two bullet points of the article.
The ETFs and dividend stocks run the danger of keeping you in the futile area. I got out of futility by getting into stuff like the first two. Rollercoaster but every so often you can get off close to the top. Were there is volatility there is a greater possibility of change if you can be a little smart.
Since SSP looks for volatility and looks on the TSE it tends to concentrate on the more volatile industries and this means oil, rocks and drugs.
Over the years I have done quite well with SSP, however, I find now I am investing an ever decreasing part of my funds with it. I think it is successful because it tends to pick smaller stocks but that also limits it. Many of the positions are so hard to get into and out of that they take weeks and the resulting price moves makes larger blocks less profitable.
I sometimes think that the periods are extreme quiet here is because people drift away. I blame the volatility rather than the 'smallness.' My back-up theory is Facebook (I have heard that one can waste a lot of time there.)
Which is a shame since there is a dearth of good stock advice in Canada. Most of my money is now invested outside the country because it seems that the only advisory information one gets here is on what ETF or GIC to buy.
My love of Chartwell comes from having to find a long term care facility for my mother. In researching what was the best for her I also discovered that it looked like a very good investment. My return on that investment more than paid for my mom's private room and her other needs so I get to make money and feel good about it.
With the pharma, tobacco, and specialty governmental type products I have no such morality safety cushion. Charity does seem like a good option. (In the middle ages robber barons funded monasteries to pray for their souls. I think my solution is better.) I have two rules for charity 1) I never admit to actually giving anything to charity, 2) I do not like to fund grown men wearing fezes and riding around on little motor bikes.
If I did give to charity microcredit would be the way to go. Unless like me you have the luxury of travelling to the locations where the need is and seeing the clients directly there is no easy way to check the 'honesty' of the middle men. The advantage of these is that there is payback. So the money acts as its own verification device. If there is dishonesty it does not come back. Don't keep on sending it to the same middle man in that case.
Since I have inherent faith in the general goodness of most people (excepting those that own and are executives of pharmaceutical companies) I would anticipate that the funds on hand would grow faster than defaults deplete them. I would not expect ETF rates of return but I would not be surprised if it exceeded bank GIC returns. [Perhaps I should add bank executives in with pharma.]
D
