I received dividends from the 3 stocks I hold at the end of January. $15.40 in dividends to be exact. Pretty small, I know, but I did not have to lift a finger to earn that $15.40. Passive income.
The value of both Maple Leaf Foods and Toronto Dominion Bank are both up but the long dipping and dragging Shopper’s Drug Mart is bringing the entire portfolio down. I had fleetingly considered dumping Shopper’s and vowing never to step in to retail again but last night I read this article http://www.theglobeandmail.com/globe-investor/investment-ideas/strategy-lab/dividend-investing/shoppers-drug-mart-a-sickly-stock-thats-poised-for-recovery/article8279334/ in The Globe And Mail (Canada’s national newspaper without scantily clad women).
The Globe thinks that Shopper’s is poised to increase and it is now being considered by several major funds as a good investment. Are the experts correct in their analysis? Or, my theory, does the stock increase because 1 good article in a reputable publication starts people thinking and buying the stock. Do people read the paper, read the quotes from the experts and think of it as a stock tip and buy?
How many people only read the title of that article and are making their decision based on a headline?
How much does media, old school newspapers and online blogs, influence stock purchases? I read the papers (online) and the blogs and watch a lot of television news. Were my purchases influenced by the facts I read or was I swayed by the opinions of the commentors?
I bought Shopper’s because I am a fan of the store and the stock price was low and at some point a big American pharmacy chain will want to make their entry in to Canada and this is the perfect way to gain a Canadian presence. I had read a little article many years ago about an American pharmacy chain entering in to talks with Shoppers about some sort of joining together but all plans were put on hold when the economy started to dive (2008?). That article stuck with me until I made my purchase in 2012.
Maple Leaf Foods was low when I purchased it last summer and it had still not fully recovered when I bought more shares in December 2012. Maple Leaf Foods has been fighting to regain their reputation after a manufacturing problem 2 years ago allowed a powerful bug, lysteria, in to some of their processed meat line and some Canadians became ill. It was headline news in Canada. Daily updates of the number of sick people and when another flavour of luncheon meat tested positive for the lysteria. Luncheon meat sales from all manufacturers slowed dramatically across the country.
There is $245.00 cash in my TFSA (tax free savings account) where I hold my stocks. I am itching to get that amount up to $1,000 so I can make my next purchase. I like to buy about $600 to $1,000 worth of shares at a time to minimize the commission I pay from my discount broker. I will continue to read and watch and follow companies I am interested in and when the time comes to hit the buy button on the computer there will be a lot of memories of different types of media as well as some emotion wrapped up in the decision.
All my stock experience is wrapped up in 3 stocks with a total value of about $2,700 so I am no expert but I have selected good Canadian companies that provide regular dividends. I am anxious to start increasing the size of my portfolio but I have to concentrate on getting rid of the dreaded HELOC (home equity line of credit) before I can jump in with both feet.
I think people read in the papers or on Seeking Alpha and then BAM the stock goes up or down based on negativity or hype. Just look at BBRY (Blackberry) you can see that it’s exactly what happened. Or AAPL. Or SBUX.
I guess I had better google Seeking Alpha. I am missing out on a source of information.
“How many people only read the title of that article and are making their decision based on a headline?”
I’m not sure about people, but the majority of trades now are done by computers and headlines are one of their signals. However, computer trading is very short term.
Warren Buffett once said something like ‘the ideal time period to hold a stock is forever.’ I’ve thought about this and like it a lot. For example, will most of these high-flying tech companies be around in 25 years. Probably not. How about Disney or Coke. Yeah, probably.
I am a holder. I am in it for the long haul with the stocks I currently own and the ones that I plan to purchase after we win the lottery at work. I stay out of that technology stuff because I am clueless. As I type this message I know that it will be posted for all to see but I have no idea how it works. I can’t invest in things I will never understand.
I like banks because I like money and I like food production companies because people will always need to eat even if it is just soylent green.
The crazy thing about stock market news is that once it reaches the public it’s old news. Crazy how that works. Sometimes it works in our favor though, if they promote stocks that we are already holding. Good luck to you!
I will just keep holding. I will not need any of this money for ten or more years (baring a life altering emergency) and so I will just watch and wait. That is why I have only selected dividend paying stocks and I am reinvesting the dividends as I receive them.
Canadians spell favour with a u. We like to fit extra u’s in wherever we can.
haha! well reinvested dividends are an amazing thing. you are witnessing the power of compound interest first hand!
Compound interest. The most powerful force in the universe and the one that keeps my bank fat with the interest payments on my debt.
! Einstein. Love it.
Yeah, I thought I read somewhere that any news is priced into the stock within 2 seconds of being released. Yikes.
Yeah it’s usually adjusted for the “news” before you could even get to a computer to buy shares.
So I need to make friends with someone who works at a major financial publication and chat him up over lunch before the big articles and announcements come out?
I wonder if that is legal?
I don’t usually buy that many stocks. I have a few but I took an incredibly long time to pick them I didn’t see me doing it regularly. Valuating a company is very very tricky and very easy to get wrong. We get about $50/quarter in dividends, I want to increase it to $500 a month, but I am just afraid to buy anything without a thorough analysis and I don’t know if my analysis is thorough. In any case, I believe any news that is public is old news and the stock price is already ajusted for that news.
I am attempting to develop my passive income (dividends) but I don’t put as much work in to picking stocks as you do. I pick things I know and love and trust and have never done a valuation on a company. Your way of doing a complete analysis makes much more sense but I tend to make more emotional decisions.
$500 per month in dividends is a fabulous goal. Do you reinvest your dividends in more stock? I have mine in a DRIP (dividend reinvestment program) so the dividends automatically buy more stock.
Firstly: Congratulations on your $15.40! There is no end without a beginning, and almost all beginnings are small. Way to go!
As to the question about headlines: they may account for short term swings, but long term price moves are made by:
(a) the performance of the company’s management and
(b) sustained headlines, I’d say more than 20 mentions over two or more years.
Keep the good work going!
What about a flurry of bad headlines? I am thinking about Apple and the headlines about it no longer being trendy with the young and wasteful.
I love the research part of picking stocks! I buy for dividends and for the long term. So I’m looking for solid companies that have a good history of increasing dividends. I have about $36,000 now in my retirement account and as time goes by I am getting much more critical – made a few mistakes along the way. I have quite a few dividend blog sites in my blogroll that are good reading. Two free dividend sites I use are:
http://www.topyields.nl/ and http://www.dividendinvestor.com/
I need to do more research before I invest and not just go with my gut and emotions. I will check out these sites. I do not have much money so I cannot afford to make mistakes. Hope your mistakes didn’t cost you too much.
Good luck with stock picking! It’s so interesting to look at the market and try to figure out why a particular stock is high or low. I’m not smart enough for that, but I hope your grocery store investments work out!
Even though I am chosing stocks instead of ETFs or mutual funds I am still very conservative in my selections. All investing is a crap shoot and the only thing that is safe is an old fashioned super-low interest savings account.