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(B)(N) The Great Rotation & Twenty Hot Canadians 2017

January 2, 2017
exhibit-1-wrap-up-2016-bn-canadian-hot-stocks-fundamentals-cash-flow-summary

Figure 1: Twenty Hot Canadians 2016 Wrap-up

Drama. The portfolio of “Twenty Hot Canadians” that we “selected” from our World Trade Portfolio returned +23% this year at the current stop/loss prices and there’s another 5% that is lingering in the market prices above the stop/loss prices; please see Figure 1 on the right (and click on it and again to make it larger as required) and our January 2016 and October posts for more details.

In the big picture, however, this portfolio has returned an average of +29% per year for the last five years and increased our net worth by 260% from a paltry $34,000 in 2012 to the current $124,000 (and these portfolios scale to our budget without any change in the method).

We’ve also got $9,000 in our cash account which isn’t working very hard and so we’ve added seven more companies to this portfolio for this year, trimming-out only the Banro Corporation which is mining gold in the Congo and is about to lose its listing in New York (Marketwired, December 30, 2016, Banro Provides a Corporate Update).

To choose them, we have 232 Canadian companies that are currently trading at or above their price of risk and 170 of those companies are also trading at or above their current stop/loss prices and they are “expensive” or “fully valued” and we already own them.

There are also another thirty companies that are trading below their price of risk but we can’t buy those unless we can set or infer a competent risk price – it’s an opportunity class well-populated by your pension plan.

arbitrage

Figure 2: How to choose the Lucky Seven

Hence, we “selected” seven of the companies that are trading at or above their risk price but below their stop/loss price at random and the Lucky Seven pending their hopeful magnificence in 2017 are Ballard Power Systems Incorporated, China Gold International, Canadian Natural Resources Limited, Canadian Utilities Limited, Franco-Nevada Corporation, Silver Wheaton Corporation, and Tahoe Resources Incorporated.

This “method” might seem to be sub-optimal, or cavalier, but it’s not and we need to work with the markets and not against them; please see Figure 2 on the right for more details.

The Lucky Seven

Of the seven plus two that were in our portfolio but we’re stopped-out on them now, we bought back only four today (China Gold, Canadian Utilities, Franco-Nevada, and Silver Wheaton) and we’re waiting for a better price point on the others; please see the descriptions below.

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Figure 1.1: BLD Ballard Power Systems Incorporated (B-)

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Figure 1.2: CGG China Gold International Resources Corporation (B-)

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Figure 1.3: CNQ Canadian Natural Resources Limited (B-)

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Figure 1.4: CU Canadian Utilities Limited (B-)

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Figure 1.5: FNV Franco-Nevada Corporation (B-)

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Figure 1.6: SLW Silver Wheaton Corporation (B-)

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Figure 1.7: THO Tahoe Resources Incorporated (B-)

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Figure 1.8: ARE Aecon Group Incorporated (B-)

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Figure 1.9: MRU Metro Incorporated (B-)

amenOf course, unlike us, the market never sleeps at night (Bloomberg, December 30, 2016, Canadian Stocks End 2016 With Developed World’s Biggest Advance and TheStreet, January 1, 2017, 2017 Will Be a Year of Individual Stocks).

And for more examples of the (B)-class portfolio in difficult markets, please see our recent Posts on”The “W” Syndrome“, Steel,  Green Energy and The Coal War which is heating-up again now; and the Canadian Mines have also taken-off – please see our recent Post “(B)(N) Extreme Economics – The (New) Canadian Mines” for a heads-up on that.

And for more information and examples of the Free Market Yield and the terms that we have used above, please see our Posts “(P&I) The Dismal Equation (Ecclesiastes 9:1)” and “(B)(N) S&P 100 Volatility Risk and The Full Moon” and “(B)(N) NASDAQ 100 Volatility and The Stone Bunnies“ and for an introduction to The Barometer “(B)(N) What’s A Girl To Do” or “(P&I) The Swiss Franc Debacle“.

And for more information on real “risk management” in modern times and additional references to the theory and how to read the charts and tables, please see our Post, The RiskWerk Company Glossary and “(P&I) Dividend Risk and Dividend Yield“, and our recent Posts “(P&I) The Profit Box” and “(P&I) The Process – In The Beginning“; and we’ve also profiled hundreds of companies in these Posts and the Search Box (upper right) might help you to find what you’re looking for, such as “(B)(N) TLM Talisman Energy Incorporated” or “(B)(N) ATHN AthenaHealth Incorporated” or “(B)(N) PETM PetSmart Incorporated“, to name just a few.

And for more applications of these concepts please see our Posts which rely on the Theory of the Firm developed by the author (Goetze 2006) which calibrates The Process to the units of the balance sheet and demonstrates the price of risk as the solution to a Nash Equilibrium between “risk-seeking” and “risk-averse” investors within the demonstrated societal norms of risk aversion and bargaining practice. And for more on The Process, please see our Posts The Food Chain and The Process End-Of-Process.

And for more on what risk averse investing has done for us this year, please see our recent Posts on “(P&I) The Easy (EC) Theory of the Capital Markets” or “(B)(N) The Easy (EC) Theory of the S&P 500“, and the past, The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class actionLa Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100. And for more on what’s Working in AmericaBig OilShopping in America or Banking in America, to name just a few.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond
Alpha-smart with 100% Capital Safety and 100% Liquidity
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”). The Canada Pension Bond®™, The Medina Bond®™, The Barometer®™, the Free Market Yield®™ and Extreme Economics®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

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