Bank of Montreal (BMO.TO) has had a very good run lately. I purchased the stock on 4th September 2012 at $57; it closed today at $64.53 (up 13.2% in less than five months). There have been rumblings about the health of Canadian banks and today Moddy’s donwgraded six Canadian banks. It’s time to take some profits so I asked my Financial Adviser to sell 25% of my position.
There was a problem though. My Financial Adviser sold 100% of my position! This has happened before.
Canadian Oil Sands (COS.TO) is down 2.5% today. I took some profits at $22.02 in August, and the stock is now down ~10% from there. Time to top up.
Power Corp. (POW.TO) is up 8% since I topped up in July at $22.82. Coincidentally, Apple is down around 9.6% since I took profits at $650.01 in August. This offers a great opportunity to take profits on Power Corp. and use the funds to top up on Apple. Normally I would prefer to wait until these stocks has risen/fallen by 10 %, rather than 8 and 9.6%, but this convergence of advance and decline is too useful to ignore and might not last for long.
- SELL POW.TO @ $24.64
- BUY AAPL @ $587.49
The main risk to this trade is that Apple will fall further and that I’m buying too high. I discussed the technical issues that drive this risk yesterday. I don’t normally do a postmortem when I trade around (I normally do a “one month later” postmortem on core position trades) but this trade is interesting and is worth validating in a week or so.
Wow! What a week. Apple closed today, Friday 9th, at $547, down $40 (or 6.8%) since I topped up last week. There are a few factors:
- Apple went ex-dividend on 7th November, which should have reduced it’s value by ~0.5%
- There are doubts about Apple’s product roadmap and the success of the recently introduced iPad mini
- The re-election of Barack Obama has lead investors to become concerned about a possible increase in capital gains taxes caused by the US’ Fiscal Cliff*, which has caused investors to take their capitals gains now, while taxes are lower
Power Corp closed today at $24.65; basically the same price at which I sold it. Overall, this was a bad call. I should have waited for Apple to go lower before buying. I did identify this as the main risk of the trade, but I failed to be patient.
*The Fiscal Cliff issue relates to the solution to the debt crisis of 2011. The solution in 2011 was to kick the can down the road until after the 2012 presidential election, and now it raises its ugly head again.
Another wild week! On Friday 16th, Apple saw an intra-day low of $505.75 (down 14%) before closing at $527.68. Writing this morning, on Monday 19th, the stock is up to $559 (up 11% since Friday’s low, but still down 5% from this trade). Buying Apple at $587.49 was premature and expensive, but it might still prove to be a profitable trade.
Power Corp is at $24.30, down 1.4% since I sold it on 2nd November. So that part of the trade is looking OK.
Intel (INTC) has dropped around 10% since I added it as a core position last month. The fundamentals are still very strong so I took the opportunity to top up.
Today both Apple (AAPL) and Canadian Oil Sands (COS.TO) rose 10% above where I had last purchased them. I took the opportunity to trip my positions in each and take some profit.
- SELL AAPL @ $650.01
- SELL COS.TO @ $22.02
I sold only part of my position in each, hoping to rebuy later at a lower price.
Telus (T.TO) is closing in on $65.25 – a significant run up since I purchased it at $56.38 in January. It’s time to take profits. I will sell around 25% of my position.
Back in June I tried and failed to top up my Power Corp (POW.TO) holdings at $21. Today POW fell over 5% on renewed fears over Spanish bonds (POW is invested in Europe) and I used this as an opportunity to top up.