New Year Resolution

Okay, I’m a little late coming out with my New Year resolutions for 2020. However, it’s never too late to analyze your past performance and think about ways you can improve in the year ahead, especially if last year’s results did not meet your expectations.

Below are my Top 5 Resolutions for investors to consider when investing for retirement.

  1. Have a written trading plan. If there is one thing every investor can do to improve their results, this is it. Even a bad plan is better than no plan at all. If at any time you were agonizing over a falling stock and asking yourself and others what you should do – then you don’t have a trading plan. The TSX gained about 19% last year. Think about that. If you didn’t make as much money as you should have, or worse, you lost money, the biggest reason is likely that you didn’t have a trading plan. Or, if you did, you didn’t follow it.In its simplest form, a trading plan sets out your rules for What to Buy, When to Buy and When to Sell. Not sure where to start? Here are a few ideas:
    • Go to the Training tab and watch again Lesson 5 of the Successful Investing Quick Start Course. It explains how to create your plan by answering the three questions above.
    • Go to the Views tab, open Special Reports and study the “Guide To Worry Free Investing”. It’s a terrific retirement-minded trading plan.
    • Study the trading plans of these four Model Portfolios: #2 is all about safety and cash preservation – it was up about 6% in 2019; #3 focuses on safety and dividend growth, up about 20%; #4 is conservative but still gained about 19%; and #5 is a prudent portfolio that gained about 20%.
    • Finally, and this is very exciting, we now all have the all new TRADING SYSTEM VIEWER. If you’re looking for a complete trading system that suits your investment style and is performing well right now, look no further. Twelve of the 23 new current trading systems gained more than 20% last year, including a few that are perfect for retirement-minded investors: Safe & Sound ‘S’ 6/10; Steady Eddies ‘S’ 1/10 DEW; Model Portfolio #4 Conservative; and Model Portfolio #3 Retirement.
      Trading System Viewer

      Click or tap image to enlarge

      These results do not include the dividend payments which can be substantial with growth and compounding. If one of these plans suits your investment style, income needs and risk tolerance, adopt it as your own and follow it!

  2. Trade with the Trend. When you follow the Color Guard and Market Timing signals, you know when to play it safe and when to invest aggressively. Use the Daily Color Guard as your traffic light on the market. Commit to reading the Canadian Views nightly; listen to the US Enhanced Daily Color Guard Report; and, listen to the Friday night Canadian “Timing The Market” report.
  3. Diversify and follow Dr. DiLiddo’s 1% Rule. These are two of the most important Risk Management rules. Aim to hold between 10 and 20 stocks with no more than two stocks in any single industry group. Don’t put more than 10% of your funds into a single stock and never risk more than 1% of your total portfolio capital on a single stock. Example: If you have $100,000 in capital, don’t spend more than $10,000 on any one stock and set your Stop-Loss to ensure a loss no greater than $1,000.
  4. Don’t be a speculator. Swing trade and speculate all you want in a small account with money you can afford to lose, it can be profitable, but with your long-term, retirement-minded portfolio, only buy high VST, Buy-rated stocks with RS values well above 1.0. These stocks are already going up in price and have well-established track records of consistent, predictable earnings growth. Buy them as early as possible after they get a new Buy-rating, and only when the market is rising.Why do I think you might need this resolution for 2020? Almost every week in our Q&A webinars or by email, I get asked to analyze a stock that has terrible earnings, erratic price charts, and rarely if ever get a Buy rating from VectorVest. These are speculative, higher risk, short-term trading stocks. At the same time, I regularly hear from subscribers about how great they are doing buying stocks in the Master Retirement WatchList. Stocks in this list have high VST scores, high RS and rising prices. Some have high growth rates and most pay dividends with strong Dividend Safety. I often think, with stocks like these and our Model Portfolios, why do people keep looking somewhere else?
  5. Favour Dividend Growth Stocks. You can generate income through capital gains, of course, so a few high RV, high RS growth stocks are fine. But for consistent income and the benefits of compounding, you should hold a high number of Dividend Growth stocks that have better than average Dividend Safety. Stocks that have a track record of growing their dividends year in and year out are inherently solid companies worth investing in.

I wish everyone a Happy New Year and every success with developing your own RETIREMENT-MINDED TRADING RESOLUTIONS FOR 2020.

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