Last year was the first year I set some personal finance and investing goals in black and white. I posted them on my blog for the world to see and scrutinize. I also posted them on my blog to keep me accountable. In years past, while I set financial goals, they were not written down and consequently not followed up on very well they floated around in my head. In hindsight, I think this blog was a huge enabler for meeting many financial objectives in 2010. I hope this year will be just as successful.

To recap, our goals from last year were:
Goal # 1 – Put down $20,000 on our mortgage.
Goal # 2 – Maximize TFSAs.
Goal # 3 – “Clean-up” RRSP Accounts (ETFs instead of high-MER funds).
Goal # 4 – Frequent contributions to DRIPs.
Goal # 5 – Optimize RRSPs.
Goal # 6 – Save for and take a great trip.

We were fortunate enough to accomplish every one above, 100%, except for #1. That goal was indeed lofty but I think you need to have stretch assignments, at least we like them. In the end we hit 55% of our target for goal #1 and while in grade school 55% means you almost failed, I dont think our efforts were too bad.
Writing about mortgage payments brings me to our first personal finance goal of 2011:

Goal # 1 Increase mortgage payments by $200 per month

With a new place there are lots of expenses. Lots. I dont need to list them because Im sure youve moved enough yourself and you know what they are. The list never seems to end. For us, the initial big ticket items were appliances and window treatments last month. These things werent cheap and neither are the small things when you add them up. Recognizing we can never do it all at once, weve decided to strike a balance in 2011; live for today, make our house a home and take small steps at paying off the mortgage.  If we increase our mortgage payments this year by $200 per month, we figure well save almost $30,000 in interest costs over the life of our mortgage and payoff the house about 4 years earlier – sounds pretty good to us.

Goal # 2 Contribute $5,000 each to TFSAs

Our government has been pretty good to us in recent years, OK, at least in one area with the introduction of the TFSA in January 2009. We figure we better take advantage of this financial tool because who friggin knows when, if or how the rules will change. Governments are famous for that. You already know the deal:

Including this year, you could have contributed up to $15,000 into a TFSA.
The money can be earned or withdrawn completely tax free.
Contribution room can be carried forward indefinitely.
You never lose contribution room when you withdraw money.
More benefits, more benefits

With $10,000 contribution room each, weve got lots of room to manoeuvre in 2011. Wed like to contribute $5,000 each to our TFSAs. We had to withdraw money from our TFSAs in 2010 to purchase those appliances I wrote about. We dont regret this transaction (because we need to eat!) but this purchase left a big hole to fill in our financial plan. 

Goal # 3 Optimize our RRSPs

Thanks to some savvy DIY investors and financial tutors like Canadian Couch Potato, Canadian Capitalist, Michael James on Money, Andrew Hallam, DIY Investor and others, Ive been schooled on the importance of managing our RRSPs efficiently. For many years, my wife and I werent managing our RRSPs, they were managing us. For almost 10 years we held various equity and bond mutual funds in our RRSPs. That changed last year when we accomplished our financial goal called clean-up our RRSP accounts. These knowledgeable DIY investors re-emphasized the drag management fees had on our retirement savings. Armed with this knowledge we made changes last year and now were using a few ETFs in our RRSPs to match returns of the S&P/TSX 60 Index and the DEX Universe Bond Index respectively, instead of equity and bond mutual funds that charged us 2% per year. These changes lowered our management fees by over 80%!

For 2011, we intend to optimize our RRSPs that is contribute only enough needed to avoid paying any more taxes come tax time. This way, we pay ourselves first but we also retain necessary funds for the rest of our financial plan. We figure optimizing our RRSPs in 2011 will cost us a few hundred dollars every month.

Goal # 4 Continue my full Dividend Reinvestment Plan (DRIP) with Bank of Nova Scotia

After making major investments (for us anyhow) into businesses like Bank of Montreal, Sun Life, CIBC and Enbridge some time ago, my focus early in 2010 turned to Bank of Nova Scotia (BNS).  I started investing in BNS for many reasons, one of the main reasons being they behaved (not just survived) very well out of the financial storm of 2008-2009.  They too, are a dividend stalwart:  paying dividends for over 150 years.

Many savvy dividend investors like The Rat, themoneygardener, Passive Income Earner and Echo from Boomer & Echo I recall got their invitations to the BNS dividend party years ago, now Im with them.  Glad to be with you gentlemen!   Last year I managed to contribute at least $50 per month into BNS stock, no commission fees, just the cost of a stamp and an envelope.  Hopefully sometime later this year I’ll be at a point whereby I’ll be earning at least one free Bank of Nova Scotia share via my full DRIP every quarter.   I look forward to seeing that compounding machine running.

Goal # 5 Start my full Dividend Reinvestment Plan (DRIP) with Fortis

Ive been meaning to do this for some time and I think 2011 should be the year, enough procrastinating already. An overview of Fortis:

Fortis Inc. is the largest investor-owned distribution utility in Canada, serving approximately 2,100,000 gas and electricity customers. Its regulated holdings include a natural gas utility in British Columbia and electric utilities in 5 Canadian provinces and 3 Caribbean countries. Fortis owns non-regulated hydroelectric generation assets across Canada and in Belize and upper New York State. It also owns hotels and commercial real estate in Canada.

Fortis (FTS) pays a healthy (and steady) dividend and is considered a Canadian dividend aristocrat, consistently raising its payout to shareholders year after year.  I want to be part of that payout.

Goal # 6 Build up our emergency fund to $10,000

We have some funds set aside for emergencies but not enough to satisfy our comfort level. Everyone has their own level and ours is $10 K. Weve got some work to do and 2011 is the year to do it.

Unlike last year, we wont be taking any grand trips to South America or any distant lands for that matter.  My wife and I have decided that 2011 is a year to get some work done around the house and furnish it the way we want to. Lawn chairs in our living room are not an option! Those efforts will take time and money and so in 2011, any additional savings beyond our emergency fund will be going towards home improvements.  Were still planning some weekends away, together, with friends and family but no big voyages. Although wed like to travel and experience new worlds there are things to do at home, literally. On the flipside, getting some objectives accomplished around the house in 2011 should give us much more freedom in 2012 – something to look forward to for sure.  I guess thats what goals are all about

What do you think of our financial goals for 2011?  What are yours?

I look forward to hearing from you, have a good weekend!
My Own Advisor

Back in October last year, I announced the purchase of Aqua America (WTR:US), a water and wastewater services company that has over 3 million customers across 14 states.  At the time, I was pretty pleased with my purchase. Why?

o Aqua America provides what everyone needs; clean, safe, reliable water.
o Theyve been a dividend payer since 1939.
o Theyve paid quarterly dividends consecutively for more than 60 years.
o Their five year average dividend growth rate is over 8%.

With a market cap of about $3 billion they are not a small company and they have lots of room to grow through both acquisitions and service diversification.

So why did I sell them with mostly upside to be had?

Although I consider Aqua America a good company with long-term growth prospects, I recently found out that Aqua America is not eligible for any dividend reinvestment plan with my discount brokerage institution. This is in contrast to what Aqua America offers with their transfer agent Computershare in the U.S. Here are some highlights from their website:

o Aqua America, Inc. has a Dividend Reinvestment and Direct Stock Purchase Plan (the “Plan”) that offers investors a convenient and economical way to purchase shares of the Company’s Common Stock.
o Computershare Shareholder Services, Incwill administer the Plan and act as Agent for the participants.
o As a shareholder, you can buy additional shares of our common stock at any time for as little as $50. You can pay by check or by a one-time online bank debit through the Buy Stock Direct option noted above, or have your payment automatically withdrawn from your U.S. bank account.

While DRIPping Aqua America through Computershare has its merits, I do not want to go through the hassle of setting up a U.S. bank account or always commit to a minimum $50 cheque to purchase more WTR:US shares. Unfortunately when I made my Aqua America purchase in October I assumed because they offered a full DRIP via their transfer agent they would offer a synthetic DRIP with my discount brokerage institution. This was not the case. This was alarmingly clear when dividends were paid to me in December in cash.  

My lesson learned?

Before I make another U.S. stock purchase, Ill check with my discount brokerage institution to ensure the stock is synthetically DRIP eligible. Not all U.S. companies who offer DRIPs with their transfer agents offer these plans synthetically with brokerages. Im not sure why WTR:US Board of Directors made this decision (maybe they want to keep more control over the companys shares?) but it was an annoying revelation for me.

Sure, I could have kept Aqua America shares and not had the dividends reinvested but I think that goes against my strategy as a dividend investor. For every stock I own, I want to have enough shares of any company to DRIP at least one full share every quarter. I can do that for almost every stock in my portfolio, except for a couple Canadian stocks. 

o My DRIPs will provide me with dollar-cost averaging.
o My DRIPs take the emotions out of my investing.
o My DRIPs will not cost me anything to buy more shares.
o My DRIPs will take advantage of the magic of compounding.
o My DRIPs help me set and forget part of my retirement plan.

 
What can I say? I made another investing mistake and Ill probably make more.  How about you? Any investing mistakes you care to share?

My Own Advisor

If our caution proves to be warranted and the market does correct over the coming days and weeks ahead, our work suggests the pullback will be relatively small and contained within the 4-7% range (give or take a percentage or two) on the major averages. The broader indexes such as the Russell 2000 will most likely be hit the hardest, as we have pointed out the recent relative outperformance in many of the bigger cap names.

Over the past two weeks we have sold and paired back many of our portfolio holdings. Over the short-term, we feel most stocks need to correct, or at the very least, consolidate. This does NOT however, mean that we will completely abstain from adding new longs to the portfolio on a select basis.

There is always the possibility that the market turns up and moves right back into new high ground even without broad participation. It is precisely for that reason we stick with our investment theme until proven wrong and let the market itself guide us as opposed to rigidly clinging to personal opinions or theories.

If the overall market is going to get into serious trouble, our stop-loss protection will force us to the sidelines one stock at a time. Currently, our risk model remains on a buy however; it is teetering on an intermediate-term sell. Short-term caution is our stance de jour.

-Mark Minervini

I love the real life examples that he gives throughout the book, and includes both small (as small as one person) and large organizations. Chapter 8 is probably the most important one, describing how to implement his advice. Each step is broken down into easily understandable and implementable sub-steps. At the end of the book is a helpful self-assessment which allows you to determine how networked your organization is.

If you are involved with a business or even a non-profit organization, and your organizational networking could use come improvement, then I highly recommend The Network Is Your Customer.

This interview was originally published on December 17, 2010 at thekirkreport.com

Charles Kirk: It is with tremendous pleasure that I offer my last interview of 2010 with Mark Minervini.

As with many traders I interview, Mark requires no introduction as he is one of the most highly-respected independent traders of our generation. His blog in recent years has instantly become one of the must reads out there as he often shares market commentary and analysis which shows why the respect so many have for Mark is so well-deserved.

Moreover, his experience and past history of savvy market calls is legendary. It is with little doubt that we can all learn a lot from him! We hope you enjoy and find this focus interview helpful in your own journey toward more success in the markets.

Kirk: Hi, Mark. First of all, thank you for taking the time to answer our questions. I speak for many members who have a great deal of respect for you and we sincerely welcome you to this interview series.

Mark Minervini: You do a great job, Charles, and Im honored to be a part of it.

Kirk: Please tell us a little bit about how you got interested and started in trading.

Mark Minervini: I dropped out of school in the eighth grade in pursuit of a career as a drummer. From the money I made working as musician, I bought my first stock in 1983, which was a few hundred shares of Allis Chalmer. Shortly after, I read Richard Loves book, Superperformance Stocks: An Investment Strategy for the Individual Investor Based on the 4-Year Political Cycle. Everything Ive created with regard to my trading approach since stems from Loves initial impression on me, specifically from his writings in chapter 7.

Kirk: What was one of the most important lessons you learned early on?

Mark Minervini: That no one was going to do it for me; no one was going to make me rich except me. I learned that you must take responsibility for your results in the market and in life if you want to be exceptional. Secondly, I learned that in order to do well in the market you must be consistent; consistency is what separates the pro form the amateur. In order to have consistent success, risk must be managed in relation to potential reward as standard operating procedure. Youre not going to make just one trade, rather hundreds or even thousands of trades; its all about how much you make on average versus how much you lose on average over time. Lastly, I realized that I simply had to get to the bottom of what actually worked in the marketplace and ignore all the opinions and theories.

Kirk: Was there anyone out there who helped you greatly during your initial learning curve? If so, what did you learn most from them?

Mark Minervini: My Mother and my Father. I learned it was ok to do what I love; to go after my dream. I also learned it was ok to be unconventional. I was given the room to be creative. My parents trusted me. I always knew I was supported emotionally. Financially, we were poor but my parents supported my dreams.

Kirk: Indeed, it is so important to have a strong support structure in place. In a nutshell how do you currently approach the market and what is your primary trading strategy?

Mark Minervini: I approach the market from a risk first approach. My trading strategy is called Specific Entry Point Analysis or SEPA. We look to enter trades at low risk entry points relative to potential reward. Primary focus is not to lose money. Secondary focus is not to lose money. And, the final focus is to make more on average than I lose.

Kirk: You remind me of Buffett who said he had only two rules: 1) Never lose money and 2) see rule number 1! What do you see as the primary benefits from employing a strategy that focuses on both fundamentals and technicals?

Mark Minervini: The benefits are having all the pertinent information that is consistent with big winning stocks. We know what to look for both fundamentally and technically. I have seen stocks bought on pure technicals and the guy buying the stock doesnt even know that there was a cash offer or a proposed merger right at the price he paid. Refusing to look at fundamentals or any information that gives you an edge is usually because the individual just doesnt know how to use the info, or has some bias based on personal opinion or tradition.

Kirk: Why is this kind of trading best for you and, more importantly, why do you think it works so well?

Mark Minervini: My strategy works well because its my strategy. I know the strengths and, more importantly, the weaknesses of what it is I do. It also works well because I allow it to work and stick with it even when it runs into difficult times. Nothing works well if you keep changing your approach. To be a master you must be a specialist, not a jack of all trades.

Kirk: What do you trade mostly? Equities, options, futures, ETFs, currencies, etc.?

Mark Minervini: Only equities.

Kirk: In an average week how many trades do you make? What is your average hold time and how many positions do you have open at any given time?

Mark Minervini: During an average year I may make 400-500 trades. About half of that turnover is a result of taking small losses, which Im out of pretty quickly.

Kirk: What would you say are your primary strengths and weaknesses as a trader?

Mark Minervini: Discipline is my primary strength. And the willingness to admit when Im wrong and move on. My weakness is I usually sell early and often leave money on the table. But I dont really view that as a weakness, just something that could be improved upon. When you move in size you have to get out when the getting is good.

Kirk: In my experience it is often better to sell too early than too late Mark! How have you learned to mitigate your weaknesses and focus more on your strengths?

Mark Minervini: By not focusing too much on my strengths. If youre good at buying and bad at selling I would focus on selling; if you improve your selling you will have a complete game. Focus on making your weaknesses strengths and then you will have no weaknesses. Exploit your strengths and improve your weaknesses.

Kirk: What have been some of the most challenging lessons you have learned?

Mark Minervini: That you cant be everything. You must commit to a strategy and sacrifice other strategies. The problem with the market is its like playing poker however; you always get to see the next cards even though the hand is over. You always see what would have happened. This is very difficult to deal with for many people. To be successful, you have to understand that trading is NOT about picking highs and lows, its about making money.

Kirk: Very good. What are some of the key rules that you consider before selecting any potential trading opportunity?

Mark Minervini: How much am I risking is the very first concern. Also, does the stock meet all the necessary criteria? If the risk is acceptable and all the entry criteria are met, I enter the trade.

Kirk: What would you say is your average win: loss ratio for your trades?

Mark Minervini: I average 2 to 1.

Kirk: How has your overall performance been recently, as well as over the past few years?

Mark Minervini: Its been about the same as always. Im a consistent 2:1 trader.

Kirk: What would you say are your favorite kinds of technical and fundamental set-ups?

Mark Minervini: The ideal set-up is a stock emerging from a constructive consolidation with strong accelerating earnings and sales.

Kirk: Can you give us a recent example of a set-up you found to be very attractive and worked well in this market?

Mark Minervini: CML. Bought it on 11/24. Sold it on 12/7 for a quick profit.

Kirk: Have you noticed any trading set-ups more prone to failure than they have been in the past?

Mark Minervini: No. Not much has changed. Contrary to what many believe, its not different this time. LOL

Kirk: To help us understand your trading approach, can you talk about a recent successful trade from start to finish?

Mark Minervini: LULU. Supported by excellent fundamentals, the stock emerged from a double bottom pattern that formed from 4/15 11/04. I bought the stock on 11/05 the day the market topped just before a pullback of about 5% in the major averages. The stock was held through that market pullback because it acted normal and held above our stop. This gave me the conviction to add to the position as it emerged through its next buy point in November. I sold the stock (most likely too early) on 12/09 when they reported earnings up about +50% from the initial purchase from about a month earlier.

Kirk: Now please tell us about a recent unsuccessful trade.

Mark Minervini: Shorted GMCR; shorted the rally in October and November after the big break on SEC news. Stock rallied and stopped us out

Kirk: One of the things I most appreciate about you is how much you stress proper risk management. If we can, lets talk a little bit about position sizing. Can you provide an example of a recent trade and explain your method for determining the size relative to your own trading portfolio?

Mark Minervini: I want to own as much as I can but generally no more than 25% of my portfolio (as liquidity permits). You are not going to make huge returns being too diversified. However, I only risk what I can get out of safely based on liquidity.

Kirk: Thats interesting. I think many would be surprised at the idea of having any position anywhere near 25% of an entire portfolio. Besides over diversification and liquidity concerns, what common mistakes do you think many traders make concerning position sizing?

Mark Minervini: They dont know what an optimal position size should be based on their own risk/reward and risk tolerance. For instance, if youre a 2:1 trader, your optimal position size is 25%.

Kirk: Ok. I think I understand what you mean, but please explain this position sizing formula more in detail so others can perhaps apply it in their own trading. Can you offer another example?

Mark Minervini: Ok. First, its important to understand that you are not going to achieve huge returns consistently being overly diversified or by relying on diversification for protection. You will only get a smoothing effect. When you own a bunch of stocks you end up with two problems: the first being that you just cant watch and know all you need to know about each of them. The second problem is that you will have a difficult time getting fully invested quickly when opportunity presents itself and more importantly, getting liquid if you need to raise cash in a hurry. In addition, the math just doesnt support it. Depending on the size and risk tolerance of your portfolio you should typically have between 4 or 8 stocks and for large portfolios maybe up to as many as 10 or 12 stocks. This would provide sufficient diversification but not too much. The Optimal-f formula can act as a starting place for you to understand optimal position sizing based on expectation. If Ken Heebner of CGM Funds can move around billions of dollars in just twenty names and still manage to beat the market, then a personal portfolio can surely manage sufficiently with 4-5 or 10-12 stocks. If you lose 5-6% on average and even if your position size is at 25% exposure, youre still only be risking about 1.25% of your capital per trade. Of course, if you dont have an edge, then you will lose no matter what your position sizing is.

Kirk: Good, thats helpful. So, do you use and set stops, Mark? If so, whats your stop loss method?

Mark Minervini: I always know where Im going to get out of a trade before I get in. I aim to lose no more than 5-6% on average over time on my losers.

Kirk: Do you ever average down into a losing trade?

Mark Minervini: Theres a reason Paul Tudor Jones had a sign posted on his wall that read Losers average losers, and that reason is because its true. I almost always only add to a position if it proves itself and then I may add to my position at a higher price, not lower.

Kirk: Do you scale up and into winning positions? If so, how do you know when to increase a position size relative to your overall portfolio?

Mark Minervini: Yes. I generally move money into the better performing names at subsequent pivot points or set-ups.

Kirk: All good traders dedicate a lot of time and effort to improvement and reducing mistakes. How has your trading method evolved and improved over the years?

Mark Minervini: It just becomes more and more crystallized because I continue to focus on the same timeless principles, which allows me to become more and more of a specialist. The power of a narrow focus is amazing. The key is to be a real pro at something. Know all you can about a style or a tactic. Then you can build on that foundation. Traders give up too easily and jump around too much when things get difficult. How good do you think Kobe Bryant would be if while he was developing his skills growing up every time he had a really tough game he changed to a different sport or played a different position?

Kirk: I couldnt agree with you more Mark. I see this problem among many. Can you provide an example of something you thought was true when trading early in your career and now believe is just completely wrong?

Mark Minervini: Yeah, everything. But I learned very quickly sound principles. It just took me many years to master the application.

Kirk: Why do you think most traders fail?

Mark Minervini: Here are 6 reasons:

1. Poor selection criteria; usually based on personal opinion, theory or tips and bad advice
2. They dont stick to and commit to an approach; style drift
3. Dont cut losses (#1 mistake made by virtually all investors)
4. Dont know the truth about their trading they fail to conduct in-depth post analysis
5. Treat trading as a hobby not a business
6. Want too much too fast; learning a skill takes time

Kirk: Please describe a typical trading day for you. How do you organize and dedicate your time?

Mark Minervini: Most of my work is done the night before. I already know what Im going to trade before the open. I watch the market all day long, never leaving my desk for more than a few minutes during trading hours.

Kirk: How much time and attention do you pay to others opinions about the market and/or stocks you are trading?

Mark Minervini: Zero. I avoid outside opinions like the plague!

Kirk: Are there any tricks of the trade that you use to help maintain a consistent successful approach over a long period of time?

Mark Minervini: Yeah, long hours, hard work, a sound approach and discipline. There are no tricks or big secrets. Again, is there a secret to having a good basketball shot? It starts with a good coach, proper practice, plenty of hard work, discipline and sacrifice.

Kirk: Amen. However, most traders I know have a set of rules that they have learned from past mistakes. What are a few of yours that you think most traders would benefit from?

Mark Minervini: Hard work alone wont cut if you dont have a sound approach and if youre not doing the right things. You must be facing west if youre looking for a sun set. Approach each trade from risk first; ask how much can I lose. Dont risk more than you can expect to gain on average. Know the truth about your trading; study your results carefully. Never average down. Always cut your losses; keep your losses small. These are fundamental rules that should never be compromised.

Kirk: I suspect like all good traders you are working on improving your performance in some manner. Can you share what youre specifically working on right now?

Mark Minervini: Sticking to the rules. Always making sure we stick to the rules. We have a great approach, I dont like to get to tricky and over complicate something that requires a straight forward approach.

Kirk: Youve been trading for some time now. What would you say are the biggest changes in the markets and trading in general youve seen during your career, both good and bad?

Mark Minervini: The order handling rule change in 1997 has changed the way stocks move short-term because Market Makers dont really keep inventory anymore. Its a topic that would require a lengthy discussion; maybe we could talk about it another time. Other than that, not much has changed except more information moves faster than before.

Kirk: What advice would you give a person just now beginning to trade the markets?

Mark Minervini: Find a good mentor. Commit to a strategy. Cut your losses. Tune out the media. Take full responsibility for your results.
Kirk: What do you think are the greatest misconceptions beginning traders have about trading the markets and about trading systems?

Mark Minervini: Way too many to mention. Just about everything a beginner thinks is a misconception.

Kirk: A number of people who read my website desire to trade for a living and I receive a lot of questions concerning capital requirements needed to start and how to make the transition to trade full-time. Do you have any words of wisdom or rules of thumb to share along these lines?

Mark Minervini: I started with a very small sum of money and turned it into a fortune. Capital is not the challenge. Mastering yourself is the challenge. Discipline is the challenge. Persistence is the challenge.

Kirk: Do you think trading for a living is getting more difficult or easier for the average individual investor? Why?

Mark Minervini: Much easier. Tools for pros and amateurs are virtually identical. The pro has no edge. The individual has the advantage. No real liquidity concerns for the small trader versus the big fund manager. Its a fantastic time to be a stock trader!

Kirk: When all is said and done, in your experience, what is the best way to learn how to trade?

Mark Minervini: Trade. As Ralph Waldo Emerson said: Do the thing and you shall have the power. And then conduct post analysis. Learn to be objective. You could try and find a mentor. However, the chances of getting great advice are slim at best. Trading is just like any other profession, there are only a handful of really outstanding practitioners.

Kirk: Do you have any books, websites, etc. that you highly recommend beyond your own website?

Mark Minervini: The Kirk Report. Why is there anything else? LOL!!!

Kirk: You are too kind Mark. Although I know both of us share a love for the markets and trading, what are your long-term career plans and future for your website?

Mark Minervini: I honestly dont know for sure. My long-term plans are too stay healthy and be a good father to my daughter. This past year I started a pilot training program. Also, we now offer my research to the individual investor not just exclusively to the institution anymore. It feels good to help others achieve their goals. I think I may continue to develop that. Why hog all the good trades for myself? LOL!

Kirk: What are some of your personal passions beyond the market?

Mark Minervini: Ive been a drummer since I was 6 years old and I continue to play. I play tennis, train boxing and lift weights to stay in shape, and I play an occasional round of golf.

Kirk: Finally, if you had only one piece of advice to share with all traders, what would it be?

Mark Minervini: Believe in yourself and never give up. Persistence is more important than knowledge. Make an unconditional commitment to trading and you will not fail.

Kirk: Thank you so much Mark. I really enjoyed this interview and Im sure others will find it helpful.

I dont know about you, but applying for a mortgage can be frustrating and time-consuming. From our perspective, we were just another number applying for a bunch of numbers. Insert a great mortgage broker into the equation.

Heres a short (but not inclusive) list of great things a great mortgage broker can do you:

Give you customer focus – Unlike banking representatives, mortgage brokers are not tied to any one bank. Sure, they might have some favourites, but great brokers canvas the full field. Our guy was looking out for the customer (us), our terms, conditions and pre-payment options. He was working to find a product that fit our needs and situation, not his agenda. In brief, our mortgage situation is not ideal, we have a hefty penalty to pay if we break our existing mortgage and go with another lender within the next two years. (This is a reminder to look at the detailed print of your mortgage agreement before you purchase a new home .) In our case, a great opportunity arose and sometimes you simply cant pass those up regardless what the fine print says – life happens, choices need to be made and chances need to be taken. Back to my point, you can certainly make a strong argument that mortgage brokers work for themselves, not you, however without attention to personal detail, they wouldnt be in business. Our broker put our needs and requirements #1. He was always very responsive. He never said he didnt have time for us or needed to take another call.

Give you leverage The way I see it, using a mortgage broker to fund a mortgage, youre going to get more attention because the lender wants that broker to continue sending business their way. As an individual customer, were just a number apply for a bunch of numbers. In talking with our broker, I know if he sensed any run around from a prospective lender hed move on and our mortgage prospects would go with him.

Save you money No doubt mortgage brokers are compensated by the lenders they strike the deal with but a) that means you dont pay them and b) as long as the rate and conditions of the mortgage are better than what you could have obtained youre saving money. Potentially lots. Like I mentioned earlier, our broker worked hard to get us a good deal. He knew his stuff and actively monitored bond yields for us. We more than appreciated that because without our new great rate and its associated terms, we wouldnt be coming out ahead over our hefty mortgage penalty. Weve taken our lumps and learned from them. My advice? Dont take a five-year mortgage term if theres even a chance you might move within that term period. Sure, you can sometimes port your 5-year fixed term to your new home (it doesnt cost anything but the mortgage appraisal and sometimes a small discharge fee) but that wasnt ideal for us. In hindsight, we should have taken a shorter fixed term a few years back or instead, given historical research, a variable rate. Click here to read more about variable mortgage rates and how more often than not, you come out a winner over a fixed rate mortgage.

In closing, mortgage brokers can be a tremendous resource, if you have the right one. Were glad we worked with our guy. Actually, we still are.  He’s still checking in with us to ensure all the rebates we were able to take advantage of are coming our way, including one for the mortgage appraisal.

I know if I have mortgage question going forward, Ill drop him a line. Hell take my call, hell listen, hell provide good customer service and objective feedback. I dont mind sharing who we used because the experience was very positive.

Thanks very much Rob!!

Click here if you want his contact information.

Do you agree or disagree what a great mortgage broker can do for you?
Any positive or “other” experiences youd like to share?

Cheers,
Financial Cents

One way to define cloud computing is having your programs and data stored remotely on a server far away, instead of on individual computers. As long as you have an Internet connection, you can have a fairly dumb computer ans still utilize cloud computing. The clouds are simply the servers of companies that provide this service, and those servers can be located anywhere in the world. If you have Yahoo (YHOO) mail, Google (GOOG) gmail, or hotmail, then you are using cloud computing in a small way. You don’t have the email servers in your office or home, you use the Yahoo or Google servers. Many colleges and universities are turning over their student email services to Google, which saves them money on servers and saves on staffing for support.

These same benefits apply to the private sector, especially when you extend it to data storage and computer software. You don’t need a technician to come out and install new software to each employees’ station. You don’t need a bunch of network administrators monitoring the company’s servers. You don’t need to periodically upgrade computers. You don’t need to own a bunch of servers. You cut down on the costs and issues relating to the disposal of old computers and servers. You don’t need to deal with data security, as that is the job of the cloud computing company. The benefits of clouds are extensive, and there are over 25 stocks in the cloud industry to choose from, according to the Cloud Computer Stock list at WallStreetNewsNetwork.com, including companies involved in server farms and outsourced storage systems.

Cloud computing as a growing industry now appears almost every day in the financial press. And the interest from investors has been significant. Take for example Salesforce.com (CRM), which is up over 600% since it started trading in 2004.

Salesforce.com is a provider of customer-relationship management services that has promoted ‘the end of software’. Salesforce has customers of all sizes, including Corporate Express division of Staples (SPLS), Daiwa Securities (DSECY.PK), Expedia (EXPE), Dow Jones Newswires subsidiary of News Corp. (NWS-A), SunTrust Banks (STI), and Kaiser Permanente. Salesforce trades at a lofty 89 times forward earnings, debt in the amount of $495 million, with over $769 million in cash. The company just reported a quarterly sales increase of 29.8% year over year, with a 1.8% increase in earnings.

VMware (VMW) is another major cloud and virtualization player. Its product VMware vSphere is a cloud computing data center platform. It sports a forward PE ratio of 49.6. The company has $450 million in debt with $2.9 billion in cash. The company reported that latest earnings increased an incredible 121.4% in earnings on a 45.8% increase in revenues.

Citrix Systems, Inc. (CTXS) provides on demand applications and online services, including GoToMeeting, GoToWebinar, GoToTraining, GoToAssist, and GoToMyPC. This debt free company has $902 million in cash and carries a forward PE of 30. The latest quarterly earnings were up 64.3% on a revenue increase of 17.8%.

To access a free Excel spreadsheet database of numerous companies involved in cloud computing in some way, that can be downloaded, sorted, and updated, go to wsnn.com. You can also get info on the green aspects of cloud computing from my book The Green Light on Green Stocks: A Quick Guide to Green Investing and Making Money in Alternative Energy Stocks, in which I described cloud computing as a green industry and a way of providing money saving services to many corporations.

Disclosure: Author owns YHOO.

By Stockerblog.com

Wow, Christmas is almost here…are you ready?

Although Snoopy is, we’re not.

My wife and I are normally the types to have our acts together but this year, with our move to a new home just days away and many other things on the go, weve fallen behind in our holiday preparations. It doesnt feel good because its not our style.

Luckily for us, most of our family is committed to a wine bottle exchange for Christmas. Well, at least the adults are! 

Kidding aside, we have tons of shopping to do over the next week while getting settled into the new place; well be brave and hit the odd store besides the LCBO but at least weve got a few things to be proud of we managed to achieve many of our financial goals for 2010.

Lets take a quick look at what did and did not happen this year…

Goal # 1 Put down $20,000 on our mortgage



Yep, this one was a BIG stretch assignment for us, but why not have lofty goals?  Earlier this year, I think we were actually on pace to meet this goal by way of some frugal living but things quickly changed when we fell in love with a house and our purchase offer was accepted on it.  Life happens, things change that was early fall. Up until that point, we managed to put down many lump sum mortgage payments but have since diverted money towards moving costs, lawyer fees and other monies required for the move.  Moving is certainly not cheap, we’re reminded of.  In any event, in the end we 55% of our target. In grade-school, 55% means you almost failed. I dont think our efforts were too bad!?

Goal # 2 Maximize TFSAs


Earlier this year, I was proud to say we accomplished this goal and I still feel that way. My wife and I opened discount brokerage TFSAs and promptly filled them with ETFs and one REIT, HR.UN. The XBB in each of our TFSAs has yielded a tidy 4% all year long and the one REIT we hold has had a very nice runup.

Goal # 3 – “Clean-up” RRSP Accounts (ETFs instead of high-MER funds)



This housekeeping exercise was a big one for us, probably just as important as the lump sum payments on our mortgage.  If youve been reading my blog for a bit, you might recall this exercise started in earnest in late 2009 after revisiting our RRSP mutual fund holdings and their performance over the last few years. This work also accelerated because my understanding and passion for index investing has grown. Canadian Couch Potato, Canadian Capitalist, Michael James on Money, Andrew Hallam, DIY Investor and others, have been great tutors to me and have helped me see the index investing light in recent years (thanks guys).

Ive written about the benefits of ETFs before.   Their low-cost structure and strong allegiance to the indexes they follow give them advantages in the long-run over almost every actively-managed mutual fund out there. This makes ETFs great products for our RRSPs.

We completed our transition to holding ETFs in our RRSPs this summer and we havent looked back since (and won’t).

Goal # 4 – Frequent contributions to DRIPs


After making major investments (for us anyhow) into businesses like Bank of Montreal, Sun Life and CIBC a year ago, my early 2010 focus turned to Bank of Nova Scotia (BNS).  I turned to BNS earlier this year and started investing in this company since it behaved well out of the financial storm of 2008-2009.  Not only that, they’ve been a dividend stalwart:  paying dividends for over 150 years.  Why not me?  Although my portfolio at the time was entirely comprised of stocks from the financial sector (this is no longer the case), I wanted BNS in my portfolio since it was (still is) a very good company and I couldnt resist my entry point at just under $47.  Since February, I’ve had my Scotiabank stock DRIPping.  While BNS did not raise their dividend this year, unlike most over the last three decades, I bet they will in 2011.  Many savvy dividend investors like The Rat, themoneygardener and Passive Income Earner got their invitations to the BNS dividend party years ago, now I’ll be able to join them!  This year I managed to contribute at least $50 per month into BNS, free of charge, no commission fees – just the cost of a stamp and an envelope.  Hopefully sometime in 2011 I’ll be at a point whereby I’ll be earning at least one free Bank of Nova Scotia share via my DRIP every quarter.   For this year at least, goal accomplished. 


Goal # 5 Optimize RRSPs


Ive already written about this goal in a few other posts, but its worth repeating. My wife and I believe we should only contribute enough money to our RRSPs to avoid paying any additional income tax. This is not because RRSPs arent a good savings vehicle (they are, we have them, we fill them with ETFs) rather we feel our income is better used elsewhere if RRSP optimization is achieved.  Paying down our mortgage for one, buying and holding established dividend paying companies for two.  For the most part, I consider this goal complete.


Goal # 6 – Save for and take a great trip

If you spent some time on my blog last month, youll know my wife and I took our highly anticipated trip to Argentina. Visiting Buenos Aires, spending half a week in the jungle in northern Argentina, taking a high mountain bus tour through the Andes and a private wine tour around Mendoza were experiences and sights well never forget. While saving and planning for retirement are important, so is living for the day.  Thanks to our super simple automatic savings plan, disciplined budget and clear financial goals, we were able to take an unforgettable vacation.  Mission accomplished.


Looking back on our 2010 financial goals, I cant help but think it was a successful one. Did we hit the mark on everything? No, but we weren’t that far off.  Weve been fortunate in 2010 and are thankful for that, very thankful.  Even if you have good plans and goals things don’t always work out and things tend to change.  That’s life, and I’m learning to accept that more and more.  However, on the road to financial independence, what I’ve learned this year is having a few goals to work towards is certainly an enabler to getting to your destination.  This blog has helped keep me honest and accountable by putting our financial objectives in writing.  That unto itself was progress and I hope to accelerate that ride down my financial independence road in 2011. 

How about you – any financial goals you were proud of this year?
Got any BIG or small plans for 2011?

Cheers,
Financial Cents

Many investors feel that following in Buffett’s footsteps will lead to riches. Income investors think that the top yielding Buffett stocks may be the best way to provide income and give some growth potential. WallStreetNewsNetwork.com has just updated its list of stocks owned by Warren Buffett’s Berkshire Hathaway and turned up seven of them with yields greater than 3%.

ConocoPhillips (COP), the multi-national oil company, is one of Buffett’s favorites which yields 3.5%. The stock trades at 10.2 times forward earnings, The company reported that earnings for the latest quarter more than doubled on an 18.8% revenue increase.

Johnson & Johnson (JNJ), the company that makes everything from Bandaids to Neutrogena to Listerine to Tylenol, also has a dividend payout rate of 3.5%. The stock has a forward price to earnings ratio of 12.5, with an earnings report showing a 2.2% earnings increase on a slight drop in revenues.

M&T Bank Corp. (MTB), based in Buffalo, New York, is another high yielder owned by Buffett, paying 3.6%. The stock sports a forward PE of 13.5. Recent quarterly earnings were up 50% on a revenue boost of 19%.

To see the rest of the high yield Warren Buffett stocks, check out the free downloadable Excel list which can be sorted and updated at WallStreetNewsNetwork.com.

Disclosure: Author does not own any of the above.

By Stockerblog.com

A few days late with my dividend income update, but better late than never!

It’s been hectic week since we got back from vacation but in a good way. My wife celebrated her birthday this past week, we started packing for our move (coming in two weeks, whoa) and we got some Christmas shopping done. Fun and productive I must say!

Like some of my fellow bloggers already announced (Passive Income Earner, Loonie Bin to name a couple), shareholders of Enbridge were also given a reason to celebrate this week: the Calgary-based pipeline giant said it will increase its dividend by 15% to $0.49 per share. If anyone is counting, that’s the second dividend increase for ENB in the last 12 months.

I guess Enbridge is generating much more cash flow than expected, surviving two high-profile pipeline leaks in the process. Certainly a good news story for the company and its shareholders.

Without this increase included into our dividend income calculations (the increase will not take effect until the March 1, 2011 paydate), we’re on pace to earn just over $4,300 this year – if dividends were paid to us in cash. Instead, we reinvest most dividends into new stock to keep our dividend-compounding machines running. We like it that way – reinvested dividends buy more stock, more stock pays more dividends each quarter, more dividends get reinvested – simple process, extraordinary results over time. With various dividend machines humming with every payment, every quarter (for example, we recently earned 4 free shares of Bank of Montreal stock), we’ve had a slight increase in our dividend income over last month, yet another small reason to celebrate this week.

Now if only my Ottawa Senators can get their act together…

Do you think Pat Daniel, President and CEO of Enbridge has any clout there? You’re right, probably not. Even if he did, I know, I’m definitely pushing my luck

Have a great weekend and happy investing!
Financial Cents