Stock Trading - Entry 39

Taking a break from blockchains for a sec, this article is more of an op ed to catch yous up on my thinking about happenings in the real stock market at the tail end of winter and start of spring. As usual, this is not financial advice, only my ruminations regarding my unique situation. (So whenever I say 'you' in this article, I am referring to the author of this article, yours truly.)

What have you been doing during the market slump?

Since most of the stocks I am eyeing are effectively available at a discount, I have been in a bit of a frenzy because I can't seem to throw enough money at my stock purchases! That said, I am paying attention to two key indicators to avoid buying a stock that is in a genuine slump (as opposed to a more artificial one).

One indicator is how many investors are shorting the stock - meaning how many investors are betting on the stock price to keep going down. That could genuinely be because they see things that indicate to them, at least, that the price will go down more. The other could be that they want to recover some of their loses through some investing acrobatics. Either way, a bit messy for my tastes, so I am not looking to throw more money at those ones.

Another thing I am doing is a new fundamental analysis. The questions I am posing have to do with the company's cash flow, margins, revenue/sales retention amidst the tariff shenanigans, and whether or not multiple insiders are buying. Why not just one insider? Only one would indicate a power grab by company insiders (more shares = more votes) or desperation to keep the price up. Multiple insiders know the company is ok and when they see the stock price at a great discount, they scramble to buy (if they can afford to at that precise moment).

I could look at institutional investors (e.g. mutual funds and ETFs) who include the same stocks in their portfolio, but I am not trying to copy their moves. Still, it's nice to see stock prices continue to creep up slowly with steady buy-ins. IMO, that's the moving power of ETFs: constant buy-ins.

Do you think bigger investors out there are screwing you over, or could screw you over easily?

That could happen, I mean, a million shares can really jar things for someone with, say, 50 shares. That said, there are MANY people buying shares and if a company is sound, I am not overly concerned with my picks. See, it is not about who attracts attention vs not. I pick the stocks I invest in based on some due diligence knowing that no one owns 90% of the shares in companies I invest in.

What I am a little concerned about is institutional investors pulling out their big share all at once, which can happen with medium-size stocks (which I define as having a share price always above $20, but less than...$80). Moves like that can have longer-term implications both for the reasons why they, themselves, pull out and potential market reaction. That said, not all institutional investors are created equal; some stay and some go depending on the direction of their bank or fund needs. All of that is too much for a micro-investor to analyze, but there may be some worthy insights there, so I may look into that in the distant future.

In short, I rely more on the general market for the products/services of a company and only a little in investor sentiment (which you can read about in entry 20) - but I endeavour to have a big margin of error for the latter and so far that seems to be working well. (Nice try on getting me to lose sleep!)

It is starting to sound like you are doing a lot of research behind-the-scenes, is that true?

It's an every-once-in-a-while thing for me and I do enjoy it as I appreciate the understanding of Canadian markets. Honestly, writing these articles and making them just-so takes way more time (at least double by my estimation).

Have you thought of starting a formal publication on stocks and blockchains?

Yes and my response for now is 'no'. Others have tried and they didn't last at all. I have seen a few magazines out there on this subject and I found them trite, the articles were swayed by sponsors, and they didn't teach readers much of anything. To top it all off, it's difficult to write on this because everyone's situation is different and trying to cater to that market via a single publication....

Do you use AI for anything?

For writing, no, I write my own articles, thank you very much.

For research, I have only used it once because the acquisition history of a company I was interested in at one point, well, wasn't the easiest to find and ChatGPT gave me the insanely long list in seconds. In short, I only consider AI in research that is proving way too long to do on my own and, yes, I do verify, but it's a whole lot easier with a source list to start from.

If you aren't considering a publication, why are you still writing one-off articles about stocks and blockchains?

I have found that I enjoy it. I am sticking to the original mission of dispelling myths around micro-investing and I like the idea of what doing that will leave behind. What I will write about in future is a good question that I don't have the answer to yet, but I have some trade war novels I am thinking of....

Why are you only investing in Canadian stocks?

In short (pun not intended):

• I have an understanding of the context and can easily get more
• I figured early on that there would be fewer tax stipulations applicable to me
• it takes less time for me to research them
• I am aiming to build a micro-investor portfolio, not get a headache by trying to rule the global economy
• it's easy for me to diversify my portfolio to include a number of fairly stable industries

Have you sold any stocks recently?

I honestly wasn't thinking about this given the situation at the moment with many stocks being down (many at a nice discount). That said, I got a pleasant surprise mid-April with a surge in a couple of cheap stocks I had invested in, TGH and PLAN. When I looked at the percentage gain on the sale and how few months it took, that was enough for me to seriously consider. In addition, I didn't see anything about those companies to indicate a real reason for the surge, so I now have the view that they are over-inflated compared to before or, in other words, that investor sentiment is driving the price, not the company's performance. If I am wrong, I don't care too much because I made a nice coin - but I have kept those companies in my watch list should they go back down.

How does it feel still buying individual stocks from time to time?

I still take the same approach as a bigger micro-investor might if they bought the same stocks: I aim for lots of (small) wins.

See, I bought a few $1 stocks in TGH and recently sold them at a 12% bump after just four months. That's great ROI!! This means I, as a micro-investor, can get the same percentages as big movers if I choose right. When I look at how many shares I have in a company, I would like it to be ten times more and I will get there. In the meantime, I will keep doing the same. See, with trading fees for the shares I buy at zero, I feel fine knowing I can tailor my portfolio how I want and when within my means - and to emphasize that many other micro-investors can, too.

I agree that timing the market precisely requires pure luck, so I set myself up at the beginning by trying my darndest to set myself up to make it a cake walk for me to be in the black when I sell. Rinse and repeat - and this seems to be happening more often than I originally thought, which I like. Repeating this process feels a whole lot more satisfying than winning a free play from a lottery ticket!

That's how I disregard the idea that micro-investing is hogwash given that it keeps me excited and motivated to build, not depressed that I only have whatever. I'm not ready to retire yet, after all.

Speaking of retirement, are you thinking RRSPs or just TFSAs?

I have every intention of opening an RRSP, whether it's self-directed, fire and forget, or managed is TBD. This will likely result from the big analysis I want to do towards the end of this calendar year (or maybe early 2026), we'll see.

Have you finished your new home office yet?

Not yet, but it's coming along.

Why aren't you writing more Q&A articles?

Some questions I have received have formed the basis or small remarks in some articles, others make it into an article like this. Feel free to ask me questions in the comments section in any article I write here on Vocal Media.

What is your take on stablecoins?

I've already done some preliminary research, so subscribe and stay tuned! To find out more about what I do and don't invest in, subscribe for free below to become notified right when I publish those articles. Alternatively, you can bookmark this page that contains a list of all my entries in my stock and blockchain trading journey I publish on Vocal Media.