What did you sell, what might you sell? (2012)

[flywaysuzy]

The only non-equity holdings in my rrsp are three tiny strip bonds that mature in 2013/14. So, hopefully rates will go up sometime soon. It makes it hard to sell stocks like trp with a 4% yield to buy a gic with less return than that! At least the capital gains won't be taxable until the money is removed...

[northbeach]

The only non-equity holdings in my rrsp are three tiny strip bonds that mature in 2013/14. So, hopefully rates will go up sometime soon. It makes it hard to sell stocks like trp with a 4% yield to buy a gic with less return than that! At least the capital gains won't be taxable until the money is removed...

Everytime I think like this I check out the dollar amount of equities I hold and divide by 2. How probable this possibility I don't know, but the last time this happened was 2008/2009.

[flywaysuzy]

Northbeach- Was 2008 the last time your equities dropped by 50% or the last time you removed money from your rrsp and were taxed at a 50% rate?

[Shine]

Pickles wrote:
Being unable to swap investments between my RRSP and my non-registered account hasn't made my managing any easier. I have some bonds and GICs in my non-registered account that I would like to swap for the BMO shares in the RRSP. The rule change took place shortly after I bought the shares.

Why can't you make a swap?

[northbeach]

Northbeach- Was 2008 the last time your equities dropped by 50% or the last time you removed money from your rrsp and were taxed at a 50% rate?

I am talking about equities. In 2008-2009 the TSX lost half it value peak to trough. My portfolio did a bit better and my current equity mix should be safer in any possible repeat of a major market collapse.

[Springbok]

Northbeach- Was 2008 the last time your equities dropped by 50% or the last time you removed money from your rrsp and were taxed at a 50% rate?

I am talking about equities. In 2008-2009 the TSX lost half it value peak to trough. My portfolio did a bit better and my current equity mix should be safer in any possible repeat of a major market collapse.

I can understand your thinking. In 2008 many of us were probably looking at what the rock bottom value of our portfolios might be if the crash continued. Fixed income certainly cushioned the fall. We never had any fixed income defaults despite a good part of our FI being in corporates. The rest was in 5 yr GICS which had a reasonable return back then (but not now!)

I have same problem as flyawaysuzy - Difficult to find reasonable returns on fixed income. Nevertheless, remembering 2008, I have been buying 5-7yr straight bonds yielding 3.5 - 4.2% issued by stable companies. BMOIL does not always have a good inventory, so I wait until I see something acceptable shows up.

Haven't checked lately, but our FI allocation in registered accounts is usually about 55-60% and zero in taxable accounts. Overall usually 40-45% which is low according to the "experts". But if like you, I devalued our equity to what it might be if equities retract to say 2/3 of current value, then we would be more in line with conventional "wisdom".

[flywaysuzy]

I don't think it's wise to look at how much your equity portion falls-that's the point of having that nicely divirsified portfolio...you wouldn't have seen a 50% drop overall.

I'm definately a glass half full kind of person. (full glass of course is better-although I do like those cute Coronitas in the summer for lunch time sometimes!)

[Pickles]

Pickles wrote:
Being unable to swap investments between my RRSP and my non-registered account hasn't made my managing any easier. I have some bonds and GICs in my non-registered account that I would like to swap for the BMO shares in the RRSP. The rule change took place shortly after I bought the shares.

Why can't you make a swap?

CRA change of rules

[Pickles]

I don't think it's wise to look at how much your equity portion falls-that's the point of having that nicely divirsified portfolio...you wouldn't have seen a 50% drop overall.

I'm definately a glass half full kind of person. (full glass of course is better-although I do like those cute Coronitas in the summer for lunch time sometimes!)

How close are you to retirement, though? Most of my colleagues at work suffered a 25 -30% loss in the office RRSP in 2008-2009. For those with imminent retirement plans, this was catastrophic. For those still in their 40s or early 50s, this was a lesson in diversification. Oh yes, most were in a so-called diversified balanced mutual fund. They still lost 25%.

[pmj]

I don't see how a drop in one's RRSP immediately before retirement would be "catastrophic" - unless one was planning on cashing-it out right away - which would both crystallize the losses and create a significant tax bill - or immediately purchasing an annuity - which would crystallize the losses.

Without speculating on the size of someone's RRSP - if annual withdrawals were to be about 5% of the principal - and 5% of the "before-losses" value were "required" right then - a 30% loss would mean withdrawing 1.3 x 5% = 6.5% of the principal. Certainly that's not ideal - but it's not the end of the world.

I've omitted any mention of minimum annual RRIF withdrawals 'cos:
1. At age say 65 the min withdrawal is 4%
2. At ages with higher min withdrawals, if the amount withdrawn is more than needed, the excess should just be reinvested - so no loss would be crystallized (although there might be an upcoming capital gain...)

[Pickles]

I don't see how a drop in one's RRSP immediately before retirement would be "catastrophic" - unless one was planning on cashing-it out right away - which would both crystallize the losses and create a significant tax bill - or immediately purchasing an annuity - which would crystallize the losses.

My former workplace pays relatively low wages and about half the staff are immigrants who will not receive full CPP or OAS. They have no pension plan, just a group RRSP. Most people will have to dip into their RRSPs early in their retirement or annuitize.. Several people are in their late sixties, one in his early seventies, still working because of their losses in the crash and the need to build up their nest eggs. One woman, who was forced into retirement in 2009 at the age of 85, never had the chance to rebuild.

Not sure what your benefits are or what your financial situation is, pmj, but for many people, their RRSP is their only savings. To lose 25 -30% of that is catastrophic.

[deaddog]

Not sure what your benefits are or what your financial situation is, pmj, but for many people, their RRSP is their only savings. To lose 25 -30% of that is catastrophic.

I know we are taking this thread off topic, it should probably have it’s own thread.
Maybe called “Why didn’t you Sell.”

Of course it’s catastrophic to lose a good chunk of your capital. Whose fault is it that you are down 25 %?

[j831robert]

Pickles: I can see your argument but surely it would apply only to those few who had to start drawing down on their RRSP in the period 2008-2010 (the old saw that one only actually suffers a loss if one sells). My own records indicate my investments down in value 28-30% as of 31 Dec 2008 but fully recovered plus by 31 Dec 2010 and I suspect this to be the norm for most who didn't sell (or commence drawing down on their RRSP).

[FinEcon]

Back on topic.

Sold out entirely out of the North West Company (NWC). on the grounds that it has become ovrevalued in both absolte and relative terms. Better growth prospects without the growth premium all over the TSX. It's a decent business and I expect to aquire in the future if and when the numbers better reflect the reality of the business.

[Pickles]

Pickles: I can see your argument but surely it would apply only to those few who had to start drawing down on their RRSP in the period 2008-2010 (the old saw that one only actually suffers a loss if one sells). My own records indicate my investments down in value 28-30% as of 31 Dec 2008 but fully recovered plus by 31 Dec 2010 and I suspect this to be the norm for most who didn't sell (or commence drawing down on their RRSP).

You've obviously read my post. That was the situation facing several colleagues. Fortunately, only one was forced to retire, though the experience was shocking and catastrophic for the plans of all.

(added) I'm not trying to take this off-topic but for some reason my answer to Peculiar_ Investor seems to have caused a stir of questions and comments. I blame Peculiar_Investor for all this!!

[flywaysuzy]

That's terrible about the people you used to work with Pickles. I think there must be major problems with some group rrsps and the lack of support for people who speak english as a first language, never mind those for whom it is not. I know my son was just sent home with a pile of brochures to make his decisions about which funds to buy. He was almost in tears trying to make sense of it all. (He was also terribly ill that weekend) He didn't even know what a MER was. There could have been something in there about switching to less riskier investments as he got closer to retirement-but I doubt he put it into his long term memory at the age of 19...

The whole idea of the rrsp having to be folded over to an rrif or annuity just seems like a way to randomly penalize a cohort of retirees who happen to be born in a year which is 71 years before a market downturn...if we as Canadians are going to keep people working into their eighties, we may wish to revise this portion of our retirement rules...

[pmj]

Transferring a RRSP to a RRIF won't crystallize any losses unless the owner sells the stocks or mutual funds in the account. Losses are only crystallized when stocks or funds are sold and the proceeds maintained as cash or used to buy an annuity.

[Pickles]

That's terrible about the people you used to work with Pickles. I think there must be major problems with some group rrsps and the lack of support for people who speak english as a first language, never mind those for whom it is not. I know my son was just sent home with a pile of brochures to make his decisions about which funds to buy. He was almost in tears trying to make sense of it all. (He was also terribly ill that weekend) He didn't even know what a MER was. There could have been something in there about switching to less riskier investments as he got closer to retirement-but I doubt he put it into his long term memory at the age of 19...

I know we should be winding up this off-topic discussion so I'll just say that your son's experience is common. And since providers of group RRSP plans can't give individual advice -- just general info -- they won't remind your son and they didn't remind my colleagues about switching to less risky investments when closer to retirement. Diversification in equities is important but diversification should include fixed income, even when interest rates are low.

That's all I'll say about this in this thread. We now return to regular programming....

[zinfit]

I bought Churchill Corp in December and sold it on this past Wednesday. Made a nice 33% gain. Sold because Irwin Michael gave it thumbs down on market call. I pay attention to this guy.

[Shakespeare]

Quote for new windows came in higher than I expected. Goodbye SLF. (And good riddance.)

[BRIAN5000]

Sold my last bit of Telus Non voting at $58.04 this morning finally got Telus down to 5.3% of portfolio.

[Pickles]

Sold my last bit of Telus Non voting at $58.04 this morning finally got Telus down to 5.3% of portfolio.

Was this in your non-registered account? If so, what's your thinking -- take the money (and tax hit) and run rather than wait to receive voting rights (and no tax hit) in May?

I watched T.A climb up to 58.40 and I still couldn't summon the will to sell. I bought it for the dividend which seems healthy enough and I don't really want to liquidate. And if the gap between T and T.A narrows, then why not wait for the conversion? The only compelling reason to sell, in my view, is if you believe the recent price upswing is overdone and share value will decrease $5 or so any time now.

I think share price may go down some, but not 10%. So I hold and I watch.

[BRIAN5000]

Was this in your non-registered account? If so, what's your thinking -- take the money (and tax hit) and run rather than wait to receive voting rights (and no tax hit) in May?

Yup non-registered, not much thinking involved been overweight in Telus and telecom for far to long, as its been rising been selling shares. I'm still over weight by about 2% in voting shares. Did the best I could to get them out at a good price. I'm also about 13% overweight in equities looking for things to sell, anything anywhere no matter where its held. Royal bank and BCE held in registered are next up @ $60 ish and $43 ish and their gone and a old mutual fund if it can ever recover a bit.

[BRIAN5000]

In the past week, I've sold the small positions of BNS and CNR I purchased a short time earlier for quick gains in my RRSP account. I had made this short-term investment to mark some time before investing in another GIC/bond to replace a rung in my ladder.

How does one determine which stocks to purchase for quick gains while marking time to purchase something else? Is there a formula or screening technique? Is it safe to presume that you are also prepared to accept quick losses? If you can make quick gains this way, why lock into a GIC at today's low rates?

Signed,
A somewhat peculiar buy and hold investor

I was thinking about what Pickles is doing and if there is any safer less labour intensive way to Jazz fixed income returns. ( cause I'd like higher returns too )
If I understand correctly Pickles takes 10% of RRSP funds invests in a few stocks for dividends and growth for relatively short periods of time. (under a year) So to get an overall increase of 3/4 of 1% she would need to make @ 10% return on that 10% portion. There is a slight change to asset allocation so really this is just mental accounting?

If there was a 15% allocation (in RRSP but total porfolio then less 5% ) to US high yield bonds @ 7 % this would accomplish the same thing. Not sure if it's any safer?

[Pickles]

Brian, this thread is to record sells and explain one's reasons for the sell. It is not a general discussion thread for strategy (and yes, we occasionally get off track but try not to). If you wish your questions to be addressed, open a new thread and cut and paste your post.

We now resume the regularly scheduled thread.