Saturday, November 3, 2018

What It Means To Hold a Long Position - Buying My First BMO.TO Shares

Last week, I bought my first shares of a Canadian company, Bank of Montreal. They have not missed a dividend payment for over 100 years, and are a legacy bank here in Canada.

I had been watching the stock for a few weeks now, and it has been moreover very stable at just over $100. I bought shares on October 22nd, using the strategy that I have heard and read about... and waiting for the share to dip before buying. And so on October 22nd, I saw an opportunity. And this is what the history looked like on that day:



To me, this looked like exactly where I wanted to get in.

And then the following days unfolded... and pretty much immediately, panic sets in:


Yup, I bought at around $103, and it's been hovering around $97-98.

The upside is that I only bought about $1400 worth of stock. The downside is that it's hard to know how much longer it will continue to slide down.

But the important perspective is the LONG perspective. Unless I found the one monumentally unlucky moment in BMO's history where they are headed towards disaster, the stock can be expected to go up in next few years, just as the 5Y historical trend shows:


So here it is through experience. It sucks in the short term to have an immediate loss, which in the context of recent history, feels like a very bad loss. But because I'm intending to hold my positions for the next 15 years, the trend will be most decidedly upwards. So the short term grief is not the same as the long term projection.

The one other lesson I'm learning is both when to buy dividend stocks, and the pace at which I acquire more. Each transaction has the same $4.95 transaction fee, whether I buy 1 stock or 100,000 stocks. Buying one BMO stock at this price is not really a smart return on the fee payment, even with the dividends (I mean, really, I'm going to attribute all of my dividend payouts to covering my transaction fees?)

So my new strategy, is to continue to deposit my peripheral income into my investment account, and then buy stocks at a strategic time. I'm still learning about this timing with ex-dividend dates and when the stock is likely to fall just after the dividend payout. It's still a learning process for me.

On the fun side, $TSLA got its turn in increased stock prices this past week, to no surprise. Not as significant of an increase as I would expect, but as long as it's going up, that's fine with me! I am intending on purchasing more shares in the future, though I feel like I may have already missed the boat on this last dip.

Finally, I identified a flaw in my positions chart at the end of the last post. Because my newly purchased BMO shares in are CAD funds (traded on the TSX), and the TSLA and CMC are in USD, I need to track them separately. Behind the scenes, I'll look at my combined gains/losses all in CAD (for my tax reporting purposes). But for these blog posts, the two currencies will be separated.


MY POSITIONS FOR TODAY
(click on image to see larger version)

As of November 3, 2018 closing.

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