2011 Recap

Below are the results for 2011 for each of my portfolios.  RBC does a good job of providing performance analysis of your portfolios.  These are for actual accounts, no the practice account I display weekly here.  The results provided by the service only go back to 2009 unfortunately.

2009 was obviously an easy year to put up a big number.  There were stocks in March 2009 trading at one 10th of the value they would trade at 9 months later.  I was lucky enough to pick a few of these trash bin turkey’s that turned around when the great depression did not quite happen.  Teck Resources, Western Canadian Coal, and Mirasol Resources were all big wins.

2010 was still easy, but not quite as much.   The big moves off the lows had been done, but I was in the right place at the right time with a number of Cardium stocks (Midway, Bellatrix, Result and West Energy before they were bought out).  2010 was also the year of the pulp stocks, and while I lost more than a few nights sleep worrying about the debt on Mercer’s balance sheet or the state of the NBSK market, it turned out to be a good call in the end.

2011 was a tougher year that the last couple. The last 6 months have been a struggle to keep my head above water, let alone actually turn a significant profit.  Nevertheless I did outperform the benchmarks by a clean margin.

My margin account outperformed my RSP for one reason and one reason only.  Shorts.  That you can’t short in an RSP account is a travesty in my opinion.  The fact that you have to tie the fortunes of your retirement to a long only bet on the economy is unfortunate.

Portfolio Composition by Month

One interesting analysis that I peformed was to look at the stocks I held at the end of each month this year.

You can see how when the European crisis hit I quickly consolidated my holdings to a few key names.  Another point, which I will touch on more below, is that there were a lot of stocks that I started the year off with that I did not end the year with.  The only three stocks that I held positions in for the entire year were Arcan Resources, Coastal Energy and Lydian International.

Trying to learn something from the past

Buy and hold is dead.

Taking a look at last years statements, one thing that is interesting is just how poorly I would have done had I just sat on the stocks I held in December 2010.  Here are a few of the names I owned on January 1st 2011:  Tembec, Mercer, Geologic, OceanaGold, Mirasol Resources, Canfor Pulp, PennWest Energy, Cline Mining (which was $4 at the time!!!), Avion Gold and International Forest Products.  Honestly, if I had held onto these stocks through the year I would be down 30%+ right now.

More is not better

Another point to be made is how it was really just a few stocks that made me my gains in 2011.  I had a large position in Coastal Energy on January 1st 2011.  The stock was at  $6.06.  It was nearly a 3 bagger in the year.  I haven’t done the math but I suspect that stock alone makes up a good chunk of the gains for the year.   A second big winner was Cameco.  I feel a bit slimy saying it, but when the earthquake hit Japan it was clear to me quite quickly that Cameco was going down hard.  I picked up 50% before cashing out.

Swing trading

A final observation is that I made a lot of my money this year on swing trading.  Now I do not consider myself a swing trader.  I don’t buy a stock with the intention of taking a quick gain and getting out.  But last year lent itself to such a strategy and maybe somewhat unconciously I did exactly that.  OceanaGold is one example I have already mentioned on a few occasions.  i bought and sold OGC 3 times over the last year.  Buys between $2 and $2.20.  Sells between $2.50 and $2.70.  Earlier in the year I did the same thing with Mercer before it became clear that the bottom was slipping away from the pulp market.  Lydian still is a clear buy at $2 and an equally clear sell at $3.

These are all good lessons for the upcoming year.  At the moment at least, I don’t see a big up move coming in stocks.  It makes me think i should take the gains when I have them (meaning take some right now perhaps), and don’t spread yourself too thin (something I am concerned I am in the process of doing right now).  And let’s hope that 3 year trend line I see above gets broken to the upside.