Charts and candles

At the moment I am reading The Naked Trader by Robbie Burns. It's well written, humorous and free of technical jargon.

I also started reading A Beginner's Guide To Day Trading Online by Toni Turner. This book is full of charts and technical stuff. I have no intention in turning into a day trader but I am interested in her analyses to gain a better understanding of the technical side of trading.

Take the following 1 month daily interval candle chart for Ambarella (AMBA). The price exceeded $60 on a couple of days last week on high volume and has been moving between $50 and $60 for most of the month. This information is readily available in a candle chart. I'm hoping to sell at around $58, which will net me a decent profit thanks to the strong dollar.

This week I sold my 2 Netflix (NFLX) shares for $109. NFLX has continued rising since then but P/E is over 300, which seems very high even for a fast-growing company like Netflix.

I also bought 7 shares in PayPal (PYPL). The NASDAQ-100 Index (NDX) will add shares of PayPal before the market open on November 11 so I am hopeful the shares will rise, although they have lost value for the last three days. 

PayPal will replace Broadcom Corp. (BRCM). 

For more on this story, please see http://finance.yahoo.com/news/paypal-finds-another-etf-home-114528801.html.

Update at the end of October 2015

Money invested through DeGiro so far: €2,500
Loss so far: €7.96

The bad result is mostly caused by two investments, Tesla Motors (TSLA), sold with a €36 loss and Ambarella (AMBA), which continues to fall. I am looking at at loss of €27 if I were to sell now. However, I think Ambarella has been somewhat unfairly punished for GoPro's bad results. The company has more legs to stand on than GoPro. The quarterly earnings will be revealed in early December.

TSLA is now valued at around $207 and will probably fall even lower as I don't think they will meet the quarterly targets. I may invest again after the results are out.

Netflix (NFLX) has recovered well after hovering around $100 earlier this month. Combined with a strengthened dollar I am looking at a €19 profit so far. Mario Gabelli, Gabelli Funds Chairman, bought more Netflix shares on Friday. The share price has risen six days in a row now. I will keep the shares for as long as the price keeps rising.

QQQ also continues to do very well for me.

After buying 10 shares in Realty Income Corporation (O) on October 28th, the next day my DeGiro account listed my monthly dividend of about €1.5. The share price has dropped a bit since then but hopefully it will pick up.

TAG Immobilien (TEG), the German REIT, is also dragging down my portfolio.

Putting my plan in to action

Today I transferred another €1000 into my DeGiro account and bought three of the dividend shares I identified in my previous post.

TAG Immobilien (TEG), 25 shares x €12

AT&T (T), 10 shares x $33.50

Realty Income Corp (O), 10 shares x $50.5

All of these offer a 4-5% dividend yield, and the ex-dividend date for AT&T is tomorrow, October 29.

I also considered Schwab US Large-Cap ETF (SCHX) today, but I think I will wait until it drops a bit.

Lately I have been reading How I made $2,000,000 in the stock market by Nicolas Darvas, which you can read here: http://vantagepointtrading.com/wp-content/uploads/2010/05/How-I-Made-2000000-in-the-Stock-Market.pdf. It's a very fascinating story, and interestingly written.

Lessons from Millionaire Teacher

In Millionaire Teacher, Andrew Hallam recommends a portfolio of ETFs (national and international total stock index) and short-term government bonds. For a 30-year old he recommends 30% bonds; for a 40-year old 40% etc. 

Given that shares tend to do better than bonds over time, and given that I still have a long way to go until retirement, I am not sure a youngish investor would need any bonds at all, at least not such a huge portion. I will therefore, at least initially, invest only a small amount in bonds, perhaps 5% of my portfolio, to evaluate how they perform over time against ETFs and dividend shares.

I will keep looking for other bonds, but for now the one on my radar is iShares Euro Government Bond 7-10yr UCITS ETF (IBGM), which can be bought on the Amsterdam stock exchange.

My main focus will be ETFs and dividend stocks.
I am considering the following ETFs for about 70% of my portfolio. I have selected these ETFs based mainly on charges, liquidity, yield, performance and current discount/premium. http://etfdb.com/ is great for screening ETFs.

VAN FTSE EU ETF EUR (VEUR) seeks to provide long-term growth of capital by tracking the performance a market-capitalisation-weighted index of common stocks of large- and mid-cap companies in sixteen European countries.

U.S. Large-Cap ETF (SCHX) seeks to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Large-Cap Total Stock Market Index. The annual charge is only 0.04% and it's currently trading at a 0.61% discount.

The Vanguard High Dividend Yield ETF (VYM) seeks to track the performance of the FTSE® High Dividend Yield Index. The current yield is 3.13% and it's currently trading at a 0.43% discount. The annual charge is 0.1%.

I will also keep adding to QQQ whenever the price seems right.



About 20% of my portfolio should consist of dividend stocks.
I am considering four shares at the moment, in no particular order.

Realty Income Corp (O) is a REIT (Real Estate Investment Trust). Current yield is 4.58%, dividend is paid monthly and dividend has grown for 19 years.

AT&T (T) offers a 5,57% yield, just posted a good result and has a record of increasing dividend for 30 years.

TAG Immobilien AG (TEG) is a German real-estate owner and developer, which means no currency issues. However, the stock is listed on the Xetra exchange, so DeGiro charges €4 + 0.04% (up to a maximum of €60).

Greet REIT plc (GRN) is an Irish REIT which offers many of the same advantages as the German REIT with a cheaper charge of €2 + 0.04%. 

EPR Properties (EPR) is a US REIT. Yield is 6.41%. Dividend growth is only 4 years. The share price seems to be on the way up.



The remaining 5% will consist of other shares, preferably paying dividend.

I will also take the EUR-USD exchange rate into account. Days when the dollar is relatively strong are good for selling US equities and buying eurozone equities. A weak dollar is a good opportunity for buying US equities.

In January, I intend to do a €100 challenge to see how much I can grow €100 in one year. That should be fun! Please let me know if you would like to join me.

A great day for selling

The euro lost 2% against the dollar today, which means the dollar is stronger than in a long time. This presented me with a good opportunity for some profit taking.

Facebook broke the three-digit barrier for the first time, so I decided to sell my single Facebook share at $102 and take my profit. It is possible that the share will continue to rise, but since Mark Zuckerberg doesn't pay any dividend the only way to earn money from his company at present is to buy relatively low and sell higher. Besides the P/E ratio is over 100, which seems rather high.

I bought FB on September 24 at $92.98, so I am quite pleased with how it turned out. I made a profit of €8.82 from my investment of €83.76, which includes 2 x €0.5 broker commission. This equates to a 10.53% return in one month.

I also took advantage of the strong dollar to get rid of two shares in Ambarella. I bought the ABMA shares on the 21th at $53 each plus commission (€93,55 + €0.51) and sold at $54. This resulted in a profit of €3.45 in just three days.

Thanks to the strong dollar and the strong performance of my portfolio, I am up €19.53 today for a total profit of €3.55 so far.

My portfolio currently consists of €918.31 in shares and €525.84 in cash.

My first profit from managed funds

A couple of days ago, I sold my first fund, Henderson Global Technology Fund A2, at a profit of €2.55. I invested €200 in this fund through RaboDirect in August, which means I earned 1.275% in about 2.5 months.

Status for my remaining RaboDirect investments:

Ambarella (AMBA) shares lost 5.63% today, closing at $53.62, so I bought two more at $53 + €0.51 in commission. As far as I can tell there is no recent news that would justify this price drop so I am hopeful the share price will rebound soon.

My current portfolio:

The story so far:

Seller's remorse

It's been a busy week at work, which is just as well, as things certainly aren't going my way on the stock market at the moment.

Since my last update, the Tesla (TSLA) share price has gone downhill a lot, although it recovered somewhat after Tesla released self-driving features over the air. I think it will probably go down again when Tesla misses the full-year production goal. In any case, in a moment of madness, which I now regret, I sold it at $223.01, a loss of $39.99. It ended the week at $227.01.

Netflix (NFLX), my previous star performer, is going through a rough patch after disappointing subscriber figures. At one time, I had a profit of about $24 on my Netflix shares. I am now staring at a loss of €4.51. I' not going to sell this time.

I am however selling one of my RaboDirect funds. Henderson Global Tech Fund A2 has made a profit for me, which is nice, but I can get more value for money by investing in ETFs. I intend to sell the others at a profit too. Which fund do you think will be profitable next?

After selling TSLA, I decided to buy 5 shares in Ambarella (AMBA), in their own words, "a leading developer of low-power, high-definition (HD) and Ultra HD video compression and image processing solutions". Ambarella's products are used in GoPro cameras and have been hit by bad news from GoPro, so I was hoping to buy at low point and make a small profit quickly. I'm down €7.10 so far but I'm still optimistic.

I have begun looking at dividend paying shares and have identified a few that I will research more before making a decision. A few of them pay monthly dividends.

The monthly candidates are, in no particular order, Gladstone Commercial (GOOD), LTC Properties (LTC), Realty Income Corp (O), Sabine Royalty Trust (SBR), Shaw Communications (SJR), Cross Timbers Royalty Trust Units (CRT), Gladstone Capital (GLAD), Enerplus Corporation (ERF), Hugoton Royalty Trust (HGT), Main Street Capital Corp (MAIN). Some of them pay almost 10%, which sounds good but could be risky.

I am also looking at AT&T (T) and STAG Industrial (STAG). Their dividends seem decent but only quarterly.

Today I finally received Millionaire Teacher by Andrew Hallam. I am looking forward to reading it.

Holidays, and further share purchases

After having bought shares in Tesla and Apple I had holidays coming up. Thus I had plenty of time to read, study shares and learn more. A few weeks before travelling, I had requested The Naked Trader by Robbie Burns from my local library, but I am still waiting for it. So I had to make do with So Anyway by John Cleese instead, which I rather enjoyed. Another book on my To Read list is Millionaire Teacher by Andrew Hallam, which I have just ordered from kennys.ie. The price was very good and delivery is free. Both books can be sampled from the Apple Book Store.

But enough about books for now. On September 24, I bought one share in Facebook (FB) at $92.98 (priced $93.24 at close on Friday). Facebook is completely dominating social media and is making lots of money from targeted advertising. Just take a look at these numbers:

Facebook also owns Pinterest, with 100 million monthly users, 85% of them female.

I believe both Facebook and Pinterest will continue to grow over the coming years.

I also bought shares in a few other companies at a time when there was a lot of turmoil and falling prices:
2x Netflix (NFLX) ($99 and €99.50)
4x Spectra Energy (SE) ($25.70)
2x Verizon (VZ) ($43.50)
1x PowerShares QQQ Trust (QQQ) ($100.89)

I subscribe to Netflix and as they're creating more and more original content and expanding to new countries, I think NFLX shares will keep appreciating. The current price is $113.33.

Spectra Energy was not on my radar. I think I heard about SE in a newsletter or podcast, possibly Motley Fool. They've had a bad year overall but hopefully things will improve. As I bought pretty much at the bottom, I am very happy with the current price, $29.85. In addition, the current dividend yield is 5.55%, paid quarterly. The next ex-dividend date is in about one month.

I bought Verizon for similar reasons to Spectra Energy. VZ shares are now worth $44.16 with a dividend yield of 5.12%. The ex-dividend date was just a few days ago, so I will receive $0.79 (after tax) in the beginning of November. Both Verizon and Spectra Energy improves the diversification of my small portfolio.

I bought PowerShares QQQ Trust as I thought the price was good (I first bought QQQ at $107), as QQQ is now worth $106.53. I now hold 2 QQQ shares. I will receive a small dividend from my first QQQ share at the end of this month.

I am looking into buying more ETFs in future transactions and also companies paying monthly dividends. Regular income is a good financial backbone.

Further share purchases

Welcome back to my investment saga. Can I say "saga", or will I be sued by King, the company behind Candy Crush Saga and similar games? I better write "saga" in lower case just to be on the safe side.

Can you buy shares in King by the way? Turns out you can. The stock symbol is KING. Too volatile for my liking though, and it is possible that they may have peaked. Maybe one to watch for adventurous day traders.

Anyway, following my QQQ purchase, I still had money that I could use to buy other shares, so I bought shares in a couple of companies I think I know well, Tesla Motors (TSLA) (1 share, $263) and Apple (AAPL) (1 share, $112). The transaction fee was just $0.50 for each of them.

Tesla Motors, in case you don't know, makes the Tesla Model S, an EV (electric vehicle) which has won rave reviews and has a fanatical fan base very much like Apple fans. Just a few days ago, they also launched the Model X, an all-electric SUV with a price tag of $132,000 for the top model and a waiting list of approximately one year. Oh, and it does 0-60 in 3.2 seconds. Tesla will be coming to Ireland next year. Next year Tesla will also reveal the Model III, a $35,000 EV for the masses. TSLA may be a risky choice, especially at this price, but it could also pay off handsomely. The 52 week high is 286,65 but Morgan Stanley thinks it may double (http://www.bloomberg.com/news/articles/2015-08-17/morgan-stanley-massively-hikes-price-target-on-tesla-says-stock-could-almost-double). The price has taken a hit lately, as they probably won't make their delivery target for 2015. Last night TSLA closed at $226.72.

Apple doesn't need an introduction. Suffice to say I myself have bought several Apple products (iPod touch) in the past and would like to replace my constantly crashing first-generation Google Nexus 7 with an iPad. In addition, Apple has recently been poaching Tesla employees, so it looks like they may be building a car. They've certainly got the money to do it and a solid brand image that could make it their next big hit. AAPL closed last night at $109.50.

Another great thing about Apple is dividend payments. It's not a whole lot, and below the industry average, but certainly better than a bank account. The data below come from dividend.com.

It looks like another quarterly dividend payment is due next month. Bring it on!

My overall objective is to grow my money and to beat the savings rates offered by Irish banks.

My initial investment strategy is to hold these and other shares for years unless I totally lose faith in them. I intend to go for a mixture of ETFs, growth shares and dividend shares. I also obviously need to diversify in other ways to reduce risk, but for the time being the US economy seems strong and therefore the dollar may appreciate against the euro so it seems a good choice, but I also want to buy European shares at some stage. The big question is which ones. I honestly can't think of any European companies I'd like to own a part of at present.

As for Irish companies, I think Ryanair will continue to do well in the coming years. However, there is a 1% stamp duty when buying Irish shares and the DeGiro basic fees are €2 or €4 (not sure which; the fee schedule is a bit unclear on this) compared to €0.50 for US shares, which makes a big difference for small trades such as these. Besides, I've got exposure to Ryanair through a couple of funds, primarily the Merrion Irish Opportunities Fund.

My first ETF

So, in September I opened an account with DeGiro (www.degiro.ie), which was very quick and easy. If anyone finds a better and cheaper broker, please let me know. Overall, I am very happy with them so far. I'll provide screenshots in future posts.

On September 11, the money I transferred from my Bank of Ireland account a few days earlier (€500) had arrived and my DeGiro account was up and running. 

To some of you, €500 may seem like a very small amount but I would counter that you should never invest any money you're not prepared to lose, or that you would lose sleep over. Besides, you've got to start somewhere.

Having read up a bit on ETFs, I was interested in investing in one of them. I chose PowerShares QQQ Trust (stock symbol QQQ), which tracks the Nasdaq 100 index, which has done very well since 2009. 

I bought one yes one QQQ share at $107 on September 16. I also paid a commission of €2.02, as DeGiro charge a flat rate of €2 + 0.02% for ETFs. A few days later I got an unexpected bonus, a $0.26 dividend (minus $0.04 in tax).

As I write this, my QQQ share is worth $105.50.

Please see http://www.investopedia.com/terms/e/etf.asp for more information about ETFs and do let me know if you would like me to write more about ETFs and their benefits over traditional funds.