Derek Knight, 31
Maintenance planner at an oil refinery.
Includes shares in Rogers Communications, Telus, Iamgold, Gildan Activewear, Cott, Leons Furniture, TD Bank, Bank of Nova Scotia, Petrominerales, Bird Construction, RioCan, Contrans Group and Badger Daylighting.
Derek Knight and his wife, a teacher, are very good savers. But investing their money has been a roller-coaster ride because Mr. Knight has “no upper limit for risk tolerance.” Nevertheless, he is learning to temper his risk-taking for the sake of his wife, who has “a point where she trades sleep for possible return.”
How he invests
In the mid-2000s, Mr. Knight bought the battered shares of Stelco Inc., hoping for a turnaround. Instead, the company prematurely entered bankruptcy protection, wiping out shareholders.
Coming out of the 2008 bear market, the money left in their portfolio was put into shares of Teck Cominco (now Teck Resources Ltd.) at $4. According to Mr. Knight’s research, the company had $12 per share in net assets and was “financially backed by a major player.” A year later, the shares were sold at $40, more than recouping portfolio losses inflicted by the market crash.
Mr. Knight now believes “the best strategy is to keep it simple.” He confines his focus to about two-dozen “great companies” that have cash balances equal to at least 25-per-cent of debt. Then he waits to buy at a good price, usually after “the market punishes the company for some reason.” He and his wife have also diversified into an investment property.
Back in the mid-2000s, everyone was drinking a new beer called Lakeport. It was cheap and tasted good. When talking to his mom about investing, she said, “everyone seems to be drinking this beer lately and I bet it would be a good investment.” After he invested, the company, Lakeport Brewing Co., was taken over and a quick return was made.
It was buying dividend stocks on margin (loan from the broker). The dividends were paying the interest and the position was deemed “essentially risk-free” as long as a 30-per-cent drop was avoided. Then the market collapsed in early 2009. He worked overtime “to dump money into the account to stay ahead of a margin call,” until he was forced to sell almost at the bottom.
Keep it simple. And take your spouse’s risk tolerance into account. For more, see freeat33.com/
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Companies & investments Mentioned In This Article (13)
LNF-T 16.03 0.188 % 1,744 Cott Corp.
BCB-T 8.89 0.68 % 22,495 Bird Construction Inc.
BDT-T 13.74 -0.435 % 50,212 Gildan Activewear
GIL-T 55.21 0.528 % 297,356 Contrans Group
CSS-T 12.98 0.00 % 65,717 TD Bank
TD-T 51.65 0.82 % 1,742,218 Teck Resources
TCK.B-T 24.40 0.041 % 1,216,912 Bank of Nova Scotia
BNS-T 65.15 0.805 % 1,251,864 TELUS Corp.
T-T 38.50 0.759 % 699,107 Iamgold Corp.
IMG-T 3.83 -0.519 % 1,297,633 RioCan Real Estate Investment
REI.UN-T 27.64 0.986 % 306,931 Badger Daylighting
BAD-T 40.18 -0.372 % 200,330 Rogers Communications
RCI.B-T 44.26 0.568 % 441,669