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Investment Ideas An investor who buys stocks when they are out of favour

Kevin Butler

Occupation

Real estate broker

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The portfolio

Includes shares in Bank of Montreal, Telus Corp., Canadian National Railway Co., Travelers Cos. Inc., Seaspan Corp., Kraft Foods Group Inc. and units of RioCan REIT.

The investor

Kevin Butler started buying stocks at the age of 18 after taking the Canadian Securities Course. He has worked in real estate for 25 years but only recently began to invest in real properties.

How he invests

"Since 2008, I have doubled my portfolio to over $1-million," reports Mr. Butler. This performance had a lot to do with loading up on stocks during the market bottom of 2009. "There is no magic formula, except the rule to 'buy when there is blood in the streets,'" he says.

One way he controls risk is by allocating no more than 5 per cent of his portfolio to any one stock. "I have found the 5-per-cent strategy to be a huge winner," says Mr. Butler. "It keeps me disciplined in my purchases."

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With mortgage rates low and rental demand strong, Mr. Butler is buying properties in Saint John, N.B. – where average house prices are only $160,000. A bonus would be if the National Energy Board approves TransCanada Corp.'s proposed Energy East pipeline running from Alberta to Saint John, which could boost the real estate market by creating more jobs in the area's oil refineries and export terminal.

Best move

It was buying Bank of Montreal's stock when the dividend was yielding 9.8 per cent during the financial crisis of 2008. The share price is now up 160 per cent, and dividend increases have raised the dividend yield on the capital he originally invested to 12 per cent, he says.

Worst move

"Buying BlackBerry at $54 and doubling down for an average cost of $22." Although the stock is down considerably, Mr. Butler is holding onto his position because he believes "BlackBerry will come back – there's too much value there."

Advice

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"Ignore the daily market gyrations and have a long-term vision. Buy quality stocks that pay a dividend and let the power of compounding do the rest."

Want to share your strategies? E-mail mccolumn@yahoo.com

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