Mike Koktan, 65
Occupation
Retired production line worker
Current portfolio
Cash
The investor
Mike Koktan's approach to the subprime crisis has left him in investing limbo. Before the markets started to collapse, he heeded a financial commentator's advice and moved into cash. "I'd seen my portfolio lose close to half of its value in the tech crash, and I thought 'I'm not going to disregard the warnings this time.' " Cash was a great place to be, he says, but he also didn't get back in when the market was recovering. "I was saying this wasn't for real, but I missed an opportunity to make a good dollar," he says. "The [U.S. Federal Reserve]went into money-printing mode, and that money needed to find a home, and home was the stock market."
Who he follows
Mr. Koktan respects Bill Fleckenstein, who writes a column for MSN Money, and was a major factor in Mr. Koktan moving into cash. Back in the late 1990s, Mr. Fleckenstein warned the tech bubble would end in tears. "When what he predicted happened, I said to myself 'I'm going to pay more attention to this guy in the future.' "
Why he's still on the sidelines
Mr. Koktan thinks the U.S. will continue its efforts to stimulate the economy through unconventional means such as so-called quantitative easing – creating money to purchase bonds in an attempt to drive down long-term interest rates. This may move the market up. But he also wonders whether investors this time may see through the "smoke-and-mirrors."
What he's looking at
While he and his wife have good pensions, he says, "Our cash can't sit doing nothing forever." He's looking at a couple of funds that focus on generating income through selling "covered call" options, which give the buyers the temporary right to buy stocks in the fund at pre-determined prices in the future. BMO Covered Call Canadians Banks ETF sells call options on the big Canadian banks; Horizon AlphaPro Enhanced Income Equity ETF sells options on a basket of large-cap Canadian stocks.
Best move
In the mid-2000s, Mr. Koktan got some handsome returns with a couple of short-term income funds, Mavrix Monthly Pay fund and TD Monthly Income fund.
Worst move
In the late nineties, Mr. Koktan had money in tech funds such as Altamira's science-and-technology and e-business offerings. "I tripled my money but when it all blew up, I was right back to square one."
Advice
"If you're a novice, seek professional advice of some sort, and gain some insights by reading and using the Internet. Don't just try to do it all on your own unless you're really savvy and have been in it for a while."
Special to The Globe and Mail
Want to share your strategies?
tony.martin@sympatico.ca