Includes exchange-traded funds (ETFs) such as iShares S&P/TSX Canadian Dividend Aristocrats, PowerShares Canadian Dividend and BMO Laddered Preferred Shares; shares in Royal Bank of Canada and Banco Santander Mexico SA; cash (15 per cent to 20 per cent of his portfolio)
Having just graduated from the University of Toronto, James Flynn will be going to the University of Oxford in October to study philosophy, politics and economics as a Rhodes Scholar. Mr. Flynn also maintains a strong interest in financial markets: He wrote his senior thesis on the role of government intervention in the U.S. and Chinese equity markets – and in December, 2016, he plans to take the Chartered Financial Analyst Level 1 exam in England.
How he invests
When Mr. Flynn appeared in Me and My Money in early 2013, he was a 19-year-old value investor with a portfolio of stocks worth $30,000. Now, it's worth $59,000 thanks to growth (with an annualized return of about 10 per cent) and new infusions of money.
However, his investment approach has changed. In 2014, he switched to mostly index funds (ETFs), retaining a handful of blue-chip stocks.
One reason for the switch was that he had read the writings of Vanguard Group founder John Bogle, who "contends that low-cost index funds tend to outperform high-cost active management strategies over the long term."
In addition, Mr. Flynn's academic courses began to consume more of his time, as did extracurricular activities such as being the news editor at The Varsity (the University of Toronto's student newspaper) and founder of Code NL (a non-profit organization seeking to improve computer-programming skills in his home province of Newfoundland).
The low time requirement for index investing thus allows him to maintain exposure to equities while pursuing a busy schedule.
In December, 2012, while still a value investor, he purchased BP PLC amid a round of bad news that had pushed the company's shares below their book value. He sold them for a 35-per-cent gain in July, 2014.
"In late 2013 and early 2014, Alderon Iron Ore was fluctuating between $1.50 and $2 per share," he says.
"I thought I had identified a consistent pattern, and pursued a strategy of purchasing shares near the lows and quickly selling near the highs. This day-trading strategy worked for a short period of time, but it quickly went south as the company's shares plummeted. I was able to get out around $1 to minimize my loss."
"Don't allow emotion to cloud your investment decisions," Mr. Flynn advises. For example, with Alderon Iron Ore, as he declares, "I became lost in the thrill of a quick gain and departed from my investment strategy."
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