University professor George Karaphillis is increasing his portfolio's diversification in order to lower risk and deal with volatility during the Trump era.
George Karaphillis
Occupation
Associate professor and Dean of the Shannon School of Business at Cape Breton University in Nova Scotia.
The portfolio
Includes shares in BCE Inc., Berkshire Hathaway Inc., BlackBerry Ltd., Brookfield Infrastructure Partners Inc., Canadian Imperial Bank of Commerce, Enbridge Inc., Intertape Polymer Group Inc., Magna International Ltd., Onex Corp., Nestlé SA and Shopify Inc.; also exchange-traded funds such as the Technology SPDR ETF.
The investor
George Karaphillis likes to buy growth stocks when they are at good values. There are several ways to spot "growth at a reasonable price." One is when a growing company has a price-toearnings ratio less than its average annual increase in earnings. He recently purchased shares in Shopify Inc. Other recent purchases were automobile-components manufacturer Magna International, "selling at a steep discount compared to its peers," and food giant Nestlé, "a strong Europe-based global brand with a new growth-oriented CEO."
Mr. Karaphillis, now in his early 60s, has lowered the risk level of his portfolio through purchases of blue-chip stocks that "generate growing dividends." They tend to be less volatile than growth stocks. He is also increasing diversification by industry and region, having learned the hard way of its importance from the "abrupt drop in oil prices three years ago."
"Political leadership in the U.S., U.K., and Russia has gone rogue and I sense the markets are in for a lot of volatility. My portfolio is more diversified and resilient now, and will hopefully ride it out," Mr. Karaphillis says.
ETFs have facilitated the de-risking and diversification. They provide exposure to sectors underrepresented in his portfolio without having to research many individual companies.
He also invests in Nova Scotia's local Community Economic Development Investment Funds. An example is "FarmWorks, which lends funds to small-scale farmers." Buyers of the funds' units receive tax credits and can put the units in their registered retirement savings plans.
Best move
He bought shares in private-equity firm Onex Corp. in 2010, and they have gained more than 275 per cent since then. "Onex has the smartest CEO in the sector," Mr. Karaphillis believes.
Worst move
Since 2010, "BlackBerry has been my worst investment," he discloses. "I thought the company would turn around under the new CEO. … I am still holding, although it is down by 56 per cent."
Advice
"European stocks are now selling at a discount," he notes. "The German market's …price-to-sales ratio is only 0.9 versus the TSX's 1.8. Europe may be a good place to invest in 2017."
Want to be in Me and My Money? Contact Larry MacDonald at mccolumn@yahoo.com.