Covered Calls or Day Trade – Why Dividend Paying Big Cap Stocks Work For The Small Investor – Bank of Montreal Stock (BMO) – May 26 2016

This trade is on the TSX Composite Index in Canadian dollars. Yesterday people loved Bank of Montreal stock and today they are wondering once again about what the “next quarter” will look like. Fear abounds when it comes to Canadian Banking stocks as investors have a hard time believing the banks are doing as well as they are in the midst of an oil and gas crisis.

But the balance sheets are what investors should be looking at and they show limited exposure. With the amount of loan loss provisions being increased, this is only going to help the banks and if not needed, those funds are returned to the bottom line in future quarters.

But when selling starts investors jump in and what was yesterday’s darling becomes today’s “dead-weight”.

Bank of Montreal Stock 2 Day Chart

The 2 day chart below shows the result of this worry. The stock yesterday set a new high on their earnings results. Investors enthusiastically were loading up on shares. This morning concern on oil and gas were back in vogue. The stock plunged.

BMO - 2 Day Chart - May 25 - May 26 2016

BMO – 2 Day Chart – May 25 – May 26 2016

The drop this morning sent the stock down to $83.10. I jumped in a minute later and bought 500 shares for $83.35.

Why Dividend Paying Big Cap Stocks Work

The key to growing a portfolio is to watch for opportunities in Big Cap Stocks. There are opportunities every day in the universe of large cap stocks. They offer better protection and often can easily beat speculative stocks if they are watched for opportunities such as this one this morning.

Many investors calculate out the number of winning trades versus losing trades. Instead I am not interested in the losing trades. I prefer there be so few, that they cannot slow the growth of my capital.

Every losing trade means capital is lost that I cannot reinvest. But a trade in a large cap stock when it falls, is a trade I can continue to work with to keep earnings flowing in, confident that I can add in more capital when needed, place more trades in it to assist in repairing the losing trade, enjoy the dividend and use it to add to my overall capital and sleep well, knowing that at some point the stock will recover……the rest of this strategy article and trade alert is for members.

Bank Of Montreal Trade Alert – May 26 2016

FullyInformed Members can read this Bank of Montreal Stock (BMO) trade alert and strategy discussion article  directly through this link or they can sign in to the full members site here. Non-members can join here.


Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed and presented are financial or trading advice or recommendations. Everything presented and discussed are the author’s own trade ideas and opinions which the author may or may not enter into. The author assumes no liability for topics, ideas, errors, omissions, content and external links and trades done or not done. The author may or may not enter the trades mentioned. Some positions in mentioned stocks may already be held or are being adjusted.

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