These are trades I did following the March 2009 final collapse of the Bear Market in my Retirement Stock Portfolio.
A stock market decline like that seen from Sept 2008 through into March 2009 are rare events. A decline that large usually is followed by a enormous run-up. It’s a rare chance to purchase stock at what I consider fire-sale prices and hold it for a few months without covered call writing and then sell the stocks for large profit gains.
It is for just such events like the 2008 to 2009 market collapse that I keep some cash available in my retirement account. While it is difficult to keep cash sitting in money market funds earning small returns, it is moments like this bear market when there are exceptional bargains, that make keeping cash aside, very worthwhile.
There are always opportunities to apply cash to various trades every once in a while, but a bear collapse like the 2008 to 2009 bear are rare. The last such event was in 2000 to 2003. It only takes a couple of events like these to make my cash holding very worthwhile and it more than makes up for the meagre money market returns for the rest of the year. This is just one of the reasons why I believe in the importance of having a plan.
Once I buy the shares I picked up at amazing bargain prices I hold for a short period and then sell these shares and return my cash to its safe nest inside a money market fund, waiting for the next opportunity.
Covered Calls in a retirement portfolio work well, but in a rapidly advancing market following a huge collapse, I believe buying and holding stocks for a short period is best. The last such market rapid advance was in Feb 2003 where my returns on my retirement cash were 53%.
Understanding My Indicators
To understand the indicators I used to decide to go in and buy stock at this period, please read the timing indicators article within my USA Stock Portfolio since these are the same indicators I use for all market trends. Select this link to view that article.
Trades For March 2009 to Aug 2009 (Commission Included)
All Trades Are From The Toronto Stock Exchange and are in Canadian Dollars. This is an RRSP or retirement account. In Canada the law prohibits put selling or cash secured put selling in a retirement account.
Therefore for most of the year I do covered calls. However in a market collapse such as this one, it is better to buy and sell the stock on a rally which did occur.
|Date||Stock & Symbol||Action||Capital Invested (includes Commission)||Profit/Loss||Return|
|Mar 12 09||Bank of Montreal BMO||1000 Shares Purchased @ 31.10||$31,107.00|
|Apr 29 09||Bank Of Montreal||Dividend 1000 X .70||$700.00|
|Aug 5 09||Bank Of Montreal||Dividend 1000 X .70||$700.00|
|Aug 13 09||Bank of Montreal BMO||1000 Shares Sold @ 51.20||$51,193.00||$20,086.00||64%|
|Mar 12 09||TD BANK TD||1000 Shares Purchased @ 39.93||$39,937.00|
|Apr 1 09||TD BANK||Dividend 1000 X .61||$610.00|
|Jul 2 09||TD BANK||Dividend 1000 X .61||$610.00|
|Aug 10 09||TD BANK TD||1000 Shares Sold @ 63.55||$63,557.00||$23,620.00||59%|
|Mar 9 09||BANK OF NOVA SCOTIA BNS||1000 Shares Purchased @ 29.20||$29,207.00|
|Apr 3 09||BANK OF NOVA SCOTIA||Dividend 1000 X .49||$490.00|
|Jul 3 09||BANK OF NOVA SCOTIA||Dividend 1000 X .49||$490.00|
|Aug 11 09||BANK OF NOVA SCOTIA BNS||1000 Shares Sold @ 44.60||$44,593.00||$15,386.00||52%|
|Mar 12 09||MANULIFE MFC||1000 Shares Purchased @ 11.88||$11,887.00|
|May 15 09||MANULIFE MFC||Dividend 1000 X .26||$260.00|
|Aug 6 09||MANULIFE MFC||1000 Shares Sold @ 22.70||$22,693.00||$10,806||90%|
|Aug 09||Total Dividends earned||Earned on above positions||$3860.00|
Total Capital Invested: $112,138.00
Total Dividends Earned: $3860.00
Capital Gain: $69,898.00
Total Capital Available: $185,896.00