Year end review of stocks covered in 2021
Choose well and enjoy large gains
During 2021, I published articles covering 9 Canadian stocks I judged to be undervalued. All ended the year with gains and as a portfolio enjoyed an average gain of 120%. All remain substantially undervalued in my opinion so I expect I will not only keep them but will add to those positions in 2022.
The average gain is based on assuming I held one share of each stock and simply compares the closing price on December 31, 2021 to the price on January 4, 2021 when the market first traded in 2021. While useful, that does not reflect how well I actually performed or did not perform with my investments.
2021 was a very good year for the markets. The Dow Jones average rose 18 percent in 2021; the Standards & Poor Index rose 27 percent; and, the Toronto Stock Exchange Index rose 22 percent.
A fair measure of an individuals performance is to compare to the market averages. It is worth pointing out that well over 90% of money managers underperform the market every year. I have advised many to avoid money managers who charge fees for what is typically underperformance and whose contribution is parasitical to your financial success.
Rather than cherry pick my best investment choices to crow about returns, I prefer to post the returns enjoyed on my portfolios calculated by their host brokerage firms - TD Waterhouse Canada and CIBC Investors’ Edge.
My TD Waterhouse margin account (my largest portfolio) rose 184%.
My Registered Income Fund rose by 129%
My CIBC Investors Edge account rose by 120%.
There are three keys to investment performance. First, don’t buy any investment you don’t understand. Second, carry out at least a bit of fundamental valuation using modern valuation techniques or have someone else do that for you if you have no valuation expertise. Finally, cross your fingers - investments don’t all work out well.
In 2022, I will write articles on at least 12 stocks (one a month) and they will include updates on some of those covered this year with additional articles on Peyto Exploration and Development (PEY.TO), Whitecap Resources (WCP.TO); Advantage Energy (AAV.TO); Surge Energy (SGY.TO); and Western Copper and Gold (WRN.TO). If I had to own only one stock for long term gains, I would choose Western Copper and Gold. I will explain why in a later article.