ME AND MY MONEY
Donald Dony, 59
Independent technical analyst and newsletter publisher
Portfolio iShares S&P/TSX 60 Index Fund
Since Me and My Money last looked at Donald Dony's investment strategy in October, 2009, the technical analyst says he's altered his approach to factor in how closely knit the major markets have become. "In Australia, people said they were separate from the rest of the world and, as long as China keeps growing, they would be okay," he says. "But I'd put up charts of a number of different indices and they couldn't pick theirs out, because they all move in sequence."
How that helps
Predicting where Canada's market is heading became a lot easier once he realized different markets move together.
These days, for his own investing, Mr. Dony sticks to the Toronto Stock Exchange. In general, if his analysis shows markets heading up, Mr. Dony will be invested in the iShares S&P/TSX 60 Index Fund. If the signs are negative, he'll be largely or completely in cash. Investing this way, he says, takes currency concerns out of the equation, gives instant diversification, instant liquidity, a dividend, and "You get 60 of the biggest companies in Canada in a nice, neat little package."
His current position
Mr. Dony got fully invested in the middle of January, in part because of the so-called "January effect," which says that month's returns are a good indicator of what the entire year will be like.
In 2006, Mr. Dony bought into an ETF that tracked the Shanghai index after his technical indicators told him it was on the way up, and in less than a year he had made a 40-per-cent return. "It took off like a bullet."
In 2010, Mr. Dony invested in a leveraged ETF, the Horizons BetaPro S&P/TSX 60 Bull+ ETF. Using derivatives, the ETF is designed to give investors a return double that of the index. When there was big drop, he lost some 30 per cent, since the ETF gives investors two times the market's return not just on gains but on losses, too. "I learnt my lesson and will never go there again."
"Be conservative and buy the index."
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