You Too Can Become Ridiculously Wealthy!

A few months ago I described the "Vienneau Strategy Of Becoming Filthy Rich". For those of you too lazy to click, it is a simple strategy of selling whatever I buy and buying whatever I sell.

Today I learned firsthand just how much money that would have made me...

As many know, I recently purchased a dwelling (there's no actual post today, just links to past posts - a "greatest misses" if you will, though to be fair, that would actually be the Armoire...). As part of being a responsible adult, I decided to sell off my holdings earlier this year as most of them were up and I didn't want to risk a market crash or other volatility that would threaten my financing. Here are three of the stocks I sold (in US dollars):

MMM (Three M) for $72.87
CL (Colgate-Palmolive) for $55.50
ADS (Consumer Loyalty Programs (eg. Air Miles) for $45.99

As of this morning, these are now worth:

MMM $87.01 (up $14.14)
CL $60.35 (up $4.85)
ADS $53.75 (up $7.76)

And to make it more insulting, those are all DOWN from their highs of the past few weeks, each of which were at least a dollar more. ADS, which I faithfully held on to for all of 2005 when it went nowhere but down, jumped EIGHTEEN PERCENT IN A SINGLE DAY earlier this month when it beat earnings.

And that doesn't include a Canadian stock - MDA (MacDonald Dettweiler and Assoc.) that I sold at $45.83 right before it shot up to $52.49 (it has now sunk to $49.50).

To make things worse, I marked down two stocks in the first week of January. My intent was to purchase these two stocks as soon as some other dividends had come in because I didn't want to further expose myself to a dive-bombing American dollar. These two were:

GLD (tracks the price of Gold): $52.34
RAI (tobacco company): $95.33

As of today, these two are humming along pretty good:

GLD: $69.20 (up $16.86)
RAI: $113.76 (up $18.43)

Are you ready for the pain?

If I had held on just a few more months, and if I had taken the plunge and picked up the gold and tobacco using Canadian money, I would be over $10,000 richer right now. Ten. Frickin'. Thousand.

Or more accurately, if each of you had done the opposite of my chosen path, each of you could be up ten thousand dollars*.

I suspect that if my current job contract falls flat, I have a big future in front of me in recommending stocks. Come to my seminar, pay me $500, and then make sure you ignore everything I say and do the opposite! A can't-fail path to riches!

And to make things worse, I still have all the American dollars from selling off the stocks. The American dollar was taking a bit of a beating early in the year so I thought I'd hold on to it a bit until maybe it had a momentary spike.

Of course, it has now reach 28-year lows against the Canadian dollar! Pundits are now predicting they will be at parity within two years! While this does give me the urge to visit and mock all the Americans that have tormented we Canadians over the years, it also means I'm down another two or three thousand dollars purely on exchange rates. Of course, this is dwarfed by the net $25,000 (at least) that I've lost on the exchange rate in the past five years. Thank you America for tanking your dollar through ridiculous debt levels and unsustainable economic practices. It's a pleasure to be in the poorhouse with you.

So what am I buying and selling now?

I just bought a house. That means the Toronto housing market is about to crash and burn.

I'm likely going to settle for a 5-year fixed-rate mortgage. Interest rates will now plummet.

I'm going to have to sell all my US currency to finance the house. This means the US dollar will inexplicably rise after June 26th. (to be fair, I can't see how this is possible, but the important thing to keep in mind is that I. Am. Always. Wrong.)

I'm about to sell PLB (Paladin Labs), a small Canadian pharmaceutical company that markets "Plan B" (the "Morning After" pill). After appreciating 30% to $11 in early 2002 right after I bought it, I have since held on through the 65% plummet and subsequent rebuilding. It has doubled from $4 (late 2003 through mid 2005) to finally pass my buy-in price of $8.20 this very morning. It announces earnings later this week. I'm going to gamble and hold on to it, and then likely sell a few days after. You can go two ways on this one - sell short because earnings will disappoint, or hold on and watch as it doubles or triples when some new drug licence really pays off after I exit.

Before I buy the house in late June, I'll need to sell all my shares of the Royal Bank, Budweiser and Microsoft (purchased at $34.50, now worth $23.63). That means none of them will be doing well in the next few months, but should really explode in the second half of the year. Budweiser in particular is a stock I'm pretty sure I'm going to kick myself for having to walk away from (with a loss, no less).

And in my retirement account, which I get to keep after purchasing the house, I'm holding H&R, a Canadian real estate investment trust (see above on what's about to happen to real estate), Epcor Power, another investment trust (so presumably the investment trust market will finally crash as everyone as predicted), and a Canadian Bond Exchange-traded Fund. The bond ETF is interesting as I'm pretty sure interest rates are going to rise, so I kind of want to sell it, but I like having exposure to bonds and a bit of diversity. We've already seen that interest rates will plummet because I locked in my mortgage rate, so perhaps I can win by playing both ends of the stick and breaking even?

And I still have two technology mutual funds that I stupidly have held on to since the tech crash. I'm down approximately $17,500 in those (from $22,500) and they've gone nowhere in the intervening six years. They're now such a small figure that I figure I'll keep them around, so tech is obviously moribund for at least the next little while.

There you go - the secrets to becoming rich. Enjoy!

* the $10,000 figure is not guaranteed and should be scaled to your investment level. :-)