Clarke Melville, 41
Occupation: Finance manager and part-time finance instructor at Brock University.
iShares DEX All Corporate Bond ETF, Canadian Tire, class A non-voting, TD Bank, RBC, Encana, BCE, Cenovus Energy, Bell Aliant, cash.
One benefit Clarke Melville gets from being a part-time finance teacher at Brock University is it forces him to stay on top of what's going on in the markets. "You have to think of something smart to say every week because students are so connected and so aware of what's going on in the world," he says.
With an undergrad degree in economics and consumer studies, Mr. Melville invests in companies he knows about, such as big banks and well-known retailers - and almost always Canadian companies. "I just wouldn't have the same degree of confidence buying a company on Nasdaq that I hadn't heard about."
His first investment
Mr. Melville still has warm feelings for his first-ever investment. "I always had a sense for numbers, but my heart fluttered when I bought that first one - a three-month GIC. I was amazed at the end that someone would put $50 in my bank account."
What he likes now
"I like companies I can touch and feel and understand." For example, he bought into Bell Canada because of its size, the dividends, plus as a cellphone user he understands how they make money. He learned about the benefits of dividends from his grandmother. "She lived to be a hundred, and the week of her death was still talking about the stock market."
How he researches
Mr. Melville tends to start following a company if he comes across two or three unrelated analyst reports along with some news stories. He will also look at price-earnings ratios, saying lower is better, but not too low. "It may be low for a reason, with the market saying the company won't grow." He takes a similar approach to dividend yields. "If the yield is too high, the market is signalling it's not for real." He points to Yellow Media Inc., which owns Yellow Pages. The stock has long had a double-digit yield, but has seen its share price steadily drop. It recently was trading at around half its 52-week high.
For its steady appreciation and increasing dividends, Mr. Melville is a big fan of TD, in which he first invested in 1998. His most recent purchase was for under $40 a share in early January, 2009, for his son's RESP. Was he nervous? "Absolutely. Two months earlier the world was heading for self-destruction. You have to have the right mindset to realize it's times like that when some stocks are a bargain."
Its stock price was already falling when Mr. Melville bought into Mega Brands, the Montreal-based maker of Mega Bloks and other children's toys. And soon after, a lawsuit over an injury reduced it even further. "It was the perfect storm of bad news," he says. More importantly, he now wonders: "Why would I invest in a company that just makes plastic pieces and has no competitive advantage?"
"Invest in what you know and do it consistently - every month or every year make sure you set aside some of your paycheque."
Special to The Globe and Mail
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