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What investors can learn from a Navy SEAL, a cheap bank stock, and how ETFs are taking over the TSX

U.S. Navy SEALs jump from a CH-46E Sea Knight helicopter during training near Fort Pickett, Va.

U.S. Navy/Mass Communication Specialist 2nd Class Meranda Keller

Jocko Willink will not be listening to your investing excuses.

Mr. Willink is an ex-Navy SEAL, founder of management consulting company Echelon Front and, as far as I know, has never publicly mentioned investing or finance. Nonetheless, I've found that following him on social media and listening to his podcasts has been motivational and helpful for both investing and everyday life.

"Discipline is freedom' is Mr. Willink's mantra. Once I got past the phrase's disturbing similarities to the Nazi-era 'Arbeit macht frei,' (work sets you free) it took on a deeper and important resonance. He will provide examples like disciplined eating leads to a longer, healthier life and work-related discipline in the form of efficiency and productivity leads to more leisure time.

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Discipline applied to investing leads to more options in retirement – the freedom to buy that boat, Arizona winter home on the golf course, or the extended dream tour of Europe and Asia.

Rationalizations and excuse making are foreign territory for Mr. Willink. Asked about how he dealt with jet lag on a trip to South Africa and maintained his workout schedule, he responded "Doesn't matter. Do." One of his fans was having trouble emulating his early rising schedule and asked for tips. He said 'Set the alarm. GET OUT OF BED!".

Life is not that simple for most of us, but this attitude is helpful in my opinion if only as an influence. Whether $2,000 per month, or $120, or $12, a lot of us can dollar cost average into an index fund regularly but just haven't bothered to set up the monthly withdrawal.  Personally, I tell myself that it's too much of a hassle and the market may go down anyway. I need to follow Jocko's advice and 'get after it,' just get it done.

Not everyone wants to live and function like a Navy SEAL, rolling out of bed at 4:30 a.m. every day and immediately start a heavy workout (he'll tweet a picture of his watch and the workout daily. On Tuesday his 4:30 a.m. watch photo was accompanied by the one-word admonition: "MOVE").  Mr. Willink, while remarkably thoughtful and intelligent in longer interviews, can be too martially blunt for many people to accept or follow.

To some extent, however, all investors can interpret Mr. Willink's advice in a way that works for them and improve their investing results. I'm going to go set up that monthly withdrawal right now.

--Scott Barlow

This is the twice a week Globe Investor newsletter. If someone has forwarded this e-mail newsletter to you, you can sign up for Globe Investor and all Globe newsletters here.

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Stocks to ponder


Bank of Montreal
. This stock recently appeared on the negative breakouts list - stocks with negative price momentum. The bank will be kicking off the second quarter bank earnings season, reporting its quarterly results before the market opens on May 24, writes Jennifer Dowty. The Street is anticipating earnings per share of $1.92. The majority of analysts are neutral on the stock, neither bullish nor bearish. The average 12-month target price is $104.95, implying the share price has nearly 11 per cent upside potential over the next year.


Real Matters Inc.
Just three trading days after going public, Real Matters Inc. has given investors a better idea of what to focus on: Ignore the company's quarterly losses and focus instead on its blistering year-over-year revenue growth, writes David Berman. New stocks aren't for most investors and Real Matters is no exception. Analysts have not weighed in on the company yet, which means there are no published financial targets or expert commentary. Investors are largely on their own.


Lloyds Banking Group.
The Contra Guys write that they made big bets on a pack of financial stocks in the wake of the credit crisis with the emphasis on buying institutions that had not only the wherewithal to survive, but with hefty upsides. After years of restructuring and withering fines for an insurance product scandal, Lloyds Banking Group's profits are accelerating sharply.


Parkland Fuel Corp.
This stock appeared on the positive breakouts list last week, which means it has positive price momentum. The company's share price is up over 12 per cent so far this year and analysts anticipate further upside, writes Jennifer Dowty. The stock has seven buy recommendations with the Street anticipating a price return of nearly 14 per cent and a total return (including the dividend) of 17 per cent over the next year. Red Deer, Alta.-based Parkland Fuel Corporation is a marketer of fuel and petroleum products such as gasoline, diesel, propane, and heating oil to residential and business customers across North America.



The Rundown
 

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ETF-type products on pace to soon overtake stocks in 'a ridiculous moment' for the TSX

The stock market is starting to look more like an ETF market, writes Tim Shuflet. Every year, the ranks of exchange-traded funds listed on the Toronto Stock Exchange get more crowded, and every year, the roster of publicly traded stocks thins out. If those trends continue at their current pace, within the next two years, structured products such as ETFs will outnumber operating companies on Canada's senior exchange.


David Rosenberg: How to invest around Trumponomics (don't!)

David Rosenberg writes that there's one question he has had to address frequently since Nov. 8, which is how his company is investing around Donald Trump. And his answer in the immediate aftermath of the election was that his company is not investing around Trumponomics and that answer hasn't changed six months later.


Home Capital awakens Canadians to all kinds of investment risks

Home Capital's troubles have had a beneficial effect on the complacency of Canadian investors, writes Rob Carrick. Rather than taking safety for granted, they're asking smart questions about deposit insurance for their guaranteed investment certificates and protection for their other investments if a brokerage firm goes under. Here's more about the Canadian Investor Protection Fund.


Why you should stay away from the 'sell in May' strategy

John Heinzl writes that he would never use this strategy, for a few reasons. First, although there is some evidence that, over the long term, the six months from November through April have produced higher returns than the period from May through October, he has never seen a persuasive explanation as to why this would be the case. That makes me wonder if it's just a statistical quirk. Others who have examined the historical data are also skeptical.


Investor likes stocks with high returns and 'staying power'

This investor focuses on dividend-paying companies, writes Larry MacDonald, and he holds them for the long term.


Gordon Pape: This energy deal creates a very attractive long-term investment

Two of the companies recommended in his Income Investor newsletter companies are joining forces in a deal that will create one of Canada's largest energy processing, storage, and transportation firms, writes Gordon Pape. Pembina Pipelines Ltd. is buying all the assets of Veresen Inc. in a friendly deal valued at $9.7-billion, including the assumption of Veresen's debt. This appears to be a win-win deal for everyone involved.


Why the loonie's lows are behind us

National Bank of Canada senior economist Krishen Rangasamy believes we've seen the short-term lows for the domestic currency and the loonie is set to rally. Futures positioning and the oil price say he's right, writes Scott Barlow.


Chasing dividend growth: A contrarian view

Income-oriented investors love stocks that have a habit of growing their dividends. Norman Rothery confesses to being one of them because he's done extraordinarily well by buying such stocks when the market gets a little panicky. But it turns out that selecting stocks based on past dividend growth generally hasn't yielded much of a performance advantage according to Meb Faber, the chief investment officer of Cambria Investment Management. He recently examined the issue in a blog post called The Dividend Growth Myth.


Others:

Insiders buying at Gran Tierra Energy

The Globe's stars and dogs for the week: Includes Snap Inc.; Sleep Country Canada; Yelp Inc.; Canopy Growth; Yellow Pages.

Running of the Bears: The thundering stampede to short the loonie

14 companies with recent insider buying activity

Ten companies with recent insider selling activity

A robo-adviser's best defence against cyber threats? The in-house hacker


Number Crunchers

These 14 international stocks could offer good value


Ask Globe Investor


Question:
When making non-cash contributions of securities "in kind" to one's tax-free savings account, are there any tax implications?


Answer:
Yes. Contributing securities to a TFSA (or other registered account) counts as a "deemed disposition." If the securities have appreciated in value since you purchased them, you would have to report a capital gain based on the market value at the time of the transfer. For tax purposes, it's as if you sold the shares, contributed the cash to the TFSA and then repurchased the shares. Unfortunately, if the shares have fallen in value, you don't get to claim a capital loss when you make an in-kind contribution. In this case, it would be considered a "superficial loss" because you have maintained ownership of the securities. To claim a capital loss, you would have to sell the securities, contribute the cash and then wait at least 30 days before repurchasing the shares in the registered account.

--John Heinzl

Do you have a question for Globe Investor? Send it our way via this form. Questions and answers will be edited for length.



What's up in the days ahead

Shorts love Home Capital Group. Yet, their bets against the beleaguered company have come down significantly in the past few weeks. We'll explain why. Also, we'll get some top dividend picks from Sprott's Dennis Mitchell, and later in the week Rob Carrick will look at just how profound the preoccupation with dividend stocks has become in Canada.

Click here to see the Globe Investor earnings and economic news calendar.


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Compiled by Gillian Livingston

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