Feb 2018 Update

The theme for the month was volatility.  A couple of ETNs cratered as a result of the high volatility causing investors to lose significantly when using these levered products.   “We sincerely apologize for causing significant difficulties to investors,” Nomura said.  Credit Suisse stated “investors who held shares of XIV had bet against at volatility at their own risk.  It worked well for a long time until it didn’t, which is generally what happens in markets”.   Caveat emptor.

During the month, the S&P index dipped into correction territory before rallying to close the month down 3.89%.  My portfolio sympathized with the index closing down 5.53%.  I never hit correction so my peak drop was less but I also failed to recover as quickly.  Probably an area to perform a root cause analysis on at some point.  Following back-to-back monthly losses against the S&P, I’m down 3.44%  to start the year.Selected Headlines has been retired.  You can find this section as a Menu Item (Headlines). These are generally updated within a day or two of the news item.  The older items will scroll off – my plan is to have 10-20 items at a time.

Portfolio Updates:

  • completed the move of RY from taxable to IRA through a rebalance of my taxable Canadian portfolio resulting in slight increases to BNS, BMO, BCE, CNI, CP, ENB, MFC, NTR, RCI, SLF, TU, TD, TRP and AMTD (us)
  • Added to KMB, OTTW, MAIN, NVS and QCOM
  • Initiated positions in LUV, NTB, CSL, WM, RSG, CVA and SMG

Motif informed me that I had found a loophole in their new pricing scheme.  Their intent was to enact a back-door price increase rather than a quasi free-trade platform.  So back to normal operation with them – but at least I got about a dozen free ones, and the way I use them I’ll see no price increase.


  • February delivered an increase of 35.33% Y/Y fueled by dividend increases and purchases.
  • February delivered a 13.07% increase over last quarter (November).
  • Dividend increases averaged 10.49% with 38.0% of the portfolio delivering at least one increase (including 1 cut (GE) and 1 suspension (DST see M&A).
  • 2018 Dividends received were 15.12% of 2017 total dividends putting us on pace to exceed last year in early November.


Spirit Realty Capital (SRC) – Nov 21, Form 10 was filed confidentially with spin completion targeted for 1H 2018.


Jan 13 – DST announced it was merging with SS&C for $84 cash per share.  As part of the merger agreement, the dividend has been suspended – therefore my proxy vote will be against the merger (protest vote only).  I expect the deal to complete in April or May.

Jan 31 – XRX announced a merger with Fujifilm for stock and $9.80 in cash.


All in all a good month despite the gyrations.  As if goofy products (leveraged ETNs) aren’t enough to spook the markets it appears we’re getting a preview of March Madness in the form of a Trump induced possible trade war.  Fasten your seatbelts as March could be a doozy!

Hope all of you had a good month as well.

5 thoughts on “Feb 2018 Update

  1. SR, ETNs are a financial product I have not thought about or heard about in a while. I think I looked at them once to participate in the MLP sector without the burden of K1s for tax reporting. I took a pass. It’s better for me to keep it simple when possible. Tom

    Liked by 1 person

  2. ETNs, in and of themselves, are not necessarily bad investments – my personal issue is they are essentially IOUs – not even backed by an underlying asset like ETFs are. I think the main culprit here was the leverage coupled with many individuals’ knowledge gap. With leverage, gains -and losses – are magnified. Like Credit Suisse said, they worked well for a long time until they didn’t. At least they were structured to close prior to the value dropping below 0.

    Thanks for the read!


  3. Great read on the link to the ETN article – but also very frightening to see people dabbling in instruments they don’t understand, and potentially imploding their entire wealth. People should have to pass a strenuous test before being allowed to invest. I remember having to do something similar (but less strenuous) some years ago when I opened an options account as an experiment

    How do you find Motif? I looked at it about a year ago and was curious but they didn’t offer it for Australian investors…

    Liked by 1 person

    • We used to have (in the US) rules in place that certain investment products were available only to ‘accredited investors’ (higher wealth equates to better knowledge theory). In recent years, these have been watered down to a degree. I have mixed emotions on the proper balance between government regulation and individual choice in this regard.

      Motif initially had a good niche product with good pricing. Mainstream brokers have since (for the most part) matched the individual stock trade price. The biggest issues I have are, 1) All markets are not available (NASDAQGS and some OTC markets in particular) and 2) Foreign dividends generally have a one day lag on posting. Their strength now lies in the ability to essentially create a personalized fund (or LIC-like product) of up to 30 stocks/ETFs for an initial $8.95 broker fee (about $0.30 per issue). A secondary strength is that fractionals are applied to stock dividends while other brokers generally pay cash on credited fractional shares.

      Appreciate the comment!


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