Misadventures with Investing in Resource Stocks


I believe in the adage of “buy low and sell high” when it comes to stocks. However, it is ever so difficult to know when it is a time to buy. I saw that oil and gold stocks have been badly beaten up over the past while and for the past year thought it was a good time to buy and picked up a few stocks. I like stocks with good consistent dividends and Iamgold (IMG:T)  was on my radar. It had been well-regarded for its dividend and the price had really come down. So of course after I bought it, they suspended the dividend. The stock price dropped further and I have had a money loser in my portfolio for a very long time now. I bought a little bit more in order to dollar cost average the stock price, figuring that surely it had hit bottom. Then of course it lost some more. Many people I regard as wise investors, such as Seymour Schulich, maintain that gold is a great investment and he has said that he intends to hang onto his gold stocks because he is certain that it will come back.

My investment in Teck Resources (TCK.B:T) has been similar. It was briefly up by 10% after I bought it when it was in a big slump. Then they cut the dividend and the stock is way down, as is my investment in Vale Resources (VALE:NYSE)  and Barrick Gold (ABX:T).

I’m also a little nervous about my positions in Baytex Energy (BTE:T), Crescent Point (CPG:T) and Twin Butte Resources (TBE:T), all of which have seen dramatic losses. There have been mutterings about how they are hurting because of the NDP in Alberta, that oil prices will never go higher, that the world is changing and renewable sources of energy will make the oil sands obsolete. They all still pay dividends, though Crescent Point is the only one whose dividend has remained unchanged. It also sees only 4% of its production in Alberta, the rest is in Saskatchewan.

I suppose it’s all just a matter of time, and these things will turn around. There’s the other saying which is to buy when there are blood in the streets and the market is fearful. Yes, I did that! But I can’t help but wonder if I would have been better off sticking to my conservative blue chip dividend strategy here and loaded up on Proctor and Gamble (PG:NYSE) or Sun Life (SLF:T).


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