Chan's Personal Blog

After weeks of doom and gloom in the stock markets, we finally have some bull market action. Yesterday, the Dow Jones Industrial was up a whopping 200 points. In either case, I'm crowning a new stock of the year in my portfolio. My previous stock of the year title was given to Advanced Micro Systems (AMD) which was up 40% since I bought it. For those who are unfamiliar with AMD, they make CPUs for computers ranging from personal computers to laptops to servers. They're a direct competitor to the industry goliath, Intel (INTC don't buy, don't buy!). Right here, right now, I'm crowning Ballard Power Systems (BLD.TO) my stock of the year.

So just a quick introduction to Ballard Power Systems. They're a Canadian company based in Burnaby, and they're recognized as the world's leader in fuel cell technology. Their goal is to create power plants based on fuel cell technology, and also to power cars using fuel cells. Notable partners include General Motors, Honda, Mercedes Benz, etc. This company was an industry darling during the dot com bubble. The stock traded at over $160/share. Once the bubble popped in 2002, the price came tumbling down to $15/share.

By the end of 2004, a lot of these former dot com bubble companies were witnessing a resurrection, at least I thought. At the end of 2004, I was ready to get into the stock market because I had a few years of success with mutual funds, and I had finished most of my business courses, and I thought I had a good handle on things. In addition, what a great time to buy stocks when the stock market was just crawling out of the ashes of the bubble burst.

I was hunting for a good speculative stock. A speculative stock is basically a high risk stock that can either make you a lot of money, or lose you a lot of money. They're high risk because the companies themselves don't make any money yet, and their futures are very unpredictable. Typically they're researching or developing something that could be the next big thing.

The only time you should invest in a speculative stock is when you have money that you can literally throw away and not cry about. Cash earmarked for tuition, rent, etc would NOT qualify as money you can speculate on because you need that money. The other thing is, only 20% of your stock portfolio should contain speculative stocks. Why? During the dot com bubble, people had 100% of their stock portfolio in speculative internet start-up companies, and they lost everything when the bubble burst. So, that's why we limit our risk exposure. In addition, if you're nearing retirement, you shouldn't hold ANY speculative stocks in your RRSP. I rarely recommend speculative stocks to friends because it's just too risky, and I don't like to be yelled when they lose money.

In either case, I settled on Ballard Power Systems because the stock was hovering at around $8/share, and everyone was very negative about Ballard because a lot of people lost a lot of money in it. However, their technology was still sound; they were still the world leaders in fuel cell technology.

My thesis was, given that oil is becoming increasingly expensive, green technologies will become more and more viable (especially with the Kyoto Protocols in play). So, this was a long-term play where I would buy and hold and wait for the thesis to come true. This is not something where you buy and hope you get rich in a month.

To illustrate this, I've pulled up stock charts from Yahoo Finance. Yahoo Finance's charts are really cool because as you can see, there's a feature to map your current mood relative to the stock's performance . So, here begins my rollercoaster ride with Ballard Power Systems.


I bought shares in the company at $8/share just before Christmas. I thought the stock was done going down considering how much it had already dropped from. How wrong I was. Within a few months, the thing sank down to $6/share. That was a house of pain right there. We're talking about -25%. A few more weeks and it went below $5/share.

Well, after two weeks of sleep deprived non-stop end-of-term academic madness, I finally have a few days to catch my breathe. The end of term was fairly crazy this year. Three assignments due on the last week of class, and I had my first exam three days after the end of classes. That's not a lot of time to study for a class at all. In either case, had my first exam first thing Tuesday morning, and I think I rocked it.

Anyway, with the few days that I have, I decided to finally do my taxes. For some reason, I'm doing my taxes fairly late this year, but probably because I haven't had a lot of time. I've also been waiting to get all my tax forms through the mail, and they've been somewhat late this year as well.

In either case, I finished preparing my taxes tonight. I'm looking at another record tax return! W00t! Most people dread the tax season, but for me, it's almost as good as the Christmas season! I'm sure I'll look back on this entry five years from now, and feel awful because it's tax season. But hey, while I'm still a poor graduate student, I'll continue leeching off the system before I enter the real world and become a productive member of society.

The one bad thing is, I've discovered that I haven't been taking advantage of a certain tax law related to charitable donations for three year's worth of taxes. So, I'm going to have to adjust three year's worth of tax returns. The stupid thing is, the government sent me a "light" edition of their tax package which was meant for students. This light edition didn't include certain forms related to charitable donations.

Another year, I got H&R Block to do my taxes, and they too overlooked this crucial tax law, so I'm not too happy about that. For an organization that touts itself as being the leader of tax preparation, they didn't do a very good job. So, they're on my black list. While we're on the subject of H&R Block, it should also be noted that H&R Block screwed up on their own tax return for the last few quarters, and they ended up owing an extra $32 million to the government. That's pretty embarassing. The other thing about them is, they're being sued by the government because they screwed over 500,000 customers by getting them to invest in a retirements savings plan, and H&R Block charged insanely high hidden fees for the plan. Furthermore, 85% of people who bought into the plan has lost money. This makes no sense at all since this was a money market savings account which means you should be guarenteed interest every year, so it'd be impossible to lose money. From the article, "[a] resident made a one-time deposit of $300 into an H&R Block Express IRA in 2002, but actually ended up with less money four years later. The customer received $10.29 in interest but paid out $45 in fees." Shame on H&R Block. I would avoid them like the plague, and the same goes for their stock (symbol HRB).

Anyway, there's only 18 days left before taxes are due, if you haven't done yours yet, you better get to it.

Today's blog entry is inspired by an exceptionally crappy day for the stock markets today. It was the first day of the earnings season where companies report how well they did from last quarter. Typically, this is a joyous time where we reward good companies for good performances. The first company to report blew away analyst estimates, and they did quite a bit better than everyone was hoping. This should have set the tone for the day. But no! What does Iran do? At 7:00am this morning, the Iranian president announces that they've successfully enriched uranium. Crap. After that, the market takes a huge dive downward. Everything was down. Oil briefly traded at $70 a barrel which was this year's highest price so far.

Nothing made sense today in the markets. Even alternative energy companies that usually benefit from high oil prices took a huge dive today. Traditional safe havens like bank stocks even went down. But in the end, it doesn't really matter to me too much because I'm invested in things with a long term goal, so this is a mere hiccup in the grand scheme of things, but still, today was an exceptionally bad day for stocks.

In either case, I came across this quiz from the SEC that tests your money smarts. The quiz is fairly basic, but it covers a good portion of what investors should know at minimum before investing. I scored 10/10 on this one.

Buoyed by my own ego, I set out to find a more challenging investor's quiz, and found this investor quiz at the Toronto Stock Exchange's website. The quiz is split up into a basic, intermediate, and advanced section. Each section consists of 15 questions. It is definitely more challenging than the SEC's quiz. Some of the stuff will be completely over your head unless you've taken a financial accounting course or something. Anyway, I did all three quizzes there, and scored 44/45 on it. Not bad at all