Imagine turning your tax-free savings account into a staggering $500,000. That’s exactly what Doug, a 69-year-old retiree from the West Coast, has achieved—not through luck, but by leveraging a unique, instinct-driven momentum strategy. But here’s where it gets controversial: Doug’s approach, while wildly successful for him, relies heavily on intuition rather than traditional financial analysis. Could this be a recipe for disaster, or is there something we can all learn from his bold method? Let’s dive in.
Doug’s journey began in the 1980s when he graduated from law school and ventured into the financial sector, primarily working at Bay Street brokerage houses. He also completed the Canadian Securities Course, a credential essential for analyzing securities and recommending investments. This background not only honed his financial acumen but also gifted him a significant windfall when the brokerage he was a shareholder in was acquired—a move he describes as ‘a very good investment.’
By his mid-40s, Doug had semi-retired, dedicating his days to managing a portfolio now valued in the ‘high seven figures,’ or even ‘low eight figures’ when including family assets. And this is the part most people miss: his portfolio is 100% allocated to stocks, a bold move that raises eyebrows but has clearly paid off for him. He holds about 30 stocks in registered retirement savings plans and another 30 in non-registered accounts, focusing on established companies like Royal Bank of Canada, Enbridge Inc., and Exchange Income Corp.
But Doug’s TFSA—opened in 2009 and maxed out annually—is where his momentum strategy truly shines. Here, he adopts a more speculative approach, targeting stocks in uptrends. ‘I like to ride companies that are doing well,’ he explains, often choosing rapidly growing businesses while avoiding cyclical stocks. His watchlist on Yahoo Finance includes over 50 stocks, and he’s quick to cut ties with underperformers. ‘Sometimes I sell too fast and miss out on a big upswing,’ he admits, ‘but overall, it keeps my portfolio out of trouble.’
Doug’s early career exposed him to the volatility of the markets, including the 1987 crash when the Dow Jones plummeted 22%. ‘I’ve survived several crashes since,’ he reflects. ‘They’re sobering but also great lessons.’ This experience has shaped his disciplined yet instinctual approach, which he acknowledges isn’t ‘very scientific.’
Take, for instance, his TFSA trades. Doug bought shares in Lightspeed Commerce Inc. between 2019 and 2021 at an average cost of $56, selling them in September 2021 at $151. Similarly, he purchased Nuvei Corp. in December 2020 at $73 and sold at $163.50 in September 2021. Even his investment in Kits Eyewear Ltd., an online retailer of eyewear, saw a solid return from $9.50 to over $16.50.
Currently, his TFSA holds positions like Brookfield Corp., with an unrealized gain of $45,250, and Shopify Inc., a company he’s holding onto despite recent momentum loss. ‘I still think it’s a great company,’ he says, ‘and I’m willing to be patient.’ Kraken Robotics Inc., another holding, has an unrealized gain of $45,630, benefiting from the federal government’s focus on defense.
But here’s the controversial part: Ross McShane, an advice-only financial planner, suggests Doug’s reliance on instinct could be risky. While Doug’s background and research give him an edge, McShane advises focusing more on fundamentals. ‘The key is to remain disciplined,’ he notes. Additionally, while Doug’s 100% equity allocation works for him due to sufficient cash flow, it’s not a one-size-fits-all strategy. And let’s not forget the TFSA’s limitation: capital losses can’t be used, unlike in non-registered accounts.
So, is Doug’s momentum approach genius or gamble? His success is undeniable, but it raises questions about the role of intuition in investing. What do you think? Is instinct a valid tool, or should investors stick strictly to fundamentals? Share your thoughts in the comments—let’s spark a debate!
