How to survive this economic crisis

I first started investing in the stock market in November 2013. As part of my learning to invest, I started playing the "Portfolio" game on Royal Bank Direct investing (RBC DI) web site in February 2014. By July the first game had gone from $100,000 to $550 million. Since then that game has fallen to $388 million.

What I have learned is how to spot good stocks to invest in. At first, I was only buying stocks that has a dividend yield in excess of 15%. This led to a high but very short term income. Then the value of the stock would drop in value. It took me another 18 months of research and observation to learn the importance of EPS (earnings per share), PE (price to earnings ratio), PB (price to book value) and the total debt to total assets ratio. Now most of my "portfolio" games on the RBC DI site and the "portfolio" games on Google are show positive returns.

Starting in July 2014, I started noticing the search criteria I was using at that time were showing approximately 90% of the stocks were over priced. My new search criteria has turned up approximately 3 stocks on the Canadian markets of 6,100 companies. The American markets are even worse - only 2 stocks out of over 30,000 companies.

My new search criteria is simple. I use Google Finance located at www.google.ca/finance/stockscreener as it is very simple, covers many markets around the world and searchers may customize their searches. My search criteria is as follows:

• must pay a dividend with a yield between 5% and 15%
• must have a PE ratio between 1 and 10
• must have total debt to total assets of less than 40%, 0% is preferred
• Price to book value must be between 0.4 and 1.5

Since I perfected my search criteria, my main trading account has started turning around. This account has lost approximately 63% since February 2014. However, since I perfected my new search criteria, my rate of loss, even during this bear market, has slowed from a high of -14.36%, in February 2014, to a low of -1.38% in March 2016. Mark you, in March, April and October 2015 I actually had gains of 1.71%, 2.3% and 7.58% respectively. These gains were just the luck of the draw more than anything.

Since I learned the consequence of a high debt load, even at zero or negative interest rates, is loss of shareholder value, I have been selling off the stocks that has debt in excess of 40% of assets. I started selling the stocks with the highest debt load first to reduce future losses. Eventually, even the stocks with debt loads of 30% will be sold to reduce the drag the debt has on that stock's price recovery.

Because there is a lot of chatter on the internet regarding the collapse and termination of the US$ as the world's reserve currency and a general economic safe haven, I have been looking to silver as an insurance policy and get out of debt card. Back in February 2016, I learned about a Canadian junior mining company that operates in China. Back then the stock was selling at Cdn. $0.485 per share. Today, April 12, it is selling at Cdn. $0.88. If I had bought 100 shares then the gain would have been a 50.58% increase. With silver prices expected to maybe double in price this year, I could still double my investment the stock this year even at Cdn. $0.88.

To round out this post, here are the two of the three Canadian stocks that was bought using my new search criteria:

• TransAlta Renewables Inc - RNW
• Granite Oil Corp - GXO

The American stock that was Identified is Global Self Storage Inc. it's symbol is SELF. The silver mining stock is Minco Silver Corporation. It's symbol is MSV.