Here are three easy-to-avoid errors that most investors make when investing money in the stock market. All three can seriously hinder your portfolio’s long-term results.

1. Taking an overly optimistic view of speculative investments: Some investors generally put too high a value on speculative ventures. They want to believe that innovations will succeed, and that they’ll get a fair chance to …read more »

We’ve long recommended these 4 stock market research tips in our newsletters and investment services. They can help you cut risk — and increase profits — in your stock portfolio.

(Our special report, “Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada,” is full of safe investing strategies that you can easily put into practice right …read more »

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific advice on the fundamentals of successful investing and how to make better stock market picks. Each Investor Toolkit update gives you a new fundamental tip and shows you how you can put it …read more »

Some investors follow a “sector rotation” approach to investing. That’s when you try to hop from sector to sector, underweighting or overweighting your holdings in certain sectors of the stock market depending on a forecast of the stage of the economic cycle, or other factors.

This approach can work in any one year, say. However, it’s difficult if not impossible to …read more »

We display a price-to-sales or p/s ratio with every stock we cover in our newsletters, including our flagship publication, The Successful Investor.

Price-to-sales is the ratio you get when you compare a stock’s price to its sales per share (you get sales per share by dividing total annual sales by the number of outstanding shares).

Treat financial ratios like price-to-sales as …read more »

Here are three common mistakes many investors make when selecting Canadian stock picks. All three can seriously hinder — or eliminate — your portfolio’s long-term profit potential.

1. Buying low-quality investments: Most of the bad deals in Canadian stock picks exhibit the usual tip-offs. For example, many lack a history of earnings or dividends. They may also spend way too much …read more »

Technical analysis (or reading stock market charts) can be a useful tool for picking stocks. However, some investors choose to make investment decisions based solely on charts. That’s when technical analysis can lead you to make poor (and sometimes disastrous) choices.

Technical analysis is the process of analyzing a stock’s price movements in an attempt to determine its future price. It …read more »

The p/e ratio (the ratio of a stock’s price to its per-share earnings) is one of many handy investing tools.

Typically, you calculate p/e’s using a stock’s current price and its earnings for the previous 12 months. The general rule is that the lower a stock’s p/e, the better. And a p/e of less than, say, 10, represents excellent value. …read more »

One of our key rules for successful investing is to diversify — spread your money out across most, if not all, of the five main economic sectors: Manufacturing & Industry; Resources & Commodities; Consumer; Finance; and Utilities.

If you follow this rule, you improve your chances of making money over long periods, no matter what happens in the market.

For example, manufacturing …read more »

Our Successful Investor rating system is a key guide we use to make stock market picks for our newsletters and investment services, including Wall Street Stock Forecaster, our publication that focuses on top-quality U. S. stock market picks.

Use our ratings to quickly spot the best U.S. stock market picks

We continue to recommend that Canadian investors hold 25% to 30% of …read more »

In our new report, Mutual Funds Canada: Inside the Top 10 Canadian Mutual Funds, we spotlight the top 10 Canadian mutual funds for your portfolio.

But that’s not all. We also show you how we selected these funds, and strategies you can use to find funds that are capable of weathering a market slump, and profiting anew when the market …read more »

When you analyze a stock, it’s important to have an idea of how likely it is to survive a business slump and go on to prosper when economic growth resumes.

A number of factors can help you to do that. These include the interest rate on the company’s debt, how sensitive it is to economic cycles, its advantages and disadvantages …read more »

FORTIS INC. $27 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 170.7 million; Market cap: $4.6 billion; Price-to-sales ratio: 1.2; Dividend yield: 3.9%; SI Rating: Above Average) earned $36 million in the third quarter of 2009, down 26.5% from $49 million a year earlier. Earnings per share fell 32.3%, to $0.21 from $0.31, on more shares outstanding.

However, the …read more »

When you join my Inner Circle service, you get to ask me your own personal investment questions, plus you get to see what other Inner Circle members have asked, along with our answers. So you can see how the service works, and get a sense of how it might help your portfolio, I’d like to share a member question about …read more »

Price-to-sales is one of the key financial ratios we look at when we assess a company. That’s the ratio you get when you compare a stock’s price to its sales per share (you get sales per share by dividing total annual sales by the number of shares outstanding).

Price-to-sales, or p/s, is one of the financial ratios you’ll find displayed …read more »

Economic statistics are big news these days, but they have a weak link at best with the value of your investment portfolio. A surprisingly good economic statistic can make the stock market jump. But a bad surprise can come along and reverse that move the next day.

In retrospect, it’s clear that economic turning points do have an impact on the …read more »

Economic statistics are big news these days, but they have a weak link at best with the value of your investment portfolio. A surprisingly good economic statistic can make the stock market jump. But a bad surprise can come along and reverse that move the next day.

In retrospect, it’s clear that economic turning points do have an impact on the …read more »

Economics questions are everywhere these days. Do we face a double-dip recession? Is the economy headed for the proverbial “seven lean years”? Should Obama launch another stimulus package? This brings to mind a famous quote from Peter Lynch, world champion mutual-fund manager of the 1980s and 1990s:

“If you spend a dozen minutes a year worrying about the economy, you’ve wasted …read more »

We recently read the Yahoo news story of Ddalgi (Korean for “Strawberry”), a five-year-old parrot from Papua, New Guinea, who competed with 10 human investors in a stock-picking contest in South Korea.

Strawberry’s stock market picks reportedly posted a 13.7% return. While not good enough for first, the result put her in a respectable third place. Her human competitors, on …read more »

There’s no doubt that p/e (price-to-earnings) ratios are a major part of many investors’ stock research. They are published regularly on the Internet and in newspapers, and are widely followed.

The p/e is the ratio of a stock’s market price to its per-share earnings. Generally, the rule is that the lower the p/e, the better, and a p/e of less …read more »

Pat McKeough, host of TSI Network (www.tsinetwork.ca), was featured earlier today on U.S. based MarketWatch.com in a column by Peter Brimelow.

Entitled “Quiet Canadian is calm, confident on stock values,” the article discusses how the “Successful Investor lives up to its name by sticking to its guns.”

Peter Brimelow has been calling Pat the “quiet Canadian” for a number of years. He …read more »

Although stock markets have rebounded lately, they remain sharply lower than their 2008 highs. Likewise, the economy has shown some signs of life, but it remains in recession.

In these times of market turbulence, it’s easy for investors to panic and make mistakes. Here are three common ones:

1. Overanalyzing

The media is full of economic statistics and line-by-line analyses of the economic …read more »

Every investor would like to find an easy-to-use market indicator that tells you when to buy and when to sell. Some look to technical analysis as a way of determining this.

Technical analysis is the process of analyzing a stock’s past price movements in an attempt to determine its future price. It’s not concerned with financial statements, management or anything …read more »

We advise against a so-called “sector rotation” approach to investing; this is when you try to hop from sector to sector. We also advise against practicing a top-down sector rotation style; underweighting or overweighting sectors of the stock market depending on a forecast of the stage of the economic cycle, or other factors.
Few sector rotation strategies succeed over long periods, …read more »

Some investors wonder if now is a good time to sell short — that is, sell borrowed shares in hopes of a drop in price. I’ll say “no,” based on my view of today’s market trend, and on the perennial drawbacks of short selling.

The time to sell short is when the market has been booming and investors are confident and …read more »

We think this market rise could last for weeks if not months. It could even turn out to be the start of a new long-term rising phase.

One positive sign is that many stocks are now cheap in relation to their dividends and assets. Many are also cheap in relation to current earnings. Others are attractive, despite recession-depressed profits, because their …read more »

As you’ll see inside, many companies we follow have piled up hoards of cash. So have individual investors who dumped stocks late in February, when the market fell below November’s lows.

Cash on the sidelines is a powerful market and economic indicator. It represents latent buying power that can go to work in a heartbeat, when investors and businesses regain confidence. …read more »

I’m a lukewarm fan at best of many government regulations. But I was happy to hear that the U.S. may re-instate the ‘uptick rule’.

Some financial institutions are vulnerable today partly because of bad regulatory rules. Without the uptick rule, hedge funds are free to sell them short at any price, forcing them down before they can mend their balance sheets. …read more »

When stock prices go down as much as they have lately, it generally means the stock market offers some highly attractive buying opportunities. But many investors now wonder if we are headed for a period of years of weak stock markets.

In fact, we’ve already gone through more than a decade of unsettled stock markets. Stock prices have dropped more than …read more »

partly because so many commentators are talking about the risk of a 1930s-style depression.

That kind of talk is common in any deep stock market setback. But this time it’s closer to home, due to plunging house prices and the troubles of the auto industry.

To top it off, President Obama has taken to warning that we risk a new depression if …read more »

When making investment decisions, chart reading seems much simpler than delving into and weighing the fundamentals. It appears to be a winning combo of moneymaker and time saver.

Some successful investors find it helps to know a little about charts. But if you rely on charts at all, you should look on them as just one of many things to consider …read more »

The Canadian dollar will likely remain low relative to most major currencies for the next year or so. This is good news for CAE and Gennum, which get a high proportion their sales from the U.S. and overseas markets. (A low Canadian dollar enhances the contribution of international sales.) Their high research spending also makes them look less profitable than …read more »

Canadian banks have recently issued new preferred shares to raise capital. To attract investors in a time of weak stock markets, they’ve issued these preferreds on especially attractive terms.

The preferreds pay dividends that give them yields of 6.25% to 6.50%. That’s higher than current Government of Canada long-term bond yields of 4% or so.

What’s more, preferred dividends are treated the …read more »

Some investors base buy and sell decisions in part on p/e ratios (the ratio of a stock’s price to its per-share earnings). When we provide a p/e, we try to eliminate all one-time items from earnings. These include writedowns, investment gains or restructuring charges. This gives you a clearer, truer view of a company’s profitability.

For decades, investors have used p/e’s …read more »

In a bear market, or stock market downturn like the one we are now in, investors spend a lot of time wondering about “the bottom”.

Sometimes, the market seems to turn around overnight, and the indexes quickly shoot upward. Other times, the indexes bump along near the bottom for months or even years.

Here are two consistent things about bottoms:

1. You …read more »

We are always happy to expand the information we provide to you, but only if it improves the ease and value of using our service.

For instance, some investors base buy and sell decisions in part on p/e ratios (the ratio of a stock’s price to its per-share earnings). When we provide a p/e, we try to eliminate all one-time items …read more »

At times like this, when deciding what to do with your portfolio, you should resist the urge to dump high-quality investments just because you think they may get dragged down by a further decline in the market.

After all, when things look bleakest (as they do today), the market often turns around and begins rising. That’s especially true of high-quality stocks …read more »

Investors today often focus on two key questions: When is the market likely to turn around and start to rise again, and which stocks are likely to lead the way upward?

On the first question, my view is that the rise could start any time from now through May. Many stocks are cheap at current prices, even in view of the …read more »

On the Thursday before Thanksgiving, the S&P 500 index fell below its low in the 2000-2002 bear market. That left it 52% below its peak, and at its lowest level since 1997. Some chart enthusiasts took this to mean that a much bigger drop lies ahead.

My view is that if you pay any attention to chart analysis, you need to …read more »

As you can see, more than a quarter of our recommendations are U.S. stocks. We’ve long felt that Canadians should have around a quarter of their portfolios in U.S. stocks.

This advice helped moderate our readers’ losses in the bear market. The U.S. dollar bottomed out around $0.92 Cdn. a little more than a year ago, and is now around $1.23 …read more »

Investors worry that President Obama will hurt the economy by raising taxes and working against free trade.

However, Obama may turn out to be more conservative in action than you’d guess from looking at his circle of friends and associates, or some of his earlier writings.

U.S. politicians are rarely as bad or extreme in office as you’d expect, based on their …read more »

Investors worry President Obama will hurt the economy by raising taxes and working against free trade.

However, it’s encouraging that Warren Buffett was an early Obama supporter and will undoubtedly have a big impact on his programs, as will former Fed chairman Paul Volcker.

If Obama pursues pragmatic economic policies, he could bring an unexpected boost to the U.S. dollar and the …read more »

The Dow’s recent plunge may be the climax of a panic reaction that assumed the absolute worst for the economy.

If governments around the world were doing nothing to counter the credit crisis — or, worse, doing all the wrong things as governments did in the 1930s — then the crisis could get a lot worse. My view is that governments …read more »

The Dow’s 11.1% gain on October 13, 2008 was the fifth biggest percentage gain on record. The 9.8% gain on Toronto the next day was the biggest ever.

Markets have been volatile since those big moves. But my view is that governments around the world are now taking the kind of steps that will contain the crisis and eventually restore …read more »

Investing for beginners can seem like a real challenge. There are a huge number of investment options to choose from, so how do you evaluate the choices?

There are three key questions you should probably ask when you are evaluating any of your investments:

1. Is this a good-quality investment?

2. Is it right for me?

3. What’s the market likely to do and …read more »

Our three-part investment approach focuses on where you should put your money. Our advice is to invest mainly in well-established companies, spread your money across the five main economic sectors and downplay investments in the broker/media limelight.

Investing this way takes a lot of the risk out of the more difficult question of when to buy and sell.

Still, it’s a …read more »

The mortgage crisis continues to weigh not just on financial stocks, but on the overall stock market. That’s mainly because investors are bracing themselves for much worse news than we’ve seen so far, such as much higher mortgage defaults. Investors also worry that Washington’s plan to buy up bad mortgage loans and illiquid securities, at a cost of up to …read more »

Is it a good time to bargain hunt for Canadian income trusts? According to one school of thought, Ottawa’s planned 2011 removal of income trusts’ tax advantages has unduly rattled investors and spurred unwarranted selling.

That’s the kind of assumption that makes sense, but it’s unlikely to make you any money.

Tax-law changes are a drawback for some investors in Canadian …read more »

The world is full of conflicts of interest, especially when it comes to stock advice, so investors need a healthy sense of skepticism. That’s especially so with junior companies, because they sometimes pay for their stock to be recommended in an investment publication.

A stock promoter may pay all or a large part of the cost of sending an investment publication …read more »

Two of our long-time recommendations —

Transalta Corp. $37 (Toronto symbol TA; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 199.0 million; Market cap: $7.4 billion; SI Rating: Average)

and

Fording Canadian Coal Trust $90 (Toronto symbol FDG.UN; Aggressive Growth Portfolio, Resources sector; Units outstanding: 150.0 million; Market cap: $13.5 billion; SI Rating: Average) — have attracted unusual takeover bids.

The private …read more »