If you want to invest in index funds, we think you should stick with exchange-traded funds (ETFs) like those we recommend as buys.

ETFs are like open-ended index funds in that they trade at net asset value. But ETFs trade on stock exchanges, just like stocks.

You’ll have to pay brokerage commissions to buy ETFs. But you’ll make that back quickly with …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 »

Many aggressive investors find the lure of stock option investing hard to resist. However, despite their appeal, the vast majority of investors lose money with options.

An option is a contract between a buyer and a seller, based on an underlying security, usually a stock. The buyer pays the seller a fee, or premium, for certain rights to the stock. …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 »

“Penny” mining stocks are some of the riskiest stocks you can buy. These companies are trying to find mineral deposits that can be mined at a profit, and such finds are exceedingly rare. Because of this, it’s even more important to look for investment quality in Canadian penny stocks.

It may seem contradictory to use the terms “investment quality” and “Canadian …read more »

The supermarket business is getting more competitive. Wal-Mart continues to build new supercentres, which are 50% larger than its traditional stores. These supercentres sell discount-priced produce, dairy products and meat, as well as general merchandise.

To compete, Canadian grocery chains Metro and Loblaw have aggressively cut their costs. They are also investing heavily in new inventory control technology and stores.

We feel …read more »

There are some signs emerging that suggest the worst of the credit crisis may be over and bank stocks could be looking up.

The likely passage of a new housing bill will help ease concerns over the possible bankruptcy of government-sponsored mortgage lenders Fannie Mae and Freddie Mac. The bill will also help troubled homeowners refinance at fixed rates in order …read more »

Despite the bear market underway in the U.S., the resources boom continues here in Canada. Some investors think it will keep on rising indefinitely, due to slower but continuing growth in India and China.

Resources prices may be headed much higher in years and decades to come, but they remain cyclical. That means you’ll see periodic collapses along the way.

We see …read more »

LINAMAR CORP. $13 (Toronto symbol LNR) has paid an undisclosed sum for a plant in Swansea, Wales. This is Linamar’s fifth plant in Europe, and 38th over all. The facility makes automotive engines. However, Linamar plans to install new equipment that will let the plant produce a wider variety of automotive parts. Expanding in Europe also helps cut the company’s …read more »

BCE INC. $39 (Toronto symbol BCE; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 805.3 million; Market cap: $31.4 billion; SI Rating: Above average) now aims to complete its sale to a group of private investors headed by the Ontario Teachers’ Pension Plan by December 11, 2008.

The consortium will still pay $42.75 a share, but BCE has agreed to stop paying …read more »

Every investor would like to find a fits-on-a-T shirt formula or stock philosophy for deciding when to buy or sell. It would make investing life so much simpler.

In my experience, however, these formulas and the solutions they give you never provide dependable guidance. Sometimes a stock philosophy will work and other times it will not. The outcome of applying …read more »

You may want to have a look at my June 20, 2008 interview on the Business News Network “Market Call” program with Michael Hainsworth. (You can find it at www.bnn.ca).

The show got way more calls than we could handle. Many came from investors who hoped to profit from investing ‘themes’ such as uranium, or fertilizer, or even water. Many callers …read more »

We avoid most new stock issues for a very simple reason: Human nature dictates that new issues will generally come to market when it’s a good time for insiders or the company to sell. That needn’t be, and often isn’t, a good time for you to be buying.

If, while you were investing in the stock market, you bought every new …read more »

Many investors look on the soaring price of oil as a major negative for the market and economy. Certainly it hurts some companies and industries. But it may turn out to be a plus of sorts for a number of stocks we recommend, and not just our oil selections.

That’s because many oil-producing countries are gathering up a growing portion of …read more »

My guess is that we are now closer to the end of a market downturn than the start of one. However, you need to distinguish between the two main kinds of market downturn.

One is the stereotypical bear market — the kind of long-term decline that drags on for a year or more and is generally accompanied by a painful recession …read more »

Many members of my Inner Circle have asked the same question this week: Is it time to buy?

If I had to choose between “Buy” and “Sell”, I’d say “Buy”, by a big margin.

Having said that, I’m obliged to repeat a caveat you’ve often heard from me over the years: Nobody can predict these things consistently. If you could do that, …read more »

Market weakness early in 2008 unsettled investors who are believers in the so-called ‘January barometer’ — the idea that January’s performance provides a clue to understanding the stock market for the rest of the year. However, this indicator is something of a self-fulfilling prediction, because it lumps January’s results in with results of the remaining 11 months.

If the market goes …read more »

Long-term studies show that stock market performance as a whole generally produces total pre-tax annual returns of 10% to 11%, or around 7.5% after inflation.

Returns will vary widely from year to year, of course. But I think the market will generate average annual compound returns of 10% to 11%, or 7.5% after inflation, over the next couple of decades as …read more »

Like any year, 2008 could turn out good or bad for investors. But everything I see leads me to believe it will be a year of rising stock prices.

First, 2008 is the year of the next U.S. presidential election. As long-time readers know, I view the U.S. presidential election year cycle as the single best indicator for American stock prices. …read more »

At Stock Pickers Digest, we look for aggressive investments that combine high potential with low risk. It’s a difficult job.

All aggressive investments — ours included — expose you to more risk than you find in the conservative investments we recommend in The Successful Investor, our flagship advisory. (That’s why we advise you to limit your aggressive investments to a third …read more »

In this month’s issue, you’ll find seven new buys which we first recommended in our service for aggressive investors, Stock Pickers Digest. Their subsequent gains ranged as high as 1,920.0%, but we feel each of them has further gains ahead.

The Successful Investor has two main goals. First, we explain our 3-pronged investment approach, which consists of investing mainly in well-established …read more »

In our July 27 Hotline, I said the market could ultimately knock 5% to as much as 15% off the market indexes. But I felt losses would be temporary and markets would go on to new highs in 2008.

That view is unchanged. However, stocks could stay volatile over the next few months, while remaining within a range between the peak …read more »

Hexagon AB’s $50 U.S. bid for NovAtel gives us a gain of 2986.4% since we first recommended the stock in June, 2001. It’s what successful investors might call a ’28-bagger’.

That beats our other recent successes such as Aur Resources (a 12-bagger) and Home Capital (a 10-bagger). However, it doesn’t quite measure up to Janna Systems, a software stock we recommended …read more »

A member of my Inner Circle recently asked a question that many clients may have wondered about.

“Have you ever felt like mortgaging the house to load up on an investment? If so, what was it and when? Also, considering the current correction, are you bullish longer term on any particular sector or is it too early to project that at …read more »

So far, the market downturn seems to have stayed within the limits we envisioned for it in our July 27 Stock Pickers Digest Hotline, and last month’s issue.

However, no one can consistently predict the market’s future. That’s why you need to take a portfolio approach to your investments, including any aggressive investments you hold.

Our aggressive recommendations vary widely in risk, …read more »

The Canadian economy grew at an annualized rate of 3.4% in the second quarter, well ahead of the Bank of Canada’s forecast of 2.8%. That followed strong growth of 3.9% in the first quarter.

Consumer spending, which makes up almost 60% of our economy, grew at an annualized rate of 4.9% in the second quarter, up from 3.4% in the first …read more »

In our July 27 Hotline, I said the market downturn could go on till October. I felt it could ultimately knock another 5% to as much as 15% off the market indexes, from July 27 levels. However, I felt the index losses would be temporary and markets would go to new highs in 2008.

I also felt speculative areas would suffer …read more »

In our July 27 Stock Pickers Hotline, I said the market downturn that had just begun could carry on till October and knock another 5% to as much as 15% off the market indexes.

That’s still my view. I doubt that the liquidity problems are going to spread.

I do think that subprime lending is dead for five years or more. This …read more »

As I said in our July 27 Hotline, the market downturn that got going that week could carry on till October and knock another 5% to as much as 15% off the market indexes.

I still feel the damage will be greater in speculative areas, where some prices have risen out of proportion to value. Before the setback ends, however, some …read more »

In recent elections, Japan’s Prime ruling Liberal Democratic Party lost control of the upper house for the first time in over 50 years.

Prime Minister Shinzo Abe still controls the more-powerful lower house of parliament, where elections need not be held until late 2009. But the centre-left Democratic Party can now delay government bills.

Japan’s Nikkei 225 stock market index is now …read more »

Last month we pointed out that we were in a particularly dangerous time in the market — a time you might call the ‘hey, this-is-easy’ segment of the market cycle, particularly for investing newcomers.

That’s when it may seem that you (or your broker) can do no wrong. But since then the market has gone into a steep decline, ostensibly due …read more »

Readers sometimes ask why we don’t advise you to sell more often. But you aren’t in the stock market to buy or sell – you’re in it to make money. Over the years, I’ve found that the market’s big winners are investors who don’t do a lot of trading.

These investors follow the essence of an old real-estate saying: “You make …read more »

A basic rule of marketing is to “turn a feature into a benefit.” That is, you describe the feature so that it sounds as if it’s an actual benefit for the people you aim to sell to.

For example, hedge-fund marketers stress the fact that much of the money in hedge funds comes from rich private individuals. Today’s investment innovations let …read more »

The Canadian economy stagnated in April, after growing 0.3% in March and 0.4% in February. The flat month followed strong annualized growth of 3.7% in the first quarter of 2007. Consensus forecasts called for growth of 0.3% in April.

The Canadian dollar had reached a new 30-year high before the release of the April growth figure, rising to 0.9551 U.S. It …read more »

My ideal investment is what you might call a “heads-you-win, tails-you-break-even” situation. These investments can produce healthy profits, but you won’t get hurt too badly when they disappoint you.

This contrasts with the traditional sucker bet, where the odds are more like “heads-you-break- even, tails-you-lose”.

You may make a profit in a sucker bet. But it’s likely to be a modest profit …read more »

TIM HORTONS INC. $34 (Toronto symbol THI; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 190.1 million; Market cap: $6.5 billion).

Tim Hortons mainly went public due to hedge-fund pressure on its former corporate parent. In contrast, all too many new issues only come to market because the company or its insiders feel it’s a good time to sell, and that’s rarely …read more »

Some readers have asked when we plan to recommend some new stocks, to replace recent takeovers.

Regardless of takeover activity, we continually look for new stocks to buy. But a key part of our stock-picking philosophy is “win by not losing”. If we have any doubts about a stock, we refrain from recommending it, no matter how promising it may seem. …read more »

It’s always best to base investment plans on an entire market cycle — boom, bust and everything in between. That’s also the way to judge investment advice and advisors. No one can consistently predict market trends, and it’s a costly error to invest as if you can.

One common way to guess wrong is to take the recent past as a …read more »

The Canadian dollar is now trading at over $0.93 U.S., its highest level since September 1977. Its strength owes a lot to the rise in commodity prices, particularly metals and oil.

Unlike many advanced countries, Canada is a major exporter of these and other commodities. When commodity prices rise, we get more foreign revenue for commodities we export.

Buyers of our exports …read more »

We have to look through lots of penny mines to find a handful of attractive buys. That’s because of the many safeguards we apply to cut your risk. Here are some examples.

1. We insist on political stability. Exploration is risky enough without the threat of expropriation or onerous taxes.

2. We look for well-financed penny mines with no immediate need to …read more »

When you think about putting money in any investment that has yet to establish a history of profit, you need to keep one key fact in mind: It’s far easier to create an intriguing investment opportunity than a successful, self-perpetuating business.

Mind you, both tasks take some ingenuity. Both call for an injection of capital and the application of various professional …read more »

Investors often ask how long they should hang on to a disappointing stock, even if it’s not an outright loser. There is no single answer to the question. We do our best to look at as much information as possible, and to weigh each tidbit of information according to how much impact we expect it to have. That way, you …read more »

Aggressive investments should make up no more than, say, 30% of your portfolio. You can cut your risk all the more by taking a conservative approach to your aggressive holdings.

For instance, you should hold your aggressive investments within a portfolio that reflects our three-pronged Successful Investor wealth-building philosophy.

That is, invest mainly in well established companies; spread your money out across …read more »

Japan’s Nikkei 225 stock market index is now trading at 17,454, a level not seen since 2000. That’s despite the recent setback on global stock markets. The index bottomed out at around 8,000 in May, 2003, rose to 11,000 by the end of 2003, and then moved sideways until it started rising in mid-2005.

The Bank of Japan recently raised interest …read more »

It was great to see the Saturday, February 3, 2007  Globe & Mail Report on Business ranked Stock Pickers Digest as Canada’s top investor newsletter in 2006. (The Successful Investor, our flagship newsletter for less aggressive investors, was #3 in the Globe’s analysis.)

We achieved this ranking despite a couple of formidable obstacles that we faced this past year.

First, we advise …read more »

We always try to strike a balance in the information we provide — not too little and not too much.

One bit of information that doesn’t get the attention it deserves is a company’s market capitalization or “market cap”. This is the value of all common stock it has outstanding.

When analyzing a stock, we of course always look at its market …read more »

The U.S. economy grew at a rate of 3.5% in the fourth quarter of 2006, beating consensus forecasts of 3.0%. That’s down from growth of 5.6% in the first quarter of 2006, but up from 2.6% in the second quarter and 2% in the third quarter.

The growth in the latest quarter was led by a 4.4% increase in consumer spending, …read more »