Investors often ask us for our opinion on borrowing money to invest in stocks. We think that borrowing to make stock market investments can be a good strategy for some investors under certain circumstances. You’ll benefit most from this strategy by sticking with well-established, dividend-paying stocks, like the ones we recommend in our Canadian Wealth Advisor newsletter.

Here are 3 …read more »

When you join my Inner Circle service, you get to ask me your own personal questions about stock market investments or any other financial matter. Plus, you get to see what other Inner Circle members have asked, along with our answers.

So you can get a sense of how the service works, and how it can help you make better …read more »

Over the years, we’ve recommended many stocks that have been taken over for big profits. In fact, some readers of our newsletters and investment services tell us that they never had a stock taken over at a profit until they began following our advice.

(To get all the details on our stock market strategy, and how it can help …read more »

There are many ways to calculate the performance of a stock market newsletter. Some provide far more favourable figures than others.

That’s why, in our newsletters, we simply provide the return since our first recommendation, and leave more detailed calculations to independent sources, particularly The Hulbert Financial Digest. (We recently posted returns that were far higher than an index of …read more »

The term “buying on margin” means that you’re borrowing money from your broker to buy securities. The main cost involved with this stock market trading strategy is interest on the money you borrow. Plus, when you sell a security that you’ve bought on margin, you must first pay back the loan from your broker.

How to build a winning stock …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 »

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 just a couple of …read more »

Markets have risen considerably since their March lows. In light of this, investors who sold at the bottom have missed out on the 40% or so that the TSX has gained since then. They now no doubt feel that they’ve made a grave investment error.

Successful investors avoid market predictions as part of their stock market strategy. Instead, they stick with …read more »

FAIR ISAAC CORPORATION $22.51 (New York symbol FICO; SI Rating: Average) (415-472-2211; www.fico.com; Shares outstanding: 48.9 million; Market cap: $1.1 billion) has changed its ticker symbol on the New York exchange from FIC to FICO.

The new symbol is part of the company’s plan to change its corporate identity. The company’s main business remains its FICO software, which lets lenders of …read more »

Over the years, we’ve met a number of investors who favour investing in stocks only when economic and financial conditions seem good, if not ideal. If these investors hear talk of a drawn-out recession or rising interest rates, for example, they are inclined to stay out of the market, or get out if they’re in.

In contrast, when they think conditions …read more »

You hear a lot of comparisons these days between the current market downturn and the 1929 stock market crash. That’s mainly due to a lack of comparables. The recent market downturn is the worst since World War II. However, nothing since then has come close to the crash that lasted into the 1930s.

When investors ask how bad it can get, …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 »

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 »

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 »

The $50 billion Madoff affair no doubt qualifies as the swindle of the year for 2008, and rivals Enron in financial history. If so, let’s hope investors look closely to see where the money went.

So far, media accounts reflect brokers’ views that Mr. Madoff’s stated investment strategy was sound, and that it only failed because he had too much money …read more »

S&P DEPOSITORY RECEIPTS $87.32 (American Exchange symbol SPY; buy or sell through brokers) are commonly called ‘Spiders’. The fund holds the stocks in the S&P 500 Index. This index is comprised of 500 major U.S. stocks chosen for market size, liquidity, and industry group representation.

The 10 highest weighted stocks on the index are Exxon Mobil, Procter & Gamble, General Electric, …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 »

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 »

You hear a lot of comparisons these days between the current market downturn and the 1929 stock market crash. That’s mainly due to a lack of comparables. The 2007-2008 (assuming it ends this fall) market downturn is the worst since World War Two. However, nothing since then comes close to the 1929 stock market crash that lasted into the 1930s.

When …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 »

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 »

S&P DEPOSITORY RECEIPTS $135 (American Exchange symbol SPY; buy or sell through brokers) are commonly called ‘Spiders’. The fund holds the stocks in the S&P 500 Index. This index is comprised of 500 major U.S. stocks chosen for market size, liquidity, and industry group representation. The 10 highest weighted stocks on the index are Exxon Mobil, General Electric, Bank of …read more »

NASDAQ-100 TRUST SHARES $44.37 (Nasdaq Exchange symbol QQQQ; buy or sell through brokers) or ‘Qubes’, hold the stocks that represent the Nasdaq-100 Index. This index is made up of the 100 largest and most heavily traded stocks on the Nasdaq Exchange. The index reflects firms across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It …read more »

ISHARES CDN LARGECAP 60 INDEX FUND $76.65 (Toronto symbol XIU; buy or sell through a broker) (formerly called iUnits S&P/TSX 60 Index Participation Fund) is a good low-fee way to buy the top stocks on the TSX. The units hold a basket of stocks that represent the S&P/TSX 60 Index. The index is made up of the 60 largest and …read more »

We think high-quality mutual funds with a long term focus will beat indexes over long periods. If funds invest as we advise — sticking with well established companies and spreading their assets out across the five main economic sectors — they will tend to lose a lot less than the market indexes in periods when the indexes fall sharply.

That’s because …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 »

China holds $1.4 trillion in U.S. dollars, and has talked of selling some of them. This brings to mind the proverbial boy-who-held-the-tiger-by-the-tail.

It took China decades to build this hoard. Dumping part of it would undermine the value of the remainder. Moreover, China needs U.S. goodwill. It needs buying by U.S. consumers far more than they need cheap manufactured goods. The …read more »

The best exchange-traded funds (ETFs) offer well-diversified, tax-efficient portfolios with very low management fees. Due to buyback and share issue arrangements, ETFs always trade close to their net asset value.

Here are some of the best deals available in ETFs. We’ve also analysed one we don’t like.

ISHARES CDN LARGECAP 60 INDEX FUND $79.86 (Toronto symbol XIU; buy or sell through a …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 »

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 »

If last week’s downturn makes you wonder if you should sell all your stocks, keep in mind that the world economy and stock market stand to gain from three special factors, just like McKesson.

Starting in the early 1990s, I’ve regularly pointed out that these special factors are often overlooked or under-estimated. They are:

1. The baby boomers remain in the prime …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 »

Exchange Traded Funds or ETFs are among the more benign investment innovations of our time. Unlike other innovations, they don’t load you up with heavy management fees, nor tie you down with heavy redemption charges if you decide to get out before six years have passed. Instead, they give you a lower-cost and more flexible and convenient alternative to mutual …read more »

As we said in our March 2 Successful Investor Hotline, North American stock markets could be sluggish or weak for a month or two.

Since then, investor fears have shifted from China to so-called “sub-prime” lending to home buyers with less-than-sterling credit ratings. Investors fear that if tighter lending standards shut these buyers out of the market, it will have a …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 »

With their first budget, the Conservatives are increasing the federal dividend tax credit on Canadian dividend income. If fully matched by the provinces, this will lower taxes on dividends by about five percentage points for top income earners. That means you’ll pay less tax on dividend income than on capital gains.

However, that would make it more advantageous for investors to …read more »