Topic: How To Invest

How to profitably pick stocks from TSX listings

tsx listings

Our investing recommendations are the same for TSX listings as they are on other stock exchanges—here’s how to choose wisely

To succeed as an investor, you need to be able to “cut through the noise”. That is, you need to sort through the news to find what’s worth your attention, and disregard the rest. This is harder than it sounds, because the time-wasting “noise” can strike at your emotions.

We have analyzed many TSX listings over the years. Of course, we’ve only recommended the best of them.


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Some information to know before buying from TSX listings

The TSX is the abbreviated name for the Toronto Stock Exchange. The TSX is the largest stock exchange in Canada and the third largest in North America. Of note is that the Toronto Stock Exchange has more oil and gas companies listed on it than any other stock exchange in the world. The Toronto Exchange started up on October 25, 1861. The TMX Group operates a number of stock and commodity exchanges, including the TSX.

Like most other major stock exchanges, the TSX is highly regulated. The Toronto Stock Exchange lists common shares of companies, but also index securities like ETFs.

How to invest in oil and gas commodities through TSX listings

Commodity prices are subject to wide and unpredictable swings. In the rising phase of the business cycle, when business is booming, resource demand expands faster than resource supply, so resource prices shoot up. This balloons profits for commodity investments. When the economy slumps, resource prices and commodity prices fall, and this drags down resource stock prices.

A crucial rule for commodity investing: if people generally believe the price of a commodity is sure to go up, the reverse often happens. That’s because both suppliers and users of the commodity also read the newspapers. They both take steps to protect themselves and profit from the situation. The suppliers try to increase supplies, and the users try to become more efficient or find alternative commodities.

Our advice is for most investors to maintain some exposure to the oil industry as part of the Resources segment of your portfolio. Overall, though, now is a particularly good time to stick to our three-part Successful Investor approach: Invest mainly in well-established, mainly dividend-paying stocks; spread your money out across most if not all of the five main economic sectors; downplay or avoid stocks in the broker/media limelight.

Above all, when considering how to invest in oil stocks, resist the urge to go overboard, particularly in higher-risk oil investments such as junior oils. They are as risky as ever, and they may especially fail to thrive in a slow oil recovery.

Investing success in TSX listings comes from making more right decisions than wrong ones over a long period of time

If you ask investors who have a few decades of successful investing behind them, few, if any, will credit their success to any one investment or investing technique. Instead, most will talk about the value of everyday behaviours like patience, consistency and a healthy sense of skepticism—in short, the kind of behaviours that bring success in all aspects of life, not just investing.

  • Approach all investments with a healthy sense of skepticism. This can help keep you out of fraudulent stocks that masquerade as high-quality stocks. It will also keep you out of legally operated, but poorly managed, companies that promise more than they can possibly deliver.
  • Losing patience can cause you to sell your best choices right before a big rise. All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)
  • Consistency is crucial. You can’t succeed by applying our three-part formula three years out of four. If you try to do that, you run a serious risk of abandoning the formula when risk is at a peak. That’s when our formula serves you best, and failing to adhere to a sound investing approach can do the greatest harm to your net worth.

 

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