How To Invest
In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
Investors should 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.
If you are a new investor, you should also realize that 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.”)
If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.
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TRANSCANADA CORP. $44.97 (Toronto symbol TRP; Shares outstanding: 704.9 million; Market cap: $31.7 billion; TSINetwork Rating: Above Average; Dividend yield: 3.9%; www.transcanada.com) has formed a new 50/50 joint venture with privately held Phoenix Energy Holdings Ltd.
The partners plan to build a 500-kilometre pipeline that would pump crude from Phoenix’s oil sands properties in northern Alberta to Edmonton. TransCanada will operate the new line.
TransCanada’s share of the project’s $3.0-billion cost is $1.5 billion. The partners aim to begin construction in 2014, and the line should start up in early 2017.
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The partners plan to build a 500-kilometre pipeline that would pump crude from Phoenix’s oil sands properties in northern Alberta to Edmonton. TransCanada will operate the new line.
TransCanada’s share of the project’s $3.0-billion cost is $1.5 billion. The partners aim to begin construction in 2014, and the line should start up in early 2017.
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LOBLAW COMPANIES $34.62 (Toronto symbol L; Shares outstanding: 281.4 million; Market cap: $9.7 billion; TSINetwork Rating: Above Average; Dividend yield: 2.4%; www.loblaw.ca) is cutting 700 jobs, or about 1% of its overall workforce. Most of these positions are administrative and are not at its 1,000 supermarkets across Canada.
Severance payments and other costs will total $60 million. To put that in context, Loblaw earned $159 million, or $0.57 a share, in the three months ended June 16, 2012.
The company did not say how much these job cuts would save it. However, the resulting lower costs will help it compete with big U.S. retailers like Wal-Mart and Target, which are aggressively expanding in Canada.
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Severance payments and other costs will total $60 million. To put that in context, Loblaw earned $159 million, or $0.57 a share, in the three months ended June 16, 2012.
The company did not say how much these job cuts would save it. However, the resulting lower costs will help it compete with big U.S. retailers like Wal-Mart and Target, which are aggressively expanding in Canada.
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ISHARES MSCI BRAZIL INDEX FUND $53.35 (New York Exchange symbol EWZ; buy or sell through brokers) is an exchange traded fund that is designed to track the Brazilian stock market. The fund’s top holdings are Petrobras preferred shares (energy), 9.8%; Vale do Rio Doce (mining) preferred, 7.9%; Petrobras common, 7.3%; Cia Itau Unibanco Holding (banking), 7.1%; Banco Brandesco (banking) preferred, 6.4%; and Vale SA, 3.9%.
The fund’s concentration in certain stocks, such as Petrobras and Vale do Rio Doce, adds risk, as does its focus on the resource sector. However, both are high-quality stocks.
Brazil’s economy is forecast to grow at just 1.5% this year. Domestic consumption remains strong, but exports have slowed. Still, growth could rebound to as high as 4.0% next year.
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The fund’s concentration in certain stocks, such as Petrobras and Vale do Rio Doce, adds risk, as does its focus on the resource sector. However, both are high-quality stocks.
Brazil’s economy is forecast to grow at just 1.5% this year. Domestic consumption remains strong, but exports have slowed. Still, growth could rebound to as high as 4.0% next year.
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ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $61.55 (New York Exchange symbol ECH; buy or sell through brokers) is an ETF that aims to track the MSCI Chile Investable Market Index, which consists of stocks that are mainly traded on the Santiago Stock Exchange.
The fund’s top holdings are LATAM Airlines SA, 9.4%; Empresas Copec SA (conglomerate), 8.3%; Quimica y Minera de Chile (mining), 6.6%; Empresa Nacional de Electricidad (electricity), 6.4%; Cencosud SA (retailer), 6.2%; Banco Santander Chile (banking), 5.7%; Enersis AS (electricity), 5.4%; S.A.C.I. Falabella (retail), 5.2%; and Empresas CMPC (pulp and paper), 4.7%.
The fund’s industry breakdown is as follows: Utilities, 23.2%; Industrials, 20.6%; Financials, 17.2%; Materials, 15.5%; Consumer Staples, 11.2%; Consumer Discretionary, 6.3%; Telecommunications, 3.7%; and Information Technology, 1.7%.
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The fund’s top holdings are LATAM Airlines SA, 9.4%; Empresas Copec SA (conglomerate), 8.3%; Quimica y Minera de Chile (mining), 6.6%; Empresa Nacional de Electricidad (electricity), 6.4%; Cencosud SA (retailer), 6.2%; Banco Santander Chile (banking), 5.7%; Enersis AS (electricity), 5.4%; S.A.C.I. Falabella (retail), 5.2%; and Empresas CMPC (pulp and paper), 4.7%.
The fund’s industry breakdown is as follows: Utilities, 23.2%; Industrials, 20.6%; Financials, 17.2%; Materials, 15.5%; Consumer Staples, 11.2%; Consumer Discretionary, 6.3%; Telecommunications, 3.7%; and Information Technology, 1.7%.
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ISHARES MSCI GERMANY FUND $22.94 (New York Exchange symbol EWG; buy or sell through brokers) tracks the stocks in the MSCI Germany Index.
This index aims to replicate 85% of the total market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly due to limitations on foreign ownership.
The ETF’s top holdings are Siemens (engineering conglomerate), 9.2%; BASF (chemicals), 8.5%; Bayer (diversified chemicals), 8.0%; SAP (software), 7.4%; Allianz (insurance), 6.2%; E.ON (energy), 4.6%; Deutsche Bank, 4.5%; Deutsche Telekom, 3.6%; and Linde AG (industrial gases), 3.5%.
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This index aims to replicate 85% of the total market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly due to limitations on foreign ownership.
The ETF’s top holdings are Siemens (engineering conglomerate), 9.2%; BASF (chemicals), 8.5%; Bayer (diversified chemicals), 8.0%; SAP (software), 7.4%; Allianz (insurance), 6.2%; E.ON (energy), 4.6%; Deutsche Bank, 4.5%; Deutsche Telekom, 3.6%; and Linde AG (industrial gases), 3.5%.
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ISHARES MSCI SOUTH KOREA INDEX FUND $57.58 (New York Exchange symbol EWY; buy or sell through brokers), is an exchange traded fund that aims to track the MSCI Korea Index.
The ETF’s top holdings are Samsung Electronics, 21.9%; Hyundai Motor Co., 6.0%; Posco (steel), 3.8%; Hyundai Mobis (auto parts), 3.3%; Kia Motors, 2.9%; Shinhan Financial, 2.6%; SK Hynix Semiconductor, 2.4%; LG Chemical, 2.3%; KB Financial, 2.3%; and NHN (Internet content), 1.8%.
The fund’s industry breakdown is as follows: Information Technology, 32.4%; Consumer Discretionary, 17.8%; Financials, 13.4%; Industrials, 13.2%; Materials, 10.9%; Consumer Staples, 5.9%; Energy, 3.1%; Utilities, 1.6%; Telecommunication Services, 0.9%; and Health Care, 0.8%.
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The ETF’s top holdings are Samsung Electronics, 21.9%; Hyundai Motor Co., 6.0%; Posco (steel), 3.8%; Hyundai Mobis (auto parts), 3.3%; Kia Motors, 2.9%; Shinhan Financial, 2.6%; SK Hynix Semiconductor, 2.4%; LG Chemical, 2.3%; KB Financial, 2.3%; and NHN (Internet content), 1.8%.
The fund’s industry breakdown is as follows: Information Technology, 32.4%; Consumer Discretionary, 17.8%; Financials, 13.4%; Industrials, 13.2%; Materials, 10.9%; Consumer Staples, 5.9%; Energy, 3.1%; Utilities, 1.6%; Telecommunication Services, 0.9%; and Health Care, 0.8%.
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ISHARES MSCI EMERGING MARKETS INDEX FUND $41.15 (New York symbol EEM; buy or sell through brokers), is an exchange traded fund that aims to track the MSCI Emerging Markets Index. Its geographic breakdown includes China, 17.6%; South Korea, 14.9%; Brazil, 12.7%; Taiwan, 10.5%; South Africa, 7.7%; India, 6.8%; Russia, 6.0%; Mexico, 5.2%; Malaysia, 3.8%; and Indonesia, 2.8%.
The fund’s top holdings are Samsung Electronics (South Korea), 3.7%; China Mobile, 1.9%; Taiwan Semiconductor (computer chips), 1.9%; China Construction Bank, 1.5%; America Movil (Brazil: wireless), 1.5%; Gazprom (Russia: gas utility), 1.4%; Petrobras (Brazil: energy), 1.3%; and Industrial & Commercial Bank of China, 1.2%.
The fund’s industry breakdown is as follows: Financials, 25.0%; Information Technology, 13.4%; Energy, 13.1%; Materials, 11.6%; Consumer Staples, 8.9%; Consumer Discretionary, 8.1%; Telecommunication Services, 8.1%; and Industrials, 6.7%.
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The fund’s top holdings are Samsung Electronics (South Korea), 3.7%; China Mobile, 1.9%; Taiwan Semiconductor (computer chips), 1.9%; China Construction Bank, 1.5%; America Movil (Brazil: wireless), 1.5%; Gazprom (Russia: gas utility), 1.4%; Petrobras (Brazil: energy), 1.3%; and Industrial & Commercial Bank of China, 1.2%.
The fund’s industry breakdown is as follows: Financials, 25.0%; Information Technology, 13.4%; Energy, 13.1%; Materials, 11.6%; Consumer Staples, 8.9%; Consumer Discretionary, 8.1%; Telecommunication Services, 8.1%; and Industrials, 6.7%.
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PENN WEST PETROLEUM $12.97 (Toronto symbol PWT; Shares outstanding: 472.9 million; Market cap: $6.1 billion; TSINetwork Rating: Average; Dividend yield: 8.3%) has agreed to sell $1.3 billion worth of non-core properties. In all, these produce about 12,000 barrels per day.
To put that figure in perspective, it’s 7.4% of the 163,181 barrels a day that Penn West produced in the quarter ended June 30, 2012.
The company now aims to sharply reduce its long-term debt of $3.4 billion, which is a somewhat high 55.7% of its market cap. That will lower its interest costs and let it invest more money in its highest-potential oil and gas properties.
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To put that figure in perspective, it’s 7.4% of the 163,181 barrels a day that Penn West produced in the quarter ended June 30, 2012.
The company now aims to sharply reduce its long-term debt of $3.4 billion, which is a somewhat high 55.7% of its market cap. That will lower its interest costs and let it invest more money in its highest-potential oil and gas properties.
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IBM $194.53 (New York symbol IBM; Shares outstanding: 1.1 billion; Market cap: $214.0 billion; TSINetwork Rating: Above Average; Dividend yield: 1.8%) is down from $210 a share in mid-October after it reported revenue of $24.7 billion in the quarter ended September 30, 2012. That’s down 5.4% from $26.2 billion a year earlier and short of the consensus estimate of $25.4 billion.
The slow global economy is hurting demand for IBM’s mainframe computers, services and software. That’s why its revenue fell.
However, the company’s ongoing cost cuts and productivity improvements pushed up its earnings before one-time items by 10.4%, to $3.62 a share from $3.28. That beat the consensus estimate of $3.61.
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The slow global economy is hurting demand for IBM’s mainframe computers, services and software. That’s why its revenue fell.
However, the company’s ongoing cost cuts and productivity improvements pushed up its earnings before one-time items by 10.4%, to $3.62 a share from $3.28. That beat the consensus estimate of $3.61.
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ENERPLUS CORP. $16.05 (Toronto symbol ERF; Shares outstanding: 197.6 million; Market cap: $3.2 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.7%) produces an average of 82,108 barrels of oil equivalent per day (weighted 51% to natural gas and 49% to oil). Its properties are mainly in Alberta, Saskatchewan, B.C., North Dakota and Montana, as well as the Marcellus Shale, which passes through Pennsylvania, New York, Ohio and West Virginia.
In the three months ended June 30, 2012, Enerplus’s cash flow per share was unchanged at $0.74 from a year earlier.
In June 2012, the company cut its monthly dividend by 50%. It now yields 6.7%.
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In the three months ended June 30, 2012, Enerplus’s cash flow per share was unchanged at $0.74 from a year earlier.
In June 2012, the company cut its monthly dividend by 50%. It now yields 6.7%.
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