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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ISHARES MSCI BRAZIL INDEX FUND $69.18 (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), 10.2%; Cia Vale do Rio Doce (mining) preferred, 8.7%; Itau Unibanco Multiplo SA (banking), 8.1%; Petrobras common, 7.7%; and Banco Brandesco (banking) preferred, 5.7%.
The fund’s concentration in certain stocks, such as Petrobras and Cia 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 a rate of 4.5% in 2012.
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The fund’s top holdings are Petrobras preferred shares (energy), 10.2%; Cia Vale do Rio Doce (mining) preferred, 8.7%; Itau Unibanco Multiplo SA (banking), 8.1%; Petrobras common, 7.7%; and Banco Brandesco (banking) preferred, 5.7%.
The fund’s concentration in certain stocks, such as Petrobras and Cia 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 a rate of 4.5% in 2012.
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ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $67.90 (New York Exchange symbol ECH; buy or sell through brokers), is an ETF that aims to track the MSCI Chile Investable Market Index. This index consists of stocks that are mainly traded on the Santiago Stock Exchange.
The fund’s top holdings are Empresas Copec SA (conglomerate), 10.3%; Quimica y Minera de Chile (mining), 7.7%; Cencosud SA (retailer), 7.6%; Empresa Nacional de Electricidad (electric power), 7.4%; Enersis AS (electric power), 6.7%; Banco Santander Chile (banking), 6.6%; Empresas CMPC (pulp and paper), 5.2%; LAN Airlines SA (Chilean national airline), 4.8%; S.A.C.I. Falabella (retail), 4.7%; and CAP SA (iron mining and steel), 4.6%.
The fund’s industry breakdown is as follows: Utilities, 22.4%; Materials, 18.3%; Industrials, 18.0%; Financials, 17.4%; Consumer Staples, 13.0%; Consumer Discretionary, 6.1%; Telecommunications, 2.7%; and Information Technology, 1.3%.
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The fund’s top holdings are Empresas Copec SA (conglomerate), 10.3%; Quimica y Minera de Chile (mining), 7.7%; Cencosud SA (retailer), 7.6%; Empresa Nacional de Electricidad (electric power), 7.4%; Enersis AS (electric power), 6.7%; Banco Santander Chile (banking), 6.6%; Empresas CMPC (pulp and paper), 5.2%; LAN Airlines SA (Chilean national airline), 4.8%; S.A.C.I. Falabella (retail), 4.7%; and CAP SA (iron mining and steel), 4.6%.
The fund’s industry breakdown is as follows: Utilities, 22.4%; Materials, 18.3%; Industrials, 18.0%; Financials, 17.4%; Consumer Staples, 13.0%; Consumer Discretionary, 6.1%; Telecommunications, 2.7%; and Information Technology, 1.3%.
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ISHARES MSCI GERMANY FUND $22.95 (New York Exchange symbol EWG; buy or sell through brokers) is an ETF that aims to track 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 fund’s top holdings are Siemens AG (engineering conglomerate), 9.2%; BASF (chemicals), 8.9%; SAP (software), 6.9%; Bayer (diversified chemicals), 6.4%; Daimler AG (automobiles), 6.4%; Allianz (insurance), 6.2%; Deutsche Bank AG, 4.9%; E.ON (energy), 4.6%; Deutsche Telekom, 3.7%; and BMW AG (automobiles), 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 fund’s top holdings are Siemens AG (engineering conglomerate), 9.2%; BASF (chemicals), 8.9%; SAP (software), 6.9%; Bayer (diversified chemicals), 6.4%; Daimler AG (automobiles), 6.4%; Allianz (insurance), 6.2%; Deutsche Bank AG, 4.9%; E.ON (energy), 4.6%; Deutsche Telekom, 3.7%; and BMW AG (automobiles), 3.5%.
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ISHARES MSCI SOUTH KOREA INDEX FUND $59.87 (New York Exchange symbol EWY; buy or sell through brokers), is an exchange traded fund that aims to track the MSCI Korea Index.
The fund’s top holdings are Samsung Electronics, 20.8%; Hyundai Motor Co., 5.3%; Posco (steel), 4.4%; Hyundai Mobis (auto parts), 3.0%; LG Chemical, 3.0%; Shinhan Financial, 3.0%; Kia Motors, 2.7%; KB Financial, 2.4%; Hynix Semiconductor, 2.4%; and Hyundai Heavy Industries, 2.1%.
The fund’s industry breakdown is as follows: Information Technology, 30.8%; Consumer Discretionary, 16.3%; Industrials, 14.7%; Financials, 13.9%; Materials, 13.0%; Consumer Staples, 4.5%; Energy, 3.3%; Telecommunication Services, 0.9%; Utilities, 1.2%; and Health Care, 0.6%.
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The fund’s top holdings are Samsung Electronics, 20.8%; Hyundai Motor Co., 5.3%; Posco (steel), 4.4%; Hyundai Mobis (auto parts), 3.0%; LG Chemical, 3.0%; Shinhan Financial, 3.0%; Kia Motors, 2.7%; KB Financial, 2.4%; Hynix Semiconductor, 2.4%; and Hyundai Heavy Industries, 2.1%.
The fund’s industry breakdown is as follows: Information Technology, 30.8%; Consumer Discretionary, 16.3%; Industrials, 14.7%; Financials, 13.9%; Materials, 13.0%; Consumer Staples, 4.5%; Energy, 3.3%; Telecommunication Services, 0.9%; Utilities, 1.2%; and Health Care, 0.6%.
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ISHARES MSCI EMERGING MARKETS INDEX FUND $44.33 (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%; Brazil, 15.6%; South Korea, 14.7%; Taiwan, 10.7%; South Africa, 7.4%; India, 6.8%; Russia, 6.5%; Mexico, 4.4%; Malaysia, 3.3%; and Indonesia, 2.6%.
iShares MSCI Emerging Markets Index Fund’s top holdings are Samsung Electronics (South Korea: electronics), 3.2%; Gazprom (Russia: gas utility), 1.8%; China Mobile, 1.7%; Petrobras Petroleo preferred (Brazil: energy), 1.6%; Vale SA (Brazil: mining), 1.3%; Taiwan Semiconductor (Taiwan: computer chips), 1.3%; China Construction Bank (China: banking), 1.3%; America Movil (Brazil: wireless), 1.3%; Itau Unibanco Holding (Brazil: banking), 1.3%; and Industrial & Commercial Bank of China (China: banking), 1.2%.
The fund’s industry breakdown is as follows: Financials, 24.0%; Energy, 14.4%; Materials, 13.4%; Information Technology, 13.3%; Consumer Staples, 7.7%; Consumer Discretionary, 7.7%; Telecommunication Services, 7.6%; Industrials, 7.0%; Utilities, 3.7%; and Health Care, 1.0%.
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iShares MSCI Emerging Markets Index Fund’s top holdings are Samsung Electronics (South Korea: electronics), 3.2%; Gazprom (Russia: gas utility), 1.8%; China Mobile, 1.7%; Petrobras Petroleo preferred (Brazil: energy), 1.6%; Vale SA (Brazil: mining), 1.3%; Taiwan Semiconductor (Taiwan: computer chips), 1.3%; China Construction Bank (China: banking), 1.3%; America Movil (Brazil: wireless), 1.3%; Itau Unibanco Holding (Brazil: banking), 1.3%; and Industrial & Commercial Bank of China (China: banking), 1.2%.
The fund’s industry breakdown is as follows: Financials, 24.0%; Energy, 14.4%; Materials, 13.4%; Information Technology, 13.3%; Consumer Staples, 7.7%; Consumer Discretionary, 7.7%; Telecommunication Services, 7.6%; Industrials, 7.0%; Utilities, 3.7%; and Health Care, 1.0%.
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ISHARES MSCI JAPAN INDEX FUND $9.99 (American Exchange symbol EWJ; buy or sell through brokers; us.ishares.com) is an exchange traded fund that tries to match the return of the Morgan Stanley Capital International (MSCI) Japan index.
The fund’s top holdings include Toyota Motor, 5.1%; Mitsubishi UFJ Financial, 2.9%; Honda Motor, 2.7%; Canon, 2.2%; Sumitomo Mitsui Financial, 2.1%; Mizuho Financial Group, 1.7%; Takeda Pharmaceutical, 1.6%; Mitsubishi Corporation, 1.5%; Fanuc Corp., 1.5%; and Mitsui & Co., 1.3%.
The fund’s industry breakdown is as follows: Industrials, 21.3%; Consumer Discretionary, 20.0%; Financials, 17.8%; Information Technology, 12.2%; Materials, 7.1%; Health Care, 6.1%; Consumer Staples, 5.9%; Telecommunication Services, 4.1%; Utilities, 3.6%; and Energy, 1.8%.
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The fund’s top holdings include Toyota Motor, 5.1%; Mitsubishi UFJ Financial, 2.9%; Honda Motor, 2.7%; Canon, 2.2%; Sumitomo Mitsui Financial, 2.1%; Mizuho Financial Group, 1.7%; Takeda Pharmaceutical, 1.6%; Mitsubishi Corporation, 1.5%; Fanuc Corp., 1.5%; and Mitsui & Co., 1.3%.
The fund’s industry breakdown is as follows: Industrials, 21.3%; Consumer Discretionary, 20.0%; Financials, 17.8%; Information Technology, 12.2%; Materials, 7.1%; Health Care, 6.1%; Consumer Staples, 5.9%; Telecommunication Services, 4.1%; Utilities, 3.6%; and Energy, 1.8%.
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ENCANA CORP. $20.16 (Toronto symbol ECA; Shares outstanding: 735.4 million; Market cap: $14.8 billion; TSINetwork Rating: Average; Dividend yield: 4.0%; www.encana.com) has agreed to sell 40% of its undeveloped Cutbank Ridge shale gas property in northeastern B.C. to Japan’s Mitsubishi Corp.
Encana will receive $1.45 billion (Canadian) when the sale closes at the end of February 2012. Mitsubishi will also invest an additional $1.45 billion over the next five years to develop this property. To put these figures in context, Encana’s cash flow was $4.2 billion U.S., or $5.66 U.S. a share, in 2011.
Adding a partner to help develop this field cuts Encana’s risk. Mitsubishi’s involvement will also help Encana open up new markets for its gas in Asia.
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Encana will receive $1.45 billion (Canadian) when the sale closes at the end of February 2012. Mitsubishi will also invest an additional $1.45 billion over the next five years to develop this property. To put these figures in context, Encana’s cash flow was $4.2 billion U.S., or $5.66 U.S. a share, in 2011.
Adding a partner to help develop this field cuts Encana’s risk. Mitsubishi’s involvement will also help Encana open up new markets for its gas in Asia.
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ARC RESOURCES $25.55 (Toronto symbol ARX; Shares outstanding: 288.5 million; Market cap: $7.4 billion; TSINetwork Rating: Speculative; Dividend yield: 4.7%; www.arcresources.com) produces oil and natural gas in western Canada. Its average daily production of 892,021 barrels of oil equivalent is weighted 64% to gas and 36% to oil.
In the three months ended December 31, 2011, ARC’s cash flow per share rose 25.4%, to $0.79 from $0.63. That’s because the company raised its production by 8.7%. It also benefited from higher oil prices.
ARC has $2.4 billion of tax pools that are letting it offset taxes and maintain its 4.7% yield. The company’s long-term debt is $721.2 million, or a low 9.7% of its market cap. The shares trade at 8.5 times ARC’s forecast 2012 cash flow of $2.98 a share.
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In the three months ended December 31, 2011, ARC’s cash flow per share rose 25.4%, to $0.79 from $0.63. That’s because the company raised its production by 8.7%. It also benefited from higher oil prices.
ARC has $2.4 billion of tax pools that are letting it offset taxes and maintain its 4.7% yield. The company’s long-term debt is $721.2 million, or a low 9.7% of its market cap. The shares trade at 8.5 times ARC’s forecast 2012 cash flow of $2.98 a share.
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ENERPLUS CORP. $23.94 (Toronto symbol ERF; Shares outstanding: 181.2 million; Market cap: $4.3 billion; TSINetwork Rating: Extra Risk; Dividend yield: 9.0%) produces an average of 77,221 barrels of oil equivalent per day (weighted 55% to natural gas and 45% 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 December 31, 2011, Enerplus’ cash flow per share fell 5.4%, to $0.87 from $0.92. That’s mainly due to lower gas prices, which offset gains from higher oil prices.
In 2011, the company sold 91,000 of its 201,000 acres of natural gas properties in the Marcellus Shale for $568 million U.S. It used the funds to continue rapidly expanding its exploration drilling.
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In the three months ended December 31, 2011, Enerplus’ cash flow per share fell 5.4%, to $0.87 from $0.92. That’s mainly due to lower gas prices, which offset gains from higher oil prices.
In 2011, the company sold 91,000 of its 201,000 acres of natural gas properties in the Marcellus Shale for $568 million U.S. It used the funds to continue rapidly expanding its exploration drilling.
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TELUS $57.67 (Toronto symbol T.A; Shares outstanding: 324.5 million; Market cap: $18.7 billion; TSINetwork Rating: Above Average; Dividend yield: 4.2%; www.telus.com) plans to merge its common shares and its non-voting class A into a single class of shares.
Telus created the non-voting shares in 1998, when U.S.-based Verizon Communications (symbol VZ on New York) held a major stake in the company. The move let Telus comply with regulations preventing foreign control of Canadian telecom firms. Verizon sold its non-voting shares in 2004. Non-Canadian investors now hold less than 20% of Telus’s stock.
Telus now has about 174.9 million common shares and 149.9 million non-voting shares outstanding. Under the proposal, each non-voting share will become one common share. Investors holding two-thirds of each share class, voting separately, must approve the change.
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Telus created the non-voting shares in 1998, when U.S.-based Verizon Communications (symbol VZ on New York) held a major stake in the company. The move let Telus comply with regulations preventing foreign control of Canadian telecom firms. Verizon sold its non-voting shares in 2004. Non-Canadian investors now hold less than 20% of Telus’s stock.
Telus now has about 174.9 million common shares and 149.9 million non-voting shares outstanding. Under the proposal, each non-voting share will become one common share. Investors holding two-thirds of each share class, voting separately, must approve the change.
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