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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We see investment clubs as a good way to learn stock trading, and gather investment information. Investment clubs can offer social and educational benefits. For example, they may be a good place to learn stock trading if you are a beginning investor and think you would feel more comfortable learning about investments with others. Some clubs let you invest as little as, say, $50 a month. Investment clubs do have hidden risks that can hurt your profits. That’s because investment clubs make decisions by committee, where responsibility for mistakes is diffused. When committees make mistakes, they sometimes make big ones....
How you can make winning stock picks with our TSINetwork ratings We display our ratings next to every stock we recommend in our newsletters
Indigo Books & Music Inc., Toronto symbol IDG, is Canada’s largest bookseller. The company operates 97 superstores under the Chapters and Indigo banners. It also has 149 mall-based stores, and sells books, movies and music through its web site. Indigo is one of the Canadian stock picks we analyze in our Successful Investor newsletter. In its latest fiscal year, which ended April 2, 2011, the Canadian stock pick’s revenue rose 5.0% to $1.0 billion from $968.9 million in the prior year. Even so, earnings fell 67.5%, to $11.3 million, or $0.45 a share, from $34.9 million, or $1.39 a share....
Investors often ask us how often they should sell investments they own and buy new ones. The answer: as rarely as possible. That’s because turnover in your portfolio cuts into your profits. (How much turnover you should have in your portfolio is one of the subjects we examine in our free report, “Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada.” Click here to download your copy right away.) Here are three costs you face every time you buy and sell a stock:...
If you’ve been following our TSI Network Daily Updates, or subscribe to one of our paid newsletters or investment services, you’re likely familiar with our three-part TSI Network investing program.
3 easy steps to lower-risk profits in Canadian stocks
One key part of our program is to spread your money out across the five main sectors of the economy: Manufacturing & Industry; Resources; Consumer; Finance; and Utilities....
Computer Modelling Group Ltd., symbol CMG on Toronto, makes software and supplies services that help its clients get as much oil as possible from their existing wells. The stock market pick makes mostly recurring revenue from software licences and consulting contracts. That gives it long-term stability. Computer Modelling Group is one of the stocks we analyze in Stock Pickers Digest, our newsletter for aggressive investing. In the three months ended March 31, 2011, Computer Modelling’s revenue rose 0.6%, to $14.4 million from $14.3 million a year earlier. A 17% increase in consulting and contract research revenue more than offset a 2% drop in software licence sales due to the strong Canadian dollar....
Sherwin-Williams Co., symbol SHW on New York, is North America’s largest paint producer. The stock market investment also operates over 3,900 paint stores, which account for half its sales. Sherwin is one of the stocks we analyze in Wall Street Stock Forecaster, our newsletter for investing in the U.S. markets. In the three months ended March 31, 2011, Sherwin’s sales rose 18.5%, to $1.9 billion from $1.6 billion a year earlier. Acquisitions and higher selling prices were the main reason for the higher sales. Earnings more than doubled, to $68.3 million or $0.63 per share, from $32.6 million or $0.30 per share. However, the year-earlier results included an $11.4-million charge related to changes in the U.S. healthcare laws....
Alliant Energy Corp., symbol LNT on New York, sells electricity and natural gas to 1.4 million customers in Wisconsin, Iowa, Minnesota and Illinois. Alliant is one of the stock trading picks we analyze in Wall Street Stock Forecaster, our newsletter for investing in the U.S. markets. In the three months ended March 31, 2011, Alliant’s earnings rose 45.5%, to $73.5 million, or $0.68 a share. It earned $50.5 million, or $0.45 a share, a year earlier. These figures exclude one-time items, such as a writedown of a proposed wind farm development. Favourable rulings by government regulators on pricing, recovery of fuel expenses and tax credits were the main reason behind the higher earnings....
The Churchill Corp., symbol CUQ on Toronto, sells construction, general-contracting, maintenance, insulation, fireproofing, electrical and power-line construction services. Its clients are in the resource, industrial, utility and power-generation industries. Churchill has customers throughout western Canada. We analyze Churchill in Stock Pickers Digest, our newsletter for investing in stocks that are more aggressive. In the three months ended March 31, 2011, Churchill’s revenue rose 67.0%, to $304.7 million from $182.5 million a year earlier. The rise was mainly due to Seacliff Construction, which Churchill bought for $380 million in May 2010. Seacliff sells general contracting, electrical-contracting and earth-moving services. Like Churchill, Seacliff mostly operates in western Canada....
RuggedCom Inc., symbol RCM on Toronto, makes computer networking equipment that is used in harsh environments. The stock pick’s products include ethernet switches, network routers, wireless devices and software. RuggedCom’s products are designed to reliably operate under high levels of electromagnetic interference. They can also cope with wide variations in temperature and humidity, as well as vibration and exposure to dust. They also work while exposed to such things as corrosive gases and water. The stock pick’s revenue jumped 38.0% in the three months ended March 31, 2011, to $26.7 million from $20.6 million a year earlier. Sales to clients in the electric-power market jumped 65%, and now account for 71% of the stock pick’s total sales....