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 EMERGING MARKETS EASTERN EUROPE INDEX FUND $32.44 (New York Exchange symbol ESR; buy or sell through brokers), is an ETF that aims to track the MSCI Emerging Markets Eastern Europe Index. The fund’s geographic breakdown is as follows: Russia, 70.6%; Poland, 18.2%; Hungary, 5.1%; and Czech Republic 4.8%. iShares MSCI Emerging Markets Eastern Europe’s top holdings are Gazprom (Russia: gas utility), 19.5%; Sberbank (Russia: bank), 9.5%; Lukoil (Russia: oil), 8.9%; MMC Norilsk Nickel (Russia: mining), 5.4%; Mobile TeleSystems (Russia: wireless), 3.9%; Rosneft Oil (Russia: oil), 3.5%; Novatek (Russia: natural gas), 3.2%; PKO Bank Polski SA (Poland: bank), 3.0%; Magnit (Russia: retailing), 2.8%; and Surgutneftegas (Russia: oil & gas), 2.8%....
LOBLAW COMPANIES $39.72 (Toronto symbol L; Shares o/s: 278.4 million; Market cap: $11.1 billion; TSINetwork Rating: Above Average; Dividend yield: 2.1%; www.loblaw.ca) is Canada’s largest food retailer. It now has around 1,000 company-owned and franchised stores. George Weston Ltd. owns 62% of Loblaw’s shares. In the three months ended October 9, 2010, Loblaw’s earnings per share rose 11.6%, to $0.77 from $0.69 a year earlier. Restructuring costs lowered its earnings per share by $0.12 in the latest quarter. Overall sales rose 1.3% in the latest quarter, to $9.6 billion from $9.5 billion. The gain was largely due to T&T Supermarket Inc., Canada’s largest Asian food retailer, which Loblaw bought in 2009. Loblaw’s same-store sales fell 0.4%. Lower sales of drugs and general merchandise offset stronger clothing sales. Food sales were flat....
When you practice a “dollar-cost averaging” investing strategy, you invest equal amounts of money (say $300 a month) over a specific period. It’s a little like systematic saving, except you put your money into stocks instead of a bank account. (Dollar-cost averaging is one of many low-risk strategies you’ll learn about in our new free report, Stock Market Investing Strategy: Pat McKeough’s Conservative Investing Guide for Making Money & Cutting Risk. Click here to download yours right away.)
Investing strategy: How dollar-cost averaging can help you profit from long-term market trends
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Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific advice on successful investing, including tax shelters. Each Investor Toolkit update gives you a fundamental piece of investment strategy, and shows you how you can put it into practice right away. Tip of the week: “These 3 powerful strategies will help you make the most of your RRSP tax shelters” Registered Retirement Savings Plans, or RRSPs, are the best-known and most widely used tax shelters in Canada....
When investing in the stock market, as in life, it pays to remember that most things we worry about never happen. It’s in our nature. As humans, we are bred to overreact to, dwell on or even brood over any hint of risk. Today’s common investment-related worries include the possibility of Japanese–style deflation in North America, currency wars, the threat of war on the Korean peninsula and the potential need for more European bailouts.
Why we’re hardwired to overreact to unseen threats
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We’re optimistic about the stock market in 2011. The recent U.S. midterm election results support our view that the Obama administration is likely to tone down its investor-unsettling policies. Moreover, the stock market has stayed reasonably strong, despite reports of new European financial strains. Year-end retail sales seem to be strengthening. All these are good signs. To put yourself in the best position to profit in 2011, it pays to remember these 3 keys to successful investing:
- Invest for the long term: As a general rule, it’s a mistake to try to read too much into short-term market moves, or the failure of a stock to make a new high. There’s a random element in all short-term stock direction. That’s especially so of junior companies. Many times stocks rise on the expectation of good news, then drop when the good news becomes public. This principal gets summed up in the old-time investor saying about how to trade stocks, “Buy on mystery, sell on history.”
- Resist the urge to invest based on popular themes or fads: When you indulge in theme investing, you allow a theme or concept to take a central place when deciding what to add to your stock portfolio. Today’s popular investment themes include alternative energy, such as solar wind and geothermal, and “cloud computing” (companies that provide software and data storage that you communicate with via the Internet)....
Our top stock picks seem to attract way more than an average number of takeover bids. We think this is because we zero in on a company’s earnings potential, rather than basing decisions on predictions for next year’s earnings. Corporate buyers and big investors usually see things the same way. Many investors tell us that until they began following our advice, they never had the pleasure of watching a stock they own jump 25% in a few days, due to takeover news. Though we’re used to takeovers, we’ve seen more of our top stock picks attract takeover bids in the past few weeks than at any other time in our history. Here’s a recap:...
Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific advice on successful investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Tip of the week: “2 risks of following a sector rotation investment strategy” Some investors follow a “sector rotation” approach to investing. That’s when you try to hop from sector to sector, underweighting or overweighting your holdings in certain sectors of the stock market depending on a forecast of the stage of the economic cycle, or other factors....
The year-end tax-loss selling season can create great stock-market bargains, because it puts temporary downward pressure on stocks that have been weak during the year. But the best of the bunch can put on spectacular recoveries after the season ends on December 24. In our new special report, “Tax-Loss Selling: 7 Christmas Stocks That Could Give You Huge Gains in the New Year,” you learn about 7 companies that have the potential to skyrocket in early 2011. Click here to download your free copy of this new report right away. One of these firms is Aastra Technologies (symbol AAH on Toronto). The company’s shares are down 37.9% from their 2010 high of $36.99....
ConAgra Foods Inc. (New York symbol CAG) makes a wide variety of packaged foods, including Chef Boyardee canned pasta, Hunt’s tomato sauce, Peter Pan peanut butter and Orville Redenbacher popcorn. The company gets 67% of its revenue by selling its products to consumers. It gets the remaining 33% by selling foods to businesses. In its 2011 second quarter, which ended November 28, 2010, ConAgra’s sales rose 2.0%, to $3.2 billion from $3.1 billion a year earlier. Sales rose 1.0% at the consumer foods division, to $2.1 billion from $2.07 billion. The commercial foods division’s sales rose 3.0%, to $1.1 billion from $1.0 billion. The company sold more of its Lamb Weston specialty potato products. As well, ConAgra’s flour-milling operations raised their prices to offset higher wheat costs....