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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VANGUARD GROWTH ETF $55.16 (New York symbol VUG; buy or sell through brokers) aims to track the MSCI U.S. Prime Market Growth Index, a broadly diversified index that mainly consists of stocks of large U.S. companies. The fund has an MER of just 0.14%. The $15.2-billion fund’s top holdings are Microsoft, IBM, Apple Inc., Cisco Systems, Wal-Mart Stores, Google Inc., Exxon Mobil, Oracle Corp., Philip Morris International and PepsiCo. Vanguard Growth ETF is broken down by economic segment as follows: Information Technologies (32.9%), Consumer Discretionary (14.3%), Consumer Staples (12.9%), Health Care (10.6%), Industrials (10.3%), Energy (8.1%), Financials (5.1%), Materials (4.6%), Telecommunication Services (0.9%) and Utilities (0.3%)....
VANGUARD EMERGING MARKETS ETF $45.24 (New York symbol VWO; buy or sell through brokers) aims to track the MSCI Emerging Markets Index, which is made up of common stocks of companies located in emerging markets around the world. The fund has an MER of 0.27%. The fund’s top holdings are China Mobile (China: wireless), Gazprom (Russia: gas utility), Samsung Electronics (South Korea: electronics), Industrial & Commercial Bank of China, America Movil SAB de CV (Latin America: wireless), Petroleo Brasileiro SA (Brazil: oil and gas), China Construction Bank, Vale SA (Brazil: mining), Itau Unibanco Holding SA (Brazil: banking) and Hon Hai Precision Industry (Taiwan: electronics). The $45-billion Vanguard Emerging Markets ETF’s breakdown by country is as follows: China (18.7%), Brazil (16.0%), South Korea (13.4%), Taiwan (10.6%), India (8.0%), South Africa (7.4%), Russia (6.4%), Mexico (4.3%), Malaysia (3.1%), Indonesia (2.4%), Chile (1.8%), Turkey (1.8%), Thailand (1.7%), Poland (1.5%), Peru (0.7%), Colombia (0.6%), Philippines (0.5%), Czech Republic (0.4%), Hungary (0.4%) and Egypt (0.3%)....
BANK OF NOVA SCOTIA $54.80 (Toronto symbol BNS: Shares outstanding: 1.0 billion; Market cap: $56.9 billion; SI Rating: Above Average; Dividend yield: 3.6%) is the third largest of Canada’s five big banks, with assets of $523.4 billion. In the three months ended July 31, 2010, Bank of Nova Scotia earned $1.1 billion. That’s up 14.1% from $931 million a year earlier. Earnings per share rose 12.6%, to $0.98 from $0.87, on more shares outstanding. The bank set aside less money to cover bad loans because of the improving economy. In the latest quarter, loan-loss provisions fell 50.2%, to $276 million from $554 million a year earlier....
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. Today’s tip: “Treat Canadian stock options like lottery tickets, because the odds are almost as bad.” Canadian stock options come in two varieties. Calls give you a right, but not the obligation, to buy a stock at a fixed price, for a fixed period. Puts give you the right, but not the obligation, to sell....
We get a wide variety of interesting questions from members of Pat McKeough’s Inner Circle. Most often, members ask us about specific investments, such as stocks, income trusts or exchange-traded funds, that they’re considering investing money in. However, they send us other types of financial questions, as well. To give you a sense of how the service works, I’d like to share a recent question from an Inner Circle member on investing money in time-shares. I hope you enjoy and profit from it. Q: Pat: What is your take on time-shares? They seem like a deal for a cheaper vacation. Thanks....
When we’re looking for the best investments to recommend in our newsletters and investment services, including our flagship publication, The Successful Investor, we start by putting all the important information we know about a company into perspective. That new invention may be a marvel, but how does it compare to what the competition is doing? The new project sounds impressive, but how much impact will it really have on the company’s profit? The debt sounds high — will the company be able to keep up its agreed-upon interest and principal repayments? Investors intuitively understand this, but they often find it hard to apply when they are looking for the best investments to add to their portfolios. Financial ratios are one way to spot the best investments, but the answers you get can be ambiguous, if not misleading....
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 the fundamentals of successful investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: “Stock market software is a help, but successful investing calls for experienced human judgment.” Many investment firms manage money with the help of something called a “black box.” This is stock market software that picks stocks or makes other investment decisions, based on historical data. Individuals sometimes buy these programs over the Internet or from direct-mail advertising....
ISHARES FTSE/XINHUA CHINA 25 INDEX FUND $40.30 (New York Exchange symbol FXI; buy or sell through brokers) is an ETF that aims to track the FTSE/Xinhua China 25 Index, which is made up of the 25 largest and most liquid Chinese stocks. All of the stocks in the index trade on the Hong Kong exchange. Some also trade as American Depositary Receipts (ADRs) on the New York exchange. The fund’s top holdings are China Mobile, 10.1%; China Construction Bank, 9.1%; Industrial & Commercial Bank, 7.9%; China Life, 6.3%; Bank of China, 5.8%; Ping An Insurance, 4.6%; China Unicom Hong Kong, 4.3%; CNOOC, 4.3%; China Telecom, 4.2%; and China Merchants Bank, 4.1%. The fund’s holdings give it the following industry breakdown: Financials, 47.1%; Telecommunications, 18.6%; Oil and Gas, 12.3%; Basic Materials, 11.0%; Industrials, 8.0%; Consumer Services, 2.1%; and Utilities, 0.8%. The ETF has an expense ratio of 0.73%. The dividend yield is 2.3%....
ISHARES MSCI EMERGING MARKETS EASTERN EUROPE INDEX FUND $26.34 (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, 73.7%; Poland, 14.2%; Czech Republic 5.7%; and Hungary, 4.9%. iShares MSCI Emerging Markets Eastern Europe Index Fund’s top holdings are Gazprom (Russia: gas utility), 19.9%; Lukoil (Russia: oil), 9.8%; Sberbank (Russia: bank), 8.8%; MMC Norilsk Nickel (Russia: mining), 4.7%; Mobile TeleSystems (Russia: wireless), 4.4%; Rosneft Oil (Russia: oil), 3.7%; Surgutneftegas (Russia: oil and gas), 3.2%; CEZ AS (Poland: utility), 2.9%; PKO Bank Polski SA (Poland: bank), 3.0%; and Tatnef (Russia: oil), 2.9%....
ISHARES MSCI BRAZIL INDEX FUND $70.55 (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), 9.4%; Cia Vale do Rio Doce (mining) preferred shares, 9.3%; Itau Unibanco Multiplo SA (banking), 9.0%; Petrobras common shares, 7.9%; Cia Vale do Rio Doce common shares, 6.8%; Banco Bradesco preferred shares (banking), 5.2%; Itausa-Investimentos Itau (conglomerate), 3.4%; Cia de Bebidas das Americas preferred shares (beer and other beverages), 3.1%; BM&F Bovespa SA (Brazilian stock exchange), 2.7%; and OGX Petroleo e Gas Patricipa (energy), 2.6%. The ETF’s industry breakdown is as follows: Materials, 26.2%; Financials, 25.1%; Energy, 20.6%; Consumer Staples, 8.8%; Utilities, 5.6%; Consumer Discretionary, 5.3%; Industrials, 3.3%; Telecommunication Services, 2.8%; and Information Technology, 2.0%. The fund has an expense ratio of 0.65%....