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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CANADIAN REIT $28.80 (Toronto symbol REF.UN; Units outstanding: 66.5 million; Market cap: $1.9 billion; SI Rating: Extra Risk; Dividend yield: 4.9%) owns over 158 properties. Its holdings include retail, industrial and office buildings located across Canada, and in the Chicago area. Canadian REIT’s occupancy rate is 95.6%. In the three months ended March 31, 2010, Canadian REIT’s revenue was $85.2 million. That’s up 1.5% from $83.9 million a year earlier. Cash flow per unit rose 1.8%, to $0.56 from $0.55. The trust raised its monthly distribution by 2.2%, to $0.1175 from $0.1150, with the June payment. This is the ninth consecutive year that the REIT has raised its distribution. The units now yield 4.9%....
RIOCAN REAL ESTATE INVESTMENT TRUST $19.32 (Toronto symbol REI.UN; Units outstanding: 242.9 million; Market cap: $4.7 billion; SI Rating: Average; Dividend yield: 7.1%) is Canada’s largest REIT. RioCan has interests in 265 shopping malls across Canada, including 12 under development. In all, these properties contain over 60 million square feet of leasable area. The trust has a 97.0% occupancy rate. In the three months ended March 31, 2010, RioCan’s revenue was $214.6 million. That’s up 12.3% from $191.1 million a year earlier. Cash flow per unit rose 12.5%, to $0.36 from $0.32. The trust paid higher interest costs during the quarter, but contributions from newly acquired shopping centres and gains on property sales helped offset these expenses. The trust’s units yield 7.1%. In 2009, RioCan formed a joint venture withCedar Shopping Centers, Inc. (New York symbol CDR). Cedar owns shopping centres in the northeastern and mid-Atlantic regions of the U.S. RioCan owns 80% of this joint venture. As part of the original deal, it received common shares and warrants in Cedar. RioCan recently exercised these warrants. That gave it a 14% stake in Cedar....
One key aspect of a marketer’s job is to describe the features of whatever he or she is selling as a benefit to the potential buyer. Understanding this process can help you get past the marketing and get better value when you make consumer purchases. It can be an even bigger help in keeping you out of bad financial investments. Recently a member of Pat McKeough’s Inner Circle asked about a little-known income investment he had heard about that yields 9%. That’s a super yield at a time of low interest rates like today. But a high yield is always a sign that you need to look for hidden risks in financial investments. We looked and there they were, dressed up as investor benefits.
This real estate investment trust’s small town focus is a risk, not a benefit
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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 fundamental stock market investing tips. Each Investor Toolkit update gives you a specific tip and shows you how you can put it into practice right away. Today’s tip: “The value of a company as an investment depends on its business, not on the stock price or number of shares outstanding.” When a company splits its shares, it is simply cutting itself up into a different number of pieces, without changing its fundamental value. It simply wants its stock to trade in a price-per-share range that seems reasonable to investors....
We’ve long recommended these 4 stock market research tips in our newsletters and investment services. They can help you cut risk — and increase profits — in your stock portfolio. (Our special report, “Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada,” is full of safe investing strategies that you can easily put into practice right away. Click here to download your copy today.) 1. Look beyond financial indicators: When they first set out to formulate an investment strategy, many investors decide to focus their stock market research on a handful of measures. For instance, they may want to see a p/e ratio (the ratio of a stock’s price to its per-share earnings) below 15.0, say, along with an earnings growth rate of 20% or more a year, and perhaps a 2% dividend yield....
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 stock trading tips 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: “By the time you hear bad news, its immediate impact may be over.” If you hear bad news about a stock in which you invest, it’s easy to react impulsively and sell. But all investments come under a bad news cloud from time to time. If you always sell on bad news, you’ll pay lots of brokerage commissions, but you’ll never make money for yourself....
The Canada Revenue Agency recently advised more than 70,000 Canadians that they must pay penalties for over-contributing to their tax free savings accounts in 2009. You can make tax-free withdrawals from your TFSA at any time. You can put the money back in, as well, but the main limitation here is that you have to wait until the next calendar year to do so. That’s where many of these 70,000 investors ran afoul of the TFSA rules.
Penalties stem from confusion about rules surrounding tax free savings accounts
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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 the fundamentals of successful investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can use it to increase your chances of making winning stock picks. Today’s tip: “Corporate earnings statements can help you find winning stock picks if you read between the lines.” A company’s earnings are different from an employee’s salary. Earnings are indefinite and subject to revision, even years later. Companies have to estimate many costs, and make yearly write-offs against earnings, according to arbitrary rules....
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 and how to make better stock market picks. Each Investor Toolkit update gives you a new fundamental tip and shows you how you can put it into practice right away. Today’s tip: “Stay alert for subtle risk factors, because they may appear long before disaster strikes.” Most investors are aware of standard investment risk factors, such as disappearing profits, cuts in dividends, police investigations, etc. But it pays to be aware of more subtle signs of coming problems:...
The federal government’s new tax on income trust distributions comes into effect just under seven months from now, on January 1, 2011. This new tax will put trusts on an equal tax footing with regular corporations. Many trusts have already converted to corporations in response, or plan to do so later in 2010 or in 2011. Others will continue to operate as trusts, although they may have to cut distributions to pay the new tax.