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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Use our ratings to quickly spot the best U.S. stock market picks
We continue to recommend that Canadian investors hold 25% to 30% of their portfolios in well-established U.S. companies, like the stock market picks we recommend in Wall Street Stock Forecaster. To help you quickly and easily determine whether a U.S. stock is appropriate for your portfolio balance and risk tolerance, we display one of our six Successful Investor ratings next to every stock we cover in Wall Street Stock Forecaster....
ISHARES CDN BOND INDEX FUND $29.67 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through a broker) mirrors the performance of the DEX Universe Bond Index. This index consists of a wide range of investment-grade Canadian government and corporate bonds with terms to maturity of more than one year. The 301 bonds in the portfolio have an average term to maturity of 8.62 years. The fund’s MER is 0.30%. The bonds in the index are 85.1% government and 14.9% corporate. The fund sticks with high-quality government bonds from issuers such as Canada Housing Trust, Government of Canada and Province of Ontario, plus high-quality corporate bonds from issuers such as Bank of Montreal, TransCanada Pipelines, Bank of Nova Scotia and Bell Canada....
ISHARES CDN SHORT BOND INDEX FUND $29.35 (CWA Rating: Income) (Toronto symbol XSB; buy or sell through a broker) mirrors the performance of the DEX Short-Term Bond Index. This index consists of a wide range of investment-grade federal, provincial, municipal and corporate bonds with between one- and five-year terms to maturity. The fund currently holds 183 bonds with an average term to maturity of 3.01 years. Top issuers include the Government of Canada, Canada Housing Trust and the Province of Ontario. The bonds in the index are 89.7% government and 10.3% corporate. The fund’s MER is 0.25%....
PRIMARIS RETAIL REAL ESTATE INVESTMENT TRUST $17.47 (Toronto symbol PMZ.UN; Units outstanding: 62.5 million; Market cap: $1.1 billion; SI Rating: Extra Risk; Dividend yield: 7.0%) owns large malls in medium-sized Canadian cities. It also owns major shopping centres in suburbs of large cities. In all, the trust owns 26 properties that contain 9.3 million square feet of leasable area. Primaris has a 96% occupancy rate. Major tenants include Hudson’s Bay, Sears, Shoppers Drug Mart, Loblaw, Reitmans, Canadian Tire and Best Buy. In the three months ended September 30, 2009, Primaris’ revenue fell 0.7%, to $66.1 million from $66.5 million a year earlier. The trust earned less interest on its investments. That offset higher rental revenue. Cash flow per unit fell 14.3%, to $0.30 from $0.35, mainly because of one-time managment and office-restructuring costs. Primaris’ annual distribution of $1.22 gives the units a 7.0% yield....
ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $19.55 (Toronto symbol AP.UN; Units outstanding: 39.0 million; Market cap: $763.3 million; SI Rating: Extra Risk; Dividend yield: 6.8%) owns office buildings in Toronto, Montreal, Quebec City and Winnipeg. These mainly Class I properties contain over 5.8 million square feet of leasable area. Allied has a 96.2% occupancy rate. Class I refers to 19th and early 20th-century light industrial buildings that have been restored and converted to office and retail space. These properties usually feature high ceilings, natural light, exposed beams, interior brick and hardwood floors. Allied has 54 mainly Class I properties in Toronto (these contain 53.7% of the trust’s leasable area). It also has eight Class I buildings in Montreal (34.9%), seven in Winnipeg (6.7%) and six in Quebec City (3.2%)....
VANGUARD GROWTH ETF $51.35 (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 0.15%. The $15.7-billion fund’s top holdings are Microsoft, IBM, Apple Inc., Cisco Systems, Wal-Mart Stores, Google Inc., Hewlett-Packard, Oracle Corp., Philip Morris International and PepsiCo. Vanguard Growth ETF is broken down by economic segment as follows: Information Technologies (36.1%), Health Care (13.8%), Consumer Staples (11.3%), Consumer Discretionary (11.8%), Industrials (8.0%), Energy (7.5%), Financials (5.9%), Materials (4.5%), Telecommunication Services (0.8%) and Utilities (0.3%)....
VANGUARD EMERGING MARKETS ETF $38.72 (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), Teva Pharmaceutical Industries, America Movil SA de CV (Latin America: wireless), Petroleo Brasileiro SA (Brazil: oil and gas), China Construction Bank, Vale SA (Brazil: mining) and Industrial and Commercial Bank of China. The $32.7-billion Vanguard Emerging Markets ETF’s largest holdings by country are: China (17.8%), Brazil (17.0%), South Korea (12.8%), Taiwan (11.3%), India (7.6%), South Africa (6.9%), Russia (6.5%), Mexico (4.4%), Israel (2.8%), Malaysia (2.7%), Indonesia (1.9%), Turkey (1.5%), Chile (1.5%), Thailand (1.4%), Poland (1.3%), Hungary (0.6%), Philippines (0.5%), Peru (0.5%), Czech Republic (0.4%), Colombia (0.3%) and Egypt (0.2%)....
SPDR S&P CHINA ETF $67.30 (New York Exchange symbol GXC; buy or sell through brokers), is an ETF that aims to track the S&P China BMI Index. This index is made up of all of the publicly traded Chinese stocks that are available to foreign investors. Right now, this ETF holds 136 stocks. The $548.9-million fund’s top holdings are: China Mobile, 9.1%; China Life Insurance, 6.2%; Industrial & Commercial Bank of China, 5.6%; China Construction Bank, 4.8%; PetroChina, 4.5%; CNOOC Ltd., 4.0%; Tencent Holdings, 2.7%; China Petroleum & Chemical, 2.6%; Bank of China, 2.5%; and China Shenhua Energy, 2.4%. The fund’s top industry holdings are: Financials (30.9%), Oil and Gas (16.5%), Telecommunications (11.6%), Industrials (11.4%), Information Technology (10.5%), Consumer Discretionary (7.0%), Basic Materials (5.1%) and Consumer Staples (4.4%)....
ISHARES FTSE/XINHUA CHINA 25 INDEX FUND $38.90 (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 $8.2-billion fund’s top holdings are China Mobile, 10.1%; China Construction Bank, 9.6%; Industrial & Commercial Bank of China, 8.5%; China Life Insurance, 7.1%; Bank of China, 6.2%; China Merchants Bank, 4.1%; China Petroleum & Chemical, 4.0%; PetroChina, 4.0%; Ping An Insurance Group, 4.0%; and CNOOC Ltd., 3.9%. The fund’s holdings give it the following industry breakdown: Financials (46.8%), Telecommunications (17.8%), Oil and Gas (11.8%), Basic Materials (11.6%), Industrials (8.7%), Utilities (1.8%) and Consumer Services (1.6%)....
Online stock investing can look like a great way to build wealth, but it has many hidden dangers. Trading too frequently: The main risk is that the lower costs and higher speeds of online stock investing can quickly lead otherwise conservative investors to trade too frequently. That can lead you to sell your best picks when they are just getting started. Trading stocks online may even prompt conservative investors to take up short-term trading or day trading. That’s just another danger of trading stocks online, because there’s a large random element in short-term stock-price fluctuations that you just can’t get away from....