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.
[text_ad use_category="18"]
Read More
Close
EPCOR POWER, L.P. $15.04 (Toronto symbol EP.UN; Shares outstanding: 53.9 million; Market cap: $810.7 million; SI Rating: Extra Risk) has interests in 25 power plants in Canada and the U.S. These generate a total of 1,400 megawatts. In the three months ended June 30, 2009, EPCOR’s revenue rose 14.8%, to $165.2 million from $143.9 million. Cash flow per unit rose 29.1%, to $0.71 from $0.55. The trust’s plants generated and sold more power, including output from the Morris cogeneration facility in Illinois, which EPCOR bought late last year for $72.2 million U.S. Despite the improved results, EPCOR was still paying out almost all of its cash flow to unitholders, so it cut its quarterly distribution by 30.2%, to $0.44 a unit from $0.63, with the June 2009 payment. At this rate, it will pay out roughly 75% of its cash flow. EPCOR believes it can sustain this rate regardless of whether it remains a trust or converts to a corporation in 2011, when Ottawa’s new income-trust tax takes effect. EPCOR now yields 11.2%....
Economic statistics are big news these days, but they have a weak link at best with the value of your investment portfolio. A surprisingly good economic statistic can make the stock market jump. But a bad surprise can come along and reverse that move the next day. In retrospect, it’s clear that economic turning points do have an impact on the market. But nobody can consistently predict these points. That’s also true of key economic factors like interest rates, oil and gold prices....
With mortgage rates at historic lows, many investors, including some members of our Inner Circle service, are becoming more interested in Canadian real estate investing. A house is the biggest investment and consumer purchase most of us ever make. The house itself is the consumer purchase; the land underneath is the investment. Your house depreciates as surely as your car, but more slowly. Eventually, a house reaches the end of its economic life. But the land it sits on is as functional as ever.
It pays to be skeptical of bargains in Canadian real estate investing
...
We hope you have been enjoying and profiting from our daily updates on TSI Network.
Aside from the daily updates, TSI Network offers a number of other stock market education benefits, including almost 4,000 articles on individual investments and how you can use our time-tested investing philosophy to maximize your investments.
TSI Network’s glossary section is one of our key stock market education features. It contains hundreds of definitions that you can use to build your investment knowledge. These not only include a wide range of investment terms, but also the names, stock symbols and descriptions of individual companies, some of which you may be considering buying (or selling).
...
Aside from the daily updates, TSI Network offers a number of other stock market education benefits, including almost 4,000 articles on individual investments and how you can use our time-tested investing philosophy to maximize your investments.
TSI Network’s glossary section is one of our key stock market education features. It contains hundreds of definitions that you can use to build your investment knowledge. These not only include a wide range of investment terms, but also the names, stock symbols and descriptions of individual companies, some of which you may be considering buying (or selling).
A powerful stock market education tool
But that’s just the beginning. Our glossary also lets you build your stock market education by instantly cross-referencing these definitions with our latest daily updates related to the term you’ve searched....
TFSAs let you earn investment income — including interest, dividends and capital gains — tax free. You could only invest $5,000 this year to start your TFSA. However, you gain an additional $5,000 of contribution room (indexed to inflation and rounded to the nearest $500 on a yearly basis) every year, plus you get to carry forward unused contribution room from previous years. (So in 2010 you’ll have $10,000 of contribution room, $15,000 in 2011, and so on.)
Use your tax free savings account to complement your RRSP
...
When you join my Inner Circle service, you get to ask me your own personal investment questions, plus you get to see what other Inner Circle members have asked. So you can see how the service works, and get a sense of how it might help you make good investments, I’d like to share just a couple of recent member questions with you. I hope you enjoy and profit from them. Q: A friend of mine recently purchased a “Trading Robot” to help him make good investments. He is ecstatic because the robot can trade 24 hours a day with inputted instructions respecting trading. He is required to place his investment funds with a brokerage in Dubai, although he says he will set up a segregated account in the U.K. What is your opinion/experience with “Trading Robots”? Many thanks. A: Foreign exchange (“forex”) trading robots automatically place trades on your behalf using a complex formula....
An investor recently asked us a question that touches on several stock market investing concepts that we cover in our Canadian Wealth Advisor newsletter. He said, “Due to a corporate reorganization, I now have the option of cashing in $279,000 from insurance-company mutual funds, then transferring the money into my brokerage RRSP account. I prefer to invest the money directly in stocks you recommend, rather than hold mutual funds from my insurance company. However, the insurance company tells me that I have to cash in the funds first, then wait at least six weeks for the money to turn up in my brokerage RRSP account. I’m concerned that the market will turn up while the money is in transit and I’ll wind up missing out. What should I do?”...
We recently read the Yahoo news story of Ddalgi (Korean for “Strawberry”), a five-year-old parrot from Papua, New Guinea, who competed with 10 human investors in a stock-picking contest in South Korea. Strawberry’s stock market picks reportedly posted a 13.7% return. While not good enough for first, the result put her in a respectable third place. Her human competitors, on the other hand, posted an average loss of 4.6%. (The story reminded me of a Globe and Mail stock-picking contest in which I was pitted against eight other human competitors and a plastic Santa. More on that in a moment...) Stories like these are not uncommon, and are not limited to stock-picking contests. You may have heard of Maggie the Monkey, who makes yearly hockey playoff picks that routinely beat those of human analysts....
Opening a brokerage account is often one of the first steps beginning investors take when they start investing in the stock market. You’ll first have to choose whether a full-service or discount broker is right for you. (This is one of the questions we help you answer in our new special report, “Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada.”) If you choose to use a full-service broker for investing in the stock market, you’ll have to fill out an application form to set up your account. When you do, we think you should pay special attention to two sections: “risk level” and “investment objectives.” (You don’t need to fill these out with a discount broker, but the answers are well worth thinking about nonetheless.)...
There’s no doubt that p/e (price-to-earnings) ratios are a major part of many investors’ stock research. They are published regularly on the Internet and in newspapers, and are widely followed. The p/e is the ratio of a stock’s market price to its per-share earnings. Generally, the rule is that the lower the p/e, the better, and a p/e of less than, say 10, represents excellent value. A low p/e implies more profit for every dollar you invest. Typically, when you do stock research, you calculate p/e’s using a stock’s current price and its earnings for the previous 12 months.