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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BANK OF NOVA SCOTIA $47.64 (Toronto symbol BNS: Shares outstanding: 992 million; Market cap: $47.3 billion; SI Rating: Above Average) is the third-largest of Canada’s five big banks, with assets of $513.6 billion. In the three months ended April 30, 2009, Bank of Nova Scotia’s revenue rose 13.4%, to $3.6 billion from $3.2 billion. However, earnings per share fell 16.5%, to $0.81 from $0.97. That’s because the bank raised its loan-loss provisions by 219.6%. Bank of Nova Scotia has the largest international operations of the big-five banks, with a third of its earnings coming from overseas. It prefers to focus on developing countries in Latin America and Asia, where it can quickly increase its earnings and market share....
TEMPLETON EMERGING MARKETS FUND $17.44 (New York symbol EMF; CWA Fund Rating: Speculative) is a closed-end fund that invests in equities from emerging economies. Franklin Templeton manages the fund. Templeton Emerging Market Fund’s holdings are spread around the world. Despite its volatility, the fund gives investors access to countries like Brazil, China, India and others that still have strong growth prospects. The $254.2-million fund’s largest holdings by country are: Brazil (16.6%), China (15.4%), Russia, (14%), Mexico (8.3%), South Africa (8.1%), India (7.3%) and South Korea (7.1%)....
NEW GERMANY FUND $9.91 (New York symbol GF; CWA Fund Rating: Speculative) is a closed-end fund that mostly invests in small- and mid-cap German equities. The fund’s manager is Deutsche Asset Management. The $210-million fund’s holdings operate in Germany (91%) and the Netherlands (9%). The New Germany Fund’s top holdings are European Aeronautical Defense (Netherlands: aerospace and defense), 5.9%; Bilfinger Berger (construction and engineering), 4.6%; United Internet (Internet service provider), 4.4%; Rheinmetall AG (an industrial conglomerate), 4.4%; GEA Group (chemicals), 4.3%; Software AG, 4.2%; Wacker Chemicals, 4.0%; MTU Aero Engines, 3.6%; Lanxess (specialty chemicals), 3.4%; and Hochtief AG (construction), 3.3%....
KOREA FUND $31.74 (New York symbol KF; CWA Fund Rating: Speculative) is a closed-end fund that invests at least 80% of its assets in Korean equities. Currently, it is entirely invested in South Korean stocks. RCM Asia Pacific manages the fund. Korea Fund’s top holdings are Samsung Electronics at 14.1%; Posco (steel), 5.7%; LG Electronics, 5.1%; LG Corp. (conglomerate), 4.8%; Hyundai Engineering & Construction, 3.5%; Daewoo International (conglomerate), 3.2%; Shinhan Financial, 3.2%; LG Display Company (LCD screens), 3.1%; KB Financial Group, 3.1%; and NCsoft (online computer games), 3.0%. The stocks in the Korea Fund’s $307.2-million portfolio are in the following industries: information technology (24%), industrials (24%), financial services (14%), consumer discretionary (14%), materials (8%), consumer staples (6%), telecommunications services (4%), health care (1%), and energy (1%)....
CENTRAL EUROPE AND RUSSIA FUND $27.69 (New York symbol CEE; CWA Fund Rating: Speculative) is a closed-end fund that mostly invests in larger cap stocks from Russia and central Europe. The fund’s manager is Deutsche Asset Management. The $394-million fund’s holdings are invested in Russia (55%), Poland (13%), Turkey (13%), Czech Republic (11%), Hungary (4%), Austria (3%) and Kazakhstan (1%). The fund’s top holdings are Gazprom (a Russian gas utility) at 10.2%; Lukoil (Russia: oil and gas), 8.5%; Rosneft Oil (Russia: oil and gas), 6.7%; Sberbank (Russia: bank), 6.2%; CEZ (Poland: utility), 5.4%; Mobile TeleSystems (Russia: wireless), 3.9%; MMC Norilsk Nickel (Russia: mining), 3.8%; Surgutneftagaz (Russia: oil and gas), 3.7%; Telefonica O2 (Czech Republic: telecom), 3.5%; and Telekomunikacja Polska (Poland: telecom), 3.2%....
AIC DIVERSIFIED CANADA FUND $34.89 (CWA Rating: Conservative) mainly holds shares of Canadian companies of average or above-average quality. It also holds some U.S. stocks. The $1.0-billion fund’s 10 largest holdings are TD Bank, Shoppers Drug Mart, Power Financial, Canadian Oil Sands Trust, First Capital Realty, Thomson Reuters Corporation, Brookfield Asset Management, Royal Bank of Canada, C.I. Financial Corp. and EnCana Corporation. AIC Diversified Canada holds just 21 stocks. The fund holds 43.9% of its assets in financial-services stocks. The rest of the portfolio breaks down as follows: energy, 15.2%; consumer staples, 10.6%; consumer discretionary, 8.0%; health care, 7.4%; and information technology, 3.6%....
AIC AMERICAN ADVANTAGE FUND $4.04 (CWA Rating: Aggressive) (AIC Group of Funds, 1375 Kerns Road, Burlington, Ont., L7R 4X8, 1-800-263-2144; Web site: www.aicfunds.com. Buy or sell through brokers) invests mostly in U.S. stocks. It holds 99% of its assets in the financial-services area. The fund’s financial holdings break down as follows: wealth management, 26.8%; life and health insurance, 20.9%; investment banking and brokerage, 11.9%; property and casualty insurance, 11.7%; diversified financial services, 7.3%; diversified banks, 7.1%; multi-line insurance, 6.3%; and consumer finance, 4.8%. The $30-million AIC American Advantage Fund’s top 10 holdings are JP Morgan Chase, Wells Fargo, AFLAC, Hartford Financial Services, Franklin Resources, Goldman Sachs, Bank of New York Mellon Corp., MetLife, Prudential Financial and Morgan Stanley. This fund holds just 17 stocks....
A few weeks ago, we asked TSI Network visitors whether they trade stocks online. A full 88% answered that they did.
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Why choose Internet stock trading?
Some investors have made the switch from a full-service broker to Internet stock trading through a discount broker because it offers lower commission fees. Others have switched because they examined their results and discovered that their own investment ideas worked better than those of their brokers....
Although stock markets have rebounded lately, they remain sharply lower than their 2008 highs. Likewise, the economy has shown some signs of life, but it remains in recession. In these times of market turbulence, it’s easy for investors to panic and make mistakes. Here are three common ones:
1. Overanalyzing
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Many investors consider investing in alternative investments, like art. It’s an interesting area that we’ve talked about from time to time with my Inner Circle members. Our view is that you can’t really invest in art. An investment is something that may one day produce income — dividends from stocks, interest from bonds, rent from real estate, and so on. Art and similar alternative investments produce no income. In fact, art consumes income: you have to pay to insure and/or store it. It’s also expensive to buy and sell.