Every investor would like to find an easy-to-use market indicator that tells you when to buy and when to sell. Some look to technical analysis as a way of determining this. Technical analysis is the process of analyzing a stock’s past price movements in an attempt to determine its future price. It’s not concerned with financial statements, management or anything else that underlies a company’s business. It only studies how stock prices have behaved in the past, and the clues that could offer about future stock-price movements. In fact, an investor who uses only technical analysis might buy and sell a stock while knowing little or nothing about the underlying company.

One tool among many

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Simply put, a well-constructed stock portfolio will make your life easier and maximize your gains.

Early in their investing careers, many investors have only a vague idea of the value of a planned portfolio when investing in the stock market.

When you try to pick a handful of stocks that will all beat the market, you are asking a lot of yourself. No one, not even people that devote their entire lives to it, has ever been able to consistently pick stock-market winners over long periods.

On the other hand, it’s relatively easy to acquire a balanced, diversified portfolio of mainly high-quality dividend paying stocks, spread out across the five main economic sectors: Resources & Commodities, Finance, Manufacturing & Industry, Utilities and Consumer.

Spreading your holdings out across the five sectors helps you avoid overloading yourself with stocks that are about to slump because of industry conditions or a change in investor fashion. By diversifying across the sectors, you increase your chances of stumbling upon a market superstar – a stock that does two to three or more times better than the market average. These stocks come along every year. By nature, their appearance is unpredictable: if you could routinely spot them ahead of time, you’d quickly acquire a large proportion of all the money in the world, and nobody ever does that.

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GREAT-WEST LIFECO $22.43 (Toronto symbol GWO; Shares outstanding: 944.2 million; Market cap: $21.2 billion; SI Rating: Above Average) is a leading Canadian insurance company, with $332.9 billion in assets under administration. It also sells wealth management and other financial services, and also operates in the U.S. and Europe. Power Financial controls 72.7% of Great-West. Excluding one-time items, Great-West’s earnings fell 34.5% in the three months ended March 31, 2009, to $326 million, or $0.35 a share, from $493 million, or $0.55. Falling stock markets cut sharply into the fees it earns from assets it manages, including Putnam’s mutual funds. Great-West shored up its already strong capital base by issuing $1 billion in common shares and $230 million in preferred shares last December. This will help it deal with any challenges ahead from the recession, and gives it plenty of flexibility to buy companies at bargain prices. Great-West is also actively cross-promoting its products to Putnam’s large client base....

ALTAMIRA SCIENCE & TECHNOLOGY FUND $6.68 (CWA Rating: Aggressive) (Altamira Investment Services, The Exchange Tower, 130 King Street West, Suite 900, Toronto, Ont. M5X 1K9. 1-800-263-2824; Web site: www.altamira.com. No load — deal directly with the company) invests mostly in U.S. companies in the telecommunications, biotechnology, environmental-technology, health-care and computer industries. Altamira Science & Technology’s top holdings include: Apple, Microsoft, Nokia, Hewlett-Packard Co., Oracle Corporation, Nvidia Corp., Micron Technology, Google, Research in Motion, Qualcomm, Baidu, First Solar, Broadcom and Juniper Networks. The $41.7-million fund lost 14.3% (in Canadian dollars) in the year ended April 30, 2009. The Nasdaq index lost 15.8% (also in Canadian funds). The fund’s MER is 2.65%....

ARC ENERGY TRUST $17.53 (Toronto symbol AET.UN; Units outstanding: 234 million; Market cap: $4.1 billion; SI Rating: Speculative) produces oil and gas in western Canada. ARC’s average daily production of 64,325 barrels of oil equivalent (this measurement includes natural gas) is weighted 50% to oil and 50% to natural gas. ARC’s revenue fell 44.8% in the three months ended March 31, 2009, to $225.2 million from $407.9 million. Cash flow per unit fell 44.9%, to $0.54 from $0.98. Lower oil and natural-gas prices were the main reason for the declines. The trust’s debt remains low, at 17% of its market cap. ARC has just lowered its monthly distribution by 16.7%, to $0.10 from $0.12. The units now yield 6.9%. ARC flowed only 70% of its cash flow through to its unitholders as distributions in the latest quarter. The units trade at 8.2 times ARC’s estimated 2009 cash flow of $2.15 per unit....

PENGROWTH ENERGY TRUST $9.33 (Toronto symbol PGF.UN; Units outstanding: 257.8 million; Market cap: $2.4 billion; SI Rating: Average) produces oil and gas in western Canada and off the Nova Scotia coast. Its average daily production of 80,284 barrels of oil equivalent is weighted 51% to oil and 49% to natural gas. Pengrowth’s revenue fell 29.4% in the three months ended March 31, 2009, to $323 million from $457.6 million. Cash flow per unit fell 57.5%, to $0.37 from $0.87. Low oil and gas prices also prompted Pengrowth to cut production. Pengrowth’s $1.7-billion long-term debt is a somewhat high 71% of its market cap. But it’s just over three years’ cash flow. The trust distributed 82% of its cash flow as distributions in the latest quarter, but it should average about 62% this year. The units trade at 4.2 times Pengrowth’s estimated 2009 cash flow of $2.20 per unit. The trust yields 12.9%....

PENN WEST ENERGY TRUST $14.88 (Toronto symbol PWT.UN; Units outstanding: 414.2 million; Market cap: $6.2 billion; SI Rating: Speculative) is the largest oil and gas trust in North America. In the first three months of 2009, lower oil and gas prices pushed down Penn West’s revenue by 47.7%, to $625 million from $1.2 billion. Cash flow per unit fell 50.6%, to $0.87 from $1.76. The trust’s $4.1-billion long-term debt is 66% of its market cap, but just 3.1 times its annual cash flow. Penn West has average daily production of 180,096 barrels of oil equivalent (weighted 41% to natural gas and 59% to oil). The units yield 11.8%. Penn West pays out around 60% of its cash flow as distributions. It trades at 4.1 times its estimated 2009 cash flow of $3.60 per unit....

ISHARES CANADIAN SHORT BOND INDEX FUND $29.34 (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 iShares Canadian Short Bond Index Fund currently holds 152 bonds with an average term to maturity of 2.9 years. Top issuers include the Government of Canada, Canada Housing Trust, Bank of Nova Scotia, the Province of Ontario and the Province of Quebec. The bonds in the index are 68.4% government and 31.6% corporate....

ISHARES CANADIAN BOND INDEX FUND $29.23 (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 221 bonds in the fund’s portfolio have an average term to maturity of 8.7 years. The bonds in the index are 71.2% government and 28.8% 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, Great-West Lifeco and Bell Canada....

JAPAN EQUITY FUND $4.79 (New York symbol JEQ; CWA Rating: Aggressive) mostly invests in large-capitalization stocks on the Tokyo Stock Exchange. The fund’s top holdings include: Toyota Motor, Mitsubishi UFJ Financial Group, Honda Motor, Sony Corp., Sumitomo Corp....