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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BMO EQUITY FUND $20.70 (BMO Mutual Funds, 77 King Street West, Suite 4200, Royal Trust Tower, Toronto, Ontario, M5K 1J5, 1-800-665-7700; Web site: www.bmo.com. No load — deal directly with the bank) (CWA Rating: Conservative) mostly invests in blue chip Canadian companies. The fund’s managers aim to identify stocks based on their analysis of the outlook for the industry the firms operate in, as well as their earnings records, management strength and growth potential. The $1.4-billion BMO Equity Fund’s 10 largest holdings are Bank of Nova Scotia, Royal Bank of Canada, Toronto-Dominion Bank, Canadian Natural Resources, Suncor Energy, EnCana Corporation, Barrick Gold, Manulife Financial, CIBC and Goldcorp. The fund currently holds 35.9% of its portfolio in the resource sector. Its next-largest segment is financial services, at 21.6%....
RBC CANADIAN EQUITY FUND $18.03 (CWA Rating: Conservative) (RBC Funds, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-463-3863; Web site: www.royalbank.com. No load — deal directly with the bank) mainly invests in larger-capitalization stocks, but may also buy small- and mid-cap stocks. The $3.1-billion fund’s largest holdings are Royal Bank, Manulife, EnCana, TD Bank, Potash Corp., Bank of Nova Scotia, Canadian Natural Resources, Suncor Energy, Research in Motion and BCE. The fund is heavily weighted (47.2%) toward the resource sector; 27% of its investments are in finance. Over the last 10 years, RBC Canadian Equity posted a 4.9% annual rate of return. That’s just over the S&P/TSX’s 4.6% gain. The fund lost 38.3% over the last year, compared to a loss of 38.2% for the S&P/TSX. The fund’s MER is 1.96%....
SWISS HELVETIA FUND $8.96 (New York symbol SWZ; Shares outstanding: 33.3 million; Market cap: $297.8 million; CWA Rating: Conservative) invests mainly in large-capitalization Swiss stocks. Hottinger Group, which dates back to 1786, manages the fund. The Swiss government has moved quickly to restore confidence in the country’s banking system. It’s also lowering interest rates to ease credit and devalue the Swiss franc. The Swiss economy is heavily reliant on exports. A rise in world trade would greatly benefit the country’s industries. The $469.1-million Swiss Helvetia Fund’s top holdings are: Nestle SA (food and beverages), 19.9%; Roche Holdings (pharmaceuticals), 12.9%; Novartis AG (health care and pharmaceuticals), 9.3%; Addex Pharmaceuticals, 3.8%; Alpiq Holding (electric power), 3.4%; Acino Holding (pharmaceuticals and chemicals), 3.4%; Basilea Pharmaceutica (biopharmaceuticals), 3.2%; Actelion Limited (pharmaceuticals), 1.9%; and Galencia AG (pharmaceuticals), 1.4%....
CIBC CANADIAN EQUITY FUND $16.61 (CWA Rating: Conservative) (CIBC Securities, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631-7008; Web site: www.cibc.com. No load — deal directly with the bank) looks at fundamentals like earnings, cash flow and debt level to identify companies that it sees as having above-average growth potential. The $317.2-million fund’s top holdings are: TransCanada Corp., EnCana, Research in Motion, Bank of Nova Scotia, CN Railway, Potash Corp., BCE Inc., Canadian Natural Resources and Royal Bank of Canada. CIBC Canadian Equity holds 39.4% of its portfolio in resource stocks and 27.1% in finance stocks....
SCOTIA CANADIAN GROWTH FUND $41.09 (CWA Rating: Conservative) (Scotia Securities, 40 King Street West, 6th Floor, Toronto, Ontario M5H 1H1. 1-800-268-9269; Web site: www.scotiabank.com. No load — deal directly with the bank) attempts to use an investment’s fundamentals to determine whether it has the potential for above-average growth. The $315.8-million Scotia Canadian Growth Fund’s largest stock holdings include EnCana Corp., Royal Bank, TD Bank, BCE Inc., Potash Corp., Canadian Natural Resources, Suncor Energy, Bank of Nova Scotia and Barrick Gold. Scotia Canadian Growth holds 43.3% of its portfolio in the resource sector. Its next-largest segment is financial services, at 24.9%....
TEMPLETON EMERGING MARKETS FUND $7.87 (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. Although volatile, the fund gives investors access to countries like Brazil, China, India and others that still have strong growth prospects. The $187.6-million fund’s regional allocation is heavily weighted toward Asia (63.1%), followed by Latin America, (21.5%) and Europe (15.4%)....
NEW GERMANY FUND $5.90 (New York symbol GF; CWA Fund Rating: Speculative) is a closed-end fund that invests mostly in small and mid-cap German equities. The fund’s manager is Deutsche Asset Management. The $198-million fund’s 52 holdings operate in Germany (91%) and the Netherlands (9%). The New Germany Fund’s top holdings are Fresenius (health care equipment & supplies), 6.8%; European Aeronautical Defense (a Dutch-based aerospace and defense firm), 5.6%; Bilfinger Berger (construction & engineering), 5.2%; SGL Carbon (electrical equipment), 4.2%; Software AG, 3.9%; Qiagen (life sciences), 3.5%; Hannover Rueckversicherung (insurance), 3.5%; GEA Group (chemicals), 3.3%; Rheinmetall AG (an industrial conglomerate), 3.2%; and United Internet (Internet service provider), 3.2%....
KOREA FUND $18.27 (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, all of its assets are in South Korean stocks. RCM Asia Pacific manages the fund. Korea Fund’s top holdings are Samsung Electronics at 9.9%; KT&G Corporation (a cigarette maker), 4.7%; KT Corporation (telecommunications), 4.2%; Samsung Fire & Marine (insurance), 4.1%; LG Electronics, 4.0%; Posco (steel), 3.9%; SK Telecom (wireless telecom), 3.9%; Yuhan Corp. (pharmaceuticals), 3.8%; Hyundai Engineering & Construction, 3.8%; and LG Corp. (conglomerate), 3.7%. The industry exposure of the 36 stocks in the Korea Fund’s $244-million portfolio is as follows: Industrials, 25%; Information technology, 19%; Financial services, 15%; Telecommunications services, 12%; Consumer staples, 10%; Consumer discretionary, 9%, Materials, 7%; and Health care, 3%....
CENTRAL EUROPE AND RUSSIA FUND $12.38 (New York symbol CEE; CWA Fund Rating: Speculative) is a closed-end fund that invests mostly in larger cap stocks from Russia and central Europe. The fund’s manager is Deutsche Asset Management. The $314-million fund’s 62 holdings are currently invested in Russia (49%), Poland (16%), Turkey (12%), Czech Republic (12%), Hungary (4%), U.S. (4%) and Austria (3%). The fund’s top holdings are Gazprom (a Russian gas utility) at 8.5%; Lukoil (Russia: oil and gas), 7.3%; Ceske Energetike Zavody (Poland: utility), 5.8%; Sberbank (Russia: bank), 5.5%; Rosneft Oil (Russia: oil and gas), 5.4%; Telefonica (Czech Republic: telecom), 4.9%; Telekomunikacja Polska (Poland: telecom), 4.9%; Bank Pekao (Poland: bank), 4.7%; Surgutneftagaz (Russia: oil and gas), 4.5%; and Powszechna Kasa (Poland: bank), 3.8%....
POWER CORPORATION $17.23 (Toronto symbol POW; Shares outstanding: 407.5 million; Market cap: $7.0 billion; SI Rating: Above Average) is a diversified holding company. It controls one of Canada’s largest mutual-fund companies, IGM Financial, and Great-West Lifeco, one of the country’s largest life insurers. Power Financial, 66.4% held, is a holding company for Power Corp.'s financial assets, which include 72.9% of Great-West Lifeco and 58.4% of IGM Financial. As well, Power Financial holds 50% of holding company Parjointco, which, in turn, owns a 54.3% interest in Swiss-listed Pargesa Holdings SA. Pargesa has 95% of its assets in five large European companies: Imerys (minerals), Total SA (oil), Pernod Ricard (wine and spirits), Suez (energy, water and waste services) and Lafarge SA (cement and building materials). In the three months ended September 30, 2008, Power Corp.'s earnings, excluding one-time items, fell 6.2%, to $332 million, or $0.70 a share, from $354 million, or $0.76. Great-West contributed $203 million to Power’s earnings and IGM contributed $74 million....