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 $24.41 (BMO Mutual Funds, 77 King Street West, Suite 4200, Royal Trust Tower, Toronto, Ont., M5K 1J5, 1-800-665-7700; Web site: www.bmo.com. No load — deal directly with the bank) (CWA Rating: Conservative) generally invests mostly in ‘blue-chip” Canadian companies. These stocks are selected based on the manager’s outlook for the industry they operate in, the earnings record of each company, the strength of management and the potential for growth. BMO Equity Fund’s 10 largest holdings are Bank of Nova Scotia, Royal Bank of Canada, TD Bank, Canadian Natural Resources, Suncor Energy, EnCana Corporation, Potash Corp., Manulife Financial, CIBC and Research in Motion. The $1.8 billion fund currently holds 40.5% of its portfolio in the Resources sector. Its next-largest holding is Financial services at 26.1%....
RBC CANADIAN EQUITY FUND $19.69 (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) invests mostly in larger-capitalization stocks, but also looks for opportunities in small and mid-cap stocks. The fund’s 10 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 Inc. The $4.2 billion fund holds 41.3% of its holdings in Resources stocks. It also holds 30.7% in Finance. Over the last ten years, RBC Canadian Equity posted a 9.5% annual rate of return. That’s just under the S&P/TSX’s gain of 9.7%. The fund lost 14.9% over the last year, compared to the loss of 14.4% for the S&P/TSX. The fund’s MER is 1.96%....
TD CANADIAN EQUITY FUND $19.01 (CWA Rating: Conservative) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-866-222-3456; Web site: www.tdcanadatrust.ca. No load — deal directly with the bank) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify undervalued companies with strong growth potential. TD Canadian Equity Fund’s 10 largest holdings are Royal Bank, Brookfield Asset Management, TD Bank, Potash Corp., Crescent Point Energy Trust, Nexen Inc., Suncor Energy, Sun Life Financial, Manulife Financial and Research in Motion. The $2.6 billion fund currently holds about 47.6% of its portfolio in Resources shares. It also has a bias towards Financial services stocks at 28.2%....
NEW IRELAND FUND $9.20 (New York symbol IRL; Shares outstanding: 5.1 million; Market cap: $47.2 million; CWA Rating: Aggressive) invests in Irish companies. The fund’s manager is the Bank of Ireland, which dates back to 1783. The Irish economy has slowed along with lower housing prices in the country, plus a slowdown in exports. Longer term, the country’s openness to foreign investment will continue to pay off. Ireland is part of the Euro currency system. It has also invested heavily in education and worker training. The New Ireland Fund’s top holdings at last report were: CRH plc (building materials), 25.6%; Ryanair Holdings (airline), 11.4%; Allied Irish Banks at 8.9%; DCC (distribution), 6.1%; Aryzta plc (agriculture & food), 5.8%; Elan Corp. (Healthcare services), 5.6%,– Kerry Group (food products), 5.4%; United Drug plc (Healthcare services), 3.4%; Origin Enterprises (agriculture), 2.7%; and Norkom Group (financial crime detection), 2.6%....
INDIA FUND $19.58 (New York symbol IFN; Shares outstanding: 42.5 million; Market cap: $832.5 million; CWA Rating: Aggressive) invests mainly in large-capitalization Indian stocks. The manager of the fund is the Blackstone Group. India’s growth has exceeded 9% annually over the last few years. The global slowdown and credit problems will hurt the Indian economy, but growth could still be as high as 7% in 2009. India Fund’s top holdings are: Reliance Industries (conglomerate) at 13.1%; Bharti AirTel (telecom), 7.1%; Infosys Technologies (software), 6.9%; Housing Development Finance (finance), 4.5%; Oil & Natural Gas Corp., 4.0%; Hindustan Unilever (consumer products), 3.4%; State Bank of India, 2.9%; and Reliance Communications (telecom), 2.6%....
SINGAPORE FUND $8.19 (New York symbol SGF; Shares outstanding: 9.4 million; Market cap: $76.7 million; CWA Rating: Aggressive) is fully invested in Singapore stocks. The manager is the Development Bank of Singapore. Singapore’s economy is dependent on exports to major markets such as the U.S., China and Japan. It should prosper anew when these market recover. The Singapore Fund’s top holdings are: United Overseas Bank, 11.8%; Overseas-Chinese Banking 9.6%; Singapore Telecom, 9.3%; Keppel Corp. (varied industries), 5.4%; Capitaland (property), 4.4%; Hongkong Land Holdings, 4.1%; SMRT Corp. (Singapore public transit), 3.8%; Sembcorp Marine (shipbuilding), 3.8%: Singapore Petroleum, 3.0%; and Ascendas REIT (commercial real estate), 3.0%....
SWISS HELVETIA FUND $11.39 (New York symbol SWZ; Shares outstanding: 33.2 million; Market cap: $378.6 million; CWA Rating: Conservative) invests mainly in large-capitalization Swiss stocks. The fund’s manager is Hottinger Group, which, as Banque Hottinger, dates back to 1786. The Swiss government has moved quickly to restore confidence in its banking system. This includes taking a 9% interest in banking giant UBS AG. Renewed global growth will help the export oriented Swiss economy. The $594.4 million fund’s top holdings are Nestle SA (food & beverages), 17.0%; Roche Holdings (pharmaceuticals) at 12.2%; Novartis AG (health care and pharmaceuticals), 9.2%; Zurich Financial Services (insurance), 5.4%; Syngenta AG (agribusiness), 4.9%; Basilea Pharmaceutica AG (Swiss biopharma), 3.8%; Atel Holding AG (Swiss energy), 3.5%; UBS AG (banking), 2.6%; Addex Pharmaceuticals, 2.6%; and BKW FMB Energie AG (Swiss power), 2.1%....
TELUS CORP. $40.47 (Toronto symbol T.A; Shares outstanding: 335.6 million; Market cap: $13.6 billion; SI Rating: Above average) provides local and long distance telephone service in B.C., Alberta and parts of Quebec, and wireless service across Canada. In the three months ended June 30, 2008, Telus’s earnings per share excluding unusual items rose 13.7%, to $0.83 from $0.73 a year earlier. Revenue rose 7.7%, to $2.4 billion from $2.2 billion. Strong gains at its wireless and high-speed Internet operations offset lower local and long-distance revenues. Telus’s shares yield 4.5%. Recent auctions of new radio frequencies (or wireless spectrum) will let new cell phone firms enter the market. These include Quebecor, European and Egyptian-backed Globalive and Data & Audio-Visual Enterprises Wireless, a firm controlled by Canadian businessman John Bitove. Just 60% of Canadians use a cellphone, so there’s still room for growth in the industry. As well, Telus’s strong reputation for customer service and its focus on more affluent users and long-term customers should help it expand its wireless profits....
RBC CANADIAN EQUITY FUND $19.69 (CWA Rating: Conservative) (RBC Mutual 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) invests mostly in larger-capitalization stocks, but also looks for opportunities in small- and mid-cap stocks. The fund’s 10 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 Inc. The $4.2-billion fund holds 41.3% of its holdings in resource stocks. It also holds 30.7% in finance. Over the last ten years, RBC Canadian Equity posted a 9.5% annual rate of return. That’s just under the S&P/TSX’s gain of 9.7%. The fund lost 14.9% over the last year, compared to the loss of 14.4% for the S&P/TSX. The fund’s MER is 1.96%....
CANADIAN PACIFIC RAILWAY LTD. $65 (Toronto symbol CP; SI Rating: Average) transports freight over a rail network between Montreal and Vancouver. In the United States, subsidiaries connect CP’s Canadian lines to major hubs in the Midwest and Northeast. Alliances with other railways extend its reach to Mexico. In the three months ended June 30, 2008, CP’s revenue was unchanged at $1.2 billion. The lower U.S. dollar and lower shipments of automobiles and forest products slowed revenue growth. Earnings before one-time items fell 13.4%, to $0.97 a share from $1.12. CP’s profits dropped, despite steady revenues, partly from costs related to the U.S. Midwest flooding, but mostly due to higher fuel costs. However, by the end this year, CP expects to have provisions in all of its contracts to let it pass on fuel price increases. It also aims to improve long-term efficiency with several new initiatives, including sharing more tracks with other railways, as well as better scheduling....