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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AIC DIVERSIFIED CANADA FUND $42.87 (CWA Rating: Conservative) mainly holds shares of Canadian companies of average or above-average quality. It also holds stocks of some U.S. firms. The $1.0 billion fund’s 10 largest holdings are Power Financial, Canadian Oil Sands Trust, TD Bank, Shoppers Drug Mart, FedEx, Thomson Reuters Corporation, Brookfield Asset Management, Royal Bank of Canada, Manulife Financial and Johnson & Johnson. AIC Diversified Canada holds just 17 stocks. The fund holds 49.6% 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%; Industrials, 3.6%; and Conglomerates, 2.3%....
AIC AMERICAN ADVANTAGE FUND $5.70 (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, with over 99% of assets in the financial services area. The fund’s holdings in this segment break down as follows: Property & casualty insurance companies, 20.9%; Life & health insurance, 15.0%; Multi-line insurance, 14.5%; Investment banking & brokerage, 12.5%; Diversified financials, 9.1%; Diversified banks, 9.0%; Wealth management, 7.7%; and Consumer finance, 7.1%. The $48.9 million AIC American Advantage’s top 10 holdings are AEC Limited, AFLAC, Hartford Financial Services, Prudential Financial, JP Morgan Chase, Wells Fargo, American Express, American International Group, Merrill Lynch & Co. and The Progressive Corporation. This fund holds just 17 stocks....
H&R REAL ESTATE INVESTMENT TRUST $17.88 (Toronto symbol HR.UN; SI Rating: Extra risk) holds interests in 34 office properties, 124 industrial properties and 129 retail properties comprising over 43 million square feet. Over half of H&R’s properties are in the Greater Toronto Area. The rest are elsewhere in Ontario, in Quebec, western Canada and the United States. The company now has an industry-leading portfolio occupancy rate of 99.2%. Revenue in the three months ended June 30, 2008 was $151.3 million, up 6.1% from $142.5 million a year earlier. Cash flow per unit was unchanged at $0.40. H&R’s annual distribution of $1.44 gives the units a yield of 8.1%. H&R REIT is a buy.
CANADIAN REIT $29.30 (Toronto symbol REF.UN; SI Rating: Extra Risk) owns a portfolio of more than 150 income properties consisting of retail, industrial and office properties across Canada and in the Chicago, Illinois area. Occupacy is at 96.7%. CREIT’s revenue in the three months ended June 30, 2008 was $73.1 million, up 10.2% from $66.4 million a year earlier. Cash flow per unit rose 5.7%, to $0.56 from $0.53. The units yield 4.6%. CREIT focuses on acquiring properties in prime locations, usually near major metropolitan centres, that attract strong tenants, maintain high occupancy rates and deliver a reliable stream of rental income....
RIOCAN REAL ESTATE INVESTMENT TRUST $21.51 (Toronto symbol REI.UN; SI Rating: Average) is Canada’s largest REIT. RioCan has ownership interests in a portfolio of 227 retail properties across Canada, including 15 under development. These properties contain over 59 million square feet of leasable area. Portfolio occupancy stands at 97.0%. RioCan’s revenue in the three months ended June 30, 2008 was $169.9 million, up 7.1% from $158.3 million a year earlier. Cash flow per unit rose 5.3%, to $0.40 from $0.38. RioCan’s annual distribution of $1.35 gives the units a yield of 6.2%. RioCan is still a buy.
IBM $118.34 (New York symbol IBM; SI Rating: Above average) is the world’s biggest supplier of computers and information processing services. The company’s shift over the past few years into higher margin computer services and software is paying off. Revenues rose 12.8% in the three months ended June 30, 2008, to $26.8 billion from $23.8 billion a year earlier. Earnings rose 22.3%, to $2.8 billion from $2.3 billion. Earnings per share rose 28.7%, to $2.02 from $1.57, on fewer shares outstanding from share buybacks. IBM has increased its stock repurchase authorization by $15 billion. The company aims to buy back $12 billion worth of its stock in 2008, or about 8% of its market cap....
FORDING CANADIAN COAL TRUST $92.55 (Toronto symbol FDG.UN; SI Rating: Average) — recently accepted a cash-and- stock offer from Teck Cominco worth about $96 a unit. The deal should close in October, 2008. Note though that unlike most takeovers, Revenue Canada will treat the entire proceeds as ordinary income....
H&R REAL ESTATE INVESTMENT TRUST $17.88 (Toronto symbol HR.UN; SI Rating: Extra Risk) holds interests in 34 office properties, 124 industrial properties and 129 retail properties comprising over 43 million square feet. Over half of H&R’s properties are in the Greater Toronto Area. The rest are elsewhere in Ontario, in Quebec, western Canada and the United States. The company has an industry-leading portfolio occupancy rate of 99.2%. Revenue in the three months ended June 30, 2008, was $151.3 million, up 6.1% from $142.5 million a year earlier. Cash flow per unit was unchanged at $0.40. H&R’s annual distribution of $1.44 gives the units a yield of 8.1%. H&R REIT is a buy....
TD HEALTH SCIENCES FUND $15.69 (CWA Rating: Speculative) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-463-3863; Web site: www.tdcanadatrust.ca. No load — deal directly with the bank) invests mostly in U.S. companies with a mixture of large-capitalization stocks and earlier-stage biotechnology shares. The fund’s managers believe all these firms will profit from an aging population stimulating higher spending by governments and individuals on health care, drugs and research. The fund’s top holdings include Gilead Sciences, Alexion Pharmaceuticals, Elan Corp. plc, Baxter International, Genentech Inc., Biomarin Pharmaceutical, Wyeth, Monsanto Co., Illumina and Cephalon. The fund’s MER is 2.70%. The $170.3 million fund lost 7.4% over the last year. TD Health Sciences Fund is still a buy.
RBC CANADIAN DIVIDEND FUND $46.18 (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) has 43.5% of its portfolio in Financial services stocks. It has a further 19.4% in Energy stocks and 6.5% in Consumer discretionary. The $9.6 billion RBC Canadian Dividend Fund’s top stock holdings are Royal Bank of Canada, Bank of Nova Scotia, Toronto-Dominion Bank, Manulife Financial, Canadian Imperial Bank of Commerce, EnCana Corporation, Bank of Montreal, Sun Life Financial and Power Corporation. Over the last five years, RBC Canadian Dividend Fund has posted a 13.1% annual rate of return. That’s less than the S&P/TSX’s gain of 18.2% over the same period....