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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JAPAN SMALLER CAP FUND $9.27 (New York symbol JOF; CWA Rating: Aggressive) invests mainly in less-widely-followed Japanese over-the-counter stocks. The fund has recently increased its holdings of service-sector firms, as well as financial services stocks. The fund’s top holdings are Jupiter Telecom, Mirai Industry Co., Nagase & Company, Tokai Rubber, Futuba Industrial, Aeon Delight, Disco Corp., Kansai Urban Banking, Shimamura Co. and Hisamitsu Pharmaceutical. Japan Smaller Cap Fund sells for a 4% discount to the current value of its assets....
JAPAN EQUITY FUND $7.39 (New York symbol JEQ; CWA Rating: Aggressive) invests mostly in large capitalization stocks on the Tokyo Stock Exchange. Lately, the fund has added to its holdings of firms selling to emerging markets, to offset exposure to the slowing U.S. economy. It has also upped its holdings of Japanese financial stocks. These have limited exposure to subprime-related securities. The Japan Equity Fund’s top holdings include: Toyota Motor, Mitsubishi UFJ Financial Group, Mizuho Financial, Sony Corp., Denso Corporation, Mitsubishi Corp., Canon, East Japan Railway, Komatsu Ltd. and Takeda Pharmaceutical Co. Japan Equity Fund is available for 9% less than the current value of its assets. Our long-standing advice is that you only buy closed-end funds trading at close to or below net asset value. It’s a buy.
FIDELITY FOCUS TECHNOLOGY FUND $8.81 (CWA Rating: Aggressive) invests mainly in technology companies. The fund’s investments include computer services, computer software and systems, communications systems, electronics, office equipment, scientific instruments and computer chips. The fund looks for stocks that have strong earnings growth and appear undervalued. Fidelity Focus Technology Fund’s top holdings now include Cisco Systems, Nintendo, Apple Computer, Nokia, Qualcomm, Google, Hewlett-Packard, Intel, Oracle Corporation and Microsoft....
FIDELITY FOCUS FINANCIAL SERVICES FUND $19.30 (CWA Rating: Aggressive) invests mostly in financial services companies in brokerage and investment management, investment banking, life insurance, personal loans, property and casualty insurance, and savings and loans. Fidelity Focus Financial Services Fund now holds a higher percentage of U.S. and UK stocks than in the past. Geographically, its holdings are allocated: the U.S., 41.8%; the UK, 11.6%; Japan, 9.0%; France, 8.4%; Germany, 7.6%; Switzerland, 5.3%; Sweden, 4.1%; Norway, 4.1% Italy, 3.0%; and Brazil, 2.9%. The top holdings of this $59.9 million fund are Bank of New York Mellon, American International Group, Munich Reinsurance, Mitsubishi UFJ Financial Group, Banca Intesa Sanpaolo, AXA, Assicurazioni Generali, Unicredito Italiano, Allianz and Sumitomo Mitsui Financial Group....
FIDELITY FOCUS CONSUMER INDUSTRIES FUND $17.03 (CWA Rating: Aggressive) (Fidelity Investments Canada, 483 Bay St., Suite 200, Toronto, Ont. M5G 2N7. 1-800-263-4077; Web site: www.fidelity.ca. Load fund — available from brokers) invests mainly in U.S. consumer goods and services companies. Consumer spending is a key part of the U.S. economy, accounting for approximately two-thirds of activity. Fidelity Focus Consumer Industries Fund’s top holdings include Procter & Gamble, Nestle SA, Tesco, CVS Caremark, Toyota Motor, British American Tobacco, PepsiCo, DaimlerChrysler, Japan Tobacco and Imperial Tobacco. The $6.5 million fund is broken down by industry as follows: 12.3% in Food products, 11.5% in Media, 10.4% in Food & staples retailing, 10.2% in Household products and 10% in Beverages....
TD SCIENCE & TECHNOLOGY FUND $13.49 (CWA Rating: Aggressive) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W1P9. 1-800-386-375 7; Web site: www.tdcanadatrust.com. No load — deal directly with TD) invests mostly in U.S. firms engaged in the research, development and production of products or services related to science and technology. TD Science & Technology’s top holdings include: Microsoft Corporation, Google, Cisco Systems, Hewlett-Packard, American Tower, Qualcomm, IBM, Corning Inc., Nintendo Co., Oracle Corp., Samsung Electronics, Nokia, Intel and Apple Inc. The fund’s loss in Canadian dollars over the last year was 15.8%. The Nasdaq index lost 16.1% in Canadian funds. The $90.5 million fund’s manager is well-respected U.S. mutual fund manager T. Rowe Price Associates. Its MER is 2.70%....
ALTAMIRA SCIENCE & TECHNOLOGY FUND $8.13 (CWA Rating: Aggressive) (Altamira Investment Services, The Exchange Tower, 130 King St. West, Suite 900, Toronto, Ont. M5X 1K9. 1-800-263-2824; Web site: www.altamira.com. No load — deal directly with the company) invests in the telecommunications, biotechnology, environmental technology, health care and computer industries. Top holdings are Apple, Microsoft, Yahoo!, Nokia, Intel, Microchip Technology, Google, Research in Motion and Cisco Systems. The $52.5 million fund lost 7.2% in Canadian dollars over the last year. The Nasdaq index lost 16.1% in Canadian funds. The fund’s MER is 2.70%....
BANK OF NOVA SCOTIA $47.82 (Toronto symbol BNS: SI Rating: Above average) is the second-largest of Canada’s five big banks, with assets of $449.4 billion. It has 1,000 branches in Canada. In the three months ended January 31, 2008, Bank of Nova Scotia earned $835 million or $0.82 a share, down 18.1% from $1.02 billion or $1.01 a share a year earlier. The latest earnings included $238 million in pre-tax writedowns and other charges. Without those charges, the bank would have earned about $1.00 a share. Revenue fell 9.7%, to $2.8 billion from $3.1 billion. The bank’s shares currently yield 3.8%. Bank of Nova Scotia has among the lowest remaining exposure to writedowns of asset-backed securities among Canadian banks. Future writedowns are likely to be minimal. Lower interest rates should spur demand for new loans. The bank is also doing a good job controlling non-interest costs....
SUN LIFE FINANCIAL $48.69 (Toronto symbol SLF; SI Rating: Above-average) offers savings, retirement, pension and life and health insurance products and services to individuals and corporations. The company has assets under administration of $425.3 billion....
GREAT-WEST LIFECO $31.29 (Toronto symbol GWO; SI Rating: Above-average) is a leading Canadian insurance company. As well, it provides wealth management and other financial services. Great-West also operates in the U.S. and Europe. The 2007 purchase of Putnam Investments Trust for $3.9 billion doubled its assets under administration, to $394 billion....