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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RBC CANADIAN EQUITY FUND $29.28 (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 TD Bank, Manulife Financial, Bank of Nova Scotia, Royal Bank, EnCana, Canadian Natural Resources, Suncor Energy, Research in Motion, Potash Corp. and Bank of Montreal. The $5.3 billion fund holds 39.3% of its holdings in Resources stocks. It also holds 28.4% in Financial services stocks. Over the last ten years, RBC Canadian Equity posted a 10.3% annual rate of return. That’s about equal to the S&P/TSX’s gain of 9.8%. The fund made 21.4% over the last year, equal to the gain of 21.4% for the S&P/TSX. The fund’s MER is 1.99%....
TD CANADIAN EQUITY FUND $32.56 (CWA Rating: Conservative) (TD Asset Management, P.O. Box 7500, Station A, Toronto, Ontario. M5W 1P9. 1-800-386-3757; 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, Suncor Energy, TD Bank, Rogers Communications, Canadian Natural Resources, Canadian Oil Sands Trust, Research in Motion, Schlumberger, Manulife Financial and Freeport McMoran. The $3.2 billion fund currently holds about 51.7% of its portfolio in Resources shares. It also has a bias towards Financial services stocks, with 18.8% of its holdings in that sector....
TD HEALTH SCIENCES FUND $15.67 (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 managers believe all these firms will profit from an aging population stimulating higher spending on health care, drugs and research. The fund’s top holdings include WellPoint, Alexion Pharmaceuticals, Elan Corp., CVS/Caremark, Genentech, Gilead Sciences, Merck & Co., Aetna, Roche Holdings and Cephalon. Its MER is 2.70%. The $204.2 fund gained 4.3% over the last year. TD Health Sciences Fund is still a buy.
RENAISSANCE GLOBAL HEALTH CARE FUND $15.89 (CWA Rating: Speculative) (CIBC Asset Management, 1500 University Street, Suite 800, Montreal, PQ. H3A 3S6. 1-800-268-8258; Web site: www.talvest.com. Available from brokers) is the new name of the Talvest Global Health Care Fund. The fund invests in global companies in a variety of segments of the health-care industry. Top holdings include Schering-Plough Corp., McKesson Corp., Cardinal Health, Sanofi-Synthelbo, Takeda Chemical Industries, Eisai Co. Ltd., Forest Laboratories, Medtronic, Daiichi Sankyo and Eli Lilly. Talvest Global Health Care lost 3.5% over the last year. The $954.6 million fund’s MER is 3.16%. Renaissance Global Health Care Fund is still a buy.
FIDELITY FOCUS TECHNOLOGY FUND $10.18 (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, Canon Inc., Apple Computer, Nokia, Qualcomm, Google, Hewlett-Packard, Broadcom, Oracle Corporation and Taiwan Semiconductor....
FIDELITY FOCUS FINANCIAL SERVICES FUND $21.90 (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 international stocks than in the past. Geographically, its holdings are allocated: the U.S., 36.1%; Japan, 17.2%; Italy, 13.4%; Germany, 6.4%; the Netherlands, 4.4%; France, 3.5%; the UK, 3.5%; Switzerland, 2.7% Bermuda, 2.2%; and Thailand, 2.0%. The top holdings of this $75.2 million fund are ABN Amro Holdings, Fannie Mae, Royal Bank of Scotland Group, Mitsubishi UFJ Financial Group, National Financial Partners, AXA, CitiGroup, Unicredito Italiano, Allianz and T&D Holdings....
FIDELITY FOCUS CONSUMER INDUSTRIES FUND $17.49 (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, Philips Electronics, Comcast Corp. and Sony. The $8.4 million fund is broken down by industry as follows: 9.6% in Media, 12.6% in Food products, 8.6% in Household products, 10.1% in Food & staples retailing and 9.2% in Automobiles....
TRANSALTA POWER, L.P. $8.38 (Toronto symbol TPW.UN; SI Rating: Extra risk) is now the subject of a friendly $8.38 per unit takeover offer from Hong Kong-based Cheung Kong Infrastructure Holdings Limited. TransAlta Corp. has no direct interest in TransAlta Power. However, TransAlta Power owns 49.99% of five gas-fired power plants in Ontario, Saskatchewan and Alberta. TransAlta owns the remaining 50.01%, and runs the plants. The takeover offer is still positive news for TransAlta Corp., since TransAlta Power’s new owner may eventually offer to buy TransAlta’s controlling stake in these plants....
TEMPLETON EMERGING MARKETS FUND $25.25 (New York symbol EMF; CWA Fund Rating: Speculative) is a closed-end fund that invests in equities from emerging economies. The fund’s manager is Franklin Templeton. Templeton Emerging Market Fund provides broad geographic diversification. Although volatile, it provides access to fast-growing economies such as Brazil, China, India and others. The $418.1 million fund’s regional allocation is Asia (58.8%), Europe (19.1%), Latin America (18%) and the Middle East and Africa (4.1%). Asian country allocations are China (17%), South Korea (9.3%), Turkey (8.8%), Thailand (7.8%), India (5.3%), Taiwan (4.8%), Pakistan (2.4%), Hong Kong (1.8%) and Indonesia (1.6%). Europe comprises Russia (8.8%), Hungary (4.7%), Poland (3.1%), Austria (1.3%) and Sweden (1.2%). Latin America includes Brazil (15.2%) and Mexico (2.8%). The African country is South Africa (4.1%)....
NEW GERMANY FUND $18.50 (New York symbol GF; CWA Fund Rating: Speculative) is a closed-end fund that invests mostly in middle-market (small and mid-cap) German equities. The fund’s manager is Deutsche Asset Management. The $486 million fund’s 56 holdings are currently in Germany (94%), the Netherlands (4%) and Ireland (2%). The New Germany Fund’s focus on mid-tier German stocks provides investors access to some of Germany’s fastest-growing companies The New Germany Fund’s top holdings are Saltzgitter (metals and mining) at 4.8%; Fresenius (health care equipment), 4.6%; K+S (chemicals), 4.3%; GEA Group (chemicals), 3.6%; Software (software), 3.3%; Bilfinger Berger (construction and engineering), 3.2%; European Aeronautical Defense (Dutch-based aerospace and defense), 3.2%; SGL Carbon (electrical equipment), 3.1%; Rheinmetall (industrial conglomerate), 2.9%; and Celesio (healthcare providers and services), 2.9%....