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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GREAT-WEST LIFECO $34.17 (Toronto symbol GWO; SI Rating: Above-average) is a leading Canadian insurance company, with $212 billion in assets under administration. The company also provides wealth management and other financial services. It also operates in the U.S. and Europe. Power Financial controls about 75% of Great-West. Great-West’s earnings in the three months ended June 30, 2007 rose 18%, to $544 million or $0.61 a share from $461 million or $0.52. Revenues fell 30%, to $4.6 billion from $6.6 billion on new accounting rules for investments. The shares yield 3.0%. The $3.9 billion U.S. acquisition of U.S.-based investment management firm and mutual fund company Putnam Investments Trust will close shortly. The purchase will more than double Great-West’s assets under administration. Great-West is also making a series of small acquisitions aimed at expanding its share of the employer-sponsored health insurance market in the United States....
SUN LIFE FINANCIAL $50.16 (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 operates mainly in Canada, the U.S. and the UK, and also in Asia, China and India. It has assets under administration of $435 billion. In the three months ended June 30, 2007, Sun Life’s earnings rose 15.2%, to $590 million or $1.03 a share, from $512 million or $0.88 a year earlier. Revenue fell 27.8%, to $4.5 billion from $6.2 billion, due to new accounting rules for investments. Sun Life has raised its quarterly dividend by 6.3%, to $0.34 from $0.32. The shares now yield 2.6%....
AIC DIVERSIFIED CANADA FUND $46.42 (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 $1.6 billion fund’s 10 largest holdings are Power Financial, Canadian Oil Sands Trust, TD Bank, Shoppers Drug Mart, Johnson & Johnson, Thomson Corporation, Brookfield Asset Management, Royal Bank, Manulife Financial and Royal Bank of Scotland. AIC Diversified Canada Fund holds just 23 stocks. The fund holds 53.6% of its assets in Financial services stocks. The rest of the portfolio breaks down as follows: Consumer staples, 16.1%; Energy, 8.2%; Consumer discretionary, 7.5%; Health care, 7.0%, Industrials, 3.0%; Information technology, 2.3%; and Conglomerates, 1.5%....
AIC AMERICAN ADVANTAGE FUND $7.73 (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. This segment breaks down as follows: Life & health insurance, 17.8%; Property & casualty insurance companies, 14.2%; Investment banking & brokerage, 13.2%; Multi-line insurance, 12.9%; Diversified banks, 10.9%; Diversified financials, 6.7%; Wealth management, 6.6%; Insurance brokers, 6.2%; Consumer finance, 4.3%; Regional banks, 3.6%; Thrifts & mortgage finance, 3.5%; and Conglomerates, 0.8%. The $115.5 million AIC American Advantage’s top 10 holdings are Morgan Stanley, JP Morgan Chase, American International Group, Manulife Financial, AFLAC, Hartford Financial Services, TD Bank, Northern Trust, Merrill Lynch and Willis Group Holdings. This fund holds just 19 stocks....
SCOTIA CANADIAN GROWTH FUND $72.43 (CWA Rating: Conservative) (Scotia Securities, 40 King Street West, 6th Floor, Toronto, Ontario M5H 1H1. 1-800-268-9 269; Website: www.scotiabank.com. No load — deal directly with the company.) uses fundamental analysis to identify what the managers see as investments that have the potential for above-average growth. The $614.0 million Scotia Canadian Growth Fund’s 10 largest holdings are Manulife Financial, Suncor Energy, Royal Bank, TD Bank, Goldcorp, Nexen, Bank of Montreal, BCE Inc., Bank of Nova Scotia and Alcan. Scotia Canadian Growth currently holds 31% of its portfolio in the Financial services industry. Its next-largest holding is Energy at 22%....
CIBC CANADIAN EQUITY FUND $27.77 (CWA Rating: Conservative) (CIBC Securities, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N 6X7. 1-800-631-7008; Website: www.cibc.com. No load — deal directly with the company.) uses a “bottom-up” approach (using fundamentals such as earnings, cash flow and low debt) to identify companies that trade at reasonable valuations and yet have growth potential. The $662.8 million fund’s top holdings are Petro- Canada, EnCana, Manulife Financial, Teck Cominco, Bank of Nova Scotia, TD Bank, Canadian National Railway, Brookfield Asset Management, BCE Inc. and Alcan. CIBC Canadian Equity holds 38% of its portfolio in Financial services stocks and 25% in Energy stocks....
BMO EQUITY FUND $33.88 (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 Manulife Financial, Suncor Energy, Royal Bank, TD Bank, Sun Life Financial, EnCana Corporation, Alcan, Potash Corporation, CIBC and Bank of Nova Scotia. The $2.3 billion fund currently holds 33% of its portfolio in the Financial services industry. Its next-largest holding is Energy at 22%....
RBC CANADIAN EQUITY FUND $29.54 (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, Alcan, CIBC and Bank of Montreal. The $5 billion fund holds 32% of its holdings in Financial stocks. It also holds 25% in Energy stocks. Over the last ten years, RBC Canadian Equity posted a 10.4% annual rate of return. That’s about equal to the S&P/TSX’s gain of 10.1%. The fund made 22.7% over the last year, equal to the gain of 22.7% for the S&P/TSX. The fund’s MER is 1.99%....
TD CANADIAN EQUITY FUND $32.70 (CWA Rating: Conservative) (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) 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, Alcan, Canadian Oil Sands Trust, CN Railway, Ivanhoe Mines, Goldcorp and EnCana. The $3.1 billion fund currently holds about 27% of its portfolio in Financial services shares. It also has a bias towards Energy stocks, with 27% of its holdings in that sector....
ALTAMIRA SCIENCE & TECHNOLOGY FUND $8.32 (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. The $55.5 million fund gained 5.1% in Canadian dollars over the last year. Its MER is 2.70%. Top holdings are: Microsoft, Apple Computer, Adobe, Broadcom, Sun Microsystems, Corning, Opsware, Nokia, Research in Motion and Cisco Systems. Altamira Science & Technology Fund is a buy for highly aggressive investors only.