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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IBM $136.30 (New York symbol IBM; Shares outstanding: 970.1 million; Market cap: $130.4 billion; TSINetwork Rating: Above Average; Dividend yield: 3.8%; www.ibm.com) will buy Truven Health Analytics, a private firm that provides hospitals and pharmaceutical companies with analytic data services. Truven will become part of IBM’s Watson Health business. It uses advanced artificialintelligence technology to process and analyze large volumes of data, including patient records, drug information and insurance claims. That helps hospitals and clinics reduce errors and cut their costs. IBM will pay $2.6 billion for Truven when it completes the purchase later this year....
PENGROWTH ENERGY $1.18 (Toronto symbol PGF; Shares outstanding: 543.0 million; Market cap: $564.8 million; TSINetwork Rating: Average; No dividends paid; www.pengrowth.com) produces oil and natural gas, mostly in Western Canada. This includes its Lindbergh oil sands project in Alberta. Pengrowth has suspended its $0.01-a-share quarterly dividend in response to the sharp decline in oil prices. It will also reduce its capital spending to between $60 million to $70 million in 2016, from $184 million in 2015. The company also laid off workers. That should save it $25 million in 2016. In addition, Pengrowth aims to sell $600 million of less important properties. These funds will probably go toward paying down its $2.1 billion debt. That’s now 3.7 times its depressed market cap....
ISHARES MSCI EMERGING MARKETS INDEX FUND $31.82 (New York symbol EEM; buy or sell through brokers) aims to track the MSCI Emerging Markets Index. The fund’s geographic breakdown includes China, 24.0%; South Korea, 15.3%; Taiwan, 12.8%; India, 8.0%; South Africa, 6.4%; Brazil, 5.7%; Mexico, 4.6%; Russia, 3.7%; Malaysia, 3.5%; Indonesia, 3.0%; Thailand, 2.3%; and Turkey, 1.5%. Its top holdings are Samsung Electronics (South Korea), 3.8%; Taiwan Semiconductor (computer chips), 3.4%; Tencent Holdings (China: Internet), 2.9%; China Mobile, 2.0%; China Construction Bank, 1.5%; Naspers (South Africa: media and Internet), 1.5%; Industrial & Commercial Bank of China, 1.1%; and Hon Hai Precision (Taiwan), 1.0%....
ISHARES MSCI SOUTH KOREA INDEX FUND $48.28 (New York symbol EWY; buy or sell through brokers) aims to track the MSCI Korea Index. The ETF’s top holdings are Samsung Electronics, 21.2%; Hyundai Motor, 3.7%; SK Hynix Semiconductor, 2.9%; Hyundai Mobis (auto parts), 2.8%; Shinhan Financial, 2.7%; Naver (Internet), 2.6%; Korea Electric Power, 2.5%; LG Chemicals, 2.3%; Posco (steel), 2.2%; Kia Motors, 2.0%; AmorePacific Corp. (cosmetics), 2.0%; KT&G Corp. (tobacco), 1.9%; KB Financial, 1.9%; and Samsung Fire & Marine Insurance, 1.7%. The iShares MSCI South Korea Index Fund was launched on May 9, 2000. Its expense ratio is 0.64%....
ISHARES MSCI GERMANY FUND $24.22 (New York symbol EWG; buy or sell through brokers) tracks the stocks in the MSCI Germany Index. This index aims to replicate 85% of the market capitalization of the German stock market. The remaining 15% is unavailable for investment, partly due to limitations on foreign ownership. The ETF’s top holdings are Bayer (diversified chemicals), 8.8%; SAP (software), 7.5%; Siemens (engineering conglomerate), 7.4%; Allianz (insurance), 6.8%; Daimler (automobiles), 7.3%; BASF (chemicals), 6.1%; Deutsche Telekom, 5.4%; Munich Reinsurance, 3.3%; BMW AG, 2.7%; Linde AG (industrial gases), 2.6%; Fresenius (health care), 2.6%; Deutsche Bank AG, 2.4%; and Deutsche Post AG, 2.3%....
ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $34.42 (New York symbol ECH; buy or sell through brokers) is an ETF that aims to track the MSCI Chile Investable Market Index, which consists of stocks that mainly trade on the Santiago Stock Exchange. The fund’s largest holdings are Enersis SA (electricity), 10.3%; Empresa Nacional de Electricidad (electricity), 9.0%; Empresas Copec SA (conglomerate), 7.9%; S.A.C.I. Falabella (retail), 6.5%; Banco Santander Chile (banking), 5.8%; Cencosud SA (retailer), 5.8%; Empresas CMPC (pulp and paper), 4.7%; Colbun SA (utility), 4.6%; and Banco de Chile, 4.3%. The ETF’s industry breakdown consists of Utilities, 31.9%; Financials, 19.5%; Materials, 13.0%; Consumer Staples, 9.7%; Energy, 8.2%; Consumer Discretionary, 8.0%; Industrials, 4.4%; Telecommunication services, 2.5%; and Information Technology, 2.1%....
ISHARES MSCI AUSTRALIA ETF $18.36 (New York symbol EWA; buy or sell through brokers) is an ETF that holds the 73 largest Australian stocks. The fund’s top holdings include Commonwealth Bank of Australia, 11.2%; Westpac Banking Corp., 8.8%; National Australia Bank, 6.0%; Australia and New Zealand Banking Group, 6.0%; BHP Billiton, 4.7%; CSL Ltd., 4.4%; Wesfarmers, 4.2%; Woolworths Ltd., 2.6%; Scentre Group, 2.2%; and Transurban Group, 2.1%. The ETF’s industry breakdown consists of Financials, 54.8%; Materials, 12.1%; Consumer Staples, 7.7%; Health Care, 6.5%; Industrials, 6.1%; Energy, 4.7%; Utilities, 2.6%; Consumer Discretionary, 2.4%; and Telecommunications, 2.3%....
ISHARES MSCI BRAZIL INDEX FUND $22.11 (New York symbol EWZ; buy or sell through brokers) is an ETF that’s designed to track the Brazilian stock market. Its top holdings are AmBev SA (beer and beverages), 10.8%; Cia Itau Unibanco Holding (banking), 10.0%; Banco Brandesco SA, 7.1%; Petrobras (oil and gas), 5.3%; BRF SA (food), 4.3%; Cielo SA (payment processing), 3.6%; Ultrapar SA (gas distribution and petrochemicals), 3.1%; and Itausa Investimentos SA (financial services), 2.9%. iShares launched the ETF on July 10, 2000. It has a 0.64% expense ratio....
MARKET VECTORS VIETNAM ETF $14.25 (New York symbol VNM; buy or sell through brokers) holds Vietnamese companies and foreign firms that get a significant amount of their revenue from Vietnam. The ETF’s top holdings are Vincom Corp. (real estate), 7.8%; Bank for Foreign Trade of Vietnam, 7.5%; Masan Group (a food, resources and banking conglomerate), 6.5%; Saigon Thuong Tin Commercial Bank, 6.3%; and Baoviet Holdings (insurance), 6.1%. The ETF cuts risk by investing part of its assets in firms that are based outside of Vietnam but still do business there. That’s a better approach than adding thinly traded or illiquid shares of smaller Vietnamese firms....
We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus. The best ETFs offer very low management fees and well-diversified, tax-efficient portfolios of highquality stocks. Here’s a look at four international ETFs we see as buys, and two we feel you should hang on to:...