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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POWER CORP. $28.98 (Toronto symbol POW; Shares outstanding: 414.4 million; Market cap: $13.6 billion; TSINetwork Rating: Above Average; Dividend yield: 4.3%; www.powercorporation.com) holds its financial assets through its 65.7% ownership of Power Financial. That holding includes 58.7% of IGM Financial, a leading Canadian mutual fund provider. IGM had $131.0 billion worth of assets under management as of January 31, 2016, down 9.9% from $145.5 billion a year earlier. The company’s fee income rises and falls with the value of the mutual funds and other securities it manages, so its revenue and earnings decline when the price of these assets falls. However, IGM sells most of its funds through its own salesforce. This makes it less dependent on selling through the brokerage industry than its competitors. Its sales model also lets IGM form close relationships with its clients and keep redemption rates down....
MANITOBA TELECOM SERVICES INC. $33.27 (Toronto symbol MBT; Shares outstanding: 79.3 million; Market cap: $2.6 billion; TSINetwork Rating: Average; Dividend yield: 3.9%; www.mts.ca) has completed the sale of its Allstream division to U.S.-based Zayo Group (New York symbol ZAYO)....
NEWMONT MINING $26.26 (New York symbol NEM; Shares outstanding: 529.1 million; Market cap: $13.4 billion; TSINetwork Rating: Average; Dividend yield: 0.4%; www.newmont.com) is one of the world’s largest gold and copper producers, with major mines in the U.S., Peru, Suriname, Australia, Ghana and Indonesia. Newmont’s shares have gained 41% since the start of 2016. That’s mainly because the recent volatility in global stock markets has pushed up gold prices during the same period by 17% to $1,242 an ounce. Rising gold prices will also improve the profitability of Newmont’s Cripple Creek & Victor gold mine in Nevada. The company acquired the operation in August 2015. Newmont expects its overall operating costs will fall as it opens new mines in the next few years....
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ISHARES MSCI GERMANY FUND $24.15 (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), 8.9%; SAP (software), 7.6%; Siemens (engineering conglomerate), 7.3%; Allianz (insurance), 7.1%; Daimler (automobiles), 6.5%; BASF (chemicals), 5.9%; Deutsche Telekom, 5.5%; Munich Reinsurance, 3.1%; BMW AG, 2.7%; Fresenius (health care), 2.5%; Linde AG (industrial gases), 2.4%; Deutsche Bank AG, 2.4%; and Deutsche Post AG, 2.3%....
POWERSHARES QQQ ETF $101.65 (Nasdaq symbol QQQ; buy or sell through brokers; www. invescopowershares.com), formerly called Nasdaq 100 Trust Shares, holds stocks representing the Nasdaq 100 Index, which consists of the 100 largest companies on the Nasdaq exchange by market cap. The Nasdaq 100 Index contains shares of companies in a number of major industries, including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial firms. The fund’s MER is about 0.20%. It yields 1.4%. The index’s highest-weighted stocks are Apple, 10.9%; Alphabet Inc., 10.2%; Microsoft, 8.8%; Amazon.com, 5.4%; Facebook, 5.4%; Intel Corp., 2.9%; Comcast, 2.8%; Gilead Sciences, 2.5%; Cisco Systems, 2.4%; and Qualcomm, 1.3%....
SPDR S&P 500 ETF $191.30 (New York symbol SPY; buy or sell through brokers; www.spdrs.com) holds the stocks in the S&P 500 Index, which consists of 500 major U.S. companies chosen based on their market cap, liquidity and industry group. The fund’s MER is just 0.10%, and it yields 2.5%. The index’s highest-weighted stocks are Apple, 3.2%; Microsoft, 2.6%; Alphabet, 2.6%; Exxon- Mobil, 1.9%; Johnson & Johnson, 1.7%; General Electric, 1.6%; Facebook, 1.5%; Berkshire Hathaway, 1.4%; Wells Fargo & Co., 1.4%; Amazon.com, 1.3%; AT&T, 1.3%; Procter & Gamble, 1.3%; and JPMorgan Chase, 1.3%. The SPDR S&P 500 ETF is a top ETF pick for 2016.
ISHARES CANADIAN SELECT DIVIDEND INDEX ETF $20.37 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highestyielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of the ETF’s assets. The fund’s MER is 0.55%, and it yields 5.0%. Its top holdings are CIBC, 9.7%; Bank of Montreal, 7.4%; Royal Bank, 6.8%; BCE, 6.5%; Bank of Nova Scotia, 5.6%; Rogers Communications, 5.2%; Laurentian Bank of Canada, 5.0%; Manitoba Telecom, 5.0%; TD Bank, 4.7%; IGM Financial, 4.4%; and TransCanada Corp., 4.4%. The ETF holds 58.6% of its assets in financial stocks. The top Canadian finance stocks have sound prospects, but if you invest in this ETF, be sure to adjust the rest of your portfolio so it won’t be overly concentrated in the financial sector....
ISHARES S&P/TSX 60 INDEX ETF $18.65 (Toronto symbol XIU; buy or sell through brokers; ca.ishares.com) is a good low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. The ETF’s MER is just 0.18% of assets, and the units yield 3.2%. The index mostly consists of high-quality companies. However, it must ensure that all sectors are represented, so it holds a few we wouldn’t include. The index’s top holdings are Royal Bank, 8.7%; TD Bank, 8.0%; Bank of Nova Scotia, 5.6%; CN Railway, 4.8%; BCE, 4.0%; Bank of Montreal, 3.9%; Suncor Energy, 3.8%; Valeant Pharmaceuticals, 3.5%; Enbridge Inc., 3.3%; and Manulife Financial Corp., 3.1%....