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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ISHARES MSCI AUSTRALIA ETF $19.43 (New York symbol EWA; buy or sell through brokers) is an ETF that holds the 71 largest Australian stocks. The fund’s top holdings include Commonwealth Bank of Australia, 12.1%; Westpac Banking Corp., 9.3%; National Australia Bank, 6.9%; Australia and New Zealand Banking Group, 6.7%; BHP Billiton, 5.4%; CSL Ltd., 4.2%; Wesfarmers, 3.8%; Woolworths Ltd., 2.7%; Macquarie Group, 2.2%; and Telstra Corp., 2.1%. The ETF’s industry breakdown consists of Financials, 53.0%; Materials, 14.4%; Consumer Staples, 7.8%; Industrials, 6.3%; Health Care, 6.0%; Energy, 3.9%; Telecommunications, 2.5%; Consumer Discretionary, 2.2%; and Utilities, 2.1%.
The iShares MSCI Australia ETF was launched on March 12, 1996. It has a 0.48% expense ratio. Australia benefits from its stable banking and political systems and is rich in natural resources. Low commodity prices have hurt the country’s economy, but its proximity to Asian markets with vast potential, including India and China, gives it strong long-term prospects.
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ISHARES MSCI CHILE INVESTABLE MARKET INDEX FUND $31.91 (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), 10.1%; Empresas Copec SA (conglomerate), 8.1%; Empresa Nacional de Electricidad (electricity), 8.1%; S.A.C.I. Falabella (retail), 6.1%; Banco Santander Chile (banking), 5.9%; Empresas CMPC (pulp and paper), 5.4%; Cencosud SA (retailer), 5.3%; Colbun SA (utility), 4.4%; and Banco de Chile, 4.2%.
The ETF’s industry breakdown consists of Utilities, 31.2%; Financials, 19.7%; Materials, 13.7%; Consumer Staples, 9.6%; Energy, 8.4%; Consumer Discretionary, 7.4%; Industrials, 5.3%; Telecommunications, 2.5%; and Information Technology, 1.7%.
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The fund’s largest holdings are Enersis SA (electricity), 10.1%; Empresas Copec SA (conglomerate), 8.1%; Empresa Nacional de Electricidad (electricity), 8.1%; S.A.C.I. Falabella (retail), 6.1%; Banco Santander Chile (banking), 5.9%; Empresas CMPC (pulp and paper), 5.4%; Cencosud SA (retailer), 5.3%; Colbun SA (utility), 4.4%; and Banco de Chile, 4.2%.
The ETF’s industry breakdown consists of Utilities, 31.2%; Financials, 19.7%; Materials, 13.7%; Consumer Staples, 9.6%; Energy, 8.4%; Consumer Discretionary, 7.4%; Industrials, 5.3%; Telecommunications, 2.5%; and Information Technology, 1.7%.
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ISHARES MSCI GERMANY FUND $26.83 (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), 9.6%; Daimler (automobiles), 7.3%; Siemens (engineering conglomerate), 7.1%; Allianz (insurance), 7.1%; SAP (software), 6.8%; BASF (chemicals), 6.6%; Deutsche Telekom, 5.1%; BMW AG, 3.1%; Deutsche Bank AG, 3.1%; Munich Reinsurance, 2.9%; Linde AG (industrial gases), 2.9%; Deutsche Post, 2.5%; and Fresenius (health care), 2.4%.
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ISHARES MSCI SOUTH KOREA INDEX FUND $52.74 (New York symbol EWY; buy or sell through brokers) aims to track the MSCI Korea Index. The ETF’s top holdings are Samsung Electronics, 24.6%; Hyundai Motor, 3.6%; SK Hynix Semiconductor, 2.8; Shinhan Financial, 2.8%; Naver (Internet), 2.8%; Hyundai Mobis (auto parts), 2.7%; LG Chemicals, 2.4%; Kia Motors, 2.2%; KB Financial, 2.2%; AmorePacific Corp. (cosmetics), 2.1%; Korea Electric Power, 2.0%; KT&G Corp. (tobacco), 1.8%; and Posco (steel), 1.8%.
The iShares MSCI South Korea Index Fund was launched on May 9, 2000. Its expense ratio is 0.62%. South Korea has Asia’s fourth-largest economy, after China, Japan and India. It is heavily reliant on exports, but shipments to the U.S. are rebounding, offsetting weakness in Europe and China.
The steady rise of South Korea’s currency, the won, hurt its economy in 2012 and 2013 by making its goods more expensive for foreign buyers. But South Korea has cut interest rates to record lows, bringing the won back down to five-year lows against the U.S. dollar and boosting exports.
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The iShares MSCI South Korea Index Fund was launched on May 9, 2000. Its expense ratio is 0.62%. South Korea has Asia’s fourth-largest economy, after China, Japan and India. It is heavily reliant on exports, but shipments to the U.S. are rebounding, offsetting weakness in Europe and China.
The steady rise of South Korea’s currency, the won, hurt its economy in 2012 and 2013 by making its goods more expensive for foreign buyers. But South Korea has cut interest rates to record lows, bringing the won back down to five-year lows against the U.S. dollar and boosting exports.
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ISHARES MSCI EMERGING MARKETS INDEX FUND $33.84 (New York symbol EEM; buy or sell through brokers) aims to track the MSCI Emerging Markets Index.
The fund’s geographic breakdown includes China, 23.5%; South Korea, 16.4%; Taiwan, 12.4%; India, 8.2%; South Africa, 7.6%; Brazil, 6.2%; Mexico, 4.8%; Russia, 3.9%; Malaysia, 3.2%; Indonesia, 2.5%; Thailand, 2.2%; and Turkey, 1.4%.
Its top holdings are Samsung Electronics (South Korea), 3.7%; Taiwan Semiconductor (computer chips), 3.1%; Tencent Holdings (China: Internet), 2.5%; China Mobile, 2.1%; China Construction Bank, 1.7%; Industrial & Commercial Bank of China, 1.3%; Hon Hai Precision Industry (Taiwan), 1.1%; and Bank of China, 1.1%.
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The fund’s geographic breakdown includes China, 23.5%; South Korea, 16.4%; Taiwan, 12.4%; India, 8.2%; South Africa, 7.6%; Brazil, 6.2%; Mexico, 4.8%; Russia, 3.9%; Malaysia, 3.2%; Indonesia, 2.5%; Thailand, 2.2%; and Turkey, 1.4%.
Its top holdings are Samsung Electronics (South Korea), 3.7%; Taiwan Semiconductor (computer chips), 3.1%; Tencent Holdings (China: Internet), 2.5%; China Mobile, 2.1%; China Construction Bank, 1.7%; Industrial & Commercial Bank of China, 1.3%; Hon Hai Precision Industry (Taiwan), 1.1%; and Bank of China, 1.1%.
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RIOCAN REAL ESTATE INVESTMENT TRUST $24.99 (Toronto symbol REI.UN; Units outstanding: 319.9 million; Market cap: $8.2 billion; TSINetwork Rating: Average; Dividend yield: 5.5%; www.riocan.com) has settled its dispute with U.S.-based department store chain Target (New York symbol TGT).
In April 2015, Target closed all 133 of its Canadian stores, including 26 in RioCan’s malls. So far, the trust has found new tenants for seven of these stores. It will have to remodel the other 19, but it expects to have them rented by the end of 2017.
Target has now paid $132 million in compensation. Of that total, $92 million went to RioCan and $40 million went to its partners in some of these malls.
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In April 2015, Target closed all 133 of its Canadian stores, including 26 in RioCan’s malls. So far, the trust has found new tenants for seven of these stores. It will have to remodel the other 19, but it expects to have them rented by the end of 2017.
Target has now paid $132 million in compensation. Of that total, $92 million went to RioCan and $40 million went to its partners in some of these malls.
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H&R REIT $21.11 (Toronto symbol HR.UN; Units outstanding: 278.3 million; Market cap: $5.9 billion; TSINetwork Rating: Extra Risk; Dividend yield: 6.4%; www.hr-reit.com) owns or has stakes in 506 office buildings, industrial properties and shopping malls in Canada and the U.S. In all, these holdings include 46.6 million square feet of leasable space.
In December 2014, the REIT sold part ownership in 101 industrial properties, or a total of 19.5 million square feet, in Canada and the U.S. for $731 million. The buyers included the Canadian Public Sector Pension Investment Board.
H&R kept a 50% interest in the Canadian properties and a 49.5% stake in the U.S. portfolio. It continues to manage these assets and receives fees for doing so. H&R also held on to full ownership of 14 other industrial properties.
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In December 2014, the REIT sold part ownership in 101 industrial properties, or a total of 19.5 million square feet, in Canada and the U.S. for $731 million. The buyers included the Canadian Public Sector Pension Investment Board.
H&R kept a 50% interest in the Canadian properties and a 49.5% stake in the U.S. portfolio. It continues to manage these assets and receives fees for doing so. H&R also held on to full ownership of 14 other industrial properties.
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CANADIAN REIT $41.74 (Toronto symbol REF.UN; Units outstanding: 72.9 million; Market cap: $3.0 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.3%; www.creit.ca) owns 198 properties, including retail, industrial and office buildings, across Canada and in Chicago. These holdings contain 24.9 million square feet of leasable area. The trust’s occupancy rate is 94.7%.
In the three months ended September 30, 2015, Canadian REIT’s revenue rose 4.5%, to $109.5 million from $104.8 million a year earlier. Cash flow per unit gained 2.7%, to $0.76 from $0.74.
The trust aims to grow mostly by developing its own properties rather than through large acquisitions. Over the next few years, it’s spending $660 million to add 3.1 million square feet of space. To cut its risk, Canadian REIT takes on partners to help carry out big projects.
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In the three months ended September 30, 2015, Canadian REIT’s revenue rose 4.5%, to $109.5 million from $104.8 million a year earlier. Cash flow per unit gained 2.7%, to $0.76 from $0.74.
The trust aims to grow mostly by developing its own properties rather than through large acquisitions. Over the next few years, it’s spending $660 million to add 3.1 million square feet of space. To cut its risk, Canadian REIT takes on partners to help carry out big projects.
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Invest like fabled investor Warren Buffett by looking for long-term fundamental value.
