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We’ve long recommended that all Canadian investors own two or more of the country’s big five bank stocks. That’s mainly because of their importance to Canada’s economy. As well, investors continue to underestimate them. As a result, they consistently trade at below-average price-to-earnings ratios. (In the latest issue of The Successful Investor, we’ve published a special analysis of all five of Canada’s big bank stocks. One of the banks, CIBC, pays an especially attractive 4.9% dividend yield — and it could be poised for further increases. Read on for full details.) ...

Members of our Inner Circle service often ask for our portfolio investing advice on stocks they are thinking of buying that we don’t cover in our newsletters. These companies range from the most speculative penny mines to large multinational corporations.

Many of these stocks fall into a grey area....

Hidden value is one of the key factors we look for when we’re picking high return investments to recommend in our investment advisories, including Wall Street Stock Forecaster, our newsletter that covers the U.S. stock market. By hidden value, we mean valuable assets that are not getting the attention they deserve from investors. When a company’s assets are wholly or partially hidden, the stock trades for less than it’s really worth, so you get to buy at a bargain price. Hidden assets come in many forms. For example, companies often carry their real-estate assets on the corporate books at its purchase price, even though its value has multiplied many times over the years....

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific advice on the fundamentals of successful investing and how to make better stock market picks. Each Investor Toolkit update gives you a new fundamental tip and shows you how you can put it into practice right away. Today’s tip: “Stay alert for subtle risk factors, because they may appear long before disaster strikes.” Most investors are aware of standard investment risk factors, such as disappearing profits, cuts in dividends, police investigations, etc. But it pays to be aware of more subtle signs of coming problems:...

The federal government’s new tax on income trust distributions comes into effect just under seven months from now, on January 1, 2011. This new tax will put trusts on an equal tax footing with regular corporations. Many trusts have already converted to corporations in response, or plan to do so later in 2010 or in 2011. Others will continue to operate as trusts, although they may have to cut distributions to pay the new tax. ...

Buying and selling stock options is different from regular stock transactions. You can make money in options investing, of course, but to be successful in this complex, often risky area, it’s crucial to have a firm grasp of how options investing works (and how to avoid the pitfalls that can expose you to serious risk). An option is a contract between a buyer and a seller that is based on an underlying security, usually a stock. The buyer pays the seller a fee, or premium, for certain rights to the stock. In exchange for the premium, the seller assumes certain obligations.

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In the first quarter of 2010, Canada’s economy posted an annualized growth rate of 6.1%. That’s the fastest pace in more than a decade, and much stronger than the 5.8% that the Bank of Canada and consensus forecasts called for. The sharply higher growth has added to investor concerns about inflation, and was part of the reason why the Bank of Canada raised its key interest rate by 25 basis points, to 0.50%, on June 1. That’s the first time the bank has raised the rate since 2007. However, despite the sharp rise in economic growth, Canada’s current inflation rate of 1.8% (as measured by the consumer price index) is still well within the Bank of Canada’s target range of between 1% and 3%....

GLOBAL X SILVER MINERS ETF $14.40 (New York symbol SIL; buy or sell through brokers) tracks the Solactive Global Silver Miners Index. This index includes between 20 and 40 international companies that mine, refine or explore for silver. Germany-based Structured Solutions AG developed this index. Global X Silver Miners ETF is a recent new issue: it began trading on April 19, 2010. We generally advise against buying new issues. That’s because they come to market when it’s a good time for the company and its insiders to sell. This may not be, and often isn’t, a good time for you to buy....

ISHARES S&P/TSX GLOBAL GOLD INDEX FUND $22.72 (Toronto symbol XGD; buy or sell through brokers) aims to mirror the performance of the S&P/TSX Global Gold Index. This index is made up of gold stocks from Canada and around the world. The weight of any one company is capped at 25% of the index’s market capitalization. The fund’s MER is 0.55%. iShares S&P/TSX Global Gold Index Fund began trading on March 23, 2001....

PRIMARIS RETAIL REAL ESTATE INVESTMENT TRUST $17.32 (Toronto symbol PMZ.UN; Units outstanding: 67.6 million; Market cap: $1.2 billion; SI Rating: Extra Risk; Dividend yield: 7.0%) owns large malls in medium-sized Canadian cities. It also owns major shopping centres in suburbs of large cities. In all, the trust owns 28 properties that contain 10.5 million square feet of leasable area. Primaris has a 96.7% occupancy rate. Its major tenants include Hudson’s Bay Company, Sears, Shoppers Drug Mart, Loblaw, Reitmans, Canadian Tire and Best Buy. In the three months ended March 31, 2010, Primaris’s revenue rose 13.6%, to $78.4 million from $69.0 million a year earlier. Cash flow per unit rose 2.9%, to $0.36 from $0.35. the trust’s annual distribution of $1.22 gives the units a 7.0% yield....

ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $19.87 (Toronto symbol AP.UN; Units outstanding: 39.1 million; Market cap: $777.1 million; SI Rating: Extra Risk; Dividend yield: 6.6%) owns office buildings in Toronto, Montreal, Quebec City and Winnipeg. These mainly Class I properties contain over 5.7 million square feet of leasable area. Class I refers to 19th and early 20th-century light industrial buildings that have been restored and converted to office and retail space. These properties usually feature high ceilings, natural light, exposed beams, interior brick and hardwood floors. The trust has 53 mainly Class I properties in Toronto (these contain 52.7% of Allied’s leasable area). It also has 13 Class I buildings in Montreal (35.8%), seven in Winnipeg (6.7%), five in Quebec City (3.2%) and one in Kitchener-Waterloo (1.5%)....

ISHARES DEX SHORT BOND INDEX FUND $28.97 (CWA Rating: Income) (Toronto symbol XSB; buy or sell through a broker) mirrors the performance of the DEX Short-Term Bond Index. This index consists of a wide range of investment-grade federal, provincial, municipal and corporate bonds with between one- and five-year terms to maturity. The fund holds 185 bonds with an average term to maturity of 2.68 years. Top issuers include the Government of Canada, Canada Housing Trust and the Province of Ontario. The bonds in the index are 88.8% government and 11.2% corporate. The fund’s MER is 0.25%....

VANGUARD GROWTH ETF $52.22 (New York symbol VUG; buy or sell through brokers) aims to track the MSCI U.S. Prime Market Growth Index, a broadly diversified index that mainly consists of stocks of large U.S. companies. The fund has an MER of just 0.14%. The $17.1-billion fund’s top holdings are Microsoft, IBM, Apple Inc., Cisco Systems, Wal-Mart Stores, Google Inc., Hewlett-Packard, Oracle Corp., Philip Morris International and PepsiCo. Vanguard Growth ETF is broken down by economic segment as follows: Information Technologies (35.0%), Health Care (13.3%), Consumer Discretionary (12.8%), Consumer Staples (11.0%), Industrials (8.8%), Energy (7.6%), Financials (6.4%), Materials (4.1%), Telecommunication Services (0.7%) and Utilities (0.3%)....

ISHARES DEX UNIVERSE BOND INDEX FUND $29.56 (CWA Rating: Income) (Toronto symbol XBB; buy or sell through a broker) mirrors the performance of the DEX Universe Bond Index. This index consists of a wide range of investment-grade Canadian government and corporate bonds with terms to maturity of more than one year. The 310 bonds in the portfolio have an average term to maturity of 8.49 years. The fund’s MER is 0.30%. The bonds in the index are 85.1% government and 14.9% corporate. The fund sticks with high-quality government bonds from issuers such as Canada Housing Trust, Government of Canada and Province of Ontario, plus high-quality corporate bonds from issuers such as Bank of Montreal, TransCanada Pipelines, Bank of Nova Scotia and Bell Canada....

VANGUARD EMERGING MARKETS ETF $38.85 (New York symbol VWO; buy or sell through brokers) aims to track the MSCI Emerging Markets Index, which is made up of common stocks of companies located in emerging markets around the world. The fund has an MER of 0.27%. The fund’s top holdings are China Mobile (China: wireless), Gazprom (Russia: gas utility), Samsung Electronics (South Korea: electronics), Teva Pharmaceutical Industries, America Movil SAB de CV (Latin America: wireless), Petroleo Brasileiro SA (Brazil: oil and gas), China Construction Bank, Vale SA (Brazil: mining) and Hon Hai Precision Industry Co. (Taiwan: electronics). The $39.2-billion Vanguard Emerging Markets ETF’s largest holdings by country are: China (17.2%), Brazil (16.1%), South Korea (13.5%), Taiwan (10.8%), India (7.9%), South Africa (7.1%), Russia (6.4%), Mexico (4.5%), Malaysia (3.0%), Israel (2.8%), Indonesia (2.1%), Turkey (1.6%), Thailand (1.5%), Chile (1.4%), Poland (1.3%), Hungary (0.6%), Peru (0.5%), Philippines (0.5%), Colombia (0.4%), Czech Republic (0.4%) and Egypt (0.3%)....

Members of Pat McKeough’s Inner Circle enjoy a double benefit when it comes to taking advantage of our investment research. They get to address investment questions directly to me and my research associates; AND they get to see all other members’ questions, and our answers (of course, we eliminate any personal information). Aside from specific investments (such as stocks, income trusts or exchange-traded funds), members ask us a wide range of other kinds of investment questions, as well. So you can get a sense of how the service works, I’d like to share an example of the type of question a more conservative investor might ask. I hope you enjoy and profit from it. Q: Dear Pat, I’m a conservative investor who just received $50,000 that is important to my retirement (which is in about 12 years), so I have to invest this money carefully. The market has fallen lately, and I’m concerned that it could drop further. As a conservative investor, I would like to know if I should invest this new money in the stock market all at once or spread it out over a certain period of time. Thanks for your help....

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific advice on the fundamentals of successful investing. Each Investor Toolkit update gives you a new fundamental tip and shows you how you can put it into practice right away. Today’s tip: “Time spent finding a good stock broker can be an excellent investment.” Investors often ask us to refer them to a good full-service stock broker. Stock brokers are now more commonly referred to as “investment advisors.” But good stock brokers or investment advisors have always been hard to find. We mainly only hear about them after they’ve retired, when investors complain about the bad brokers who have taken over their accounts....

Whether you’re an aggressive or more conservative investor, we feel you can improve your results in stock market investments — and cut your risk — by understanding and avoiding these 5 common investment errors: 1. Focusing on three or fewer of the 5 main economic sectors: Manufacturing and Resources stocks expose you to above-average risk, Utilities and Canadian Finance stocks involve below-average risk, and Consumer stocks fall in the middle. The sectors go in and out of investor favour, depending on economic conditions and investor whim. But in the long run, winners and losers appear in all five. Spreading your money out across most or all of the five sectors limits the role of luck in your results. Your stock market investments will always have some exposure to the year’s most profitable investment area, and that’s a key factor in successful investing....

FPL GROUP INC. $48 (New York symbol FPL; Income Portfolio, Utilities sector; Shares outstanding: 414.7 million; Market cap: $19.9 billion; Price-to-sales ratio: 1.3; Dividend yield: 4.2%; WSSF Rating: Average) operates through two wholly owned subsidiaries. Florida Power and Light Company (which accounted for 73% of FPL Group’s 2009 revenue and 49% of its earnings) sells electricity to 4.5 million customers in eastern and southern Florida. This subsidiary’s power stations operate under some form of government regulation. That limits the prices Florida Power and Light can charge, but it also gives the company steady revenue streams. FPL Group also owns NextEra Energy Resources, which operates unregulated electrical-power projects in Canada and 26 U.S. states. NextEra mainly sells its power to other utilities, and is free to sell at the market price or under long-term contracts. In all, its projects generate 18,148 megawatts....

Exchange traded funds (ETFs) have gained popularity among investors in recent years, mainly because they offer low management fees. However, you should always keep in mind that not all exchange traded funds are created equal. For example, there are a lot of ETFs that have been created to tap into popular, but risky, themes and fads. So you need to be very selective with your ETF holdings. Exchange traded funds are set up to mirror the performance of a stock-market index or sub-index. They hold a more or less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index. ETFs trade on stock exchanges, just like stocks. Investors can buy them on margin or sell them short....

Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific investment advice on the fundamentals of successful investing. Each Investor Toolkit update gives you a new piece of investment advice and shows you how you can put it into practice right away....

Investors generally look to aggressive stocks for capital gains and to more conservative stocks, like utilities, for income. However, there are some aggressive stocks that pay dividends that are as high — or even higher — than more established companies. (We’ve updated our buy/sell/hold advice on a high-dividend aggressive stock in a just-published issue of Stock Pickers Digest. See below for further details.) ...

Our Stock Pickers Digest newsletter helps you find the aggressive investing stocks that could greatly enhance your portfolio’s results. These undervalued, often overlooked companies have the potential to explode for large returns of 50% or more in six months or less. It’s important to keep in mind that all aggressive investing stocks – including those we recommend in Stock Pickers Digest – expose you to a higher degree of risk than conservative selections. However, there are many ways to cut your risk in aggressive investing and still put yourself in position for large returns. Here are three key strategies you can easily apply to the part of your portfolio you devote to aggressive investments. They form the core of the advice we give you in Stock Pickers Digest....

Whether you’re a beginning or experienced investor, it’s always a good idea to review the fundamental points of successful investing. That’s what we give you in our new “Investor Toolkit” series. Every Wednesday, we’ll give you a new fundamental easy investing tip and show you how you can put it into practice right away. We hope you enjoy and profit from it. Today’s tip: “Sound investor habits and attitudes are as important as good investments.”

To succeed as an investor, you need to cultivate three personal mental strengths:...

One key part of our three-pronged investing program is to spread your money out across the five main sectors of the economy: Manufacturing & Industry; Resources; Consumer; Finance; and Utilities. In general, stocks in the Resources and Manufacturing & Industry sectors expose you to above-average volatility, and stocks in the Utilities and Finance sectors entail below-average volatility. Consumer stocks usually fall in the middle. That’s because consumer firms benefit from continuous and often habitual use of their products and services, so they have much more stability in their sales and earnings, no matter what the economy is doing....