blue chip

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 a wide range of topics, including strategies for international stock markets. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away. Today’s tip: “Foreign investments can give your portfolio greater strength and diversity and we recommend three ways you can do this with less risk.” We believe most investors could benefit from holding some foreign investments in their portfolios for added diversification. And growing markets like China and India have positive long-term outlooks. Their populations are generally younger than those in North America, and rising incomes are helping more of them advance into the middle class....

More and more, I find that I cringe a little every time an investor tells me that they recognize their current investment approach is not appropriate, but they are not yet ready to switch. With a little probing, these investors usually go on to explain that they have lost too much money with the current approach, and they “can’t afford” to sell out at current prices and convert that paper loss into a real one. Instead, they plan to stick with the current approach for an indefinite period. Sometimes they want to hold on to their current portfolio until they get back to break-even. Others say they’ll be satisfied if the current loss shrinks by, say, half. I recall one time in summer 2000. A friend asked me to have a short chat with a female relative who had just gone through a divorce and had received “a very generous settlement”. He said he didn’t know the details but the lady wanted an outside opinion on what to do with her money....

GENERAL ELECTRIC CO. (New York symbol GE; www.ge.com) continues to shrink its GE Capital subsidiary, which provides loans and other financial services to buyers of its industrial products, such as power-transmission gear, jet engines and locomotives....

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 a wide range of topics, including strategies for international stock markets. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away. Today’s tip: “Foreign investments can strengthen your portfolio and here are 3 ways you can do it with less risk.”...

The New York Stock Exchange defines a blue chip as stock in a company with a national reputation for quality, reliability and the ability to operate profitably in good times and bad. The problem is that “reputation” plays a key role in the definition. Many companies acquire a blue-chip reputation by displaying the qualities that the definition suggests. Others get it through a strong public relations effort or by being in the right industry or business situation at the right time and place. Regardless of how it got there, this blue-chip label sticks with companies long after they quit living up to it....

I have a couple of problems with the term “blue chip.” First, I find it encourages sloppy thinking. The New York Stock Exchange defines a blue chip as stock in a company with a national reputation for quality, reliability and the ability to operate profitably in good times and bad. The problem is that “reputation” plays a key role in the definition. Many companies acquire a blue-chip reputation by displaying the qualities that the definition suggests. Others get it through a strong public relations effort or by being in the right industry or business situation at the right time and place. Regardless of how it got there, this blue-chip label sticks with companies long after they quit living up to it. If you shop purely on reputation and fail to investigate before you buy, you can assume you’ll eventually get burned, regardless of whether you are looking for consumer goods or investments....

The ability to weather a crisis is one of the distinguishing characteristics of the blue chip stocks we recommend. This multinational, one of the last survivors of the original 12 Dow Jones stocks of 1896, suffered a sharp setback during the financial crisis of 2008-2009. But its deep resources and diverse industrial base have allowed it to stage a recovery. General Electric Co. (New York symbol GE; www.ge.com) is one of the world’s largest manufacturers. It makes equipment for generating and distributing electricity, such as turbines (31% of revenue, 32% of earnings); aircraft engines (13%, 17%); health care equipment, such as medical scanners (13%, 14%); home appliances and lighting (6%, 1%); and locomotives (3%, 4%)....

We were pleased to learn in November 2011 that Warren Buffett had made a major investment in IBM. Indeed, Mr. Buffett was recently quoted as saying that he was “late to the IBM party,” but even so he has committed a good deal of money to it. He now owns 6% of the company. We made IBM our #1 U.S. Stock of the Year in our Wall Street Stock Forecaster newsletter in 2010. The price was $126—yet it has risen over 60% since then. We think IBM will go still higher in years to come, and it appears Warren feels the same way....

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 a wide range of topics, including the best strategies to use in international stock markets. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away. Today’s tip: “There are 3 convenient ways to invest in foreign growth without getting out of your comfort zone.”...

TRANSCONTINENTAL INC. (Toronto symbol TCL.A; www.tctranscontinental.com) is the largest commercial printer in Canada and the fourth-largest in North America. It also publishes newspapers and magazines. Transcontinental also has over 1,000 websites, which supply 16% of its total revenue. These websites will become more important to this blue chip stock’s growth in the next few years as advertisers spend more on the Internet than print products....