diversification

Rona Inc., $15.55, symbol RON on Toronto (Shares outstanding: 129.7 million; Market cap: $2.0 billion), is the largest Canadian distributor and retailer of hardware, home-renovation and gardening products. Rona operates a network of about 700 stores of various sizes and formats. Franchisees own some of these outlets. The company also operates 40 stores that are geared to commercial customers, particularly contractors. Rona supplies all of its stores through its own network, which consists of nine distribution centres across Canada. Rona first sold shares to the public for $6.90, and began trading on Toronto in October 2002....

Claymore 1-5 Yr Laddered Corporate Bond ETF, $20.82, symbol CBO on Toronto (Units outstanding: 20.5 million; Market cap: $426.8 million), invests in a portfolio of short-term bonds drawn from the DEX (formerly Scotia Capital) Bond Index. The ETF first sold units to the public at $20 each, and began trading on Toronto on February 25, 2009. The fund’s 25 holdings are divided into five staggered, or “laddered,” maturities that generally range from one to five years. Each maturity is equally weighted and includes five or more bonds with a minimum credit rating of “A.” Each year, the two-year to five-year bonds will be a year closer to maturity and one-year bonds will reach maturity. The fund will use proceeds of the matured bonds to “roll over” or buy new bonds that restore the desired one-to-five year portfolio balance....

Growth stocks are companies whose earnings growth is expected to be above the market average. These firms often pay little or no dividends. Instead, they invest any extra money in furthering their growth. These stocks are long-term investments. They can be well-known stars or quiet gems, but they share the common trait of growing at a higher than average rate within their industry, or within the market as a whole. (You can get all the details on how to select appropriate stocks for your portfolio in our new special report, “Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada.” Click here to download this free report and get started right away.)...

In our new report, Mutual Funds Canada: Inside the Top 10 Canadian Mutual Funds, we spotlight the top 10 Canadian mutual funds for your portfolio. But that’s not all. We also show you how we selected these funds, and strategies you can use to find funds that are capable of weathering a market slump, and profiting anew when the market turns up again. Perhaps more importantly, we show you what danger signs to look for when investing in mutual funds. For example, we think you should avoid funds whose managers practice a sector-rotation approach....

When investors are just starting out, they typically have modest amounts of money to invest. You can start your stock portfolio with as little as $10,000, say, but keep in mind that the less you invest at any one time, the higher the percentage your broker’s minimum commission takes from each trade. (Starting and building a portfolio, and how many stocks you should own at each stage of your investing career, are just two of the stock market basics we explore in our free report, “Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada.” You can get a copy absolutely free. Click here to claim yours now.) ...

ETFs have added to their advantages over closed-end funds over the last few years. That’s because ETFs have evolved, and competition has increased. Still, 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. But the best ETFs offer a great combination of low fees and top-quality stocks. Below are five foreign ETFs we like. All have recovered from their lows earlier this year, but we think they still have room to rise. ISHARES MSCI EMERGING MARKETS INDEX FUND $41.85 (New York Exchange symbol EEM; buy or sell through brokers), is an ETF that aims to track the MSCI Emerging Markets Index....

ISHARES MSCI EMERGING MARKETS INDEX FUND $41.85 (New York Exchange symbol EEM; buy or sell through brokers), is an ETF that aims to track the MSCI Emerging Markets Index. The fund’s geographic breakdown includes: Brazil, 14.8%; South Korea, 12.4%; China, 11.2%; Taiwan, 10.4%; South Africa, 8.1%: Hong Kong, 6.8%; Russia, 6.3%; India, 6.0%; Mexico, 4.6%; and Israel, 3.3%. iShares MSCI Emerging Markets Index Fund’s top holdings are Samsung Electronics, 3.9%; Taiwan Semiconductor (Taiwan: computer chips), 2.7%; Petrobras (Brazil: energy), 2.6%; Banco Itau Holding Finance (Brazil: banking), 2.5%; Posco (steel), 2.2%; China Mobile (China: wireless), 1.9%; Gazprom (Russia: gas utility), 1.8%; KB Financial Group Inc. (South Korea: banking), 1.8%; and Banco Brandesco (Brazil: banking), 1.7%....

Exchange-traded funds (ETFs) hold baskets of stocks that represent stock indexes. They trade on stock exchanges, just like stocks. Unlike many other innovations, including many mutual funds, ETFs don’t load you up with high management fees, or tie you down with heavy redemption charges if you decide to take your money out. Instead, they give you a low-cost and more flexible and convenient alternative. ETFs also have advantages over closed-end mutual funds. They are more liquid than most closed-end funds, and have lower management fees. Moreover, ETFs consistently trade at or very close to net asset value, unlike closed-end funds, which often go through wide swings in their discounts or premiums to the value of their assets....

The U.S. dollar is down 22% against the Canadian dollar so far this year. Many investors fear it will keep falling. If you knew the U.S. dollar would keep falling, the best strategy would be to sell all of your U.S. stocks and buy them back when the dollar stabilizes. However, you don’t know where the U.S./Canada exchange rate is going next — you never do. ...

We feel most mutual-fund investors should own no more than five funds. When you own a larger number of funds, you increase the risk of over-diversification. You also increase the risk that your portfolio will produce a return that matches that of the market, minus the 2% to 3% cost of fund management fees and expenses. The Chou Associates Fund invests in U.S and foreign stocks, and looks to buy and hold a limited number of undervalued stocks. Few of the stocks the fund holds inspire our confidence. We don’t recommend the Chou fund. Dynamic American Value Fund holds mostly high-quality, large cap U.S. stocks. It’s okay to hold....