dow

MCGRAW-HILL COMPANIES INC. $55 (New York symbol MHP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 280.2 million; Market cap: $15.4 billion; Price-to-sales ratio: 2.4; Dividend yield: 1.9%; TSINetwork Rating: Average; www.mcgraw-hill.com) will soon split into two separate, publicly traded companies. One of these new firms, McGraw-Hill Financial, will sell financial-information products. This business will include Standard & Poor’s, which provides credit ratings on bonds, and McGraw-Hill’s J.D. Power market- research firm. Right now, this division supplies 60% of McGraw-Hill’s total revenue. The other company, McGraw-Hill Education Inc., will publish textbooks for schools and colleges. It sells its products in 28 countries and 65 languages....

MCGRAW-HILL COMPANIES INC. $55 (New York symbol MHP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 280.2 million; Market cap: $15.4 billion; Price-to-sales ratio: 2.4; Dividend yield: 1.9%; TSINetwork Rating: Average; www.mcgraw-hill.com) will soon split into two separate, publicly traded companies.

One of these new firms, McGraw-Hill Financial, will sell financial-information products. This business will include Standard & Poor’s, which provides credit ratings on bonds, and McGraw-Hill’s J.D. Power market- research firm. Right now, this division supplies 60% of McGraw-Hill’s total revenue.

The other company, McGraw-Hill Education Inc., will publish textbooks for schools and colleges. It sells its products in 28 countries and 65 languages.

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Most stock markets have risen lately. But as always, they remain subject to unexpected downturns. Even so, the long-term outlook is for higher stock prices. One way to profit from rising markets is to add exchange traded funds (ETFs) that track major stock indexes to your portfolio. ETF’s trade on stock exchanges, just like stocks. Prices are quoted in newspaper stock tables and online. You must pay brokerage commissions to buy and sell ETFs, but their low management fees still give them a cost advantage over most mutual funds....

BMO Junior Gold Index ETF, $16.65, symbol ZJG on Toronto York (Units outstanding: 6.7 million; Market cap: $111.6 million; www.etfs.bmo.com), aims to mirror the performance of the Dow Jones North America Select Junior Gold Index. This index is made up of 33 junior gold stocks from Canada (76.1% of assets) and the U.S. (23.9%). The fund’s MER is 0.55%. BMO Junior Gold Index ETF began trading on January 19, 2010. The fund’s top 10 holdings are Allied Nevada Gold Corp. at 12.1%; Coeur d’Alene Mines, 9.8%; Alamos Gold, 8.5%; AuRico Gold, 7.5%; B2Gold Corp., 5.5%; NovaGold Resources, 4.8%; McEwen Mining, 4.2%; Argonaut Gold, 3.6%; Banro Corp., 3.6%; and Dundee Precious Metals, 3.5%....

I’ve been advising members to take a positive view of the market outlook, so I was glad to see the Dow Jones Industrials rise above 13,000 last Friday. Media reports said this rise was due to a quote from the head of the European Central Bank, who said the bank “is willing to do whatever it takes to preserve the euro.” Media interpretations of a market move always seem to have an official air, as if they were as unquestionable as, say, estimates of heat damage to the coming grain harvest. But this quote struck me as standard bureaucrat-speak. I think it only got credit for the rise because it was the main euro-related news that day. Developments in the eurozone will undoubtedly influence U.S. joblessness and economic growth. But uncertainty about policies coming out of Washington will have a much bigger impact. Friday’s Dow gain may owe something to the influence of the U.S. presidential election campaign....

Sometimes, the market’s reaction to a news item can tell you something about the importance of the news item. It may also tell you something about the market’s underlying direction. For instance, on June 6, the Dow industrials moved up by 125 points after a two-month decline. Many investors assumed the gain was due to some European crisis development they missed that day. I assumed the rise came about because of political news from Wisconsin, and from the second- and third-largest California cities, San Jose and San Diego. I saw it that way because of today’s key investor concern: can governments around the world manage to tame their debts and their budget deficits without raising taxes to economically crippling levels? To do this, governments will have to break out of the stranglehold that pressure groups and entrenched special interests seem to have on them....

SPDR DOW JONES INDUSTRIAL AVERAGE ETF $123.93 (New York symbol DIA; buy or sell through brokers; www.spdrs.com) holds the 30 stocks that make up the Dow Jones Industrial Average.

The fund’s top holdings are IBM, ExxonMobil, Chevron Corp., 3M, Wal-Mart Stores, McDonald’s Corp., Coca-Cola Co., Caterpillar Inc., United Technologies and Boeing. The fund’s expenses are about 0.18% of its assets.

SPDR Dow Jones ETF is a buy.

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ISHARES DOW JONES CANADA SELECT DIVIDEND INDEX FUND $20.08 (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highest-yielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of its assets. The fund’s MER is 0.50%. It yields 4.5%.

The fund’s top holdings are CIBC, 6.9%; National Bank, 6.0%; TD Bank, 5.6%; Bank of Montreal, 5.2%; Bonterra Energy, 5.2%; AG Growth International, 4.8%; Royal Bank of Canada, 4.3%; Bank of Nova Scotia, 4.3%; and BCE Inc., 4.0%.

The fund holds 54.1% of its assets in financial stocks. Utilities are next, at 21.4%. The top Canadian finance stocks have sound prospects. However, 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.

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If I had to sum up today’s market outlook in just a few words, I might say, “It’s another ‘Death of Equities’ situation.” Depending on how long you’ve been following the market, you may recall hearing about an August 1979 Business Week cover story entitled “The Death of Equities.” The story got little attention when it came out, because the title echoed the feelings of a lot of observers. But as the great rise of the 1980s and 1990s progressed, the article turned into an icon of famous-last-words/how-wrong-they-can-be. Many individual investors had turned against the stock market by 1979. The Dow Jones Industrial Average was stuck in a narrow trading range for much of the year. It was down 15% from the all-time peak it hit in 1976. Worse, the stock market had been going sideways within a wide range for more than a decade. Investing publications were full of two kinds of stories: 1. the dismal outlook for stocks; 2. how to invest in diamonds, art, collectors’ coins, antiques and other collectibles....

Corning Inc., $12.39, symbol GLW on New York (Shares outstanding: 1.5 billion; Market cap: $18.6 billion; www.corning.com), began making glass products in 1851. The company has a long history of innovation, including making glass bulbs for Thomas Edison’s first electric lights in 1879. In 1947, Corning became the first company to mass produce cathode-ray tubes for TV sets. Today, the company makes advanced materials for a wide range of products at 80 plants in 13 countries. It gets about 60% of its sales from Asia. Corning has five divisions:...