dow

DIAMONDS TRUST SHARES $112 (American Exchange symbol DIA; buy or sell through brokers) hold the 30 stocks that make up the Dow Jones Industrial Average. Currently, the fund’s top 10 holdings are IBM, 3M, Boeing Co., United Technologies, Caterpillar, McDonald’s Corp., Chevron Corp., Johnson & Johnson, Procter & Gamble and Exxon Mobil. Expenses are about 0.18% of assets. Diamonds Trust Shares are a buy.

We still think high-quality mutual funds with a long-term focus will beat indexes over long periods. If funds invest as we advise — sticking with well-established companies and spreading their assets out across the five main economic sectors — they will tend to lose a lot less than the market indexes in periods when the indexes fall sharply. That’s because big market slides are particularly hard on the hottest, most popular stocks of the preceding market rise, and investing as we do leads you to avoid excessive investment in the hot stocks. Index funds, in contrast, do tend to load up on the hottest, most popular stocks as they rise. That’s because, as they rise, these stocks make up a rising proportion of the index. The most recent example is Potash Corporation of Saskatchewan., which now has the highest market cap on the Toronto exchange on the strength of soaring fertilizer and agriculture prices....

ECONOMIC INVESTMENT TRUST $81.51 (Toronto symbol: EVT) holds a well-diversified portfolio of high-quality Canadian, U.S. and foreign stocks. The $691.3 million fund’s largest holdings include E-L Financial, Algoma Central Railway, Chevron, CBS Corp., Marathon Oil, Altria Group, Dow Chemical, ConocoPhillips, Alliance SE, Arcelor Mittal, ING Groep, Vodafone Group plc, Renault, Xstrata plc and Sumitomo Mitsui Financial. The fund breaks down geographically as follows: Canada, 46.9%; the U.S., 18.6%, Europe, 19.0%, Asia, 13.8%; and Latin America, 1.2%....

DIAMONDS TRUST SHARES $124 (American Exchange symbol DIA; buy or sell through brokers) hold the 30 stocks that make up the Dow Jones Industrial Average. Currently, the fund’s top 10 holdings are IBM, 3M, Boeing Co., United Technologies, Caterpillar, Altria Group, Coca-Cola Co., Johnson & Johnson, Procter & Gamble and Exxon Mobil....

We think high-quality mutual funds with a long term focus will beat indexes over long periods. If funds invest as we advise — sticking with well established companies and spreading their assets out across the five main economic sectors — they will tend to lose a lot less than the market indexes in periods when the indexes fall sharply. That’s because big market slides are particularly hard on the hottest, most popular stocks of the preceding market rise, and investing as we do leads you to avoid excessive investment in the hot stocks. Index funds, in contrast, do tend to load up on the hottest, most popular stocks as they rise. That’s because, as they rise, these stocks make up a rising proportion of the index. Index funds are a better deal than the majority of funds now available, however. So if you merely want to equal the indexes, here are some of the best deals available in ETFs. We’ve also analysed one we don’t like....

Many members of my Inner Circle have asked the same question this week: Is it time to buy? If I had to choose between “Buy” and “Sell”, I’d say “Buy”, by a big margin. Having said that, I’m obliged to repeat a caveat you’ve often heard from me over the years: Nobody can predict these things consistently. If you could do that, you’d eventually acquire a measurable proportion of all the money in the world, and nobody ever does that....

I’d choose ‘Buy’ Many members of my Inner Circle have asked the same question this week: Is it time to buy? If I had to choose between “Buy” and “Sell”, I’m going to say “Buy”, by a big margin....

Like any year, 2008 could turn out good or bad for investors. But everything I see leads me to believe it will be a year of rising stock prices. First, 2008 is the year of the next U.S. presidential election. As long-time readers know, I view the U.S. presidential election year cycle as the single best indicator for American stock prices. Historically, stock prices are much likelier to rise in the two years leading up to a U.S. presidential election than in the two subsequent years. Some years deviate from the historical pattern, of course. Markets do sometimes fall in presidential election years, and President Bush’s low approval ratings might suggest it could happen in 2008. However, some of the problems that have dogged the Bush administration are improving....

Like any year, 2008 could turn out good or bad for investors. Everything I see leads me to believe it will be a year of rising stock prices. But it may be a difficult year for aggressive investors who fail to apply our risk-cutting approach to investment. First, the positives. The next U.S. presidential election takes place in November 2008. As long-time readers know, I view the U.S. presidential election year cycle as the single best indicator for North American stock prices — Canada as much as the United States. Historically, stock prices are much likelier to rise in the two years leading up to a U.S. presidential election than in the two subsequent years....

WASHINGTON MUTUAL INC. $15.15, New York symbol WM, fell over 10% this week after the company unveiled a major restructuring plan, including shutting down its remaining subprime mortgage operations. The company will continue to offer mortgages to more credit-worthy borrowers through its 2,300 branches and other retail distribution channels. A non-cash writedown will cut Washington Mutual’s fourth quarter earnings by $1.6 billion. It earned $210 million or $0.23 a share in the third quarter of 2007. To conserve cash, the company has cut its quarterly dividend 73.2%, from $0.56 a share to $0.15. The new rate of $0.60 yields 4.0%. The lower dividend should save Washington Mutual $1.2 billion in 2008. Washington Mutual also plans to issue $3.0 billion worth of convertible preferred shares. Stockholders tend to dislike convertibles, since they can increase the number of shares outstanding and cut into future per-share growth. Washington Mutual’s shares would have to rise to $21.25 before the preferred holders would even think about converting. If all preferred holders converted, the number of shares outstanding would rise 16%....