high quality stocks

This is a good time for me to say “Thanks!” to all my Inner Circle members. It’s a pleasure to receive the many compliments and expressions of gratitude you send with your questions. That’s especially true when I recognize a member’s name from decades ago, whether from the early days after the 1994 startup of The Successful Investor, or from the two previous decades that I spent at The Investment Reporter. It’s also great to see that our Successful Investor philosophy and practice seem to strike a chord with many younger investors. I wish you all a great year-end holiday and a healthy, happy and prosperous New Year. +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++...

Knowing when to sell a stock is one of the keys to successful investing. That’s why we advise investors to follow an important rule when it comes to rising stocks. When prices go down, investors naturally focus on when to sell aggressive stocks. However, you also need to consider when to sell after strong moves up by hot stocks....

ISHARES MSCI BRAZIL INDEX FUND $53.35 (New York Exchange symbol EWZ; buy or sell through brokers) is an exchange traded fund that is designed to track the Brazilian stock market. The fund’s top holdings are Petrobras preferred shares (energy), 9.8%; Vale do Rio Doce (mining) preferred, 7.9%; Petrobras common, 7.3%; Cia Itau Unibanco Holding (banking), 7.1%; Banco Brandesco (banking) preferred, 6.4%; and Vale SA, 3.9%.

The fund’s concentration in certain stocks, such as Petrobras and Vale do Rio Doce, adds risk, as does its focus on the resource sector. However, both are high-quality stocks.

Brazil’s economy is forecast to grow at just 1.5% this year. Domestic consumption remains strong, but exports have slowed. Still, growth could rebound to as high as 4.0% next year.

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Even when stock markets are in an upward trend, they are still subject to sharp setbacks, such as the one triggered by the re-election of Barack Obama as president last week. Many investors seek to protect their profits against such reverses though the use of stop-loss orders. Before you try this approach, you should keep in mind that stop-loss orders have a number of risks that can cost you money. Here’s a look at this investing strategy, and some of the dangers you may be exposed to with stop-loss orders....

Pat McKeough responds to many personal questions about specific stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for the Inner Circle. This week, one question from an Inner Circle member concerned a fund that holds gold stocks. The fund’s high distributions give it a substantial dividend yield. Pat examines whether it can sustain its yield and also looks at its policy of using call options to boost returns....

It appears investors weren’t especially happy with the results of Tuesday’s U.S. presidential election, judging by the 300-point drop in the Dow Industrials on Wednesday morning. However, we could have done a lot worse. The worst possible election outcome would have been a failure to produce a clear winner, leaving it up to the courts to say who won. That could have vastly heightened the level of divisiveness that occurred during the campaign, possibly even leading to civil unrest. This would have sent today’s high level of uncertainty through the roof. It might have stopped the two political parties from sidestepping the “fiscal cliff” (see below). It might have sparked a crisis to rival the 2008 failure of Lehman Brothers. Right now, the main negative we see for the North American economy and stock market is the high level of uncertainty among business people, which is leading to high uncertainty among investors....

Faircourt Gold Income Corp., $8.33, symbol FGX on Toronto (Shares outstanding: 4.5 million; Market cap: $37.5 million; www.faircourtassetmgt.com), mainly invests in large- and mid-sized gold producers that are part of the S&P/TSX Global Gold Index. The company holds mostly high-quality stocks, including Barrick Gold, Detour Gold, Franco-Nevada Corp., Freeport-McMoran Copper & Gold, Goldcorp, Kinross Gold, Newmont Mining, Yamana Gold and New Gold. Faircourt pays a high 7.2% dividend yield. To meet its high distributions, the company may use capital gains on its investments to increase its cash flow—a strategy that works when markets are rising but not when they are falling....

We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus. The best ETFs offer very low management fees and well-diversified, tax-efficient portfolios of high quality stocks. ISHARES MSCI JAPAN INDEX FUND (American Exchange symbol EWJ; us.ishares.com) is an exchange traded fund that tries to match the return of the Morgan Stanley Capital International (MSCI) Japan index....

We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus. The best ETFs offer very low management fees and well-diversified, tax-efficient portfolios of high-quality stocks. Here are six international ETFs we like:...

Vanguard Canadian Short-Term Bond Index ETF, $24.96, symbol VSB on New York (Shares outstanding: 1.7 million; Market cap: $42.4 million; www.vanguard.com), mirrors the performance of the Barclays Global Aggregate Canadian Government/Credit 1-5 Year Float Adjusted 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 184 bonds with an average term to maturity of 3.0 years. The bonds in the index are 72.9% government and 27.1% corporate. The fund’s MER is 0.15%. The Vanguard Canadian Short-Term Bond Index ETF yields 2.8%. However, this high yield is due to the fact that some of the fund’s bonds pay above-market interest rates. But as a result they trade above their face value. When these bonds mature, holders will only get the bonds’ face value, which means the portfolio will incur predictable capital losses. These losses will offset some of the appeal of the above-market yields....