investment advice
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 advice on successfully investing money. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Tip of the week: “Investing money in futures gives you high leverage, but leverage works two ways.” Futures trading provides a perfectly legal way to bet on price changes in commodity, currency and financial markets. When you buy or sell a futures contract, you commit yourself to buy or sell a quantity of a commodity (or currency or financial instrument) in the future. The date and quantity are standard; you fix the price when you buy or sell the contract....
We’ve long recommended that all Canadian investors own two or more of the big five Canadian bank stocks. That’s mainly because of their importance to Canada’s economy. The top five banks slumped deeply during the 2007-2009 market downturn, like most stocks. But since the market turnaround of March 2009, several of the top five have recovered and gone on (at least briefly) to all-time highs. Few other stock groups have done as well. (In the latest issue of Canadian Wealth Advisor, our newsletter for conservative investing, we update our buy/sell/hold advice on Bank of Nova Scotia, which is the third biggest of the big-five banks. Read on for further details.)...
BANK OF NOVA SCOTIA $54.22 (Toronto symbol BNS: Shares outstanding: 1.0 billion; Market cap: $56.4 billion; SI Rating: Above Average; Dividend yield: 3.6%; www.scotiabank.com) is buying the 82% of DundeeWealth Inc. (Toronto symbol DW) that it does not already own. DundeeWealth manages investments and operates a brokerage business. The company also owns the Dynamic family of mutual funds, and provides financial-planning and investment advice. The $2.3-billion, cash-and-stock deal will double the size of Bank of Nova Scotia’s mutual-fund business, and make it the fifth-largest mutual-fund company in Canada. It also gives the bank a number of new growth opportunities, including access to DundeeWealth’s high-quality clientele. As well, the bank may sell Dynamic funds through its branches in Asia and Latin America....
Higher commodity prices and an improving global economy have pushed up the prices of many junior mining stocks recently. That has prompted more members of our Inner Circle service to ask us for our recommendations on junior mines they are considering investing in. (See below for further details on a junior firm that explores for rare earth elements, which have attracted a lot of investor attention lately. We recently analyzed this company for a member of our Inner Circle service.)
Junior mining stocks have strong potential — but use caution
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BANK OF NOVA SCOTIA, $53.59, Toronto symbol BNS, is buying the 82% of DundeeWealth Inc. (Toronto symbol DW) that it does not already own. DundeeWealth manages investments and operates a brokerage business. The company also owns the Dynamic family of mutual funds, and provides financial-planning and investment advice. DundeeWealth is a recommendation of Stock Pickers Digest, our newsletter for aggressive investing. The deal will double the size of Bank of Nova Scotia’s mutual-fund business, and make it the fifth-largest mutual-fund company in Canada. It gives also gives the bank a number of new growth opportunities: Bank of Nova Scotia will now be able to sell more of its products and services to DundeeWealth’s high-quality clientele. As well, the bank may sell Dynamic funds through its branches in Asia and Latin America. Moreover, by expanding its wealth-management business, Bank of Nova Scotia is putting itself in a position to profit as more baby boomers approach retirement....
Many investors fear that today’s artificially low interest rates and high government budget deficits will spur a huge rise in inflation. These fears are prompting many investors to devote more of their money to investing in gold and gold investments, because they believe gold will provide them with additional security. That helps explain why the price of gold has risen more than 50% since the fall of 2008. We agree that a huge burst of inflation is a possibility in the next few years. But it’s a mistake to assume that vastly higher inflation is a certainty, as many who are investing in gold do today....
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 advice on making successful stock market investments. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Tip of the week: “In the long run, share buybacks can complement your dividend profits.” Stock market investments have two main ways to distribute their profits to shareholders. They can pay dividends, or they can buy back their own shares. Both dividends and buybacks pay off for investors. Here are 3 reasons why:...
Over the past few months, we’ve periodically looked at common mistakes most investors make, and given you our investment advice on how to avoid them. Here are 3 more common errors all investors make from time to time.
- Losing patience. Good chess players never “go for broke,” as the saying goes. Instead, they try to position their pieces so they can profit from the mistakes they expect from opponents who are less talented, less experienced or less patient. Successful investors follow a comparable approach. But the crucial difference is that they have no opponents who can be relied upon to make mistakes. Instead, successful investors try to arrange their portfolios so that they more-or-less automatically tap into the profit and long-term growth that inevitably comes to well-established companies operating in relatively free and stable economies.
- Relying on brokers’ stock-price targets. Investors sometimes ask us why we don’t publish price targets in the investment advice we publish in our investment services and newsletters, including Canadian Wealth Advisor, our newsletter for conservative investing....
Tax-loss selling (or tax-loss harvesting) is a strategy for lowering your Canadian capital gains tax that involves selling a security at a loss in order to offset your capital gains. You can then deduct these losses against your taxable capital gains in the current tax year. For example, December 24 is the 2010 deadline for tax-loss selling on the Toronto Stock Exchange. If you sell at a loss on or before that date, you get to deduct your loss against your 2010 capital gains. If you still have capital losses left over, you can carry them back up to three years (2009, 2008 and 2007), or forward indefinitely to offset past or future capital gains....
Lately, more Inner Circle members have been asking us about investing in commodity stocks that mine or process rare earth elements. Rare earths are used in a variety of modern devices and applications, including catalytic converters and petroleum refining; magnets in small and large motors; glass additives and glass polishing compounds; rechargeable batteries; television and computer screens; lighting; X-ray machines; and lasers. Prices of rare earth elements have risen sharply. That’s mainly because China, which accounts for around 95% of global production, has imposed a 72% cut in export quotas for the second half of 2010. China regularly imposes quotas on exports of rare earths to boost prices internationally and ensure enough supplies for Chinese companies....