investment
An investment is an asset or property acquired to generate income or gain appreciation. Appreciation is the increase in the value of an asset over time. It requires the outlay of a resource today, like time, effort, and money, for a greater payoff in the future or for generating a profit.
An investment involves using capital in the present to increase an asset’s value over time.
Investments may include bonds, stocks, real estate, or alternative investments.
Investments can be diversified to reduce risk, though this may reduce the amount of earning potential.
In business contexts, investments are financial; however, consider how some people spend time to make higher incomes in the future (i.e. invest in a college education).
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Pat McKeough responds to many requests from members of his Inner Circle for specific investing advice as well as questions on investment strategy and the economy. 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 members of Pat’s Inner Circle....
FIRSTSERVICE CORP. $49.52 (Toronto symbol FSV; TSINetwork Rating: Extra Risk) (416-960-9500; www.firstservice.com; Shares outstanding: 34.3 million; Market cap: $1.8 billion; Dividend yield: 0.9%) serves the following areas of the real estate market: commercial real estate, residential property management and property improvement....
You may have read about the “scary 1929 market chart” that has been making the rounds on Wall Street. It shows two periods of trading history of the Dow Jones Industrial Average, superimposed one over the other. (You can see the chart in a Mark Hulbert column at www.marketwatch.com) One period covers 1928 and 1929. The Dow had a sharp rise in 1928 and the first three quarters of 1929, followed by the October 1929 market plunge which led into the 1930s depression. The second period on the chart shows the Dow from mid-2012 through today. The two periods are aligned so that the peak in the 1929 market is roughly above the recent peak in today’s market. When you compare the two historical patterns, you can see some vague similarity between the two sets of squiggles. It’s clear that the creator of the chart wants to suggest that history is repeating itself and the Dow is headed for a 1929-1932 style collapse. These “1929-all-over-again” charts have been around for as long as I’ve been in the investment business. The last time I recall one of them gained this much notice was in the first half of 1988. Back then, investors were still rattled by the one-day, 22.5% market plunge that happened on October 19, 1987, sometimes referred to as “Black Monday”....
BANK OF MONTREAL $70 (Toronto symbol BMO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 644.5 million; Market cap: $45.1 billion; Price-to-sales ratio: 2.2; Dividend yield: 4.2%; TSINetwork Rating: Above Average; www.bmo.com) is Canada’s fourth-largest bank, with $537.3 billion of assets. The bank is buying U.K.-based F&C Asset Management, which sells investment services to individuals and institutional clients, such as pension plans and insurance companies. F&C has $136 billion U.S. in assets under management, which will increase the assets that Bank of Montreal’s Global Asset Management division administers to $269 billion U.S. The purchase will also add many wealth management clients outside North America....
ROYAL BANK OF CANADA $71 (Toronto symbol RY; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 1.4 billion; Market cap: $99.4 billion; Price-to-sales ratio: 2.7; Dividend yield: 3.8%; TSINetwork Rating: Above Average; www.rbc.com) is Canada’s second-largest bank, with $860.8 billion of assets. Royal recently agreed to sell its 13 branches and related operations in Jamaica. The country’s struggling economy has hurt these branches’ profits in the past few years, so selling them frees up cash for Royal to invest in its more promising Caribbean business. The bank will record a one-time loss of $60 million on the deal. Meanwhile, Royal earned $8.4 billion in its 2013 fiscal year, which ended October 31, 2013. That’s up 11.1% from $7.6 billion in 2012. Earnings per share rose 12.4%, to $5.54 from $4.93, on fewer shares outstanding....
GOODYEAR TIRE & RUBBER, $26.76, symbol GT on New York, is up over 10% after reporting strong earnings yesterday. The company also announced that it has used its rising profits to add $1.15 billion in cash to its U.S. hourly workers’ defined-benefit pension plan. This plan is now fully funded, and Goodyear has started to freeze it. A defined benefit plan is where an employer promises to pay a specified monthly retirement benefit regardless of employee contributions or investment performance. Under its recent four-year contract with its U.S. unions, Goodyear has the right to freeze this plan once it’s fully funded....
CANADA BREAD CO. LTD., $72.30, Toronto symbol CBY, has accepted a $72.00-a-share takeover offer from Mexican bakery giant Grupo Bimbo SAB. Canada Bread’s shares are trading slightly higher than the bid. That’s because the deal lets the company keep paying quarterly dividends of up to $0.75 a share until Grupo Bimbo completes the takeover, probably by June 30, 2014. Before the deal, Canada Bread paid quarterly dividends of $0.50 a share. Investors should tender their shares to Grupo Bimbo to receive the full $72.00 without paying brokerage fees....