stock prices

Financial institutions continue to create and market products like index-linked GICs that harvest many fees and commissions, but typically limit your returns.

Here’s the text of the quarterly letter I recently sent to our Portfolio Management clients:

“The subject of interest rates comes up regularly these days, in the news and in investor conversations. U.S. Federal Reserve Board members see a need for rates to move up. Prior to the recent market downturn, they were still undecided on ‘how soon’ and ‘how much’.

If stocks remain weak into the fall months, the Fed is likely to leave interest rates unchanged. However, now is still a good time to review the role of bonds as an alternative to stocks.

Bonds have been rising for 35 years

Interest rates have generally been going down, and bond prices have been going up, since 1980. That year, the yield on 10-year U.S. government bonds peaked at around 16%. Currently they yield around 2%.

...

Companies that trade on the U.S. over-the-counter market are said to trade as “pink sheet stocks,” a holdover from the days when the quotes for these stocks were printed on pink paper....

The stock market and presidential elections have a relationship that can be summed up by what is known as the “four year rule.”

Brokers like theme investing because it gives them an opportunity to recommend new stocks or ETFs to their clients, which may not be beneficial to investors.

You enjoy certain advantages with Dividend Reinvestment Plans, but don’t overrate them—they shouldn’t be the sole reason you invest in a stock.

John Templeton, one of history’s most successful investors, played a big role in my investment education. One of Templeton’s most valuable investing guidelines is, “Invest at the point of maximum pessimism”. It’s also among the easiest Templeton quotes to misunderstand, and one that’s often misapplied. Note that Templeton didn’t say, “Invest only at the point of maximum pessimism”. Yet many investors take this quote to mean that you should hold your funds in T-bills or a bank account until you see “blood running in the streets” (a quote from another famed investor). That would be problematic to say the least. Pessimism is an open-ended condition. Pessimism never gets so bad that it can’t get worse. Maximum pessimism is easiest to spot in retrospect, since you can then measure it against subsequent events. One good example occurred in February 2009. A prominent Toronto investment figure, known for strong long-time views on stocks (bearish) and gold (bullish), convened a meeting in a downtown Toronto theatre. Some of the most prominent economic pessimists on the continent came to deliver bad news on the outlook....

Learn how to buy gold as an investment in your RRSP

You may have heard of blue chip stocks, but what are blue chip companies, and why are they a good investment?

PEPSICO INC. $92 (New York symbol PEP; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.5 billion; Market cap: $138.0 billion; Price-to-sales ratio: 2.0; Dividend yield: 3.0%; TSINetwork Rating: Above Average; www.pepsico.com) has suffered lately as a more health-conscious population consumes fewer soft drinks. Sales of its low-calorie sodas have also fallen on concerns over the long-term health effects of the artificial sweetener aspartame. In 2014, total U.S. diet soda sales declined 5.9%. In response, PepsiCo has replaced the aspartame in Diet Pepsi with Splenda, a low-calorie sweetener made from regular sugar. The switch will likely boost sales, as the company has launched a new marketing campaign and promotions that will likely encourage consumers to try the new drink. Even so, PepsiCo’s overall sales will likely stay weak for the rest of 2015. PepsiCo is a hold....