stock prices

Some investors rely on technical analysis (or chart reading) when they’re looking to add high return investments to their portfolios. That’s because relying on charts seems much simpler than delving into and weighing a company’s fundamentals. We always do some technical analysis when we look for high return investments to recommend in our newsletters, including Stock Pickers Digest, our newsletter for aggressive investing. And some successful investors find it helps to know a little about charts. But if you rely on charts at all, you should view them as just one of many things to consider when you make investment decisions. ...

As investors near retirement, their advisors often recommend that they move a larger part of their investments from stocks to bonds and other fixed-return investments. To some extent, this is an understandable strategy, since bonds provide steady income and a guarantee to repay the principal at maturity. ...

When investing in the stock market, as in life, it pays to remember that most things we worry about never happen. It’s in our nature. As humans, we are bred to overreact to, dwell on or even brood over any hint of risk. Today’s common investment-related worries include the possibility of Japanese–style deflation in North America, currency wars, the threat of war on the Korean peninsula and the potential need for more European bailouts. ...

In light of today’s low interest rates, we continue to recommend that income-seeking investors buy high-quality utility stocks instead of bonds. These five utilities’ dividend yields have come down lately, but that’s because their stock prices are rising, not because they are cutting their payouts. In fact, all five have been raising their dividends, and their steady cash flows will let them continue to do so. FORTIS INC. $32 (Toronto symbol FTS; Conservative Growth Portfolio, Utilities sector; Shares outstanding: 173.7 million; Market cap: $5.6 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.5%; TSINetwork Rating: Above Average; www.fortis.ca) is the main supplier of electrical power in Newfoundland and Prince Edward Island. It also operates power plants in other parts of Canada, as well as the U.S., Belize and the Cayman Islands. Fortis’ other businesses include Terasen Inc., which distributes natural gas in B.C., and hotels in Atlantic Canada....

Recently, we heard from an investor who inquired about our Successful Investor Wealth Management service. She said she likes our approach to investing, but she admits to some concern about what she called our “all-equities philosophy.” Her broker says that all investors need to hold some bonds to reduce the volatility in their portfolios. “Philosophy” is the wrong word for it. Our view on bonds and other fixed-return investments is a reaction to today’s economic and investment situation. Up till the mid-1990s, in fact, we routinely advised that fixed-return investments, such as bonds, should make up anywhere from one-third to two-thirds of a conservative investor’s portfolio.

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Many people come up with unrealistic answers to the question of how much risk is right for them. For instance, when they’re young and just starting out, many investors decide to move away from safe investing principles and speculate. They expect to build a small portfolio into a big one in a hurry, then shift their money into boring, but more dependable investments. As a newcomer in any field, however, it’s easy to fall victim to ruses and snares that someone with more experience would spot right away. Later on, you’ll know better than to bid on an ugly painting just because it’s the work of a noted artist, or invest in a building that faces expensive repairs due to delayed maintenance, or buy a promotional stock due to rumours or touting.

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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 the fundamentals of successful portfolio investing. Each Investor Toolkit update gives you a fundamental portfolio investing tip and shows you how you can put it into practice right away.

Today’s tip: “Base investments on value, not stock price flip-flops”

Stocks go up and down every day....

When stock prices are highly volatile and bad news (strikes and national bankruptcy risk in Europe, the threat of war in Korea, risk of Japanese-style deflation in North America) seems to be everywhere, it’s natural to wonder if you should sell all or part of your portfolio and simply hold the cash until things look clearer. Going into cash can, of course, relieve stress. You might even get lucky — prices may fall after you sell, and you may manage to buy back in at a lower price. But in the long run, following a stock market timing strategy of going back and forth between stocks and cash is virtually certain to cost you money. How could it be otherwise? After all, if you could consistently spot good times to get in or out of the market, you could consistently make 10% to 20% per year on your money — more if you employed leverage. So why would you work? Why would anybody work?...

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 successful investing. Each Investor Toolkit update gives you a fundamental tip and shows you how you can put it into practice right away. Today’s tip: “Dividends can produce a large part of your total return over long periods.” Dividends rarely get the respect they deserve, especially from beginning investors. That’s because a dividend paying stock’s yearly 2% or 3% or 5% dividend barely seems worth mentioning alongside possible yearly capital gains of 10%, 20% or 30% or more....

I can think of three reasons why you might want to hold cash at any one time. 1. You can’t sleep at night because you are nervous about the market outlook. In that case you should, as the saying goes, sell down to the sleeping point. 2. You expect you will need to take cash out of your portfolio in the next year or two and you don’t want to risk having to raise cash by selling stocks at low prices....