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Our first item raises an interesting question: How does LinkedIn compare to Facebook? Neither one has immediate appeal as an investment. After all, both are good examples of in-the-limelight stocks. That is, both trade at high prices that reflect excessive investor expectations. Prices of in-the-limelight stocks can rise substantially if they remain in the broker/media limelight and continue to generate news that maintains investor enthusiasm. But when the news turns negative, these stocks can drop like stones. Stocks can drop out of the limelight and experience steep stock-price declines yet still go on to great business success. Some wind up like Microsoft. It has more than tripled its per-share profit in the past dozen years, but its stock price is within the same trading range as it was 12 years ago. At both times it was well below the peak it hit in the Internet boom of the late 1990s....

BCE INC. $41.54 (Toronto symbol BCE; Shares outstanding: 773.6 million; Market cap: $32.1 billion; TSINetwork Rating: Above Average; Dividend yield: 5.2%; www.bce.ca) is teaming up with a group of other investors, including the Ontario Teachers’ Pension Plan, to buy privately held Q9 networks Inc.

Toronto-based Q9 provides data-storage and web-hosting services to businesses across Canada. It has 11 data centres in Ontario, Alberta and B.C.

This investment will help BCE take advantage of growing demand from business clients for reliable cloud-computing services (the general term for shifting software and data off of users’ machines and onto service providers’ machines via the Internet). The company already operates six data centres. It will open a seventh later this year.

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BCE INC. $41.54 (Toronto symbol BCE; Shares outstanding: 773.6 million; Market cap: $32.1 billion; TSINetwork Rating: Above Average; Dividend yield: 5.2%; www.bce.ca) is teaming up with a group of other investors, including the Ontario Teachers’ Pension Plan, to buy privately held Q9 networks Inc. Toronto-based Q9 provides data-storage and web-hosting services to businesses across Canada. It has 11 data centres in Ontario, Alberta and B.C. This investment will help BCE take advantage of growing demand from business clients for reliable cloud-computing services (the general term for shifting software and data off of users’ machines and onto service providers’ machines via the Internet). The company already operates six data centres. It will open a seventh later this year....

We were pleased to learn in November 2011 that Warren Buffett had made a major investment in IBM. Indeed, Mr. Buffett was recently quoted as saying that he was “late to the IBM party,” but even so he has committed a good deal of money to it. He now owns 6% of the company. We made IBM our #1 U.S. Stock of the Year in our Wall Street Stock Forecaster newsletter in 2010. The price was $126—yet it has risen over 60% since then. We think IBM will go still higher in years to come, and it appears Warren feels the same way....

We are pleased to learn that Warren Buffett has made a major investment in IBM. You may recall that IBM was our #1 Stock of the Year in Wall Street Stock Forecaster last year. Since then, the stock has risen by around 41%. I think IBM is going a lot higher in years to come, and it appears Warren feels the same way. As you know from reading our analyses, IBM has moved away from its earlier stress on manufacturing and toward a business model that combines equipment, software and service. This gives the company steadier revenues and safer growth, because its customers don’t like to change service providers when they update their equipment. In addition, IBM has a couple of key advantages in the fast-growing area of cloud computing (the general term for shifting software and data storage off of users’ machines and onto service providers’ machines, via the Internet). First, IBM has some of the best cloud-computing technology available; second, it has one of the most trusted business names on the planet. When you commit your data “to the cloud”, you won’t trust just anybody with it....

Some investors think by focusing our portfolio management strategy on stocks, and staying out of bonds and fixed-return investments, we’re missing out on bonds’ ability to lower portfolio volatility.

It’s true that bonds do tend to reduce your portfolio’s volatility, since they tend to rise when stock prices fall....

We’re optimistic about the stock market in 2011. The recent U.S. midterm election results support our view that the Obama administration is likely to tone down its investor-unsettling policies. Moreover, the stock market has stayed reasonably strong, despite reports of new European financial strains. Year-end retail sales seem to be strengthening. All these are good signs. To put yourself in the best position to profit in 2011, it pays to remember these 3 keys to successful investing:

1. Invest for the long term: As a general rule, it’s a mistake to try to read too much into short-term market moves, or the failure of a stock to make a new high. There’s a random element in all short-term stock direction. That’s especially so of junior companies. Many times stocks rise on the expectation of good news, then drop when the good news becomes public. This principal gets summed up in the old-time investor saying about how to trade stocks, “Buy on mystery, sell on history.”
2. Resist the urge to invest based on popular themes or fads: When you indulge in theme investing, you allow a theme or concept to take a central place when deciding what to add to your stock portfolio. Today’s popular investment themes include alternative energy, such as solar wind and geothermal, and “cloud computing” (companies that provide software and data storage that you communicate with via the Internet)....

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.

Our view on stocks and bonds is a reaction to the times

“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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Greenbrier Cos., $12.20, symbol GBX on New York (Shares outstanding: 21.9 million; Market cap: $266.8 million), supplies equipment and services to the railroad industry. Greenbrier builds new railroad freight cars in its three manufacturing plants in the U.S. and Mexico. The company also builds marine barges at its U.S. facility. In addition, Greenbrier repairs and refurbishes freight cars and sells wheels and railcar parts at 37 locations across North America. In Europe, the company builds new railroad freight cars and refurbishes freight cars through its plant in Poland, and in various subcontractor facilities throughout Europe. As well, Greenbrier owns about 8,000 railcars, and performs management services for roughly 225,000 railcars. In the three months ended May 31, 2010, Greenbrier’s revenue fell 13.5%, to $211.5 million from $244.4 million a year earlier. The company earned $4.6 million, or $0.25 a share, compared to a loss of $51.1 million, or $3.04 a share. Without one-time charges and writedowns, Greenbrier earned $0.27 a share in the latest quarter, up from $0.02 a share. The company improved its productivity, and experienced higher sales at its operations that generate higher profit margins....

Canadian Oil Sands Trust, $25.51, symbol COS.UN on Toronto (Units outstanding: 484.4 million: Market cap: $12.4 billion), has a 36.74% interest in Syncrude Canada Ltd. Canadian Oil Sands’ share of Syncrude’s current oil production is about 118,569 barrels per day. Syncrude is the largest producing oil-sands project in the world, and Canadian Oil Sands Trust is Syncrude’s biggest stakeholder. Other partners in the Syncrude Canada venture include Imperial Oil (25%); Suncor Energy (12%); ConocoPhillips (9.03%); Nexen Oil Sands Partnership (7.23%); Mocal Energy (5%); and Murphy Oil (5%). ConocoPhillips recently agreed to sell its 9.03% stake in Syncrude to China’s Sinopec for $4.65 billion U.S. Based on that price, Canadian Oil Sands’ 36.74% interest in Syncrude is potentially worth $18.9 billion U.S. That’s 28.6% more than the trust’s current market cap. The sale should close in the third quarter of 2010....