In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
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Investors should approach all investments with a healthy sense of skepticism. This can help keep you out of fraudulent stocks that masquerade as high-quality stocks. It will also keep you out of legally operated, but poorly managed, companies that promise more than they can possibly deliver.
If you are a new investor, you should also realize that losing patience can cause you to sell your best choices right before a big rise. All too often, investors buy a promising stock just as it enters a period of price stagnation. Even the best-performing stocks run into these unpredictable phases from time to time. They move mainly sideways in a wide range for months or years before their next big rise begins. (Stock brokers often refer to these stocks as “dead money.”)
If you lack patience, you run a big risk of selling your best choices in the midst of one of these phases, prior to the next big move upward. If you lose patience and sell, you are particularly likely to do so in the low end of the trading range, when stock prices have weakened and confidence in the stock has waned.
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The company distributes its products in 197 countries through a network of 157 independent dealers. Caterpillar receives a little over half of its sales from North America, followed by EMEA (19%), Asia Pacific (18%), and Latin America (10%). Its clients are mainly in the mining, logging, farming, construction, power and energy industries. The company also provides dealers and customers with equipment financing and insurance.
Here are the company’s key segments:
Power and Energy: This is the largest segment, accounting for around 40% of annual sales. Products and services include engines, generator sets, integrated systems and solutions, turbines and turbine-related services.
Those investment accounts run the gamut from RRSPs (regular and spousal), TFSAs and other registered accounts to personal and joint accounts, corporate accounts, LIRAs from past employment, children’s and trust accounts, and so on.
In addition, some investors have one or more of what you might call “legacy” accounts. These are accounts with brokers you no longer do business with, but you never quite get around to transferring.
This fragmented-portfolio situation is more common than you’d guess. In fact, it’s a phenomenon frequently associated with decades of self-directed investing.