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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Canadian National Railway’s $33.6 billion U.S. takeover attempt for rival Kansas City Southern failed after regulators blocked a key condition of the deal. As a result, KCS has now agreed to merge with Canadian Pacific Railway—CN’s main competitor.
Investors tend to dislike the risk that comes with big acquisitions, and CN stock rallied on the news....
Its sales break down as follows: pharmaceuticals, 71%; vaccines, 17%; and consumer healthcare, 12%....
Our first question this week—see below—is from an Inner Circle member who is thinking about buying either Nike or Lululemon, and asks us to compare the two. It’s an uncommon question, since the answer depends on his investment goals, finances and temperament, what he wants in a new investment, as well as what he already owns.
To address the question, we’d start by comparing how the two companies stand in relation to each other on a wide range of measures....