How To Invest
In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience.
[text_ad]
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.
[text_ad]
Read More
Close
How To Invest Library Archives
In 2011, gold shot up to a high of $1,950 U.S. an ounce, and silver reached a peak of $48.48. Gold prices then fell steadily, hitting a low of $1,050 in December 2015 for the first time since early 2010. The metal now trades at $1,143. Silver also declined to a five-year low of $13.65 an ounce in December 2015. It now trades at $14.68. Longer term, gold and silver could well regain their 2011 highs. This would simply reflect the vast inflationary expansion in the U.S. money supply since the 2008 financial crisis....
GLOBAL X COPPER MINERS ETF $10.06 (New York symbol COPX; buy or sell through brokers; www.globalxfunds.com) tracks the Solactive Global Copper Miners Index, which includes 20 to 40 international companies that mine, refine or explore for copper. Germany-based Structured Solutions AG created this index. Canadian firms make up 38.8% of the ETF’s holdings. It also includes companies based in Australia (15.6%), Mexico (5.5%), Peru (5.4%) and Poland (5.0%). The fund’s MER is 0.65%. Its top holdings are Southern Copper at 6.9%; Oz Minerals, 6.8%; CST Mining Group, 6.4%; Kaz Minerals plc, 5.9%; Sandfire Resources, 5.9%; Grupo Mexico, 5.7%; Glencore plc, 5.4%; Turquoise Hill, 5.4%; Lundin Mining, 5.4%; Jiangxi Copper, 5.4%; Copper Mountain Mining, 5.3%; and Antofagasta plc, 4.6%....
MANITOBA TELECOM SERVICES INC. $30.95 (Toronto symbol MBT; Shares outstanding: 79.3 million; Market cap: $2.4 billion; TSINetwork Rating: Average; Dividend yield: 4.2%; www.mts.ca) has completed the sale of its Allstream division to U.S.-based Zayo Group (New York symbol ZAYO). The company received $420.0 million, net of transaction costs. It will probably put the proceeds toward its long-term debt, which was $677.1 million as of September 30, 2015. That’s equal to 29% of its $2.4-billion market cap. Manitoba Telecom is still a hold....
IBM $124.72 (New York symbol IBM; Shares outstanding: 970.1 million; Market cap: $137.4 billion; TSINetwork Rating: Above Average; Dividend yield: 4.2%; www.ibm.com) reported better-than-expected results in its latest quarter. In the quarter ended December 31, 2015, revenue fell 8.5%, to $22.06 billion from $24.11 billion a year earlier. However, that beat the consensus of $22.04 billion. IBM gets 60% of its revenue from outside the U.S., and the higher U.S. dollar hurts the value of these sales. The company continues to expand in fastergrowing areas like cloud computing and analytics software. In the latest quarter, IBM’s cloud and analytics businesses increased their revenue by 16%. That revenue now accounts for 35% of the company’s total. It also helps offset weaker demand for IBM’s consulting services and mainframe computers....
I recently exchanged investment ideas with an acquaintance who has worked in the investment business for the past several decades. After I explained how we choose stocks to recommend and how we manage client portfolios, he said, “I completely agree! I diversify for each one of my clients. My view is that if you buy a bunch of different stocks, one of them is bound to pop.” Many investors would no doubt agree. However, it takes more to succeed in diversifying your portfolio. If you just buy a bunch of different stocks, you may wind up with a grab bag of duds. But even if you stick with high-quality stocks, you may find that many of them respond to or are vulnerable to one particular type of risk. If this one factor moves against you, your entire portfolio can suffer....
SolarCity Corp., $32.00, symbol SCTY on Nasdaq (Shares outstanding: 97.6 million; Market cap: $3.5 billion; www.solarcity.com), provides rooftop solar systems for homeowners, businesses, schools and government agencies in the U.S. SolarCity’s chairman is Elon Musk, who is also the CEO of Tesla Motors. The company creates a customized energy plan for each customer, then sells, finances, engineers, installs, monitors and maintains the system. Customers can “sell” any electricity they don’t use onto their local, or state, power grid for credits they can use to “buy” electricity at night. SolarCity continues to grow quickly. On September 30, 2015, SolarCity had a total of 298,030 customers, up 77% from a year earlier. In 2013, it had a customer base of just 44,579....
Student Transportation Inc., $4.88, symbol STB on Toronto (Shares outstanding: 96.5 million; Market cap: $479.4 million; www.ridesta.com), is North America’s third-largest school bus operator, with almost 13,000 vehicles in Canada and the U.S. In its fiscal 2016 first quarter, which ended September 30, 2015, Student Transportation’s revenue rose 5.5%, to $93.4 million from $88.5 million a year earlier (all figures except share price and market cap in U.S. dollars). The company lost $9.5 million, or $0.10 a share, compared to a year-earlier loss of $8.8 million, or $0.11 a share. Student Transportation typically loses money in its fiscal first quarter because it includes the summer break. The stock yields a high 11.9%. Student Transportation has paid dividends for 135 consecutive months, and while there are no guarantees, its payout appears safe for now....
DIRTT Environmental Solutions Ltd., $6.47, symbol DRT on Toronto (Shares outstanding: 84.0 million; Market cap: $553.5 million; www.dirtt.net), designs and builds customized office interiors. DIRTT stands for “doing it right this time.” The company believes its ICE 3-D software lets it deliver pre-made, customizable interiors faster and more efficiently than traditional construction methods. DIRTT first sold shares to the public at $3 each and began trading on Toronto in November 2013. In the three months ended September 30, 2015, the company’s revenue rose 33.1%, to $62.1 million from $46.7 million a year earlier. DIRTT gets 80% of its revenue from clients in the U.S., so it gains from a higher U.S. dollar. As well, increased demand from the financial services, real estate, retail and scientific industries offset a decline in projects from oil and gas companies....
The BMO Low Volatility Canadian Equity ETF, $25.54, symbol ZLB on Toronto (Units outstanding: 25.6 million; Market cap: $653.8 million; www.etfs.bmo.com), provides exposure to a low beta weighted portfolio of Canadian stocks. The ETF selects the 40 lowest beta stocks from the 100 largest and most liquid securities in Canada. The underlying portfolio is rebalanced in June and reconstituted in December. The BMO Low Volatility Canadian Equity ETF has an MER of 0.40%. It currently yields 2.5%. The BMO Low Volatility Canadian Equity ETF’s current top holdings are: Fairfax Financial, Canadian REIT, Dollarama, Progressive Waste Solutions, Empire Company, Intact Financial, RioCan REIT, Emera, Metro Inc. and BCE Inc....
When the market is as volatile as it is today, it pays to keep the mechanics of successful investing in mind. For newcomers to our Inner Circle, let me start with a short explanation of our three-part Successful Investor approach to portfolio building: 1.Invest mainly in well-established, dividend-paying companies. Ideally, some of your picks should have hidden assets—that is, assets that many investors disregard or fail to appreciate....