How To Invest
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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How To Invest Library Archives
ENBRIDGE INC. $44.58 (Toronto symbol ENB; Shares outstanding: 856.7 million; Market cap: $39.4 billion; TSINetwork Rating: Above Average; Dividend yield: 4.8%; www.enbridge.com) will make a final decision on its proposed Northern Gateway pipeline in the second half of 2016. This $7.9-billion project would pump crude from Alberta to the B.C. coast. From there, tankers would ship the oil to Asian markets. Regulators have approved the line, but the new federal Liberal government plans to ban tanker traffic off of B.C.’s northern coast, which hurts the project’s viability. Meanwhile, Enbridge has raised its dividend by 14.0%. The new annual rate of $2.12 a share yields 4.8%....
ARC RESOURCES $16.05 (Toronto symbol ARX; Shares outstanding: 345.1 million; Market cap: $5.7 billion; TSINetwork Rating: Speculative; Dividend yield: 7.5%; www.arcresources.com) produces oil and natural gas in Western Canada. Its average daily output of 107,261 barrels of oil equivalent is 66% gas and 34% oil. In the three months ended September 30, 2015, ARC’s cash flow per share dropped 42.7%, to $0.51 from $0.89 a year earlier. Production fell 7.2%, and its realized oil price fell 43.8%. Gas prices declined 32.1%. Like many oil and gas producers, ARC is cutting exploration and development spending. In 2016, it will devote $550.0 million to this purpose. That’s equal to what it spent in 2015 but down sharply from $945.5 million in 2014....
NEWMONT MINING $18.56 (New York symbol NEM; Shares outstanding: 529.1 million; Market cap: $9.8 billion; TSINetwork Rating: Average; Dividend yield: 0.5%; www.newmont.com) has updated its long-term production goals and operating cost forecasts. The company expects its gold production to rise from 4.7 million to 5.1 million ounces in 2015 to between 5.2 million and 5.7 million ounces in 2017 as it opens new mines. It also recently acquired the Cripple Creek & Victor gold mine in Colorado for $820 million. Newmont’s annual output will likely fall to between 4.5 million and 5.0 million ounces from 2018 to 2020. However, the company could reverse that trend through acquisitions....
Exchange traded funds (ETFs) are set up to mirror the performance of a stock market index or sub-index. They hold a more or less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index. ETFs trade on stock exchanges, just like stocks. That’s different from mutual funds, which you can only buy at the end of the day at a price that reflects the fund’s value at the close of trading. Prices of ETFs are quoted in newspaper stock tables and online. You pay brokerage commissions to buy and sell them, but their low management fees give them a cost advantage over most mutual funds....
TELUS $37.70 (Toronto symbol T; Shares outstanding: 600.1 million; Market cap: $22.9 billion; TSINetwork Rating: Above Average; Dividend yield: 4.7%; www.telus.com) will now face heightened competition in Western Canada from Shaw Communications (Toronto symbol SJR.B) after Shaw’s recent $1.6-billion purchase of wireless carrier Wind Mobile. Wind operates in Ontario, Alberta and B.C. By adding Wind, Shaw will be able to offer wireless service to its customers, in addition to its main cable television, satellite and Internet offerings. Telus already sells similar bundles in Western Canada, so Shaw’s move will increase competition for new customers....
VERESEN $8.60 (Toronto symbol VSN; Shares outstanding: 295.8 million; Market cap: $2.6 billion; TSINetwork Rating: Average; Div. yield: 11.6%; www.vereseninc.com) and KKR & Co. LP (symbol KKR on New York) formed a joint venture called Veresen Midstream in late 2014. The partners then bought natural gas gathering and compression assets in northeastern B.C. from Encana and Japan’s Mitsubishi Corp. for $1 billion. As well, Veresen Midstream agreed to undertake a $5-billion expansion for gas producers, including Encana. These developments would be backed by 30-year contracts. That will significantly cut Veresen Midstream’s risk....
The Bank of Canada cut its key interest rate to 0.50% from 0.75% in July 2015. The move came as the Canadian economy slowed along with falling prices for oil and other commodities. Even so, the long-term outlook is for higher interest rates—especially after the U.S. Federal Reserve raised its benchmark rate by 0.25% in December 2015 and signaled further increases to come. We continue to advise against investing in bonds right now. That’s because today’s low interest rates make bonds unattractive, and rising rates would push down their future value....
BCE INC. $54.71 (Toronto symbol BCE; Shares outstanding: 849.3 million; Market cap: $46.0 billion; TSINetwork Rating: Above Average; Dividend yield: 4.8%; www.bce.ca) has reached a deal with video-streaming giant Netflix (symbol NFLX on Nasdaq). Under the agreement, all BCE’s Fibe TV and FibreOP TV subscribers will be able to access their Netflix accounts directly through set-top boxes. Now, instead of buying new equipment or switching TV inputs, Netflix subscribers can just select the Netflix app on their remote controls. Netflix competes with BCE’s CraveTV videostreaming service, but it’s hugely popular, with over four million Canadian subscribers. That gives Fibe an edge over rivals such as Rogers....
CENOVUS ENERGY $17.33 (Toronto symbol CVE; Shares outstanding: 833.2 million; Market cap: $14.5 billion; TSINetwork Rating: Average; Dividend yield: 3.7%; www.cenovus.com) plans to spend $1.4 billion to $1.6 billion on upgrades to its oil and gas properties in 2016. That’s down about 19% from $1.8 billion to $1.9 billion in 2015. The company will spend 80% of the funds budgeted for 2016 on maintaining existing wells and refineries. It will use the remaining 20% to expand its oil sands projects. Meantime, Cenovus is doing a good job of cutting costs in response to lower oil prices. For 2016, it expects per-barrel operating costs at its Foster Creek and Christina lake oil sands projects to be 15% lower than 2014....
CANADIAN PACIFIC RAILWAY $164.93 (Toronto symbol CP; Shares outstanding: 153.8 million; Market cap: $27.1 billion; TSINetwork Rating: Above Average; Dividend yield: 0.9%; www.cpr.ca) has revised its takeover offer for U.S.-based railway Norfolk Southern Corp. (New York symbol NSC) for a second time. Norfolk shareholders would still receive $32.86 U.S. a share in cash plus 0.451 of a CP share for each Norfolk share held. That would give them 47% of the combined company, compared to 41% under CP’s initial offer. Under the new bid, Norfolk shareholders would also get 0.451 of a contingent value right. Each CVR entitles the holder to a cash payment based on the combined firms’ share price, ranging from zero to a maximum of $25.00 U.S., by October 20, 2017. CP expects to list the CVRs on U.S. and Canadian stock exchanges....