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
ISHARES MSCI SOUTH KOREA INDEX FUND $ISHARES MSCI SOUTH KOREA INDEX FUND55.29 (New York symbol EWY; buy or sell through brokers) has rebounded from the low of $42.94 it dropped to in August 2015. That’s because the South Korean economy grew at its fastest pace in five years in the third quarter of 2015, boosted by higher domestic demand after a big government stimulus program. That offset slowing exports caused by slowing demand, particularly in China. The South Korean government launched the stimulus spending after an outbreak of Middle East respiratory syndrome cut heavily into tourism and consumer spending in the second quarter....
TD BANK $54.16 (Toronto symbol TD; Shares outstanding: 1.9 billion; Market cap: $100.3 billion; TSINetwork Rating: Above Average; Dividend yield: 3.8%; www.td.com) is seeing slowing loan demand, especially in Western Canada, where the oil-price drop has forced producers to postpone projects and lay off workers. At the same time, low interest rates are cutting the interest income TD earns on its loans, and more of its customers are banking online instead of in bank branches. All of these factors have prompted the bank to look for ways to cut costs and boost efficiency at its Canadian and U.S. operations. That will probably lead to several hundred job cuts....
TRANSCANADA CORP. $45.10 (Toronto symbol TRP; Shares outstanding: 708.9 million; Market cap: $31.5 billion; TSINetwork Rating: Above Average; Dividend yield: 4.6%; www.transcanada.com) earned $440 million, or $0.62 a share, in the three months ended September 30, 2015. That’s down 2.2% from $450 million, or $0.63 a share, a year earlier. The decline is mainly due to lower power prices in Alberta. Unplanned outages also cut earnings at the Bruce nuclear power station in Ontario (TransCanada owns 48.9% of the Bruce A reactor and 31.6% of Bruce B). However, revenue rose 20.1%, to $2.9 billion from $2.45 billion, due to gains from its pipelines and U.S. power plants....
Investing guidelines and rules of thumb can help you make better investment decisions. But to profit most from any one guideline, you need to understand why it works. That way, you can determine if the rule makes sense in a particular situation. For example, our rule on new stock issues or IPOs (Initial Public Offerings) is simple. We generally stay out of them. That’s because new stock issues come to market when it’s a good time for the company or its insiders to sell. That may not be a good time for you to buy. In fact, it’s often a bad time for you to buy, judging by academic studies of new-issue performance. In addition, brokers reserve their best new issues for their biggest and most co-operative clients—those who do a lot of trading, or who buy every new issue the broker offers them. If you rarely buy new issues, you will rarely if ever be able to buy a significant portion of the best new issues....
Hydro One Inc. is an electricity transmission and distribution utility owned by the province of Ontario. It owns and operates 96% of Ontario’s electricity-transmission capacity, serving 1.4 million customers through its 29,000 kilometres of power lines. Transmission refers to the delivery of electricity over high-voltage lines, typically over long distances, from generating stations to local areas and industrial customers. Distribution refers to the delivery of electricity over low-voltage lines to users such as homes, businesses and institutions. Hydro One doesn’t generate electricity. Ontario Power Generation, also owned by the province of Ontario, supplies about 50% of the province’s power. Companies like Northland Power, TransAlta and TransCanada Corp., along with small independent producers, supply the rest....
Weight Watchers International, $16.14, symbol WTW on New York (Shares outstanding: 57.2 million; Market cap: $880.1 million; www.weightwatchers.com), offers weight-loss services in 23 countries. The company promotes a program of lifestyle changes through over 36,000 weekly member meetings and online. It gets 80% of its revenue by collecting meeting fees and 20% from product sales. Weight Watchers has been in business for over 54 years. Jean Nidetch, a homemaker living in Queens, New York, founded the company in 1961. Nidetch struggled to lose weight, so she started a support group with friends and neighbours....
Callidus Capital, $11.16, symbol CBL on Toronto (Shares outstanding: 49.3 million; Market cap: $551.6 million; www.calliduscapital.ca), offers loans to mostly mid-sized Canadian and U.S. companies that are unable to get adequate financing from traditional lenders. Its clients include technology and resource firms. These borrowers typically have trouble getting financing because they’re seen as higher risk, or because they only require small loans. Callidus’s loans typically range from $5 million to $50 million. The company first sold shares to the public and began trading on the Toronto exchange at $14 on April 23, 2014....
Mainstreet Equity, $32.50, symbol MEQ on Toronto (Shares outstanding: 10.3 million; Market cap: $333.9 million; www.mainst.biz), owns 216 properties with 9,319 apartment units, mainly in Western Canada. In the three months ended June 30, 2015, Mainstreet’s revenue rose 9.3%, to $25.1 million from $23.0 million a year earlier. Cash flow per share gained 15.9%, to $0.73 from $0.63. Mainstreet’s total debt, including mortgages, is $672.0 million, or a high 201% of its market cap. That’s compared to, say, RioCan Real Estate Investment Trust, a recommendation of our Successful Investor newsletter, whose total debt of $6.7 billion is 82.0% of its market cap....
In last Friday’s Wall Street Stock Forecaster Hotline, we analyzed the great results that McDonald’s Corp., $111.55, symbol MCD on New York (Shares outstanding: 941.8 million; Market cap: $105.7 billion; www.mcdonalds.com), reported for the three months ended September 30. It was a standout quarter, particularly compared to the weak results that many companies have reported this year.
The first media comment we saw on these results took the view that the stock had gone up enough to offset the improvement in its results. The investment reporter quoted what he called “cynical observers” who said “there was almost no way but up” for the stock. These observers pointed out that McDonald’s had trailed the market by 62 percentage points during a recent three-year period, and that the company had only registered growth in global same-store sales in one quarter out of the past seven.
The statistics in the last sentence are true. But when you analyze a stock, you can come to a wide range of conclusions, depending on the breadth of data you choose, and the beginning and end dates of the periods you look at.
McDonald’s stock price rose from pennies per share (adjusted for stock splits along the way) in the 1970s to a peak of $45 in 1999. Like a lot of high-quality stocks, it suffered in the first few years of the new millennium, and fell to as low as $12 in early 2003. Then it began another monumental rise.
It sailed through the 2008-2009 market downturn with barely a scratch. It hit an all-time high of $67 in August 2008. The following month, the U.S. federal government took control of mortgage giants Fannie Mae and Freddie Mac, and Lehman Brothers filed the largest bankruptcy case in U.S. history. McDonald’s fell on this news like the rest of the market. In October 2008, it hit $46, an 18-month low. The stock then resumed its rise and hit $100 in October 2011.
...
The first media comment we saw on these results took the view that the stock had gone up enough to offset the improvement in its results. The investment reporter quoted what he called “cynical observers” who said “there was almost no way but up” for the stock. These observers pointed out that McDonald’s had trailed the market by 62 percentage points during a recent three-year period, and that the company had only registered growth in global same-store sales in one quarter out of the past seven.
The statistics in the last sentence are true. But when you analyze a stock, you can come to a wide range of conclusions, depending on the breadth of data you choose, and the beginning and end dates of the periods you look at.
McDonald’s stock price rose from pennies per share (adjusted for stock splits along the way) in the 1970s to a peak of $45 in 1999. Like a lot of high-quality stocks, it suffered in the first few years of the new millennium, and fell to as low as $12 in early 2003. Then it began another monumental rise.
It sailed through the 2008-2009 market downturn with barely a scratch. It hit an all-time high of $67 in August 2008. The following month, the U.S. federal government took control of mortgage giants Fannie Mae and Freddie Mac, and Lehman Brothers filed the largest bankruptcy case in U.S. history. McDonald’s fell on this news like the rest of the market. In October 2008, it hit $46, an 18-month low. The stock then resumed its rise and hit $100 in October 2011.
...
Costco Wholesale Corp., $156.24, symbol COST on Nasdaq (Shares outstanding: 439.5 million; Market cap: $68.6 billion; www.costco.com), owns and operates warehouse-sized stores that sell a wide variety of consumer goods. The company charges its customers an annual membership fee, usually $55 a year, to shop in its stores. It has 687 outlets, including 481 in the U.S., 89 in Canada, 36 in Mexico, 27 in the U.K., 23 in Japan, 12 in South Korea, 11 in Taiwan, seven in Australia and one in Spain. It also sells products online in the U.S., Canada, the U.K. and Mexico. Costco plans to open up to 32 more outlets in the next year. About half will be outside the U.S., including a second store in Spain and its first location in France....