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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Guggenheim Solar ETF, $42.37, symbol TAN on New York (Units outstanding: 9.0 million; Market cap: $381.3 million; www.guggenheiminvestments.com), aims to match the performance of the Melvin and Company (MAC) Global Solar Energy Index, which includes 30 companies listed on exchanges in developed countries. The ETF’s top holdings are SunEdison, SolarCity, First Solar, GCL-Poly Energy Holdings, Hanergy Solar Group, SunPower, TerraForm Power, Canadian Solar, Meyer Burger Technology AG, Trina Solar and Xinyi Solar Holdings. The Guggenheim Solar ETF’s MER is 0.70%. It yields 1.5%....
TransCanada Corp. has considerable growth prospects in its huge $46-billion portfolio of projects now under construction. As well, it could unlock value by transferring assets to partly controlled affiliates. These transactions, called “drop downs,” help the parent free up cash for new projects. Activist investors could also pressure TransCanada to spin off its electrical-power operations as a separate firm. TRANSCANADA CORP. $55.25 (Toronto symbol TRP; Shares outstanding: 708.6 million; Market cap: $39.1 billion; TSINetwork Rating: Above Average; Dividend yield: 3.8%; www.transcanada.com) operates 68,500 kilometres of natural gas pipelines and over 11,800 megawatts of power generation in Canada and the U.S. In the three months ended December 31, 2014, TransCanada’s revenue rose 12.1%, to $2.6 billion from $2.3 billion a year earlier. Excluding one-time items, earnings per share rose 24.1%, to $0.72 from $0.58....
GREAT-WEST LIFECO $34.92 (Toronto symbol GWO; Shares outstanding: 996.7 million; Market cap: $35.2 billion; TSINetwork Rating: Above Average; Yield: 3.7%; www.greatwestlifeco.com) has reported strong results in its latest quarter and raised its dividend. Great-West is Canada’s largest insurance company. It also offers mutual funds and wealth management. Power Financial owns 67.0% of Great-West. The company’s earnings per share jumped 34.7% in the three months ended December 31, 2014, to $0.66 from $0.49 a year earlier. Revenue rose 33.1%, to $10.7 billion from $8.1 billion....
ARC RESOURCES $24.16 (Toronto symbol ARX; Shares outstanding: 335.0 million; Market cap: $8.2 billion; TSINetwork Rating: Speculative; Dividend yield: 5.1%; www.arcresources.com) produces oil and natural gas in Western Canada. Its average daily output of 117,986 barrels of oil equivalent is 61% gas and 39% oil. In the quarter ended December 31, 2014, ARC’s cash flow per share rose 3.9%, to $0.79 from $0.76 a year earlier. Realized oil prices fell 12.5%, to $72.49 a barrel from $82.85, but ARC’s production gained 17.0%, and its realized gas prices rose 15.0%. Like many oil and gas producers, ARC plans to cut back on exploration and development spending. This year, the company will devote $750.0 million to this purpose, down from $945.5 million in 2014....
RIOCAN REIT $28.76 (Toronto symbol REI.UN; Units outstanding: 313.9 million; Market cap: $9.2 billion; TSINetwork Rating: Average; Dividend yield: 4.9%; www.riocan.com) has agreed to form a new joint venture with Hudson’s Bay Co. (Toronto symbol HBC). The REIT will contribute $325 million to this new firm, consisting of 50% of two shopping malls in Oakville and Barrie, Ontario, $52.5 million of property upgrades and $128.1 million in cash. Hudson’s Bay will contribute 10 owned or leased stores in major Canadian cities. RioCan will own 20.2% of this new business, while Hudson’s Bay will hold the remaining 79.8%. The partners will likely sell shares in the new company to the public, which would help unlock the value of these properties....
We think conservative investors could hold up to 10% of their portfolios in foreign stocks. One way to do that is to buy carefully chosen exchange traded funds (ETFs) that have an overseas focus. The best ETFs offer very low management fees and well-diversified, tax-efficient portfolios of highquality stocks. Here’s a look at six international ETFs:...
TORSTAR $7.44 (Toronto symbol TS.B; Shares outstanding: 79.9 million; Market cap: $600.5 million; TSINetwork Rating: Average; Dividend yield: 7.1%; www.torstar.com) gets 60% of its revenue from advertising on its newspapers and their websites, including The Toronto Star, Canada’s largest daily by circulation. Subscriptions account for the remaining 40%. As part of a new strategy to increase online advertising sales, Torstar plans to drop the paywall on The Toronto Star’s website and launch a new free version for tablet computers. The shift will likely hurt its 2015 revenue but should attract more readers in the long run. Torstar especially hopes that the tablet edition will attract a younger audience....
ISHARES MSCI AUSTRALIA ETF $23.58 (New York symbol EWA; buy or sell through brokers) is an ETF that holds the 72 largest Australian stocks. Its MER is 0.49%. The fund’s top holdings include Commonwealth Bank of Australia, 11.8%; Westpac Banking Corp., 9.3%; BHP Billiton, 8.5%; Australia and New Zealand Banking Group, 7.7%; National Australia Bank, 7.1%; Wesfarmers, 3.9%; CSL Ltd., 3.5%; Woolworths, 3.1%; Rio Tinto, 2.2%; Telstra Group, 2.2%; Woodside Petroleum, 2.1%; Macquarie Group, 1.7%; and Scentre Group, 1.6%. Australia benefits from its stable banking and political systems. It’s also rich in natural resources, and while low commodity prices have hurt its economy lately, its close proximity to Asian markets with vast potential, including India and China, gives it strong long-term prospects....
ISHARES INDIA 50 ETF $33.02 (Nasdaq symbol INDY; buy or sell through brokers; us.ishares.com) is an ETF that invests in the 50 largest, most liquid Indian securities. Indian stocks have moved up 34%, to record highs, since the May 2014 election of Narendra Modi as prime minister. The government has just introduced its first full-year budget, and the $290-billion spending plan includes an additional $12 billion to address one of the country’s most pressing needs—modernizing its transportation, communications and electrical infrastructure....
In 2011, gold shot up to a high of $1,950 U.S. an ounce, and silver reached a high of $48.48. Gold prices then fell steadily and in late 2014 dropped below $1,200 for the first time since mid-2010. The metal now trades at $1,203. Silver also fell, hitting a five-year low of $15.35 an ounce in late 2014. It now trades at $16.21. In the longer term, gold and silver could well regain their 2011 highs. This will simply reflect the vast expansion in the U.S. money supply that has taken place since the financial crisis struck in 2008....