Toronto symbol TWT, is a leading maker of computer-aided design, sales, engineering and manufacturing software for the interior design and furniture industries.
New York symbol MMM, is one of the world's largest industrial companies. It makes over 50,000 products in six main areas: Industrial and Transportation; Health Care; Display and Graphics; Consumer and Office; Safety, Security and Protection; and Electro and Communications.
Toronto symbol AAH, develops and markets products and systems for accessing communication networks, including the Internet.
New York symbol ABB, is a major Swiss-based provider of power technologies for utilities. It also makes automation systems and robotics that help increase plant productivity in a wide variety of industries.
Toronto symbol ACD, operates mainly in the factoring business in Canada and the U.S. Factoring is the purchase of a company's accounts receivable at a discount. Accord profits by collecting the receivables. Besides factoring, Accord also offers other asset-based lending services.
Accrued interest is a term that describes the accounting method used when interest is either payable or receivable but has not yet been paid or received. For example, accrued interest is used when referring to bond payments.
Investors have the ability to see how much accrued interest a company has on its loans by looking at the short-term liabilities section of a company's balance sheet.
With bonds, accrued interest is the amount of interest a bond has accumulated between one payment date and the next. When a bond is sold, its accrued interest is added onto its selling price. That way the seller gets all of the interest that is due to them, even if it hasn’t actually been paid out. Of course, the interest is only added onto the bond’s selling price if the sales date is not identical to the payment date. In most cases, however, investors will not be buying the bond on its payment date.
Accrued interest is a term all investors should know, especially if they are planning on researching balance sheets or investing in the bond market.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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NASDAQ symbol ACIW, sells electronic payments systems software and services to many of the world's largest financial institutions.
Active management is when a fund manager picks stocks, rather than aiming to match benchmark indexes. To do this, they use research, forecasts, experience and critical judgement to make investing decisions aimed at outperforming the investment benchmarks.
In contrast, there is passive management. Passive management is also known as indexing. There is more work associated with active management than there is with passive management.
ETFs are highly efficient mutual funds with low fees because investors don’t pay for active management. Instead, ETFs aim to mimic the performance of a market index, by holding the same securities in the same proportions used to calculate the market index.
ETFs practice passive fund management, instead of actively managing clients’ investments like conventional mutual funds provide (but with much higher fees). Traditional ETFs stick with this passive management—they follow the lead of the sponsor of the index. Sponsors of stock indexes do from time to time change the stocks that make up the index, but generally only when the market weighting of stocks change. They don’t attempt to pick and choose which stocks they think have the best prospects.
ETFs are like highly efficient mutual funds. Fees are low because investors don’t pay for active management.
Having a fund manager actively manage investments will always be more expensive than investing in passively managed investments.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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Adam Smith is a Scottish economist who wrote An Inquiry into the Nature and Cause of the Wealth of Nations in 1776. Adam Smith’s The Wealth of Nations puts forward the idea that the regulation of commerce by governments is unsound and unfavourable.
Pioneering 18th century economist Adam Smith said that the public tends to overvalue “speculative ventures”. We think this makes excellent investing advice for present day investors in speculative stocks.
When a speculative stock is losing money, it has a great deal of freedom to ponder on its future. With a little imagination, it can always show that anything’s possible, based on a logical series of events that it says will take place as it advances inevitably toward profitability. Meanwhile, it doesn’t need to worry that its price-to-earnings or p/e ratio is too high, since it doesn’t have one—it has no “e”.
But when a former money-loser finally starts making money, however, the handcuffs go on. Suddenly it has a p/e, probably one that is sky-high. Inevitably the killjoys (like us) then start calculating how fast it needs to grow to justify its current stock price, let alone go higher.
Incidentally, Adam Smith’s Wealth of Nations may have influenced The Money Game, a 1968 mega bestseller about investing, which was an eye-opener for a generation of investors. The author, George Goodman, wrote under the pseudonym Adam Smith.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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NASDAQ symbol ADBE, makes software that lets computer users easily create, edit and share electronic documents in the popular Acrobat PDF format. It also makes software that graphic designers use to create print publications and web pages.
ADR stands for American Depository Receipt, which is a certificate that lets investors invest in a foreign company on U.S. stock markets.
ADRs are sponsored by banks and brokerage firms in the U.S.
An ADR may represent one or more shares of the foreign stock. But if the stock is expensive, it may represent a fraction of a share. That way, the ADR will start trading at a moderate price, or be in range of similar stocks on the exchange where it trades. The price usually stays close to the price of the foreign stock in its home market.
ADRs make it practical for increasingly global-minded investors to invest in foreign companies, despite language barriers, shifting foreign exchange rates and the difficulty of trading on a foreign stock market.
Foreign firms benefit from ADRs by letting companies offer dollar-denominated shares and raise capital in the U.S. Issuing ADRs also raises a non-U.S. firm’s liquidity and visibility in the United States and around the world.
Depositary banks that issue ADRs sometimes charge fees for their services, and deduct these fees from the dividends and other distributions on the ADRs. The depositary bank also incurs expenses for services such as converting foreign currency into U.S. dollars, and passes these costs on to ADR holders.
We believe most investors could benefit from holding some foreign investments in their portfolios for added diversification—and that ADRs are a good way to do it.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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NASDAQ symbol ADBE, makes software that lets computer users easily create, edit and share electronic documents in the popular Acrobat PDF format. It also makes software that graphic designers use to create print publications and web pages.
Growth stocks are companies that are likely to have sales and earnings growth well above market average. Exchange-traded funds (ETFs) are set up to mirror the performance of a stock-market index. Aggressive growth funds are typically a combination of the two. Aggressive growth funds are only suitable for investors who can accept higher risk.
Our favourite aggressive ETF funds generally invest in well-established small companies that dominate their markets. You should avoid aggressive growth funds that mainly invest in stocks of companies that hold a lot of concept stocks, or that do a lot of trading, or that delve into options or futures trading.
Ultimately, the percentage of your portfolio that should be held in either conservative or aggressive investments depends on your personal circumstances. An investor with a longer time horizon or without the need for current income from a portfolio can invest some money in aggressive funds or stocks.
There is no set rule for the best holding period in growth funds. It depends on the fund and on the market outlook. Sometimes it pays to get out of an aggressive growth fund after it has a great year. But some growth funds turn out to be good investments for decades.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. These practices also work well for growth investing. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Aggressive investing is a style of investing that involves attempting to maximize returns through investment in higher risk aggressive stocks and investment products.
While higher risk investments can be a strong component of growth, they can also be considerably riskier, so portfolio exposure to such investments should be limited.
Most investors understand the added risk you take with aggressive stocks. Along with the potential to produce higher returns than more conservative stocks, they bring the risk of bigger losses. And they are often more highly leveraged and volatile than conservative stocks. But that doesn't mean you should avoid aggressive stock investing altogether. Even for conservative investors, there are very good reasons to turn to aggressive stocks. If you choose the right stocks, they can offer the opportunity to earn bigger returns without exposing yourself to excessive risk. Aggressive recommendations usually fall under the growth stock category.
Keep in mind, though, that you should focus on growth stocks that have a good long-term history of sales if not earnings and a strong position in their markets. We downplay momentum stocks, which attract many investors simply because they are moving faster than the market average, but are liable to fall sharply when their momentum fades. As a general rule we recommend that you limit aggressive holdings to 30% of your overall portfolio. They should also make up no more than, say 10% of a portfolio for conservative investors. There's room for aggressive investing in your portfolio, but at TSI Network we recommend that for your overall portfolio, you follow our three-part Successful Investor strategy:
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An aggressive investor actively looks for stocks with higher risk—but a chance for higher reward. Highly aggressive investors will often look for penny stocks in mineral exploration, new software, biotech and so on.
The most volatile sectors that aggressive investors typically seek out are the Resources and Manufacturing sectors.
An aggressive investor puts a large part of their portfolios in stocks (or ETFs) of less well-established companies without a history of earnings or dividends.
An aggressive investor sometimes gets higher returns for taking big risks, but must actively monitor the stocks they invest in. Because the stock market (and the aggressive stock itself) can be highly volatile, keeping a sharp eye on those stocks is a must.
Young aggressive investors, in particular, perceive that they can benefit from aggressive investing because they’re automatically given the advantage of time, as opposed to investors who have a shorter time left to invest. The amount of time that young investors have, they think, gives them room to stick out down periods in the stock market.
We suggest that even an aggressive investor should choose investments with as much underlying value and as many hidden assets as possible. This is the best way to cut risk, for conservative and aggressive investors alike. We recommend limiting your aggressive holdings to no more than about 30% of your overall portfolio. This is because aggressive stocks expose you to a greater risk of loss.
Use our three-part Successful Investor philosophy when investing in aggressive investments:
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An aggressive portfolio is typically a stock portfolio with a high percentage of more speculative or high-growth stocks. Aggressive portfolios hold investments that are more volatile than value or blue chip investments.
Some investors feel it’s necessary to separate aggressive investments into a separate investment portfolio. They find it is easier to keep track of these types of investments when they are separated.
While we don’t think it’s a bad idea, we’ve often said that we think limiting aggressive portfolio holdings to, say, 30% of your overall portfolio is also a good idea.
Aggressive stocks expose you to a greater risk of loss, and that’s why we recommend limiting your aggressive holdings to a small percentage of your overall portfolio. That number can vary. Ultimately, though, the percentage of your portfolio that you should hold in either conservative or aggressive investments depends on your personal circumstances and risk tolerance. An investor with a longer time horizon, or without the need for current income from a portfolio, could invest more money in aggressive stocks. But we think 30% is a good rule of thumb.
Having a more aggressive portfolio may suit your investment style. However, at TSI Network we feel that most investors should have a blend of value and aggressive stocks in their portfolios. We also recommend using our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
An aggressive stock is a higher-risk investment that can potentially produce higher returns than more conservative stocks, but also has equal potential for bigger losses.
Examples of aggressive stocks would include junior mining stocks, smaller technology stocks, and penny stocks.
As a general rule we recommend that you limit aggressive stocks to, say, 30% of your overall portfolio. They should also make up no more than, say, 10% of a portfolio for conservative investors.
An aggressive stock is often more highly leveraged (with more debt) and volatile than value or conservative stocks. That doesn't mean you should avoid aggressive stock investing altogether. Even for conservative investors, there are very good reasons to add some aggressive stocks—in limited quantities—to their portfolios.
In fact, if you choose the right aggressive stocks, they can offer the opportunity to earn bigger returns without exposing you to excessive risk.
Control your stock trading risk by following TSI Network and using our three-part Successful Investor strategy:
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What are aggressive stocks? Aggressive stocks are higher risk investments. They have the potential to produce higher returns than more conservative stocks, but also equal potential for bigger losses. And they are often more highly leveraged (with more debt) and volatile than value or conservative stocks. That doesn't mean you should avoid aggressive stock investing altogether. Even for conservative investors, there are very good reasons to add some aggressive stocks-in limited quantities-to their portfolios. In fact, if you choose the right stocks, they can offer the opportunity to earn bigger returns without exposing yourself to excessive risk. Examples of aggressive stocks would include junior mining stocks, smaller technology stocks, and penny stocks. As a general rule we recommend that you limit aggressive stocks to 30% of your overall portfolio. They should also make up no more than, say, 10% of a portfolio for conservative investors. At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to make the most of your aggressive investments in resources through this free special report, Mining Stocks: How to Spot the Best Uranium Stocks, Metal Stocks and Junior Mines, from TSI Network.
New York symbol A, makes testing systems that help manufacturers improve the quality of electronic products such as cellphones.
Agrium Inc. stock is share ownership in Agrium Inc., a supplier of retail agriculture products. It also operates potash and phosphate fertilizer mines.
Agrium Inc. has benefitted from its shift to selling fertilizers, and away from making them. Agrium Inc. also sells seeds and other products to farmers.
In December 2010, it paid $1.2 billion for AWB Ltd., which operated 220 stores in Australia.
Overall earnings fell 0.7%, from $1.50 billion in 2011 to $1.49 billion in 2012. Due to more shares outstanding, however, per-share earnings of Agrium Inc. stock rose 0.3%, from $9.52 to $9.55.
In October 2013, the company added 210 stores in Western Canada and Australia in a $485-million deal with Viterra Inc.
Sales slipped to $15.7 billion in 2013 before recovering to $16.0 billion in 2014.
In 2015, Agrium’s sales fell 7.8%, to $14.8 billion. That’s mainly because record harvests depressed crop prices, giving farmers less cash to spend on fertilizers.
In 2015, Agrium’s 1,250 retail stores in North America, South America and Australia supplied 82% of its sales, and 70% of its earnings. The remaining 18% of sales and 30% of earnings came from making nitrogen-based fertilizers from natural gas.
Learn more about Agrium Inc. stock and others by following TSI Network and using our three-part Successful Investor strategy:
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formerly Toronto symbol AEC, was a leading producer of oil and natural gas in western Canada. The company merged with PanCanadian Energy in 2002 to form EnCana Corp.
formerly Toronto symbol AL, is a leading producer of aluminum. The company was taken over by Rio Tinto in 2007.
Toronto symbol AQN, has interests in 41 hydroelectric facilities - four in Ontario, 12 in Quebec, 13 in New York State, nine in New England, one in Alberta, one in New Jersey and one in Newfoundland. Algonquin also has interests in five natural gas-fired plants, a 99-megawatt wind plant, one energy-from-waste plant and two biomass facilities in Canada and the U.S., and 17 water distribution and wastewater treatment facilities in the U.S.
Toronto symbol ATD.B, is the largest convenience store operator in Canada, with over 2,000 stores. It also has more than 3,000 U.S. stores in 28 states.
New York symbol LNT, supplies electricity and natural gas to customers in Wisconsin, Iowa, Minnesota and Illinois.
Alphabet Inc. is the new parent company for Google’s Internet search business (still called Google) and other operations, such as self-driving cars and home thermostats. Each of these subsidiaries function independently.
Alphabet has two stock classes. Class A which is one vote per share that trades under the GOOGL ticker and the class C non-voting shares that trade as the stock ticker GOOG. Both classes of stock trade on the Nasdaq stock exchange.
Alphabet Inc. is already one of the world’s biggest companies by market cap (or the total value of all of its outstanding shares).
You might take this to mean it has limited room for growth. However, Google still gets over 90% of its revenue from online advertising and is the world leader in that field. Online ads continue to grow and take market share from other forms of advertising.
Separating out Alphabet’s non-Internet-search businesses (which it calls “Other Bets”) will also help the company spin them off and unlock value. They include its Nest home thermostats and Google Fiber high-speed Internet and TV service.
Alphabet’s reorganization will also give investors more information on the company’s higher-risk “Moonshots,” such as self-driving cars and devices that use nanotechnology to detect diseases.
Alphabet now plans to buy back $5.1 billion of its class C shares. There are no time limits for these purchases. Shareholders should keep holding their class A shares, but we recommend the cheaper class C stock for new buying.
Alphabet is a long term growth stock meant for aggressive investors. We also recommend using our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Alternative investments are high priced items like art and sports cars that investors seek to collect and possibly profit from. Our view is that you can't really invest in art or cars. An investment is something that may one day produce income - dividends from stocks, interest from bonds, rent from real estate, and so on. Art and similar alternative investments produce no income. In fact, art and expensive cars consumes income: you have to pay to insure and/or store it. It's also expensive to buy and sell. Unlike some other alternative investments, the supply of art keeps growing. Fashions change and buyers often prefer something new. So your artwork probably won't bring the price you need to show a profit. That's why profitable art investments are rare. The vast majority of art and automobiles depreciates from the time of its first sale. Purchasing an alternative investment like art or cars should always be thought of as a hobby, rather than an alternative source of income. For investment success, on the other hand, follow TSI Network and us our three-part Successful Investor strategy:
The key to finding the "hidden gems" in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough's decades of experience-and his specific recommendations-in our special report, Canadian Penny Stocks: What You Need to Know about Handling the Risks and Reaping the Rewards, on TSI Network. Claim your FREE copy right now!
NASDAQ symbol AMZN, is the leading bookseller on the Internet, as well as a leading video and music seller. It also has numerous other store categories, including electronics, computer games, toys and tools. Through Amazon Services, the company also offers programs that let sellers market on its web sites.
An American Depositary Receipt, ADR for short, is a certificate that represents a foreign stock that trades in the United States. Banks and brokerage firms in the U.S. issue or sponsor ADRs, and investors buy and sell them on U.S. stock markets, just like regular stocks. If you own an ADR, you have the right to obtain the foreign stock it represents. However, investors usually find it more convenient to continue holding ADRs.
One ADR may represent one or more shares of the foreign stock. But if the stock is expensive, the ADR may represent a fraction of a share. That way, the ADR will start trading at a moderate price, or be in range of similar stocks on the exchange where it trades. The price of an ADR usually stays close to the price of the foreign stock in its home market.
J.P. Morgan introduced ADRs in 1927 to make it easier for Americans to invest in Selfridge, the British retailer. ADRs have grown substantially since then. They make it practical for increasingly global-minded investors to invest in foreign companies, despite language barriers, shifting foreign exchange rates and the difficulty of trading on a foreign stock market.
We believe most investors could benefit from holding some foreign investments in their portfolios for added diversification. Still, investing internationally remains riskier than investing in North America.
For guaranteed success in investing, apply our three-part Successful Investor strategy.
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American Express (New York symbol AXP), is one of the world's biggest financial services companies. Best known for its American Express charge and credit cards, the company gets most of its revenue from fees it charges merchants when cardholders purchase goods and services. It also provides travel-related services, including travelers cheques. Amex issues two types of cards: charge cards, which have no preset spending limit and must be paid in full each month; and traditional credit cards, which let users carry a balance. The company is also a bank that accepts deposits and makes loans. It cuts its credit risk by catering to clients with above-average incomes and good credit. Amex wrote off just 1.9% of its U.S. loans in 2015, up slightly from 1.8% in 2014. Its international write-off rate crept up to 2.2% from 2.1%. American Express is a blue chip stock, and we consider it a lower-risk stock to hold. For more long-term investing strategies, consider following TSI Network and using our three-part Successful Investor strategy: 1. Invest mainly in well-established companies; 2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities); 3. Downplay or avoid stocks in the broker/media limelight. Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Toronto symbol ARG, Toronto, processes copper from the tailings (waste rock) from Chile's El Teniente, the world's largest underground copper mine.
New York symbol AMP, provides brokerage, mutual funds and wealth management services to individuals and institutions.
Amortization is the process in which a loan is broken up into a fixed number of repayments over time. These repayments account for both principal and interest. Most investors who own a home know that the monthly payments they make on their mortgage are amortized payments.
Amortization is also used in the business world. Businesses amortize intangible assets like goodwill or intellectual property in their financial statements. That’s where they expense the total cost a little bit at a time, year by year.
One of the best things any investor can do is learn how to read and understand income statements, cash flow statements and balance sheets—including amortization. They are windows into the business you’re researching and should be part of your vetting process when determining which companies you will invest in.
At TSI we also think investors should use our three-part Successful Investor philosophy when investing in any market:
Get the complete guide to how to build wealth with a conservative investing approach in our FREE investing guide, How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio.
Toronto symbol ADW.A, is Canada's second-largest producer of wines (after Vincor Canada). Other products include premium beers (under the Granville Island brand) and home winemaking kits.
Angel investing involves individuals providing initial capital to an entrepreneur or start-up.
Angel investing is typically done by wealthy individuals who use their own money. It’s usually a bridge between funds provided by friends or family members associated with the entrepreneur, or start-up owner, and more formal venture capital funds.
An angel investor typically provides the first funds in exchange for debt that can be converted into equity or for direct ownership equity.
Professional angel investors seek to invest in a range of investments with what they hope are clear exit strategies such as being acquired or conducting initial public offerings (IPOs).
An initial public offering, or IPO, is the first sale of stock by a company as it goes public. Initial public offerings often have a turbulent start on the stock market. Stakeholders (including angel investors) often sell a portion of their shares to recoup their investment during the first weeks and months that the stock is traded.
In the U.S., angel investing is generally done by individuals with a net worth of at least $1 million and who make at least $200,000 per year. Meeting these requirements allows them to be accredited by the Securities Exchange Commission (SEC).
Angel investors often want to see that raising additional funds is viable for the company before choosing to invest.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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formerly New York symbol BUD, is the world's largest brewer, and accounts for 50% of the U.S. beer market. Acquired by InBev in 2008.
An annual report is an audited financial statement that is given yearly by a corporation to its shareholders. Annual reporting will show how well an organization did over the past year versus previous years. It’s a legal requirement for shareholders to receive annual reports from the companies they invest in.
Investors can use previous years’ annual reports as research tools for new investments. They include data such as assets and liabilities, expenses, earnings, cash flow and revenue.
They can also learn about dividend reinvestment programs through a company's annual report. You’ll most often find companies that offer them usually mention it on the inside back cover of the annual report.
Investors should remember the old adage, “hindsight is 20/20,” meaning it’s easy to look back at the past and see where things went right or wrong. It’s extremely hard to accurately predict future stock prices. To ensure long-term investing success, we recommend using our three-part Successful Investor philosophy for long-term investing:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
An annual shareholders meeting is a gathering of stock owners of a company that takes place each year. An annual report showing how the organization did over the past year versus previous years is shared at an annual shareholders meeting. It’s a legal requirement for shareholders to receive annual reports from the companies they invest in.
Future strategies are also typically discussed at shareholder meetings.
An annual shareholders meeting may also be called an annual general meeting, or AGM.
Shareholder meetings are often held in far away cities. So it may not always make sense for shareholders to incur the travel expenses and use their valuable time to be present at shareholder meetings.
Votes are conducted at annual shareholders meetings. These votes are on current issues impacting the company, including appointments to the board of directors, how much compensation executive members should receive and stock splits, among other issues.
If a shareholder wants to vote on issues at the annual shareholders meeting but cannot attend, the shareholder can vote by proxy. A vote by proxy is written authorization, or a ballot, permitting shareholders to exercise their voting rights. Voting can be conducted online or by mail or by transferring your voting authority to another shareholder, or the company’s management.
Both private and public companies hold annual shareholders meetings, although the rules are stricter for publicly traded companies.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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You buy annuities by making either a single payment or a series of payments. Annuities pay out in either one lump-sum or a deferred series of payments over time.
Retirement annuities may be worth considering for part of your assets, depending on your age, investment experience, the time you want to devote to your investments, your desire to leave an estate to your heirs and other aspects of your retirement investing. But a key drawback to annuities is that annuity rates are closely linked to interest rates, which are at historic lows. In addition, annuities have no liquidity. If interest rates and inflation move up, your annuity payments would remain fixed and you would lose purchasing power. Plus, you would have no way to rearrange your portfolio.
We generally advise investors to look at other alternatives to annuities. Many investors find they are able to generate returns that beat current annuity rates over time, if they invest conservatively in the kinds of high-quality investments that we recommend. Part of that return will come in the form of dividends from Canadian stocks, which qualify for the dividend tax credit and are consequently taxed at a lower rate than annuity or pension payments. The remainder of the return would come in the form of capital gains, which are taxed at half the rate of annuity or pension payments, and are only taxed in the year when you sell.
Above all, though, be sure to fit those stocks into a well-balanced portfolio:
We receive many questions on the subject of planning and enjoying a successful retirement. Our answers to those questions, based on decades of investment experience, are all located in this FREE report: 12 Steps to the Retirement You Want.
New York symbol APA, explores for and produces oil and gas, mostly in North America. It also has operations in the UK, Argentina, Australia and Egypt.
Apple has a long history of developing cutting-edge products. That's partly why its stock has performed so well over the last few years. Still, disruptive new technologies could overtake its latest offerings and slow its growth.
Beyond electronic devices, Apple launched Apple Pay service, which lets users add their credit card information to their phones. They can then use them to make purchases at any tap-and-pay-enabled cash register and, in some cases, online. To prevent fraud, the phone will confirm the user's identity by scanning their fingerprint.
Technology stocks tend to be riskier than other manufacturing firms. That's because demand for their products is cyclical, and they must spend heavily on research and development. Even then, there's no guarantee their efforts will boost their sales or protect them from start-ups with better technology.
Apple Inc. has a very strong balance sheet and is the largest information technology company by revenue in the world. Control your stock trading risk by following TSI Network and using our three-part Successful Investor strategy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Apple stock gives you a share of Apple Inc., (symbol AAPL on Nasdaq) a prominent U.S. technology company that creates and sells consumer electronics, including the iPhone, iMac, iPad and iPod.
Sales of these products have helped Apple stock grow in value.
Apple peaked around $200 a share in late 2007. It got down to around $80 in December 2008. It never did go much lower, even though the stock-market averages kept on dropping for four months. By the time the market as a whole hit its low in March 2009, Apple stock had already risen by 30% or more.
By the end of 2009, Apple had gone on to an all-time high. Since then, the stock has more than tripled. Of course, stock performers like Apple are rare. But the pattern is well established.
Apple is part of the SPDR S&P 500 ETF, which consists of 500 major U.S. companies that are chosen based on their market cap, liquidity and industry group. Included among Apple in this ETF are ExxonMobil, Microsoft, Procter & Gamble, Johnson & Johnson, J.P. Morgan Chase, Pfizer, General Electric, Berkshire Hathaway and Wells Fargo & Co.
The Nasdaq 100 Index contains shares of companies in a number of major industries, including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. The index’s highest-weighted stocks are Apple, Microsoft, Amgen, Google, Cisco Systems, Intel Corp., Amazon.com, Gilead Sciences, Comcast and Facebook.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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Arbitrage is a technique used to take advantage of a difference in stock prices based on stock market inefficiencies.
For example, if Acme stock can be bought in Toronto for $10 a share and sold in London at $10.50, then that’s an arbitrage opportunity. An investor who engages in arbitrage (also called an arbitrageur or “arb”) would then simultaneously purchase Acme stock here in Toronto and sell the same amount in London, making a profit of $0.50 a share, less expenses. Arbitrage is often conducted using computer-assisted trading.
Arbitrage may also involve the purchase of a convertible security—and the sale at or about the same time of the security obtainable through exercise of the rights or of the security obtainable through a convertible security.
Arbitrage is a concept all investors should know about. However, arbs can make money on these tiny differences because they pay negligible commissions—that’s not an option for the average investor. To build a sound portfolio, focus instead on following TSI Network and using our three-part Successful Investor strategy:
Discover our complete guide to Canadian wealth management and making the most out of your savings. It’s all in our newly updated report, Wealth Management & Retirement Planning: Canada RRSP Contribution Limit, RRSP Interest Rates, TFSA Contribution Limit and More. And it’s yours FREE!
New York symbol ADM, is one of the world's largest agricultural companies. Its five largest products are protein meal (animal feed), vegetable oil, ethanol, cocoa products and wheat flour. It sells these products to food processors and industrial companies.
Toronto symbol AGQ, is active in silver exploration and development in Mexico. The company is headquartered in the United Kingdom.
NASDAQ symbol ABFS, provides less-than-truckload shipping services, which combine freight from multiple customers into a single vehicle. Freight carried by the company includes food, textiles, apparel and furniture.
Asset allocation funds are mutual funds whose managers believe they can improve returns and/or reduce risk by switching back and forth among stocks, bonds and cash. Many in the investment industry promote these funds as a simple and profitable way to assemble a diversified portfolio.
Asset allocation managers often use a so-called “black box,” a computer program that makes trading decisions based on a pre-selected set of rules for interpreting financial statistics. Computer modelling gives this investment approach the appearance of being scientific and relatively foolproof. Yet it is just as likely to detract from a portfolio’s long-term return as it is to add to it.
Asset allocation programs are like hindsight; they work great when they are applied to the past, since their creators can tweak the rules to match what actually happened. They are far less effective at extracting profit in real time. However, they always work great at jacking up a fund’s expenses, because of the commissions their trading generates.
Asset allocation funds can shift their portfolio allocations between stocks, bonds and cash in order to capitalize on perceived investment opportunities in any one of those classes. For example, if the managers are convinced the bond market is depressed and due for an upswing, they may invest heavily in fixed-income investments for a few months to take advantage of the change.
Learn more about asset allocation funds and other risky strategies by following TSI Network. Build a sound portfolio byusing our three-part Successful Investor strategy:
Learn how to look for blue chip companies that are likely to pay off if business and the stock market are good, but that won’t hurt you too much during those inevitable periods when business or the markets are bad. Download Canadian Blue Chip Stocks: Bank of Nova Scotia Stock, CP Rail Stock, CN Rail Stock and More.
Asset allocation funds are mutual funds whose managers believe they can improve returns and/or reduce risk by switching back and forth among stocks, bonds and cash. Many in the investment industry promote these funds as a simple and profitable way to assemble a diversified portfolio. An asset allocation fund aims to shift its portfolio allocations between stocks, bonds and cash in order to capitalize on perceived investment opportunities in any one of those classes. For example, if the managers are convinced the bond market is depressed and due for an upswing, they may invest heavily in fixed-income investments for a few months to take advantage of the change. Some managers make their own judgments when choosing between stocks, bonds and cash. Others use what insiders call a "black box", a computer program that makes trading decisions based on a preselected set of rules for interpreting financial statistics. Computer modelling gives this investment approach the appearance of being scientific and relatively foolproof. Yet it is just as likely to detract from a portfolio's long-term return as it is to add to it. At TSI Network, we feel investments like asset allocation mutual funds are heavily marketed with brokers. We recommend using our three-part Successful Investor philosophy:
Discover how to make the most of your stock investments in this free special report, Stock Market Investing Strategy: Pat McKeough's Conservative Investing Guide for Making Money & Cutting Risk, from TSI Network.
New York symbol T, provides traditional local and long-distance telecommunication services in 22 states. It also provides wireless services nationwide.
AT&T stock refers to shares of AT&T, the largest wireless provider in the U.S.
AT&T has over 130 million subscribers in the U.S., and it also has over 9 million wireless users in Mexico.
AT&T aims to attract new users with special bundles that include unlimited wireless service when they sign up for its satellite or Internet TV services. AT&T stock will benefit from this growth as well.
The sound balance sheet of AT&T stock support its plan to spend $22 billion on its networks in 2016. These improvements will help it cope as more of its wireless customers watch and share videos on their smartphones. In addition, the company is developing a new Internet video-streaming service under the DirecTV brand. That should help it compete with Netflix and similar video services.
Stock in AT&T is just one of the top-quality investments you will find by following TSI Network and using our three-part Successful Investor strategy:
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NASDAQ symbol ATNI, owns 80% of Guyana Telephone and Telegraph Company. The rest comes from its wireless interests in the Caribbean and its expanding telecom interests in the United States.
Authorized participants is a term used in the ETF creation and redemptions process. An authorized participant is a large financial institution or market maker who helps an ETF company launch a new ETF product.
These authorized participant companies then stand ready to buy a large sum of shares that match the distribution and weight that the particular ETF has specified. In turn, the ETF company will offer the authorized participant block shares of the ETF. The authorized participant helps keep an ETF’s price in line so that it mirrors its underlying market value.
Exchange-traded funds trade on stock exchanges, just like stocks. Investors can buy them on margin, or sell them short. The best exchange-traded funds offer well-diversified, tax-efficient portfolios with exceptionally low management fees.
Understanding how ETFs are created is something every investor should know about. At the same time, you can boost your long-term investment gains by following TSI Network and using our three-part Successful Investor strategy:
Get the complete guide to Investing in Canadian ETFs—learn how to get the maximum returns from your ETF investments. Download Best Canadian ETFs, Canadian ETFs vs Mutual Funds, Canadian Index Funds and More: The Rewards and Risks of Canadian ETFs for FREE.
NASDAQ symbol ADSK, is a leader in 2D and 3D design software for the manufacturing, building and construction and media markets. Autodesk's computer-assisted-design software provides customers with tools to visualize, simulate and analyze a product's performance early in the design process. That saves time and money, and enhances quality.
Toronto symbol BIM, continues to focus on the development of its Mary River iron ore deposits on Baffin Island in Nunavut, Canada.
A balance sheet is a financial statement that gives a snapshot of a company's assets, liabilities and shareholders' equity. Investors use this data to determine how sound a company's finances are-and also to discover if it has any "hidden assets". Certain types of assets on a balance sheet might have actual market values well above historical values. For example, when a company buys real estate, the purchase price goes on its balance sheet as the historical value of the asset. Over a period of years or decades, the market value of that real estate may climb substantially. But the purchase price remains unchanged on the balance sheet. You have to look closely to spot this hidden value. At times, the hidden value in a company's real estate can come to exceed the market value of its stock. This hidden value may only become apparent to investors when the company upgrades the use of the real estate. For example, a merchandiser might repurpose a parking lot to build a shopping mall with a residential condo tower on higher floors, and a parking garage down below. Balance sheets often fail to assign any value to brand names, even those household names that have built up multitudes of loyal customers over the years. One example of customer loyalty taking a company to new heights is Apple. Their customer base was fiercely loyal to its brand and carried it through the first two turbulent decades of its life. It was this customer base that quickly adopted the iPod and pushed Apple to dominate the personal music device market and later redefine personal computing forever. We always analyze a company's balance sheet before making recommendations using TSI Network's three-part Successful Investor philosophy: 1. Invest mainly in well-established companies; 2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities); 3. Downplay or avoid stocks in the broker/media limelight. Discover how to put extra strength into your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
Balanced funds are mutual funds that hold a mixture of stocks, bonds and cash. A balanced fund is used most often by investors who seek some safety from bond holdings, while still looking for dividend income and capital gains in their portfolios.
However, we generally don’t recommend balanced funds. Bonds are unlikely to perform as well in the next few years as they have in the last few, if only because interest rates are likely to hold steady or rise. That means the funds would only earn interest income on their bonds; instead of capital gains, their bond holdings could produce capital losses.
Asset allocation funds are balanced mutual funds whose managers believe they can improve returns and/or reduce risk by switching back and forth among stocks, bonds and cash. Unlike regular balanced funds, they can shift their portfolio allocations between stocks, bonds and cash any time they want in order to capitalize on perceived investment opportunities in any one of those classes.
To invest more wisely, follow TSI Network’s three-part Successful Investor strategy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
New York symbol BAC, is one of the world's largest providers of financial services. It recently acquired mortgage specialist Countrywide Financial and brokerage firm Merrill Lynch.
The Bank of Montreal is Canada’s fourth-largest bank. Bank of Montreal is represented on the Toronto Stock Exchange with the symbol BMO.
This Canadian bank stock has consistently paid dividends for 186 years. Bank of Montreal has benefited both from expansion outside of Canada and low interest rates in recent years. Low interest rates have helped the bank by increasing demand for loans.
The bank continues to make acquisitions in the U.S. and the U.K., including Wisconsin-based banking firm Marshall & Ilsley for $4.0 billion in stock, and General Electric’s transportation-financing business, adding $11.5 billion in assets.
Bank of Montreal is also using acquisitions to expand its wealth management division, which now accounts for 18% of its earnings. It paid $1.3 billion for U.K.-based wealth management firm F&C Asset Management, which sells investment services to individuals and institutional clients, such as pension plans and insurance companies.
Bank of Montreal has paid dividends each year since 1829 and has increased its payout six times in the past three years.
Learn more about Bank of Montreal stock and other blue chip shares by following TSI Network and using our three-part Successful Investor strategy:
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Founded in Halifax, Nova Scotia in 1832, The Bank of Nova Scotia, Toronto exchange symbol BNS, is Canada's third-largest bank by assets. It is also commonly known as Scotiabank.
Bank of Nova Scotia is one of our top picks among Canada's big-five banks, due to its wide international exposure. The Bank of Nova Scotia has four major business units, Canadian Banking, International Banking, Global Wealth & Insurance, and Global Banking & Markets.
We believe Canada's big banks are still well positioned to weather any downturn in the Canadian economy, contrary to some pessimistic forecasts on the banks' prospects in the business media. They trade at attractive multiples to earnings and continue to raise their dividends. Canadian banks are perfect for investors who are looking for a long-term investment in the Finance sector.
Bank of Nova Scotia was our TSI Network #1 Stock Pick of the Year in 2013 and our #1 Safety-conscious Buy for 2014. Canadian banks are some of our most recommended stock picks. Investors should consider adding them to their long-term investment portfolios and also keep TSI Network's three-part Successful Investor philosophy in mind:
Discover how to build a winning portfolio with Canadian stocks in this free special report, Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada, from TSI Network. And it's yours FREE!
Bank shares, especially in Canada, have long been one of our top choices for growth and income.
We’ve long recommended that most Canadian investors should own two or more of Canadian bank shares. This is mainly because of their importance to Canada’s economy. Banks remain key lower-risk investments for a portfolio. As well, the big-five Canadian banks all have long histories of annual dividend increases: Bank of Nova Scotia, Bank of Montreal, CIBC, TD Bank and Royal Bank.
We believe bank shares in Canada are well positioned to weather downturns in the Canadian economy, contrary to pessimistic forecasts on the banks’ prospects from time to time from some in the business media. They trade at attractive multiples to earnings and continue to raise their dividends.
Bank of Nova Scotia remains a top Canadian bank stock pick among Canada’s big five banks due to its wide international exposure, including its continued expansion to regions like Latin America, South America and Asia. There’s still room for the bank to expand throughout Latin America and Asia, especially as their growing middle classes look for stable deposit and consumer-lending services.
Furthermore, bank shares are some of the highest yielding stocks.
Build a sound portfolio including Canadian banks, by following TSI Network and using our three-part Successful Investor strategy:
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A bank stock is a share of a financial institution, such as one our five favourite Canadian bank stocks (TD Bank. Bank of Nova Scotia, CIBC, Bank of Montreal and Royal Bank). These bank stocks have long histories of annual dividend increases.
We believe Canada’s bank stocks are still well positioned to weather any downturn in the Canadian economy. They trade at attractive multiples to earnings and continue to raise their bank dividends.
If you’ve decided to start by investing in just one Canadian bank stock, the question remains: which Canadian bank stock is best to invest in today? How can you tell which bank will give you the best long-term performance?
We believe Canada’s big banks are still well positioned to weather any downturn in the Canadian economy, contrary to pessimistic forecasts on the banks’ prospects from some in the business media. They trade at attractive multiples to earnings and continue to raise their dividends.
Bank of Nova Scotia remains one of our top picks among Canada’s big five banks due to its wide international exposure.
We feel that high-quality bank stocks should be part of every investor's portfolio. Bank stocks and the financial sector in general are known for low volatility, solid earnings and are considered some of the lower-risk investments you can make.
For the safest investments, follow TSI Network and using our three-part Successful Investor strategy:
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Bank stocks are shares of financial institutions that are licensed to receive and hold deposits and also loan money out to individuals and business. We’ve long recommended that most Canadian investors should own two or more of the big five Canadian bank stocks (TD Bank. Bank of Nova Scotia, CIBC, Bank of Montreal and Royal Bank). That’s mainly because of their importance to Canada’s economy. They are also key lower-risk investments for a portfolio. The big five Canadian bank stocks also have long histories of annual dividend increases.
We believe Canada’s bank stocks are well positioned to weather downturns in the Canadian economy. In addition, they trade at attractive multiples to earnings and have above-average dividend yields.
Conservative or income-seeking investors may want to emphasize utilities and Canadian banks in their portfolios, because of the high and generally secure dividends that these stocks provide.
We feel that high-quality bank stocks should be part of every investor's portfolio. Banking stocks and the Canadian financial sector in general is known for its lower volatility, sound earnings—and they are among the safer investments you can make. For the best stocks for your total portfolio, follow TSI Network’s three-part Successful Investor strategy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
Bargain stocks are typically stocks trading at low prices that don't reflect their intrinsic value in terms of fundamentals such as earnings, cash flow and low debt. They may also carry undervalued assets on their balance sheets, hold large patent portfolios or spend high amounts on research and development that will yield future benefits.
Bargain stocks can also have value hidden in real estate they've purchased. For instance, when a company buys real estate, the purchase price goes on its balance sheet as the value of the asset. Over a period of years or decades, the market value of that real estate may climb substantially. But the historical purchase price remains unchanged on the balance sheet.
Bargain stocks may also have hidden assets in their relationship with a clientele of loyal customers. After a series of satisfactory dealings, long-time customers develop a level of trust that makes them receptive to related offerings from the company.
At TSI Network we often recommend stocks we feel are bargains in terms of their fundamentals as well as hidden assets. We also advise following our three-part Successful Investor philosophy for investing:
Discover how to pick the best undervalued stocks for your portfolio in this free special report, Bargain Stocks: Your Guide to Finding the Best Undervalued Stocks, from TSI Network. And it's yours FREE!
Basket trading is a type of trading that simultaneously trades a group of different securities.
The term specifically defines the trading of at least 15 securities at once. However, there may be much larger basket trades that involve dozens of securities.
Basket trading is often done through the use of basket funds. Types of basket funds include index funds and exchange-traded funds (ETFs). Baskets of stocks often represent a specific index such as the S&P 500 or S&P/TSX 60.
Exchange-traded funds (ETFs) are set up to mirror the performance of a stock market index. Exchange-traded funds hold baskets of stocks that represent stock indexes. Most indexes add or remove shares only when the underlying index changes. This low turnover is more tax efficient for investors who will avoid the regular capital gains taxes from annual distributions by conventional mutual funds.
Index funds are mutual funds or ETFs that invest to equal the performance of a market index, such as the S&P/TSX 60. Index funds do show better long-term performance than about two-thirds of actively-managed mutual funds with long-term track records.
There are no additional fees involved with basket trading.
Find out more about how to invest using basket trading through ETFs by following TSI Network and using our three-part Successful Investor strategy:
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New York symbol BAX, makes medical equipment through three main divisions. Medical Delivery makes intravenous equipment and systems; BioScience makes various vaccines and drugs; and Renal makes dialysis equipment.
Toronto symbol BBP, explores for and produces natural gas in the shallow water shelf area of the Gulf of Mexico.
Toronto symbol BCE, provides local and long distance telephone services in Ontario and Quebec. It also operates a nationwide wireless service.
A bear fund is a type of ETF that is designed to rise these market downturns. The opposite of a bear market is a bull market.
Bear markets often occurs in the first half of a four-year Presidential term. Several times since the fall of 2004, after a market downturn, investors wondered if we had entered a bear market — a falling trend that lasts one to three years and knocks 20% or more off the market indexes.
Many investors are especially wary of the next bear market, since the last one was so lengthy and deep. That bear market began in mid-2000 and ended in the winter of 2002/2003. It was extremely costly for investors who made the common mistake of loading up on Internet and tech stocks.
But if you hold a conservative, diversified portfolio of well-established stocks, our advice is to stick with it in any market, bear or bull. At TSI Network we recommend our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our free investing guide, The 10 Best Practices of Successful Investors.
New York symbol BEC, makes lab equipment that doctors and medical researchers use to detect substances in bodily fluids.
In the early years of the past decade, dividend yields were generally too low to provide a third of investment returns. But since then, yields have moved up and interest rates remain low. It's now realistic to assume they will again contribute as much as a third of your total return.
Even though the best dividend stocks can be your most profitable investments, dividends rarely get the respect they deserve, especially from beginning investors. That's because a dividend-paying stock's yearly 2% or 3% or 5% yield barely seems worth mentioning alongside yearly capital gains of 10%, 20% or 30% or more. But dividends are far more reliable than capital gains. A stock that pays a dividend of $1 this year will probably do the same next year. It may even raise it to $1.05. Good dividend stocks are a valuable component of any sound investing portfolio.
At the same time, we recommend investing in them using our three-part Successful Investor strategy:
Discover how to put extra strength in your portfolio with our advice on how to identify high-quality dividend stocks. It's all in our newly updated report, and it's yours FREE! Download 7 Winning Strategies for Dividend Investors.
Beta ratings are commonly used to measure a stock's volatility.
To calculate a stock's beta, an index like the S&P/TSX Composite Index is assigned a beta of 1.0. The historical volatility of different stocks relative to the index is then measured using either a 36-month or 60-month regression analysis. If a stock has a beta of 1.0, it means the market and the stock move up or down together, at the same rate. That is, a 10% up or down move in the stock market index should theoretically result in a 10% up or down move in the stock.
A beta of 2.0 implies the stock will tend to move twice as much as the market. That is, if the market moves up 10%, the stock should move up 20%. A beta of 0.5 indicates the stock will move one-half as much as the market, either up or down.
Negative beta ratings indicate the stock tends to move in the opposite direction from the general market. That is, the stock price declines when the overall market is rising or rises when the overall market is declining. Institutional investors are always looking for so-called "quantitative" measures like beta that can be calculated automatically by a computer program.
Beta makes a broad statement about a stock's history of volatility, but it doesn't say much if anything about its prospects or its appeal as an investment. To assess a company's suitability for your portfolio, you are better off using other, more reliable measures of safety, such as steady earnings and cash flow, low debt and a secure hold on a growing market. Those are the measures we use at TSI Network as part of our three-part Successful Investor strategy:
Discover how to make the most of your stock investments in this FREE special report: Stock Market Investing Strategy: Pat McKeough's Conservative Investing Guide for Making Money & Cutting Risk.
The bid price is the amount of money an investor is willing to pay for stocks or bonds.
The difference between the bid price and the ask price is known as “slippage.” Slippage costs you money and is part of every stock trade. With options, this difference is wider than it is with stocks. You also pay commissions each time you buy or sell stock options. Commissions eat up a large part of any stock option profits you make, particularly if you trade in small quantities.
If you want to carry out a transaction immediately, you have to accept the highest available bid price, or pay the lowest offer. You can enter your own bid or offer, but this means you have to wait for another investor who is willing to do business at your price. Meanwhile, prices could go against you.
Bid prices are a part of option investing. An option is a contract between a buyer and a seller that is based on an underlying security, usually a stock. The buyer pays the seller a fee, or premium, for certain rights to the stock. In exchange for the premium, the seller assumes certain obligations.
Each option investing contract has an expiration date, which gives it a limited life span (usually less than nine months). The strike price (or exercise price), is the price at which buyers can exercise their rights under the contract.
Rather than buying options, at TSI Network, we recommend using our three-part Successful Investor philosophy to build a portfolio of stocks:
Discover how to build greater wealth with less risk, claim your FREE digital copy of How to invest in stocks: Canada investor advice on building a balanced stock portfolio now.
Toronto symbol BIR, is focused on oil and gas exploration, development and production in northwestern Alberta's Peace River Arch area.
Blue chip shares are stocks of well-established, mostly dividend-paying companies, often with household-name brands. They have strong business prospects, sound management, and historically have competed successfully in a changing marketplace. Examples of blue chip companies include Bank of Montreal (TSX:BMO), TransCanada Corporation (TSX:TRP) and Loblaw Cos. (TSX:L).
We recommend that most investors hold the bulk of their portfolios in blue chip shares. That’s because blue chip shares offer potential for capital gains growth as well as regular dividend income.
The best blue chip shares should offer good “value”—that is, they should trade at reasonable multiples of earnings, cash flow, book value and so on. Ideally, they should also have above-average growth prospects in expanding markets.
Blue chip shares give investors an additional measure of safety in today’s volatile markets. And the best ones offer an attractive combination of low p/e’s (the ratio of a stock’s price to its per-share earnings), steady or rising dividend yields (annual dividend divided by the share price) and promising capital gains prospects.
Minimize your stock market risk by following TSI Network and using our three-part Successful Investor strategy:
Discover how to put extra strength into your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.
The root of the term "blue chip" stems from the game of poker, as the blue chips represent the highest value. Investing in blue chip stocks can give you an additional measure of safety in today's turbulent markets.
Pat McKeough believes investors will profit most, and with the least amount of risk, by putting the bulk of your stock portfolio in shares of blue chip companies-those that are well-established, with strong balance sheets and steady earnings and cash flow. These are companies that have bright prospects in healthy and growing industries.
The best blue chips offer both capital gains growth potential and regular dividend income. The dividend yield is certainly one of the most concrete indicators of a sound investment. It is the percentage you get when you divide the current yearly dividend payment by the share or unit price of the investment. It's an indicator we pay especially close attention to when we select stocks to recommend in our investment newsletters.
We feel most investors should hold the largest part of their investment portfolios in securities from blue chip companies. All these stocks should offer good "value" that is, they should trade at reasonable multiples of earnings, cash flow, book value and so on. Ideally, they should also have above average-growth prospects in expanding markets.
Meanwhile, when investing in any type of stock, at TSI Network we recommend using our three-part Successful Investor strategy:
Discover how to identify the strongest Canadian stocks for your portfolio in this FREE special report, Finding the Real Blue Chip Stocks: The Power and Security of Canada's Best Dividend Stocks.
BMO mutual funds are a family of Canadian and international mutual funds offered by the Bank of Montreal.
Toronto symbol GBT.A, is one of the largest retailers of furniture, electronic goods and household appliances in Quebec through its affiliates Brault & Martineau Inc. and Ameublements Tanguay.
New York symbol BA, is the world's second-largest maker of commercial aircraft, behind Europe's Airbus.
Toronto symbols BBD.A and BBD.B, is the world's third-largest maker of passenger aircraft, after Boeing and Airbus. It also makes passenger railcars.
Bond funds (or bond mutual funds) are mutual funds that invest in a portfolio of corporate and government bonds. As a general rule, the safest bonds are issued by or guaranteed by the federal government.
Next comes provincial issues or bonds with provincial guarantees. Corporate bonds are far riskier than government bonds, and the risk on corporate bonds, varies widely. Some corporates are almost as safe as government bonds and offer only slightly higher yields. Some corporates are far riskier and offer far higher yields.
However, the major risk factor in the bond market is changing interest rates, which influence the value of existing bonds inversely. When interest rates fall, bond prices rise, and vice versa. The longer the term to maturity on the bond, the bigger the effect of a change in interest rates.
Note that we rarely recommend investing in bond funds among the many mutual fund choices available for investors. The bond market is highly efficient and few bond fund managers can add enough value to offset its management fees. But in addition, investing in a bond fund exposes you to the risk that the manager will gamble in the bond market and lose money. That's a bigger risk than ever right now.
Today's interest rates do not bring in much investment income, so managers may try to boost returns by taking on extra risk. Bonds are unlikely to perform well over the next few years, if only because interest rates will likely hold steady or rise. That means the fund would only earn interest income on its bonds; instead of capital gains, its bond holdings could produce capital losses.
Bond funds could have a place in your portfolio if you need stability and stick with short-term bonds. But for the best returns, we at TSI Network recommend investing in stocks using our three-part Successful Investor strategy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
A bond mutual fund is a fund made up mostly of bonds instead of stocks. Many bond mutual funds built great performance records in the early part of the last decade. This, though, was a function of the trend in interest rates; when rates fall, bond prices go up. Interest rates are historically low right now, but could move upward over the next few years in response to economic growth or fears of growing inflation. This is another way of saying that bond prices could fall.
When bonds yielded 10%, perhaps it made some sense to buy bond mutual funds and pay a yearly MER of, say, 2%. Now that bond yields are much lower, it makes a lot less sense.
The bond market is highly efficient and we doubt that any bond fund can add enough value to offset its management fees. But in addition, investing in a bond fund exposes you to the risk that the manager will gamble in the bond market and lose money.
For some investors, bonds can act as an offset to the volatility of stocks in your portfolio. But it's cheaper to buy bonds directly than to do so through a bond mutual fund. If you want capital gains, buy stocks or stock-market mutual funds or ETFs.
For a sound long term investing strategy, we recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
In simple terms, a bond is a form of loan whereby you are lending money to a corporation or government. In return, a bond pays a fixed rate of interest during its life. Eventually, a bond matures, and holders get the bond's face value, and nothing more. Note that receiving the fixed interest and face value at maturity is the best that can happen. Corporate bonds can go into default. As well, inflation can devastate the real purchasing power of bonds and all fixed-return investments. Bond prices and interest rates are inversely linked.
When interest rates go up, bond prices go down, when interest rates go down, bond prices go up. Bonds have been in a period of rising prices (a bull market) more or less since 1981. That year, long-term interest rates reached an historic turning point when long-term U.S. Treasury bond yields peaked near 15%. Ever since, interest rates have gone through wide fluctuations, but they have essentially headed downward. Today, interest rates just don't have that much further to fall. But under certain conditions, interest rates could go substantially higher. Remember, when interest rates go up, bond prices drop. Bonds also generate more commission fees and income for the broker, compared to stocks, especially if you buy them via bond funds and other investment products.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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Book value represents the value of a company' assets, minus its liabilities, as represented on its financial statements. The book value per share of a company is the total value that the company places on its assets, less all liabilities, divided by the number of shares outstanding. Book value per share gives you a rough idea of the stock's asset value. However, this ratio represents a "snapshot" of an instant in time, and changes over time. That's because asset values on a company's books are the historical value of the assets when they were originally purchased, minus depreciation. Certain types of assets on a balance sheet might have actual market values well above historical values, as sometimes happens with real estate or patents. When we are evaluating a stock with a low price-to-book value, we look to see if the share price is too low, or if its book value per share is inflated. Often we find that the stock price is too low. But, sometimes, the company's assets are overpriced on the balance sheet, and at risk of being written down. At TSI Network, we recommend using our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
A break even analysis is basic arithmetic that has significant value in analysing potential gains—and losses—on stocks. For example, if you lose X% in the stock market, you’ll need X% to recover, or break even. An understanding of this relationship can help you stay out of poor-quality stocks where the risk of a big decline is high.
A break even analysis isn’t complicated to perform, but it can open your eyes to how hard it is to recover from stock losses.
We feel it’s important for investors to learn about break even analysis because rather than avoiding high-risk areas, many beginning investors feel drawn to them. The truth is that investors often overlook the way that a simple break even analysis can help you reach your investment goals.
The arithmetic of taking on too much risk:
If you lose 10%, you need an 11% gain to break even.
If you lose 20%, you need to make 25% to break even.
If you lose 40%, you need to make 66.6% to take you back to where you started.
If you lose 50%, you need a 100% gain to break even.
Successful investors profit more or less automatically over long periods. They do this by tapping into the long-term growth that inevitably comes to well-established companies when they operate in relatively free economies, during relatively prosperous times.
If you’ve come to understand break even analysis, follow it up by taking advantage of TSI Network and using our three-part Successful Investor strategy:
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Toronto symbol BWR, operates three producing zinc mines: the Myra Falls mine in B.C., El Mochito mine in Honduras, and El Toqui in Chile.
New York symbol BGG, is the world's largest maker of engines for lawnmowers. It also makes other home and garden products, including pressure washers and snow blowers.
New York symbol BR, offers services to the investment industry in three main areas: investor communications; securities processing; and transaction clearing.
New York symbol BPL, is a Master Limited Partnership that transports gasoline and jet fuel through pipelines.
What is a bull market? A bull market is a term used to define a long period of rising stock prices that usually lasts one to three years or more. In contrast, a bear market is a long-term period of falling prices that typically lasts a year or two. So-called "intermediate-term corrections," or market setbacks, come along unpredictably in every bull market cycle. They often last from three to six months. In addition, the period from May through October tends to have more than an average share of market weakness. During a secular bull market, stock prices still go through bear markets (downturns of 20% or more, say). The difference with a secular bull market is that the rising phases within it generally last longer and go higher than people expect. Also, the falling phases or bear markets take a smaller toll off of stock prices, and/or end sooner than people generally expect. Most important for investors, few stocks move in lockstep with the market indexes. The best stocks in the next bull or rising market will begin rising before the next bull market gets started. Rather than try to cut risk by getting out of the market, you are better off doing so by sticking with our three-part Successful Investor strategy:
Discover how to put extra strength into your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
Buybacks or stock buybacks are when a public company decides to purchase back its own shares, decreasing the number of available shares on the open market. Buybacks raise a company's earnings per share. It's simple arithmetic: buybacks reduce the number of shares outstanding.
To get earnings per share, you divide total earnings by the number of shares outstanding. When you reduce the divisor-because the company has fewer shares outstanding, due to stock buybacks-the calculation gives you a higher number for earnings per share. On the whole, buyers are willing to pay slightly more for a stock with slightly higher earnings per share. When you hold a stock in your personal, taxable account and it pays a cash dividend, you have to pay tax on the dividend in the year in which you receive it. When a company initiates a buyback program the dividend isn't distributed (and subject to tax) but the share price tends to rise and boost investor returns. This added opportunity for tax deferral may not seem like much of an advantage in any single year.
However, the magic of compound interest applies to that tax deferral. It can add up to a huge advantage over a decade or two. The advantage expands all the more if you hold off on selling until you need the money. That holding period may even last until you retire, when your income tax rate is likely to be much lower. We think investors should be just as excited for buyback programs as dividends. Enhance your stock market returns by following TSI Network and using our three-part Successful Investor strategy:
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Buying shares refers to the act of purchasing shares of a stock in a company on a stock exchange.
Most people begin buying stocks while they’re still working. Each year, they set aside a fixed sum to invest. It’s important to continue investing the same sum (or ideally raise it) through good years and bad. The same sum buys more shares in “bad” years, when prices are low. It buys fewer shares in good years, when prices are high. This cuts your long-term average cost per share.
When you retire, you stop buying shares and begin selling enough stock every year to raise the cash you wish to withdraw from your portfolio.
We think the best way to begin buying shares is to follow our three-part Successful Investor philosophy. This entails focusing on well-established stocks with a history of earnings and, in most cases, dividends. Choose your yearly purchases from this list, based on their fundamental value. Take care to spread your money out across most if not all of the five main economic sectors: Manufacturing, Resources, Consumer, Finance and Utilities.
Some of your selections will seem particularly attractive in light of the value they offer, based on earnings and balance sheet information. Other selections will cost more in relation to these measures, but will make up for it with better growth potential. So, rather than aiming for a value or growth focus in your portfolio, you’ll have some of each.
You should also take care to downplay or avoid buying shares of stocks that are in the broker/media limelight.
Learn how to look for blue chip companies that are likely to pay off if business and the stock market are good, but that won’t hurt you too much during those inevitable periods when business or the markets are bad. Download Canadian Blue Chip Stocks: Bank of Nova Scotia Stock, CP Rail Stock, CN Rail Stock, Royal Bank Mutual Funds and More for FREE!
Toronto symbol CTY, operates in two areas: providing engineering, healthcare and other skilled professional personnel to clients on a contract basis, and producing communications systems.
Call options give the holder (or buyer) the right to buy the underlying stock at a specified strike price until the expiration date. The seller of the call in turn has the obligation to sell or deliver the underlying security at the strike price until the expiry date.
If you sell call options on your stocks, you’ll pocket low-risk premium income even if your stock just sits there. Selling call options on a stock you own is known as a covered call. This strategy is aimed at generating extra income, but also at lowering risk and volatility.
However, investors who consistently sell covered calls on their portfolios will substantially underperform over time. That’s because the buyers of your calls will always exercise away your big winners.
You can buy a call now, and lock in the future price of a stock. Note, though, that the total price that you’ll eventually pay for the stock will be the cost of the shares, plus the cost of the call option and commissions. If the stock stays around the same price, you lose one commission, plus the cost of the call.
Find the best stocks to buy by following TSI Network and using our three-part Successful Investor strategy:
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New York symbol CPB, is the world's largest maker of canned soups. It also makes sauces and canned pasta, cakes and cookies and vegetable juices.
Toronto symbol CBY, is Canada's second-largest maker of fresh and frozen breads, rolls and bagels, behind Weston Bakery. It also makes specialty pastas and sauces. Main brands include Dempster, Tenderflake and Olivieri.
The Canada Pension Plan, or CPP, is the name for the Canadian national social insurance program. The program pays out based on contributions, and provides income protection for an individual or their survivors in the instance of retirement, disability or death. Since 1999, the CPP has been legally permitted to invest in the stock market.
Nearly all individuals working in Canada contribute to the CPP, unless they live in Quebec, where the Quebec Pension Plan (QPP) exists and provides comparable benefits.
Here’s a look at some of the pensions or benefits provided by the Canada Pension Plan:
Note: You don’t have to apply to both the QPP and CPP plans. You will receive benefits based on the location of your residence. The amount you will be paid takes into account any contributions made to both plans.
Eligibility of Canada Pension Plans: Applicants can apply to receive full CPP benefits at age 65. The CPP can be received as early as age 60 at a reduced rate. It can also be received as late as age 70, at an increased rated.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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Canada RRSP Contribution Limit, RRSP Interest Rates, TFSA Contribution Limit and More.
Canadian bank stocks include shares of the Canada’s “Big Five” banks—Bank of Nova Scotia, Bank of Montreal, CIBC, TD Bank and Royal Bank.
Canadian bank stocks have long been one of our top choices for growth and income, and we recommend that most Canadian investors should own two or more of the big-five Canadian bank stocks. That’s mainly because of their importance to Canada’s economy.
Banks remain key lower-risk investments for most portfolios. As well, the big-five Canadian bank stocks all have long histories of annual dividend increases.
Our top choice for a Canadian bank stock is Bank of Nova Scotia.
Bank of Nova Scotia (Toronto symbol BNS) is in the finance sector, and holds our TSINetwork rating of “above average.” It’s Canada’s third-largest bank, and it remains our top pick for anyone who asks which Canadian bank is best to invest in. That’s mainly because it continues to expand in regions with strong long-term growth potential like Latin America, South America and Asia.
Canadian banks stocks have always been some of the best income-producing securities. We use dividends as a main barometer for picking Canadian bank stocks because they are a sign of investment quality, they grow, and they are usually consistent (be careful when investing in a Canadian bank stock, or any stock, if they’re not.)
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to profit from a long-term strategy through investments in Bank of Nova Scotia stock when you claim your FREE digital copy of Canadian Blue Chip Stocks: Bank of Nova Scotia Stock, CP Rail Stock, CN Rail Stock, Royal Bank Mutual Funds and more now.
Canadian capital gains could refer to two things. One being the profit an investor makes from a Canadian based security, a capital gain. Or it could be referring to Canadian capital gains tax. With stocks, you only pay capital gains tax when you sell or “realize” the increase in the value of the stock over and above what you paid for it. (Although mutual funds generally pass on their realized capital gains each year.)
Several years ago, the Canadian government cut the capital gains inclusion rate (the percentage of gains you need to “take into income”) from 75% to 50%.
For example, if an investor purchases stock for $1,000 and then sells that stock for $2,000, then they have a $1,000 capital gain. Investors pay Canadian capital gains tax on 50% of the capital gain amount. This means that if you earn $1,000 in capital gains, and you are in the highest tax bracket in, say, Ontario (49.53%), you will pay $247.65 in Canadian capital gains tax on the $1,000 in gains.
If you want to learn more about successful investing, we at TSI Network recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio.
Canadian capital gains tax is the tax paid when an individual sells a stock outside of an RRSP or RRIF and profits from the sale. To calculate your total Canadian capital gains taxon a share you sold during the previous tax year, subtract the adjusted cost base of the shares you sold from the total proceeds of the sale. The adjusted cost base of the shares is equal to the cost of the shares plus any costs associated with owning them, such as brokerage commissions. For example, say you bought 1,000 shares of Canadian National Railway at $10 per share years ago. When you made the purchase, you paid $50 in brokerage commissions. When the stock reaches $60 per share, you decide to sell. Your proceeds from the sale are $59,950 ($60 per share multiplied by 1,000 shares minus $50 in brokerage commissions) and your adjusted cost base (the cost of purchase) is $10,050 ($10 per share multiplied by 1,000 shares, plus the $50 in commissions). If you've bought shares of the same company more than once, the adjusted cost base you need to calculate your Canadian capital gains tax is equal to the average cost of each share. You can determine the average cost by dividing the total cost of all the shares you've purchased by the total number of shares you hold. Paying your Canadian capital gains taxes is a necessary part of Canadian investing. At TSI Network, we recommend using our three-part Successful Investor philosophy when investing:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
Canadian diamond mines are mining operations located in Canada that produce diamonds for jewellery as well as industrial uses.
Investing in diamond mines is risky business because of the time it takes diamonds to get from the exploration stage to retail stores. However, a single Canadian diamond mining operation can last up to twenty years or more, and a productive mine can hugely profitable.
In September 1991, explorers discovered the first economic diamond-bearing kimberlite deposit in Canada, located in the Lac De Gras area in the Northwest Territories, after over a decade of searching.
So far, five Canadian diamond mines have opened: the Ekati mine in the Northwest Territories, which developed from Charles Fipke’s discovery; the Diavik mine in the Northwest Territories; the Jericho mine in Nunavut; the Snap Lake mine in the Northwest Territories (owned by DeBeers Canada); and the Victor mine in northern Ontario (also owned by DeBeers).
Investing in a Canadian diamond mine is an aggressive investment because it’s a long way between the exploration phase and commercial production, when they begin to produce diamonds for sale and start making money. As well, there’s often a long time lag between news of progress toward a mine, and share prices can drift down in the meantime.
Canadian diamond mines are risky and should only be included in the speculative part of your portfolio. For the bulk of your portfolio, follow TSI Network and use our three-part Successful Investor strategy:
Discover how to make the most of your copper investments in this free special report, Gold Mining: How to Choose the Best Stocks and ETFs to Profit from the Reconstruction of Japan, from TSI Network
Canadian dividend stocks are publicly traded Canadian stocks that pay a dividend. And at TSI Network, we think Canadian dividend stocks are some of the best shares you can own.
Dividend stocks from Canada have added appeal because their dividends receive special tax benefits—U.S. dividends are not eligible for these tax benefits.
Canadian taxpayers who hold Canadian dividend stocks are eligible for the dividend tax credit. This means that dividend income will be taxed at a lower rate than the same amount of interest income (investors in the highest tax bracket pay tax of around 23% on dividends, compared to 50% on interest income—investors in the higher tax bracket pay tax on capital gains at a rate of 25%.)
But we caution investors to be wary of a Canadian dividend stock that has an unusually high dividend yield. This could be a sign of share-price volatility and also an indication of a yield that is not sustainable—in other words, investors may be anticipating a dividend cut. As well, look for a history of dividends before investing in a stock.
All in all, we think Canadian dividend shares are some of the best stocks you can own. And to build a strong portfolio with the best chance of gains, we recommend using our three-part Successful Investor philosophy for long-term investing:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks. And it’s yours FREE!
Canadian ETFs (exchange traded funds) 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 Canadian 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 long-term cost advantage over most mutual funds.
As well, shares are only added or removed when the underlying index changes. As a result of this low turnover, you won't incur the regular capital gains taxes generated by the yearly distributions most conventional mutual funds pay out to unitholders.
Some leading Canadian ETFs include the iShares S&P/TSX 60 Index ETF (Toronto symbol XIU; ca.ishares.com). This ETF is a good low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange. Expenses are just 0.17% of assets, and it yields 2.7%.
A second is the iShares Canadian Select Dividend Index ETF (Toronto symbol XDV; ca.ishares.com). This ETF holds 30 of the highest-yielding Canadian stocks. Its selections are based on dividend growth, yield and payout ratio. The weight of any one stock is limited to 10% of the ETF's assets. The fund's MER is 0.55%, and it yields 4.9%.
Whatever you invest in, we think you should follow TSI Network and use our three-part Successful Investor strategy:
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Canadian Imperial Bank of Commerce (Toronto symbol CM) is one of Canada's largest banks to invest in, offering a high-dividend yield of 4.8%. Canadian Imperial Bank of Commerce recently agreed to sell its 41% stake in U.S.-based wealth management firm American Century Investments (ACI) for $1 billion U.S. CIBC was unable to gain full control over ACI, which is why it decided to sell this investment. CIBC expects to realize a gain of $170 million U.S. when it completes the sale in mid-2016. The deal also frees up cash the bank can use to pursue other acquisitions. Meanwhile, Canadian Imperial Bank of Commerce has announced several plans to spur its growth, including spending less on branches and expanding its online and mobile-banking systems. It will also consolidate 120 data centres into a single facility. In all, the bank expects to spend $400 million on these moves over the next three years. But they will cut $600 million from its annual costs by 2019. These savings will also offset any potential losses on loans to oil and gas producers. At last report, these loans totalled $17.3 billion, which is a moderate 6% of CIBC's outstanding loans and credit commitments. Canadian Imperial Bank of Commerce is also seeing lower losses from credit cards, mainly because it sold half of its Aeroplan accounts to TD Bank when TD took over the plan in 2014. As a result, it set aside $771 million for potential bad loans in 2015, down 17.7% from $937 million in 2014. We consider CIBC a buy, and feel that most Canadian investor should own at least two of Canada's big-five banks To determine which stocks are best to invest in, use our three-part Successful Investor philosophy:
Discover how to build a winning stock market portfolio in this free special report, Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada, from TSI Network
Canadian income trusts are Canadian-based income investment trusts that hold income-producing assets. Their units trade on stock exchanges, but they flow much of their income through to unitholders as “distributions.”
Canada offers special tax treatment for income trusts. When they flow their income through to their unitholders, they don't pay much if any corporate tax. Instead, investors pay tax on most of the distributions as ordinary income (although some distributions qualify as a tax-free return of capital).
Today, there are far fewer Canadian income trusts available to investors than in the early part of the last decade. That’s because the federal government’s new tax on income-trust distributions took effect on January 1, 2011.
Most trusts converted to conventional corporations. However, real estate investment trusts (REITs) were exempted from the new income-trust tax. They are now the primary source of Canadian income trusts available for investors.
To be profitable in any market, use TSI Network’s three-part Successful Investor philosophy:
Discover how to invest the best Canadian growth stocks in this free special report, Canadian Growth Stocks: WestJet Stock, RioCan Stock and more, from TSI Network. It’s your complete guide to investing in Canadian growth stocks and profiting from a long-term growth strategy.
A Canadian index fund can be a mutual fund or exchange-traded fund (ETF) whose goal is to equal the performance of a Canadian market index, such as the S&P/TSX 60. A market index aims to track the performance of a selected group of stocks. For example the S&P/TSX 60 is an index of the 60 largest companies that trade on the Toronto Stock Exchange.
Indexes are also used to determine how well a stock market is performing and are reported on in all forms of media. Most Canadian index funds are passively managed. That means that they don't have a management team watching them at all times and making adjustments based on their short-term views of individual stock performance.
Canadian index funds may be updated only a few times a year, and for that reason they have much lower management fees. Some Canadian index-fund fees run as low as 0.10% per year, compared to 2.5% or more on many broker-sold mutual funds. Those high fees can eat into your profits. Canadian index funds are especially good for new investors who want to invest in a wide variety of stocks with a single investment. They also make good additions to RESPs and TFSAs. A Canadian index fund is also a sound investment for seasoned investors as well. When investing in stocks, as well as Canadian index funds, TSI Network recommends using our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Canadian investments are stocks, bonds, mutual funds, or ETFs, of Canadian companies.
One example: Canadian value stocks are typically stocks trading below the price that their financial fundamentals suggest. They are then recognized by investors as undervalued, and then begin to rise.
Another example of a Canadian investment is a Canadian dividend stock. Dividend stocks from Canada have added appeal because their dividends receive special tax benefits.
Canadian taxpayers who hold Canadian dividend stocks are eligible for the dividend tax credit. This means that dividend income will be taxed at a lower rate than the same amount of interest income.
Canadian bank stocks are one of our favourite Canadian investments. Canadian bank stocks have long been one of our top choices for growth and income. We’ve long recommended that most Canadian investors should own two or more of the Big Five Canadian bank stocks—Bank of Nova Scotia, Bank of Montreal, CIBC, TD Bank and Royal Bank. That’s in large part because of their importance to Canada’s economy. Banks remain key lower-risk investments for a portfolio. As well, the big five Canadian bank stocks all have long histories of annual dividend increases.
Get the best recommendations for Canadian investments by following TSI Network and using our three-part Successful Investor strategy:
Discover how to build greater wealth with less risk, claim your FREE digital copy of How to invest in stocks: Canada investor advice on building a balanced stock portfolio now.
Canadian mining stocks are stocks of mining companies that are based in Canada. These are Canadian miners that explore for, develop and mine many different minerals including gold and silver. Typically, most of their operations are in Canada.
These Canadian mining stocks have a key advantage over other mining stocks. Canada is rich in minerals, but it’s also very politically stable and safe to operate in, compared to some other less developed countries.
The group of Canadian mining stocks can generally be broken up into two categories, majors and juniors. Majors are mining companies that have been in the mining business for many years and more often than not they operate on a global scale. Majors have proven methods for exploration and mining, and have consistent output year over year.
Canadian junior mining stocks are mining companies that are new or have generally been in business for a decade or less. They are usually smaller companies and take on risky mining exploration. If a junior mining stock is successful at finding and mining minerals, it can mean huge returns for investors.
We think high quality Canadian mining stocks can play a role in the portfolios of most investors. For an overall portfolio approach, follow TSI Network and use our three-part Successful Investor strategy:
Discover how you can maximize your profits in this free special report, Best Canadian Mining Stocks TSX: Plus Gold Stocks, Canadian Diamond Mines and More, from TSI Network.
Canadian mutual funds are diversified portfolios of equities and other investments that trade on Canadian stock markets, in which small investors can take part. They are an investment product involving individual shares, called units.
Most funds are set up because a fund sponsor has a saleable idea. It may or may not be a good investment idea, and these days it often isn’t. Marketing departments are in charge at many mutual fund organizations, leading to management decisions that are mainly aimed at selling new units of mutual funds, rather than safeguarding the interests of the investors buying mutual funds.
When buying Canadian mutual funds, it’s important to keep the long term in mind. That’s because Canadian mutual fund fees are unavoidable for mutual fund investors—including sometimes upfront fees.
Studies of top performing mutual funds show most of their investors who jump in at the top will lose money or make negligible returns. That’s because most investors in a top performing fund only buy into the fund after it has already made big gains. Investors also tend to sell former top performing funds only after a major slump in the value of their holdings. When you chase investment performance, it’s all too easy to buy at the top and sell at the bottom.
Some tips on Canadian Mutual Fund investing include avoiding mutual fund managers who trade heavily, avoiding purchasing mutual funds with a lot of dead weight, and avoiding mutual funds with anonymous managers.
Improve your investing in Canadian mutual funds by following TSI Network and using our three-part Successful Investor strategy:
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Best Canadian ETFs: Canadian ETFs vs Mutual Funds, Canadian Index Funds and More.
Canadian National Railway, Toronto symbol CNR, operates a freight rail network across Canada, and in parts of the United States.
In 2012, we chose its competitor Canadian Pacific Railway as our #1 buy, however, we also have a high opinion of its larger rival, Canadian National Railway—one of North America’s most efficient railways, Toronto Symbol CNR.
Canadian National Railway has thrived since it became a public company in 1995, thanks to a series of acquisitions that greatly expanded its U.S. operations. That has helped Canadian National Railway profit from the North American Free Trade Agreement (NAFTA), which spurred a rapid rise in trade volumes between Canada, the U.S. and Mexico.
Canadian National Railway is the originating carrier for 85% of the goods it ships. This helps the company improve its efficiency and speed up its delivery times, because it has more control over when cargo is transferred from ships and trucks to its trains.
Canadian National Railway has several competitive advantages, such as a larger rail network, better railway efficiency and exclusive access to the port in Prince Rupert, B.C., which is the closest North American port to Asia. Moreover, Canadian National Railway has a lower price-to-earnings ratio and higher dividend yield than its competitor Canadian Pacific Railway.
Canadian National Railway continues to invest in better trains and tracks by buying new locomotives with distributed power capability. This unique technology lets Canadian National Railway run longer trains, particularly in cold weather.
The company’s ongoing focus on improving its efficiency should keep fueling its earnings growth and give it more cash for dividends.
When investing in Canadian railways, or any other type of stock, TSI Network recommends using our three-part Successful Investor philosophy:
Should you invest in Canadian National, or Canadian Pacific? Discover how CP Rail became our Pick of the Year for 2012 in CP Rail: The Making of a #1 Stock Pick. See how our coverage revealed the hidden assets that give CP remarkable growth potential for a 127-year old stock!
Canadian oil stocks are stock issues for companies that explore for, produce and refine oil. These companies are typically headquartered in Canada, but can also explore for, produce and refine oil in other countries too.
At TSI Network, we continue to advise against overindulging in Canadian oil stocks. That's because the Resource sector (including oil) is highly volatile, and no one can accurately predict future oil prices. Canadian oil stocks and their companies are subject to various regulations and royalties that can eat into their profits.
However, you can profit nicely over long periods by investing a reasonable portion of your portfolio in well-established or well-managed Canadian oil stocks, especially those with high-quality reserves and rising production. These companies are well-positioned to profit during periods of high oil prices, and are able to at least partly offset price declines by producing more oil.
As well, well-established oil producers can take advantage of the setback to pick up properties and employees who might be harder to find in more prosperous times. You might consider investing in Canadian oil stocks for your portfolio. But note that junior Canadian oil stocks can be particularly risky and should only be held by aggressive investors.
If you do buy oil stocks, make sure they fit into a well-balanced portfolio that follows our three-part Successful Investor strategy:
Discover how to make the most of your resource investments in this free special report, Juniors to Giants: The Complete Guide to Mining Stocks, from TSI Network.
Canadian Pacific Railway, Toronto symbol CP, transports freight over a rail network between Montreal and Vancouver. In the United States, subsidiaries connect Canadian Pacific Railway’s Canadian lines to major hubs in the Midwest and Northeast. Alliances with other railways extend its reach to Mexico.
We recommended Canadian Pacific Railway in our very first issue in January 1995. At that time, Canadian Pacific Railway held a variety of businesses beyond railways, such as hotels, coal, and oil and gas. We saw these as undervalued assets. In 2001, Canadian Pacific Railway unlocked some of this hidden value by spinning off these businesses as separate firms.
As a stand-alone railway, we still felt Canadian Pacific Railway had plenty of room to improve. A prominent American hedge firm shared our opinion, and in 2012, it installed former Canadian National Railway chief executive Hunter Harrison as Canadian Pacific Railway’s new CEO. Thanks to a major cost cutting plan, Canadian Pacific Railway hit a record high of $248 in October 2014.
Both of the top two Canadian railways, (Canadian Pacific Railway and Canadian National Railway) focus on cutting costs and streamlining their operations. That puts them in a better position to handle changing demand for the cyclical products they transport, such as coal, grain and oil by rail.
Canadian Pacific Railway continues to benefit from its efficiency improvements, which include speeding up trains and reducing the amount of time they spend at terminals.
When investing in railways, or any other type of stock, TSI Network recommends using our three-part Successful Investor philosophy:
Discover how Canadian Pacific Railway became our Pick of the Year for 2012 in CP Rail: The Making of a #1 Stock Pick. See how our coverage revealed the hidden assets that give Canadian Pacific Railway remarkable growth potential for a 127-year old stock!
Canadian platinum mining stocks offer ownership in companies that explore and mine platinum in Canada.
In terms of global production, Canada is the 4th largest producer, with a platinum production of 9,000 kilograms. Most of the platinum in Canada comes from the Sudbury Basin in Central Ontario.
Palladium, a related substance based on chemical structure, is included in the platinum group metals. Annual Canadian palladium production is approximately 24,000 kilograms.
Palladium and platinum are both used in catalytic converters for gasoline and diesel engines. Historically, platinum has been used primarily in diesel engines, but palladium is now being used in place of platinum in these engines.
Mining stocks can generally be broken up into two categories, majors and juniors. Majors are mining companies that have been in the mining business for many years and have proven methods for exploration and mining, and have consistent output year over year.
Junior mining stocks are small mining companies that take on riskier projects and are new or have been in business for a decade or less.
A Canadian platinum mining stock is considered part of the resource sector. We recommend that you cut your risk in the volatile resource sector by investing mainly in stocks of profitable, well-established mining companies with high-quality reserves. For that matter, resource stocks should make up only a limited portion of your portfolio
Learn more about Canadian platinum mining stocks and other resource investments by following TSI Network and using our three-part Successful Investor strategy:
Discover how to pick the best Canadian mining stocks on the Toronto Stock Exchange, claim your FREE digital copy of Best Canadian Mining Stocks TSX: Plus Gold Stocks, Canadian Diamond Mines and More now.
Canadian real estate investing involves buying houses or other property in Canada.
Investing in Canadian real estate can entail higher levels of risk than stocks because real estate is less liquid, expensive to manage and buy or sell, and highly geographically concentrated. Changes on the street or in your property’s neighbourhood can make it hard to find tenants or buyers. So can physical problems, like adverse traffic patterns, backed-up sewers and zoning changes that allow undesirable development.
Many individuals have grown rich through part-time involvement in Canadian real estate investments—probably more than have done so through the stock market. However, that’s mainly because of three key factors that are easy to overlook: leverage, sweat equity and higher risk.
It’s easier to get financing for real estate than for stocks because real estate tends to be less volatile and easier to appraise, and it generally produces more current income. It also rarely drops drastically overnight, as some stocks do.
Canadian real estate investing enthusiasts say that if you buy a property with a 10% down payment, then a 10% rise in its value means you have doubled your money. However, that claim neglects the costs of selling (up to 5% or 6% for real estate commissions, plus lawyer’s fees and related expenses). It also overlooks any negative cash flow you may have experienced when you owned the property.
Learn more about Canadian real estate investing—and stock market investing—by following TSI Network and using our three-part Successful Investor strategy:
Discover how to build greater wealth with less risk when you download your FREE copy of How to invest in stocks: Canada investor advice on building a balanced stock portfolio now.
Toronto symbol REF.UN, focuses on acquiring properties in prime locations, usually near major metropolitan centres. That attracts strong tenants, maintains high occupancy rates and delivers a reliable stream of rental income.
Canadian shares are the stocks of companies that are based in Canada and have their primary listing on the Toronto Stock Exchange.
There are generally two types of stock issued by a company: common and preferred. Preferred stocks typically have no voting rights (unless a specified number of dividend payments have been missed). Instead, preferred Canadian shares are entitled to a fixed dividend payment. In the event of company bankruptcy, preferred shareholders have a higher priority claim on company assets than common shareholders. Dividends on preferred Canadian shares must be paid out before dividends to common shareholders.
There are also Canadian dual shares. Most Canadian stocks with two share classes have a “coattail provision” in place. This provision aims to ensure that both Canadian share classes have equal rights in the event of a takeover. So, if you hold non-voting or subordinate-voting shares, you won’t miss out on a takeover bid.
If a company’s two classes of shares trade for roughly the same price, you’re better off buying the voting shares. That’s because the voting shares may move substantially higher than the non-voting shares if a Canadian shareholder who is trying to take control of the company accumulates a large number of shares. In addition, voting shares sometimes trade above non-voting shares because certain institutions refuse to buy non-voters, or only buy them in limited quantities.
Over the years, we’ve had great success with a number of companies that have two or more Canadian share classes. Often, you can invest in these companies at a lower ratio of price to asset value or earnings power simply because some investors prefer not to invest in them.
Boost your investment gains by following TSI Network and using our three-part Successful Investor strategy:
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What is a Canadian solar stock?
A Canadian solar stock is a share in a Canadian company that operates a business in the solar power industry. Canadian solar stocks can be companies that manufacture solar panels, provide solar panel installation, or develop new technologies used in the solar industry.
Solar power is a rapidly changing technology and has attracted a lot of investment in recent years. That has quickly moved the technology forward. For example, advances in manufacturing techniques continue to steadily push down the prices of solar cells and solar panels. At the same time, alternatives to costly silicon, which is currently used in most solar cells, are emerging. These include copper-indium-gallium-selenium solar cells.
Technology advances add considerably to the risk of solar-power companies that are focused on developing or making a single technology. That’s because they constantly risk being overtaken by competitors with a superior product.
Investors should consider investing in Canadian solar issues that have other energy operations, such as hydroelectric power. That will cut your risk. For the best portfolio gains, follow TSI Network and use our three-part Successful Investor strategy:
Discover how to invest in energy stocks when you download Canadian Natural Resources Stock Guide: What to look for in Canadian Energy Stocks for FREE today!
The Canadian stock market consists of the shares issued and traded primarily on the Toronto Stock Exchange.
Stock markets are also known as equity markets.
Many investors have given up on full-service stock brokers to execute their trades. They now do all that buying and selling through discount brokers, with no regrets. But a lot depends on you, and whether you were able to find a high-quality full-service broker.
There are five economic sectors in the stock market: manufacturing and industry, resources and commodities, consumer, finance and utilities.
Long-term studies show that the Canadian stock market as a whole generally produces total pre-tax annual returns of 10% to 11%, or around 7.5% after inflation.
Investing in stocks can earn less than the market return for a variety of reasons. One is sheer randomness. Others include taxes; brokerage commissions; mutual fund MERs; getting caught up in stock-market fads; buying speculative stocks that collapse; buying financial-industry creations that are virtually certain to produce meager profits if not losses for the bulk of participants; loading up on risky investments at market peaks; selling out in despair at market bottoms; and every other market error you’ve ever thought or heard of.
To maximize your gains and minimize risk in the Canadian stock market, at TSI Network we recommend using our three-part Successful Investor philosophy when investing in the stock market:
Discover how to build greater wealth with less risk, claim your FREE digital copy of How to invest in stocks: Canada investor advice on building a balanced stock portfolio now.
A Canadian stock option is a contract between a buyer and a seller, based on an underlying security, usually a stock. The buyer pays the seller a fee, or premium, in exchange for certain rights to the stock. In exchange for the premium, the seller assumes certain stock option obligations.
Options trade through stock exchanges, with prices quoted each day in the financial section of newspapers. Each options contract is for 100 shares of stock. So one contract quoted at $5 will cost you $500 (before commissions).
Each contract has a limited life span, or time to expiry—usually less than nine months. The expiry date is the date on which the contract expires. The strike, or exercise price, is the price at which the rights granted to the buyer can be exercised. There are two types of options:
Call options give the holder or buyer the right to buy the underlying security at a specified strike price until the expiration date. The seller of the call has the obligation to sell or deliver the underlying security at the strike price until the expiry date.
Put options grant the holder or buyer the right to sell the underlying security at the strike price until the expiry date. In turn, the seller or writer of the put has the obligation to buy or take delivery of the underlying security until expiration.
Stock options should be used by aggressive investors, who fully understand them. At TSI Network we also recommend using our three-part Successful Investor strategy:
Discover which stocks to buy and hold forever in your portfolio in this FREE special report, 10 Stocks to Buy and Hold Forever.
Canadian stocks are companies based in Canada that trade on Canadian stock exchanges.
There are a variety of Canadian stocks. Two of the best kinds are Canadian dividend stocks and Canadian bank stocks.
Canadian stocks with dividends have three big advantages:
Dividends make an important contribution to your long-term gains, and expose you to less risk than stocks that don’t pay dividends. That’s why we believe the majority of your stocks should always be dividend payers. And strong portfolios are built on a foundation of the best Canadian dividend stocks.
Canadian stocks in banks have long been one of our top choices for growth and income.
Banks remain key lower-risk investments for a portfolio. As well, the big five Canadian bank stocks all have long histories of annual dividend increases.
We’ve long recommended that most Canadian investors should own two or more of the big five Canadian bank stocks—Bank of Nova Scotia, Bank of Montreal, CIBC, TD Bank and Royal Bank. That’s mainly because of their importance to Canada’s economy.
Control your Canadian stock trading risk by following TSI Network and using our three-part Successful Investor strategy:
Discover how hidden value turns into explosive profits, claim your FREE digital copy of Canadian Value Stocks: How to Spot Undervalued Stocks & Our Top 4 Value Stock Picks now.
Toronto symbol CTC.A, operates stores that sell automotive, household and sporting goods. It also operates PartSource auto parts stores, Mark's Work Wearhouse casual clothing stores and gas stations.
Canadian uranium stocks are shares in companies that explore for, mine, and process uranium.
Canadian uranium miners face a lot of regulations because of the radioactive properties of uranium.
While uranium is mined all over the world, we prefer Canadian uranium shares as well as other uranium miners operating mostly in North America. We generally stay away from mining stocks operating in insecure and politically unstable regions like the Congo and Venezuela, or in countries with little respect for property rights and the rule of law, such as Russia or Mongolia
One key recommendation when it comes to uranium stocks is that we like to see an experienced management team involved with the company. We like to see teams that have a history of mine development and have financed similar projects in the past.
To lower your risk, we continue to recommend that Canadian uranium stocks make up only a limited portion of your portfolio’s resource segment. The demand for uranium will likely increase longer term but it will take a keen investment eye to find the most profitable uranium stocks to invest in.
To profit from Canadian uranium stocks—and to boost you investment gains overall—incorporate our three-part Successful Investor philosophy:
Discover how to profit from the coming changes in the Canadian oil and gas industry in this free special report, Canadian Natural Resources Stock Guide: What to look for in Canadian Energy Stocks, from TSI Network.
Canadian Wealth Advisor is an eight-page newsletter, published monthly. The newsletter deals with 'safe money' investments: mutual funds, income trusts, conservative large-capitalization stocks, RRSPs, RRIFs, GICs, and tax-advantaged investments. The newsletter also looks at financial planning, tax planning, investment bargains (and rip-offs, too) and many other issues for safely making more money. You can subscribe on-line at www.canadianwealthadvisor.ca, or by calling 1-800-270-0287.
CanAlaska Uranium has symbol CVV on the TSX Venture Exchange.
In May 2016, CanAlaska announced a separate deal on another of its properties with another big name in mining. That agreement is with De Beers Canada to explore for diamonds in Saskatchewan’s northwestern Athabasca basin.
Exploration in the area is focused on uranium, and until now has not been thought of as suitable for diamond mining. But after examining a high-resolution, airborne geophysical survey carried out by the Saskatchewan Geological Survey in 2011, De Beers thinks that a series of magnetic anomalies could indicate the presence of 75 kimberlite targets—a solidified magma that flows to the surface from deep within the earth’s mantle, lifting diamonds from far below the surface.
Until January 2016, CanAlaska Uranium had another joint venture agreement with Mitsubishi Corp. in place for its West McArthur project in the Athabasca basin. Under the terms of that deal, the Japanese company would receive 50% interest in the property for its investment of $14.4 million in exploration spending. However, Mitsubishi pulled out by selling its interest to CanAlaska in exchange for $600,000 and a 1% royalty arrangement.
In February 2016, Canadian major Cameco chose to option the property, which sits 15 kilometres west of its 70% owned McArthur River uranium mine.
Learn about the best junior mining stocks by following TSI Network and using our three-part Successful Investor strategy:
Discover how to profit from the coming changes in the Canadian oil and gas industry, claim your FREE digital copy of Power and Profits of Energy Stocks now.
New York symbol CAJ, is a leading maker of business machines such as copiers and printers, cameras and optical products such as chips and specialty lenses for TV sets and medical equipment.
Capital gains can occur when an investor sells an asset. To calculate capital gains, the total of the adjusted cost base (ACB) is subtracted from the proceeds of the sale. The adjusted cost base of the shares is equal to the cost of the shares plus any costs associated with buying and selling them, such as brokerage commissions.
If the remainder is positive, the investor has a capital gain. If the remainder is negative, the investor has a capital loss. Say, for example, you bought 1,000 shares of Canadian National Railway at $10 per share years ago. When you made the purchase, you paid $50 in brokerage commissions.
When the stock reaches $60 per share, you decide to sell. Your proceeds from the sale are $59,950 ($60 per share multiplied by 1,000 shares minus $50 in brokerage commissions) and your adjusted cost base (the cost of purchase) is $10,050 ($10 per share multiplied by 1,000 shares, plus the $50 in commissions you paid when you bought them). Hence, you capital gain is $49,900 ($59,950 minus $10.050).
You must pay capital gains tax if you've made a profit on the sale. The exception is if the stock is a Registered Retirement Savings Plan (RRSP) or RRSP or Registered Retirement Income Fund (RRIF). At TSI Network we recommend our three-part Successful Investor philosophy for investing:
Discover how to turn capital gains taxes to your advantage in this free special report, Capital Gains Canada: 7 Secrets for Managing your Canadian Capital Gains Tax Liabilities.
Capital gains tax must be paid on the profit that comes from the sale of an asset. An asset can be a security, such as a stock or a bond, or a fixed asset, such as land, buildings, equipment or other possessions.
Say you purchased 1,000 shares of TD Bank at $20 per share, and when it reached about $40 per share, you decided to sell. Your proceeds from the sale would be $40,000 and your cost would have only been $20,000. This means that your profit on the sale, also known as your capital gain, is $20,000.
Capital gains are given favourable tax treatment in Canada. You only pay tax on 50% of the amount of your capital gain (the 50% amount is known as the capital gains inclusion rate). So, the amount of your taxable capital gain is only $10,000 ($20,000 multiplied by 50%). If your tax rate is 40%, you would only pay $4,000 in taxes ($10,000 in taxable capital gains multiplied by a 40% tax rate).
Capital gains tax is a great way to plan your income to pay less taxes. All forms of income have their place in a properly planned portfolio, but by planning ahead you can minimize your overall tax burden and maximize the money you save (and the size of your investment portfolio).
At TSI Network we recommend our three-part Successful Investor philosophy for investing:
Don’t wait, Pat McKeough shows you 7 powerful strategies that could save you thousands in taxes in his FREE special report, Capital Gains Canada: 7 Secrets for Managing Your Canadian Capital Gains Tax Liabilities.
Capital gains taxes are the taxes you pay when you sell or “realize” an increase in the value of a stock over and above what you paid for it.
The best way to understand how capital gains taxes work is to give you an example:
For example, if an investor purchases stock for $1,000 and then sells that stock for $2,000, then they will have a $1,000 capital gain. Investors pay Canadian capital gains tax on 50% of the capital gain amount. This means that if you earn $1,000 in capital gains, and you are in the highest tax bracket in, say, Ontario (49.53%), you will pay $247.65 in Canadian capital gains tax on the $1,000 in gains.
Capital gains taxes are lower than the tax on interest and on dividend income as well. That makes capital gains a very tax-advantaged form of income. Interest income is 100% taxable in Canada, while dividend income is eligible for a dividend tax credit in Canada.
Understanding capital gains taxes and how they affect your own personal tax liability is a key part of investment planning. For your overall investing strategy, follow TSI Network’s three-part Successful Investor strategy:
Discover how to profit from coming changes in the natural resource industry in this free special report, Canadian Natural Resources Stock Guide: What to look for in Canadian Energy Stocks, from TSI Network.
Capital structure is the way a company funds its business through different sources, including debt and equity. When researching capital structures, investors often start by looking at a company's debt-to-equity ratio. This ratio comes in several variations, but the basic idea is that you measure a company's financial leverage by comparing its debt with its shareholders' equity. You assume an attractive company can earn a higher return on its total capital than the interest it pays on the debt portion of its capital. When a company loses money, it still has to pay the interest and eventually repay the debt. Generally it does so by dipping into shareholders' equity. In extreme cases, losses wipe out shareholders' equity and the stock becomes worthless. Then bondholders and lenders take over the assets to try to get back their investment. A high ratio of debt to equity increases the risk that the company (that is, the shareholders' equity in the company) won't survive a business slump. Note though that we think the best way to assess the debt in a company's capital structure is to look at the ratio between a company's debt and its market capitalization or "market cap" (the value of all shares the company has outstanding). That's because shareholders' equity can be misleading-it reflects historical values rather than hard current numbers. Discover how to turn capital gains taxes to your advantage in this free special report, Capital Gains Canada: 7 Secrets for Managing your Canadian Capital Gains Tax Liabilities, from TSI Network.
In investing, capitalization can also refer to a stock's market cap. The market cap is the total number of shares outstanding multiplied by the current price per share. While many numbers and statistics frequently prove to be of limited value in judging stocks, there is one that is often underused: market cap. Market cap says a great deal about a company.
A company's market cap can grow even while its stock price falls, if it issues new shares. If a company's market cap is close to or less than its total yearly sales, this may indicate that it offers substantial value. However, companies in businesses with low profit margins, such as food retailers, ordinarily have a market cap that is a fraction of their sales.
That's because they earn modest profit margins, perhaps a few pennies on each dollar of sales. When a stock trades at a high ratio of market-cap-to-sales-over 5.0-to-1.0, for instance-it usually means it's in a highly profitable business, or else investors have bid up the price of its shares because they have high expectations for future growth.
This introduces an element of risk. A high market-cap-to-sales ratio makes a stock sharply vulnerable in a market setback. If its profit falls or if it fails to live up to investor expectations, its stock price can plummet. It's best to avoid over-loading your portfolio with stocks that have a high market-cap-to-sales ratio. At TSI Network, we always look at a company's capitalization and market cap in our investment analyses.
We also recommend using our three-part Successful Investor philosophy: Invest mainly in well-established companies; Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; and Utilities); Downplay or avoid stocks in the broker/media limelight.
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
A carbon fiber is a long, thin strand of material composed mostly of carbon atoms. The carbon atoms are bonded together in microscopic crystals that make the fiber very strong for its size. Several thousand carbon fibers are twisted together to form a yarn, which may be used by itself or woven into a fabric. The yarn or fabric is combined with epoxy and molded to form various composite materials. Over the years the practice and manipulation of carbon fiber has been refined and it now has many commercial applications. We cover a number of stocks in our newsletters that sell products making use of carbon fiber technology, including General Electric and United Technologies. Carbon fiber-reinforced composite materials are used to make aircraft and spacecraft parts, racing car bodies, golf club shafts, bicycle frames, fishing rods, automobile springs, sailboat masts, and many other components where light weight and high strength are needed. When investing in stocks, we at TSI Network recommend using our three-part Successful Investor philosophy:
Discover how to put extra strength into your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
Cash flow is calculated by adding net income plus non-cash charges such as depreciation, depletion and amortization. Simply put, it's earnings without taking into account non-cash charges such as depreciation, depletion and the write-off of intangible assets over time.
Cash flow is particularly useful in valuing companies in industries in which depreciation and depletion charges are based on the historical value of assets instead of current values-industries such as oil and gas and real estate. Note though, that as with any financial ratio or number, you have to look at it in context with many other factors. That's not to say that there won't be surprises that affect every company in a particular industry. But well-established stocks have the asset size and the financial clout-including solid balance sheets and strong cash flow-to weather market downturns or changing industry conditions.
In summary, cash flow is in many ways a better measure of a company's performance than earnings. While reported earnings are subject to accounting interpretation and can be restated in later years, cash flow is a measure of the cash flowing into a company right now less cash outlays.
Investors should always seek out information about cash flow when analysing a stock-but you should also keep TSI Network's three-part Successful Investor philosophy in mind:
Discover how the secrets of successful investors can help you to a more profitable investment future in this special report, The 10 Best Practices of Successful Investors. And it's yours FREE!
A cash sale is a term used to describe a transaction on a stock exchange in which the buyer or seller uses a cash account, rather than buying or selling on margin. A cash sale requires the investor to pay for securities within two days from when the purchase is made.
Most cash sales of liquid stocks are made between stock brokers. However, with illiquid or thinly traded stocks, a market maker is a trader responsible for maintaining an orderly market in an individual stock by standing ready to buy or sell shares.
The market maker’s job is to maintain a firm bid and ask price for their assigned securities. If a broker wants to buy a stock but there are no offers to sell it, the market maker fills the order himself by selling shares from his own firm’s account. In turn, if a broker wants to sell but no one wants to buy, the market maker buys the share
It’s important for all investors to know how the stock markets works. The cash sale process makes for efficient and timely trades. To invest more wisely, follow TSI Network’s three-part Successful Investor strategy:
Discover how to profit from coming changes in the natural resource industry in this free special report, Canadian Natural Resources Stock Guide: What to look for in Canadian Energy Stocks, from TSI Network.
New York symbol FUN, is a Master Limited Partnership that owns amusement parks, water parks and hotels.
Toronto symbol CME, has as its main asset a 100% interest in the Kingurutik property, 85 kilometers northeast of Vale Inco's Voisey's Bay nickel mine and property in Labrador. In addition, Celtic holds other interests in the area plus other nickel prospects in Quebec and Newfoundland.
CESGs stand for Canada Education Savings Grants. The Canadian federal government will match a portion of what you put into a registered education savings plan (RESP) for your child. For example, for the first $2,500 you save in a RESP, the Canadian government will match 20% of the dollar amount each year. Depending on your family's income, the Canada government will give you an additional 10% to 20% of the first $500 you save in an RESP. The net family income amounts are indexed to inflation each year.
How can your child receive a CESG? You must have an active RESP that is in the name of a Canadian child resident that is under the age of 17.
Contributions to RESPs aren’t tax-deductible like RRSP contributions, but the money does grow on a tax-sheltered basis. When the student withdraws the plans earnings, they are taxable to the student, not the contributors. However, students usually have little income and pay little or no tax.
All income earned in RESPs—whether it is in the form of dividends, interest or capital gains— grows on a tax-sheltered basis with no attribution back to the contributor. Contributions and Canada Education Savings Grants from the federal government are not taxable when withdrawn for the student’s education.
CESGs are an important part of educational savings that every Canadian resident should know about. TSI Network also recommends using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Toronto symbol GIB.A, provides information technology and business process services to a wide range of business and government clients.
Charitable donations are money or assets that are given or bequeathed to a non-profit organization. Most charitable donations are tax deductible and can be an attractive way of lowering an investor's taxable income. Unfortunately, all too many charitable donors pick charities the way beginning investors pick stocks. They get seduced by an appealing concept, based on snap judgments of a photo or sound bite, or the recommendation of a friend or acquaintance.
A little digging can go a long way toward making your charitable donation work harder toward bringing about the goal that attracted you in the first place. You can get free annual reports from charities, just as you can from public companies. In addition, the Canada Revenue Agency compiles information about charities in a free database that you find here. The site lets you see how much money the charity pays its 10 highest-paid employees, in nine salary ranges: under $40,000, $40,000 to $79,999, $80,000 to $119,999, $120,000 to $159,999 and so on to $350,000 and over.
Of course, a larger charity or one that is involved in technical areas will need more high-priced help. You should pay close attention to the portion of the charity's revenue that goes to charitable purposes (as opposed to administration and fundraising). We like to see charitable donation spending make up a minimum 80% of the total. In contrast, lots of charities devote little more than half their budget to charitable purposes.
At some surprisingly large and seemingly reputable charities, administration and fundraising expenses eat up 40% or more of donations. After donating, you can get better returns on your other investments by following TSI Network and using our three-part Successful Investor strategy:
Discover how to put extra strength into your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
New York symbol CHK, is the third-largest U.S. domestic natural gas producer after BP and ConocoPhillips.
New York symbol CVX, is the second-largest integrated oil company in the United States after ExxonMobil. Production accounts for about 80% of its earnings. The remaining 20% comes from refineries and retail gas stations.
Toronto symbol CUQ, offers a range of construction, general contracting, maintenance, insulation, fireproofing, electrical and power-line construction services to clients in the resource extraction, industrial, utility and power-generation industries throughout western Canada.
The excessive selling and buying and selling of stocks in a client's account by a broker, for the purpose of generating commissions and without taking into account the client's investment objectives.
CI mutual funds are one of the investment products offered by CI investments. They feature a wide variety of investment options based on region, industry, asset class and investment style.
Toronto symbol XEC, is an oil and gas explorer and producer primarily focused in western Oklahoma, Kansas, the upper Gulf Coast areas of Texas and South Louisiana, the Permian Basin area of West Texas, plus the Gulf of Mexico.
NASDAQ symbol CTAS, sells and rents uniforms to businesses in the United States and Canada. It also supplies a variety of other business services. These include first aid kits, fire extinguishers and smoke alarms, and document storage and shredding services.
Closed end mutual funds are a lot like conventional, open-ended mutual funds. They hold a diversified portfolio of stocks, chosen by a fund manager who gets a fee for his or her services. The key difference is that open-ended funds stand ready to sell new fund units, or redeem existing fund units, on demand.
Closed-end funds work with a fixed asset base, invested in a portfolio of securities. The value of their assets rises and falls, depending on how they invest. Their units trade like stocks, and mostly on a stock exchange. Their units may trade above the per-unit value of the investments they own—“at a premium” to net asset value, as brokers say. Mostly, they trade at a discount.
If a broker sells you a closed end mutual fund, they charge you a commission (individual brokers get to keep perhaps a third of the fees and commissions they bring in.) But the broker won’t earn another dime on that asset until you sell, possibly many years later.
On the other hand, if a broker sells you a conventional mutual fund, the broker can earn a steady stream of yearly trailer fees. Sometimes they get an immediate back-end load of up to 6% of your investment.
Closed ended funds are just one of the many security vehicles at your disposal. Control your stock-trading risk by following TSI Network and using our three-part Successful Investor strategy:
Get the complete guide to Investing in Canadian ETFs—learn how to get the maximum returns from your ETF investments. Download Best Canadian ETFs, Canadian ETFs vs Mutual Funds, Canadian Index Funds and More: The Rewards and Risks of Canadian ETFs for FREE.
The term “commodity” is generally used to refer to raw or primary products such as iron ore, corn, cocoa, sugar, crude oil, copper and so on, for which a trading market has developed. A commodity investment can consist of shares of a commodity producer or a direct purchase of commodities or commodity futures.
Most, if not all, non-professionals who get directly involved in trading commodity investments wind up losing money. That’s why Pat McKeough believes the best way to invest in, and profit from, commodities is by purchasing commodity stocks.
Commodity stocks are shares of well-established companies that will benefit from a rise in commodity prices. Even though it’s hard for them to bring a distinct product to market, they can distinguish themselves by how well they find and profitably produce their commodities.
When researching commodity investments, TSI Network recommends using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Commodities include raw materials, like oil, copper, tin and aluminum, as well as agricultural products, such as cocoa, coffee and sugar. Most, if not all, non-professionals who get directly involved in trading commodity investments wind up losing money. We believe the best way to invest in, and profit from, commodities is by purchasing commodity stocks. Commodity stocks are shares of well-established companies that will benefit from a rise in commodity prices.
Resource companies produce and sell commodities. It’s hard for them to bring a distinct product to market, but they can distinguish themselves by how well they find and produce their products.
Commodity investments are subject to wide and unpredictable swings in the prices. In the rising phase of the business cycle, when business is booming, resource demand expands faster than resource supply, so resource prices shoot up. This balloons profits for commodity investments. When the economy slumps, resource prices fall, and this drags down resource stock prices.
Here is one general commodity tip that is especially relevant to natural gas stock prices: If people generally believe the price of a commodity is sure to go up, the reverse often happens. That’s because suppliers and users of the commodity also read the newspapers, and they both take steps to protect themselves and profit from the situation. The suppliers try to increase supplies, and the users try to become more efficient or find alternative commodities.
When researching commodity investments, or any other type of investments, TSI Network recommends using our three-part Successful Investor philosophy:
Our free report reveals how you can increase your profits — and cut your risk — in commodity investments. Download Commodity Investments: Fertilizer Stocks and Potash Stocks That Will Profit from Rising Food Demand today.
Commodity prices are subject to wide and unpredictable swings. In the rising phase of the business cycle, when business is booming, resource demand expands faster than resource supply, so resource prices shoot up. This balloons profits for commodity investments. When the economy slumps, resource prices and commodity prices fall, and this drags down resource stock prices.
A crucial rule for commodity investing: if people generally believe the price of a commodity is sure to go up, the reverse often happens because both suppliers and users of the commodity also read the newspapers. They both take steps to protect themselves and profit from the situation. The suppliers try to increase supplies, and the users try to become more efficient or find alternative commodities.
We believe the best way to invest in, and profit from, commodities is by purchasing commodity stocks. The best commodity stocks are those of well-established and well-managed companies that will benefit from a rise in commodity prices.
Examples of commodity price movements you can benefit from includes stocks of producers of raw materials like copper, tin and aluminum, as well as agricultural products, such as corn, cocoa, coffee and sugar.
We think that most investors should have some exposure to resource and commodity investments in their portfolios, in reasonable amounts—say, up to around 20% of the total.
To build your overall portfolio, we recommend following TSI Network and using our three-part Successful Investor strategy:
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Commodity stocks include raw materials, like oil, copper, tin and aluminum, as well as agricultural products, such as cocoa, coffee and sugar. Most, if not all, non-professionals who get directly involved in trading commodity investments wind up losing money. That’s why Pat McKeough believes the best way to invest in, and profit from, commodities is by purchasing commodity stocks. Commodity stocks are shares of well-established companies that will benefit from a rise in commodity prices.
The prices of several agricultural commodities continue to strengthen. For example, wheat prices are moving higher on continued dry weather in the U.S. Meanwhile, heavy rains are hurting wheat production in Germany.
One of the main reasons why prices of many agricultural commodities are rising is that consumers in developing countries are eating more and higher quality food. As they grow wealthier, developing-world consumers also buy more processed foods. Like meat production, making processed foods calls for crop-consuming livestock, as well as increased dairy production.
When researching commodity stocks, or any other type of investments, TSI Network recommends using our three-part Successful Investor philosophy:
Our free report reveals how you can increase your profits — and cut your risk — in commodity investments. Download Commodity Investments: Fertilizer Stocks and Potash Stocks That Will Profit from Rising Food Demand today.
Common stock consists of shares that let you hold an ownership stake in a company.
Common stock that you own gives you an effective claim on the earnings and assets of a company.
Common stock of public companies usually trade on stock markets. The price of a common stock usually fluctuates throughout the trading day, depending a number of factors such as economic news, geo-political developments, and company-specific news and financial reports.
Common shares usually rank behind preferred shares and debt holders.
Long-term studies show that the stock market as a whole generally produces total pre-tax annual returns of 10% to 11%, or around 7.5% after inflation. If you’re new to investing, or even a veteran investor, you should consider incorporating our long term investing three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio.
Who is Computer Modelling Group? Computer Modelling Group (symbol CMG on Toronto), is a computer software technology and consulting company specializing in the oil and gas industry. Their software provides engineers with oil and gas reservoir simulation, and three-dimensional visualization and animation. CMG profits are derived mostly from recurring revenue from software licenses and consulting contracts. That gives it long-term stability. Computer Modelling Group's software and consulting services help oil and gas producers squeeze more out of those reservoirs using advanced recovery techniques, such as injecting steam or chemicals. Typically, only 25% to 30% of oil and gas is recovered during primary production. Unconventional producers using hydraulic fracturing, or fracking, of oil and gas-bearing shale can also use Computer Modelling's software to determine optimal drilling locations and depths. CMG has customers in over 50 countries and offices in Calgary, Houston, London, Caracas, Bogota, Kuala Lumpur and Dubai. The company is a leader in complex heavy oil and oil sands simulations. We've covered Computer Modelling Group frequently over the years in our Stock Pickers Digest newsletter and have historically recommended this stock because they've consistently increased their dividends and bought back shares. They also had a 2-for-1 stock split back in 2014. Whatever stocks you buy, at TSI Network we recommend using our three-part Successful Investor philosophy:
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New York symbol CAG, makes a wide variety of packaged foods such as pasta, popcorn, whipped and canned tomatoes and sauces.
Conservative investing is an investment strategy that involves a focus on lower-risk, predictable and stable income flows. This strategy typically involves the purchase of blue-chip stocks and other low-risk investments.
A conservative investing approach also means building a portfolio gradually, over time. The number of stocks in your portfolio will all depends on where you are in your invest career.
Conservative investments also call for a healthy sense of skepticism: A cardinal rule: If an investment sounds too good to be true, it probably isn’t true. Conservative investors recognize that some of your most promising investments will disappoint you, since no one can predict the future.
A conservative investor is persistently curious. They recognize that most investment professionals know more about investing than they do, because they devote their lives to it. But they also know you can get more knowledge than most investors if you simply read widely and ask lots of questions.
Conservative investing relies on compound interest, earning interest on interest. This can have an enormous ballooning effect on the value of an investment over the long term.
Conservative investors know to look for investment quality first. Long term gains are not made by worrying about current stock prices. At TSI Network we recommend our three-part Successful Investor strategy:
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A conservative investor is someone who builds a stock portfolio with the goal of achieving steady returns, including dividends, while maintaining a lower level of risk.
Conservative investments also call for a healthy sense of skepticism: A cardinal rule: If an investment sounds too good to be true, it probably isn't true.
Conservative investors also recognize that some of your most promising investments will disappoint you, since no one can predict the future. That makes diversification a key part of conservative investing.
A conservative investing strategy typically involves the purchase of blue-chip stocks and other low-risk investments.
Conservative investors are persistently curious. They recognize that most investment professionals know more about investing than they do, because they devote their lives to it. But they also know you can get more knowledge than most investors if you simply read widely and ask lots of questions.
Conservative investing can also include taking advantage of compound interest, earning interest on interest (or dividends on dividends). This can have an enormous ballooning effect on the value of an investment over the long term. Long-term gains are not made by worrying about current stock price fluctuations. Conservative investors know to look for investment quality first.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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A conservative portfolio is a group of stocks held by an investor with the goal of achieving steady returns, including dividends, while maintaining a lower level of risk.
At TSI Network we recommend creating a diversified conservative portfolio of mainly high-quality, mostly dividend paying, stocks spread out across the five main economic sectors.
Over time you'll still experience a wide variation in results among your holdings, but you'll find that at the worst of times, you won't lose much by holding a portfolio answering that description. When times are good, this kind of portfolio will pay off nicely.
By diversifying across the sectors, you also increase your chances of stumbling upon a market superstar-a stock that does two to three or more times better than the market average. These stocks come along every year. By nature, their appearance is unpredictable; if you could routinely spot them ahead of time, you'd quickly acquire a large proportion of all the money in the world, and nobody ever does that.
At TSI Network, we think a conservative portfolio is great way to invest in stocks. We also recommend using our three-part Successful Investor philosophy:
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They are reliable businesses that have well-established business models and are considered to be lower-risk investments. Conservative stocks also most likely have a long record of paying dividends. All these stocks should offer good "value"-that is, they should trade at reasonable multiples of earnings, cash flow, book value and so on. Ideally, they should also have above average-growth prospects in expanding markets. Investors can find conservative stocks in all market sectors.
The Financial and Utilities market sectors are great places to start. At TSI Network, our investing philosophy is based on holding the bulk of your portfolio in conservative stocks with strong balance sheets for long term periods of time. We feel that aggressive stocks expose you to a greater risk of loss. That's why we recommend limiting your aggressive holdings to no more than about 30% of your overall portfolio. That number can vary.
Ultimately, the percentage of your portfolio that you should hold in either conservative or aggressive investments depends on your personal circumstances and risk tolerance. An investor with a longer time horizon or without the need for current income from a portfolio can invest more money in aggressive stocks. But we think 30% is a good rule of thumb.
While building a portfolio of conservative stocks we recommend using our three-part Successful Investor strategy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
A consumer is someone who buys goods or services. In the investing world, consumer spending is a measure used as barometer for how much citizens are spending on items, both big and small. Slowing consumer spending can be a sign that investors are holding on to their money because of economic uncertainty, or other world and financial events.
One of the five main economic sectors for investing is the consumer sector. Companies like Proctor & Gamble, Kraft Heinz Co. and the spice company McCormick and Co. are all in the Consumer sector.
Consumer-sector stocks are apt to fall in the middle, between the more volatile resources and manufacturing companies and the more stable finance and utilities companies. Consumer spending is a key part of the U.S. economy, accounting for approximately two-thirds of activity.
When investing in consumer stocks, we recommend using our three-part Successful Investor philosophy:
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Convertible securities are preferred shares, bonds or debentures that can be exchanged for common shares of an underlying company. The terms of the conversion are detailed with each security. In some cases, companies can initiate the conversion themselves if it is financially advantageous to do so.
When evaluating exchangeable or convertible securities, it's particularly important to assess the premium-the extra cost of buying the convertible instead of the underlying stocks into which you can convert.
The premium, stated as a percentage, is the current market value of the convertible bond in excess of the current market value of the shares into which it can be converted. The premium reflects the market's evaluation of the advantages of hanging on to the convertible or exchangeable security, rather than exercising the conversion/exchange privilege.
The size of the premium gives you some idea of how far the underlying shares have to rise before they begin to push up the price of the convertible. When a premium is high, the underlying shares need a big rise to make it likely that they will push up the value of the convertible. (To put it another way, when a premium is high, the underlying shares can move up much more quickly than the exchangeable.) When the premium shrinks down close to zero, the stock and the exchangeable can move more or less in tandem.
We feel investors should be aware of how convertible securities work. But for your common stock portfolio, we recommend using our TSI Network three-part Successful Investor philosophy for investing:
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Copper ETFs are exchange-traded funds, primarily holding shares of companies that mine, refine or explore for copper. Copper prices do tend to rise with inflation. But unlike gold and silver, which are thought of more as hedges against inflation, copper also has a wide range of industrial uses.
Copper is heavily used in the power-transmission and construction industries, in cables, wires and plumbing. Copper ETFs let investors invest in many copper mining operations at once. That provides diversification. One risk factor with copper ETFs is that the higher copper's price goes, the more incentive manufacturers have to re-design their products to use less copper wherever possible, or eliminate copper altogether.
In addition, as recycling efforts get more widespread and efficient, they will bring more recycled copper to market.
Copper ETFs trade on stock exchanges, just like stocks. Investors can buy them on margin, or sell them short. They are also very liquid. One positive aspect of copper ETFs is that they offer investors diversification. Investors can invest in all of the major copper mining companies by purchasing shares from a single copper ETF.
Copper ETFs may have a place in your portfolio, and at TSI Network we also recommend using our three-part Successful Investor strategy:
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What is copper mining? Copper mining is performed by extracting copper ores, either from underground mines, or from open-pit mines. Once mined, the ore is crushed, heated, smelted and refined. Traditionally, investors have invested in copper mining as a way to profit from general economic growth. That's because, unlike gold and silver, which are thought of more as hedges against inflation, copper has a wide range of industrial uses. Copper prices do tend to rise with inflation as well. But copper mining has the added advantage, as mentioned, that copper also rises with industrial demand. Moreover, stocks that produce oil and base metals, including copper, generally have higher dividend yields than precious metals stocks like gold or silver. Copper stocks should benefit not just from rising demand, but also from tightening supply. In the short term, labour problems and technical delays will continue to slow global copper production. Over the longer term, ore grades are falling at many major copper mines around the world as producers use up the easy-to-mine ore zones in their copper deposits. High prices will, of course, boost exploration efforts to discover new mines. Meanwhile, rising copper prices will prompt mining companies to re-evaluate copper deposits they had previously dismissed as too low-grade to mine when prices were lower. We like copper mining's long-term prospects. However, to cut your risk, stay out of promotional penny mines that are merely drilling for copper. Also stay out of investment vehicles (like options or futures) that will only make money for you if copper goes up in the short term. For top investment returns, follow TSI Network and use our three-part Successful Investor strategy:
Discover how to make the most of your copper investments in this free special report, Copper Mining: How to Choose the Best Copper Stocks and ETFs to Profit from the Reconstruction of Japan, from TSI Network
Copper mining stocks are issues of stock in companies that explore, mine and refine the mineral, copper. Copper mining stocks do tend to rise with inflation, but copper has the added advantage that its price also rises with general economic growth. Copper has a wide range of industrial uses (unlike gold and silver, which are thought of more as hedges against inflation). Copper is heavily used in the power-transmission and construction industries, in cables, wires and plumbing.
Copper stocks have more appeal than gold stocks. That's partly because they have higher dividend yields than gold stocks. As well, they're usually much cheaper than gold stocks in relation to their earnings and cash flow. That means they have less room to fall if investors sour on them. That's just another way of saying they are less risky than golds. To sum up, we like copper's long-term prospects.
Copper should benefit not just from rising demand, but also from tightening supply. In the short term, labour problems and technical delays will continue to slow global copper production. We think that most portfolios should include 10% to 20% exposure to the Resources and Commodities sector of the economy-and that includes copper mining stocks.
However, stay out of promotional penny mines that are merely drilling for copper. Also stay out of investment vehicles (like options or futures) that will only make money for you if copper jumps in the short term. Whatever stocks you decided to buy, keep TSI Network's three-part Successful Investor philosophy in mind:
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A corporate merger is a unification of assets from two corporations into one, often forming a new, equally owned entity. A corporate merger is different than an acquisition, which is when one company buys the business of another as a takeover. (Although sometimes takeovers are presented as mergers, but are actually one firm buying another.)
Some takeovers work out well for the buyers, of course. This doesn’t diminish the inherent risk. More important, risk multiplies as takeovers become a habit.
Major, successful, well-managed companies do succeed in growth by acquisitions. But they use them as a tool for pursuing a core business, rather than making acquisitions the core of their business.
A growth-by-acquisition strategy isn’t foolproof—even the best managed companies stumble, and fail. The best companies cut the risk by only making takeovers that help expand their core business. At the same time, they are willing to get out, even at a loss, when they see an exit as the smart thing to do.
Corporate mergers can lead to growth in revenue and the launching of new products or services.
We focus on high-quality, well-established companies in our investment recommendations. They make fewer takeover blunders. When they do make mistakes, they tend to recognize them earlier, and cut their losses before they reach catastrophic levels.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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From time to time, companies set up one or more of their divisions or subsidiaries as an independent firm, then hand out shares in that new company to their own investors as a special dividend, or “corporate spin-off.”
A number of studies have shown that after an initial adjustment period of a few months, spin-offs tend to outperform groups of comparable stocks for several years. For that matter, the parent companies also tend to outperform comparable firms for several years after a spin-off.
Oddly enough, many investors react to spin-offs as a nuisance, because they leave you with a tiny holding in a stock you didn’t choose and know little about. As a result, these investors may dump any spin-offs they receive as soon as they can. However, they’d be better off to buy more of any spin-off they receive, because spin-offs seem to come with the odds set in the investor’s favour.
Needless to say, things don’t work out this well every time. Corporate spin-offs and their parents sometimes run into unforeseeable woes. However, it’s a good bet that both the parent and spin-off will prosper.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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From time to time, companies set up one or more of their divisions or subsidiaries as an independent firm, then hand out shares in that new company to their own investors as a special dividend, or “corporate spin-off.”
A number of studies have shown that after an initial adjustment period of a few months, spin-offs tend to outperform groups of comparable stocks for several years. For that matter, the parent companies also tend to outperform comparable firms for several years after a spin-off.
Oddly enough, many investors react to spin-offs as a nuisance, because they leave you with a tiny holding in a stock you didn’t choose and know little about. As a result, these investors may dump any spin-offs they receive as soon as they can. However, they’d be better off to buy more of any spin-off they receive, because spin-offs seem to come with the odds set in the investor’s favour.
Needless to say, things don’t work out this well every time. Corporate spin-offs and their parents sometimes run into unforeseeable woes. However, it’s a good bet that both the parent and spin-off will prosper.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. These practices also work well for growth investing. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Covered call writing is where you sell a call option against a stock you own. You receive cash for selling the call but are obligated to sell the stock at a fixed price (the "strike price") if the holder of the call exercises the option. In other words, in exchange for being paid the price of the option, covered call writing means you give up any increase in the stock above the strike price. Selling call options generates an income stream. However, it also tends to shrink any capital gains the fund's portfolio might generate. When the stocks the fund owns rise above the strike price, holders of the call options it has sold will exercise those options and buy the stock from the fund at the price fixed by the option's terms. This introduces a filtering mechanism under which the fund has to sell its best picks to call holders at a fixed price, while holding on to stocks that go sideways or down. In other words, if it goes down, you have to hang on; if it goes up, you have to sell. In addition, regardless of market trends, covered call writing means you have to pay a heavy toll in brokerage commissions that eat away at your capital. At TSI Network, we recommend using our three-part Successful Investor philosophy for long-term investing: Invest mainly in well-established companies; Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities); Downplay or avoid stocks in the broker/media limelight. Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
The basic form of petroleum pumped from the ground is known as crude oil. Stocks involved and connected with crude oil extraction include "upstream" exploration and development firms, as well as downstream refining and retail gas station companies. Traditionally, oil companies find a pad or land site for each crude oil well drilled. In recent years, however, many oil companies have adopted a new technique called multi-pad drilling, or "octopus drilling" which lets producers drill as many as 50 wells from a single pad. This speeds up the exploration and extraction of the crude oil. A while ago, some investors felt that we had hit the peak of crude oil extraction. This was called Peak Oil Theory. It said that global crude oil production will soon hit a peak then head relentlessly downward until the world runs out of oil. However, that theory is no longer in vogue-especially with today's low oil prices. As well, the perfection of hydraulic fracturing, or "fracking," has unlocked vast amounts of crude oil. This involves pumping water and chemicals into shale-rock formations that contain oil or natural gas. This fractures the rock and releases the crude oil and gas. For the best long-term investment results, follow TSI Network and using our three-part Successful Investor strategy:
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Crude oil stocks are shares of companies that explore for, develop and produce oil in its naturally occurring, unrefined form. Crude oil can be subsequently refined into gasoline, diesel fuel and so on.
The basic form of petroleum pumped from the ground is known as crude oil. Stocks involved and connected with crude oil extraction are known as “upstream” exploration and development firms. Some also have “downstream” operations as well. This involves refining and retail gas station businesses.
Traditionally, crude oil stock companies find a pad or land site for each crude oil well drilled. In recent years, however, many oil companies have adopted a new technique called multi-pad drilling, or “octopus drilling” which lets producers drill as many as 50 wells from a single pad. This speeds up the exploration and extraction of the crude oil.
We continue to advise against overindulging in oil stocks. That’s because the Resource sector (including oil) is highly volatile, and no one can accurately predict future oil prices. As well, oil companies are subject to changing environmental regulations and royalties that can eat into their profits.
Even so, crude oil shares< have a place—in reasonable amounts—in the portfolios of most investors. You can enhance you overall long-term investment returns by following TSI Network and using our three-part Successful Investor strategy:
Discover how to build a winning stock market portfolio in this free special report,How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio, from TSI Network. This complete guide to investing in stocks for Canadians will help you build wealth with a conservative investing approach.
Currency risk is the risk that movement in exchange rates will negatively impact investments that are held in foreign currencies. For example, an increase in the Canadian dollar makes American stocks worth less to Canadian investors.
CVS stock is share ownership in CVS Health Corporation. CVS stock trades on the New York Stock Exchange with the symbol CVS.
CVS stock encompasses two main businesses: The Pharmacy Services division (66% of revenue) and the Retail Pharmacy division (34%). The Pharmacy Services division helps employers, insurers, unions and government agencies manage their drug-coverage plans. It also distributes prescription drugs to patients through the mail, as well as to more than sixty thousand U.S. pharmacies.
The Retail Pharmacy division operates more than seven-thousand drugstores in 44 U.S. states, Puerto Rico and Brazil. Many of these outlets also feature walk-in clinics.
The goal of CVS is to increase access to health care and lower the costs associated with it.
CVS has a long history of expanding by acquisition, including Clinton Drug and Discount, Mack Drug, Peoples Drug, Arbor Drugs, Rix Dunnington, Revco, and Longs Drugs, among others.
Main competitors of CVS Health Corporation include Rite Aid Corporation, Walmart Stores, Inc., and Walgreens. Additionally, some smaller pharmacies found in chain grocery stores are also seen as minor competitors.
Beyond prescription products, CVS sells beauty products, over-the-counter drugs, convenience food, seasonal merchandise and greeting cards. Online, the corporation’s website receives over 26 million visitors annually.
Find out about more investments like CVS stock by following TSI Network and using our three-part Successful Investor strategy:
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Cyclical stocks have regular rises and falls in price, usually tied to business or economic cycles. Cyclical sectors like resource and energy stocks are subject to wide and unpredictable swings. In the rising phase of the business cycle, when business is booming, resource demand expands faster than resource supply, so resource prices shoot up.
This expands profits at resource companies. But when the economy slumps, commodity prices fall, and this drags down profits and stock prices. This highly cyclical sector has gone through many booms and busts. It’s only now showing signs of recovery after its recent slump as prices of oil and most other commodities rebound from multi-year lows.
Note that it’s far better to buy these and other cyclical stocks when their p/e’s are in the middle of the historical range—neither too high nor too low. (The main exception is when their earnings have collapsed and driven their p/e’s sky-high. This is often the best time to buy cyclicals, since it coincides with a low in their earnings.)
Some investors feel resource stocks could languish for years—and that you should stay out of them until inflation moves up substantially. But these stocks could give us an early warning of coming inflation. They may shoot up long before inflation revives.
When times are good, investors in cyclical stocks sometimes ignore investment drawbacks and pitfalls. When times are bad, many investors pay too much attention to risk. For advice on when to buy resource and other cyclical stocks, follow TSI Network and use our three-part Successful Investor strategy:
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Day trading is the short term buying and selling of securities. Some brokerage firms that practice day trading complete thousands of trades in a day. New investors often have aspirations of becoming a day trader.
Most non-professionals who get involved with day trading or options trading wind up losing money if they stick with it long enough. In that respect, they are a lot like casino games.
The big risk with day trading is that you’ll try out a risky and ultimately unwinnable investment approach, and hit a lucky streak. This could embolden you to put serious money at risk just when your results are about to regress to the mean and deliver losses instead of profits.
Making short term day trades has another cost: For every trade you make, you incur a commission costs. That means for every buy order and every sell order, an expense is added onto your trades. These commissions add up and eat into the profits, if any, you make.
Many books, seminars and courses purport to show you how to profit from day trading. But if day trading was that easy, why would anybody work?
To focus your efforts on long-term investing instead, follow TSI Network and use our three-part Successful Investor strategy:
The key to finding the “hidden gems” in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough’s decades of experience—and his specific recommendations—in our special report, Canadian Penny Stocks: What You Need to Know about Handling the Risks and Reaping the Rewards, on TSI Network. Claim your FREE copy right now!
From time to time your broker may advise you to sell a particular stock you own because it represents "dead money." This doesn't mean there's anything wrong with the stock or the company. Rather, your stock broker thinks the stock may only go sideways for a period of months or longer, producing no capital gains for you. So he naturally feels you should sell it and buy something with better short-term capital-gains potential. To do so, of course, you have to pay one commission to sell and another to buy. You may also face some costs from the bid-ask spread. If you make money on the sale and the stock is outside your RRSP or other registered account, you'll have to pay capital-gains taxes, which will leave you with less capital to reinvest. Taking all that into account, putting up with a little "dead money" in your portfolio doesn't seem so bad. Besides, many stocks qualify as "dead money" much of the time. That's because they go sideways over long periods; their biggest gains occur in unpredictable spurts. Risk is relatively low in a high-quality stock that is going through a "dead-money" phase, by the way. But profits can be spectacular when it comes back to life. Rather than trying to stay out of so-called "dead-money" stocks, it's better to focus on building a portfolio that can produce a growing stream of dividends for you, plus long-term gains. That's your goal as an investor. It differs and often clashes with the goal of the brokerage business, which is to sell you investments. At TSI Network, we recommend using our three-part Successful Investor philosophy:
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A debenture is a debt instrument issued by a company to raise funds. A debenture is backed by the general creditworthiness of the issuer, but is otherwise unsecured by any collateral or assets.
Typically, debentures have a fixed rate of interest for a long-term time period.
There are two main kinds of debentures: convertible and non-convertible debentures.
A convertible debenture can be turned into equity shares of the company issuing the debenture after a specific time period elapses.
A non-convertible debenture cannot be converted into equity shares of issuing company. Non-convertible debentures typically have higher interest rates than convertible debentures.
Additionally, there are a variety of other debentures, including:
When analyzing a stock, you need to form an idea of how likely is it to survive a business slump and go on to prosper all the more when economic growth resumes, and very importantly—how much debt it has (including debentures).
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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Many successful investors start researching a company by looking at its financial ratios, including its debt-to-equity ratio. This ratio comes in several variations, but the basic idea is that you measure a company’s financial leverage by comparing its debt with its shareholders’ equity.
A high ratio of debt to equity increases the risk that the company (that is, the shareholders’ equity in the company) won’t survive a business slump. However, this ratio can mislead, because it compares a hard number with a soft one.
Debt is usually a hard number. Bonds and other loans generally come with fixed interest rates, fixed terms of repayment and so on. Equity numbers are fuzzier. They mostly reflect asset values as they appear on the balance sheet (minus debt, of course).
But the balance-sheet figures may be misleading. They may be too high, if the company’s assets have depreciated since it acquired them (that is, depreciated more than the company’s accounting shows). In that case, the company will eventually have to correct the balance-sheet figures by cutting them or “taking a writedown.”
Or, the equity value may be too low if the company’s assets have gained value since the company acquired them. This can happen with real estate and other investments.
Pat McKeough’s conservative, reduced-risk strategy is a proven approach to safe investing. He recommends a three-part investing philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our free investing guide, The 10 Best Practices of Successful Investors.
Most defensive stocks are in the Consumer sector. They benefit from continuous, habitual use and have a steady core of sales, regardless of the economy and business cycles. These companies typically make products like soap or soup—and may be considered blue chip stocks.
Defensive stocks in the Consumer sector can provide the most effective protection against recessions. That’s a key difference between Consumer stocks and companies in the Manufacturing & Industry or Resource sectors, which are far more sensitive to the ups and downs of the economic cycle.
As a general rule, Resource stocks, while not defensive stocks, provide the most effective hedge against inflation because they directly gain from rising prices of the commodities they produce.
Utility stocks used to provide a defensive hedge of sorts against economic downturns, due to their steady earnings and dividends. However, that is less true today because of changing technology and deregulation in the utility sector.
However, although it pays to be aware of these general tendencies, you should resist the temptation to fine-tune your portfolio according to theories or predictions about inflation and economic downturns. No one has ever consistently predicted either one, either in timing or degree, so most investors will want to include stocks from most if not all of the five economic sectors in a well-balanced portfolio.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Learn how to look for blue chip companies that are likely to pay off if business and the stock market are good, but that won’t hurt you too much during those inevitable periods when business or the markets are bad. Download Canadian Blue Chip Stocks: Bank of Nova Scotia Stock, CP Rail Stock, CN Rail Stock, Royal Bank Mutual Funds and More for FREE!
New York symbol DLM, makes canned fruits and vegetables, tuna, sauces and soups. It also makes pet foods.
Toronto symbol DEE, explores for, develops and produces oil in east-central Alberta, and natural gas in northeast Alberta and northeast B.C.
The most famous economic depression was The Great Depression that followed the stock market crash of October 24, 1929.
The Great Depression lasted for over a decade, and caused unemployment and poverty levels to skyrocket. The U.S. and other governments needlessly deepened and prolonged the Great Depression with poorly thought out legislation that hurt trade and hindered investment.
The mid-1930 Smoot-Hawley tariff act in the U.S. bears a lot of the responsibility for the depth of the 1930s Depression. That's why we cringe a little every time a U.S. politician says anything that smacks of protectionism. Since then, however, governments have created other programs-such as unemployment insurance, and deposit and mortgage insurance, for instance-that tend to stabilize the economy in a recession.
The 1929/1930 recession spiraled into a long-lasting depression because lots of governments around the world followed economic policies that are now near-universally recognized as guaranteed economic disasters. These include competitive devaluations and hindrances to world trade, which now get a lot of the blame. They also include the rise of fascism in Europe, and President Roosevelt's heavy-handed attempts to control and dictate to business, and pack the U.S. Supreme Court with additional justices that would stop his legislation from being declared unconstitutional.
All this made business and investors wary of investing in anything that tied their money down. Capital investment dried up and economic activity and employment dried up with it. Few governments are likely to repeat the mistakes of the 1930s, so another depression, and a prolonged bear market is unlikely. At TSI Network we recommend using our three-part Successful Investor strategy:
The most successful investors don't just "buy and hold," they "buy and watch closely." This strategy has been one of the foundations of success for us and our wealth management clients for decades. Download 10 Stocks to Buy and Hold Forever for FREE, right now.
Derivatives are financial instruments, the price of which is directly dependent upon the value of one or more underlying securities, equity indices, debt instruments, commodities, other derivative instruments, or any agreed upon pricing index or arrangement.
Derivatives involve the trading of rights or obligations based on the underlying product, but do not directly transfer property. They are typically used to hedge risk, or to exchange one rate of return for another. For instance, some derivatives swap a floating rate of return for a fixed rate of return.
Most often, derivatives involve some sort of futures the value of which will depend on the future movement of the underlying asset.
Futures and other derivatives offer extraordinary opportunities for leverage, but if you could consistently beat other traders by a factor of 5%, you could eventually acquire a measurable fraction of all the money in the world.
Mind you, you can have lengthy runs of good luck in futures or derivatives trading. But eventually you’ll hit a patch of bad luck with catastrophic losses.
In the end, we view all futures-linked or derivative deals or funds as gambles rather than investments, because they don't earn dividends or interest, and they don't profit from the buildup of capital that you get through investing in stocks. They can only profit by outguessing other futures traders by a wide enough margin to offset commissions and other trading costs, plus MERs if you invest in derivatives through funds or ETFs.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to build greater wealth with less risk, claim your FREE digital copy of How to invest in stocks: Canada investor advice on building a balanced stock portfolio now.
New York symbol DVN, is one of the largest U.S.-based independent oil and gas explorers and producers.
Diamond stocks, or the shares of companies that engage in diamond exploration, are high-risk investments.
They can pay huge dividends, because finding diamonds in mineable quantities can be very profitable. For example, Canada's Ekati diamond mine in the Lac de Gras area of the Northwest Territories is generating revenues of approximately $500 million per year over its 25-year mine life.
But investing in diamond stocks is speculative because it involves locating promising properties and bringing them into production. Generally, there is a long period between the exploration phase and the commercial production phase, before any investment will begin to pay off.
Investing in Canadian diamond stocks is risky. There’s often a long time lag between news of progress toward a mine, and share prices can drift down in the meantime.
Cut your risk in the volatile resource sector by investing mainly in Canadian diamond stocks of profitable, well-established mines with high-quality reserves. For that matter, mining stocks (and this includes diamonds and gold, of course) should make up only a limited portion of your portfolio—say less than 20% for a conservative investor or as much as 30% for an aggressive investor.
While we think you should maintain some exposure in resource stocks, at TSI Network we also recommend using our three-part Successful Investor strategy:
Discover how to make the most of your resource investments in this free special report, Mining Stocks: How to Spot the Best Uranium Stocks, Metal Stocks and Junior Mines.
Toronto symbol DDN, has interests in 10 projects covering over eight million exploration acres in Nunavut and the Northwest Territories. Its prospects range from early to advanced-stage exploration.
Dilution usually takes place when a company issues shares for less than the current trading price. For example, if employees exercise options to buy shares at a discount or below the market price, dilution occurs. Each of your shares is now worth slightly less than it was before. This also happens when holders of convertible securities exercise their conversion privileges and exchange their securities for shares at less-than-market prices. Investors should note that a share split does not dilute your interest. A company's management team may then declare a stock split of, say, 2-for-1.This turns one "old" share into two "new" shares. For instance, a company who decides perform a 2-for-1 share split doubles the number of outstanding shares they have. However, the stock market investment's market capitalization (the shares outstanding times the share price) is unchanged. One way that a company can offset dilution is to buy back shares. This is a common corporate practice. Buying back shares reduces the number of shares outstanding. That means per-share profit rises, because net income is divided by fewer shares outstanding. Higher per-share earnings help boost share prices. Share dilution is something we keep an eye out for-especially with junior mining stocks, biotech companies and so on. That's because these types of companies often run short of cash, and are forced to issue new shares at low prices to raise funds. At TSI Network, we recommend using our three-part Successful Investor philosophy:
We often receive questions about planning and enjoying a successful retirement. Our answers to those questions, based on decades of investment experience, are all located in this FREE report: 12 Steps to the Retirement You Want.
A discount brokerage firm lets you make your own “self-managed” trading decisions—and save on commissions. Discount brokerage firms typically have low fees for trades and low account minimums, henceforth the name discount brokerage firm.
Discount brokerage firms have become very popular over the last 20 years and they continue to offer investors a great alternative to full-service brokers.
While there may be good reasons to switch to a discount brokerage firm, low commission fees will not necessarily lead to better investment decisions. In fact, it can lead to crucial mistakes like selling your stocks too soon.
Online brokerage accounts can also lead investors to trade too frequently. Frequent trading can also lead you to buy lower-quality, thinly traded stocks. The danger here arises from the fact that the bid and ask spreads of many of these investments can be so wide that the share price will have to go up significantly before you’ll even begin to make money on a sale.
Discount brokerage firms can be useful for investors. The alternatives are full service brokers or using a portfolio management service. If you do use a discount broker, we recommend using our three-part Successful Investor philosophy for long-term investing:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
A discount stock broker charges lower fees than traditional brokerages but does not provide financial advice.
Trading online through discount stock brokerages, rather than with a full-service brokerage, is now the preferred option for many investors—but it has risks.
The main advantage of using discount stock brokers is lower commissions. And commission rates can be even cheaper if you trade stocks with your discount broker online, as opposed to placing orders over the telephone.
Although lower commissions are a plus, there are several reasons to be cautious. Low commission rates sometimes lead investors to trade a great deal. They may assume they can’t lose because they can sell at the first sign of trouble.
Online trading with discount stock brokerage firms may look like a fairly quick and convenient way to build wealth, but there are many hidden dangers that may not be evident at first.
The main risk comes from the fact that it all may seem deceptively easy. The lower costs and higher speeds of online trading can lead otherwise conservative investors to trade too frequently. That can lead you to sell your best picks when they are just getting started.
Frequent trading can also lead you to buy lower-quality stocks.
Manage your stock trading risk by following TSI Network and using our three-part Successful Investor strategy:
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Diversification involves the planned distribution of investments across various securities to minimize the risk exposure to a specific industry or geographic segment. However, the risk of over-diversification exists, in which an investor can at best expect to mirror the market returns, minus any brokerage fees or management expenses.
A diversified portfolio is a portfolio consisting of investments spread across the five main economic sectors as well as a range of individual stocks.
Most investors should have investments in most, if not all, of the five sectors. The proper proportions for you depend on your temperament and circumstances.
Conservative or income-seeking investors may want to emphasize utilities and Canadian banks for their high and generally secure dividends.
More aggressive investors might want to increase their portfolio weightings in Resources or Manufacturing stocks. For example, more aggressive investors could consider holding as much as, say, 25% to 30% of their portfolios in Resources. However, you’ll want to spread your Resource holdings out among oil and gas, metals and other Resources stocks for diversification within the sector, and for exposure to a number of areas.
All in all, a well-diversified stock portfolio should be tailored to your personal investment goals and temperament.
A diversified portfolio is key component to long term profitability in the stock market. Discover our complete guide to Canadian wealth management and making the most out of your savings. It’s all in our newly updated report, Wealth Management & Retirement Planning: Canada RRSP Contribution Limit, RRSP Interest Rates, TFSA Contribution Limit and More. And it’s yours FREE!
A dividend is a cash payout that serves as a way for companies to share the profits they've accumulated through their operations. These payouts are drawn from earnings and cash flow paid to the shareholders of the company. Commonly these dividends are paid quarterly, although they may also be paid annually or even monthly as well. A dividend can produce as much as a quarter of your total return over long periods. Some good companies reinvest profits instead of paying a dividend. But fraudulent and failing companies hardly ever pay a dividend. So if you only buy stocks that pay dividends, you'll automatically stay out of almost all the market's worst stocks. For a true measure of stability, focus on companies that have maintained or raised their dividends during recessions and stock market downturns. These firms leave themselves enough room to handle periods of earnings volatility. By continually rewarding investors, and retaining enough cash to finance their businesses, they provide an attractive mix of safety, income and growth. Dividends are an important contributor to your long-term gains, and dividend-paying stocks tend to expose you to less risk than non-dividend-payers. That's why the majority of your stocks should be dividend-payers at all times. As you get older and closer to retirement, you should raise the proportion of dividend-paying stocks in your portfolio, to cut risk and improve the stability of your investment results. To maximize your investment returns with the least risk, follow TSI Network and use our three-part Successful Investor strategy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
A dividend capture strategy is the trading technique of buying a stock just before the dividend is paid, holding it just long enough to collect the dividend, then selling it. If you can sell it for as much as you paid for it, you have "captured" the dividend at no cost, other than the transaction costs. To do this, you would buy a stock just before the ex-dividend date, so that you would be a shareholder of record on the record date, and would receive the dividend. Because the stock may then fall by the amount of the dividend on the ex-dividend date, a dividend capture strategy then calls for you to wait for the stock to move back to the price where you bought it before the ex-dividend date. At this point, you sell the stock for a break-even trade. Dividend capture strategies can pay off when stock markets are rising. Of course, any strategy that involves buying shares can pay off when stock markets are rising. However, you have to pay a brokerage commission to buy the shares, and a commission to sell. The commissions can eat up much of the dividend income. In fact, they may even exceed the dividend income. Improve your dividend returns by following TSI Network and using our three-part Successful Investor strategy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
Dividend income is the cash you receive from dividend payments on a stock. Dividend income can add up over the long term and in some cases it can account for a third or more of your long term gains. Not all investors share our high regard for dividend stock investing, especially as a source of retirement income.
That's because a dividend paying stock's yearly 2% or 3% or 5% yield barely seems worth mentioning alongside yearly capital gains of 10%, 20% or 30% or more. But dividends are far more reliable than capital gains. A stock that pays a dividend of $1 this year will probably do the same next year. It may even raise it to $1.05. Dividend income also gets favourable tax treatment.
Taxpayers who hold Canadian dividend-paying stocks get an additional bonus. Their dividends are eligible for the dividend tax credit in Canada. This means that dividend income will be taxed at a lower rate than the same amount of interest income (investors in the highest tax bracket pay tax of 23% on dividends, compared to about 50% on interest income-investors in the highest tax bracket pay tax on capital gains at a rate of roughly 25%).
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's titled, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. It's all in our newly updated report. And it's yours FREE!
A dividend index fund is a form of mutual fund or ETF that’s designed to follow or match an index, while emphasising dividend-paying stocks.
Dividends are typically cash payouts that serve as a way companies share the wealth they’ve accumulated through operating the business. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.
Dividends are an important contributor to long-term gains, and dividend-paying stocks tend to expose investors to less risk than non-dividend-payers. That’s why the majority of an investor’s stocks should be dividend-payers at all times. As investors get older and closer to retirement, the proportion of dividend-paying stocks in your portfolio should be raised, to cut risk and improve the stability of your investment results.
For a true measure of stability with dividend index funds, focus on companies that have maintained or raised their dividends during economic and stock market downturns. These firms leave themselves enough room to handle periods of earnings volatility. By continually rewarding investors, and retaining enough cash to finance their businesses, they provide an attractive mix of safety, income and growth.
Control your stock trading risk by following TSI Network and using our three-part Successful Investor strategy:
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Dividend paying stocks are stocks that pay out a regular dividend to a company's shareholders. Top dividend paying stocks disperse dividend payments on a predetermined schedule, such as monthly, quarterly or annually. We think very highly of dividend paying stocks at TSI Network. The best companies to invest in for dividends have strong positions in healthy industries. A dividend paying stock is a sign of a strong management team that makes the right moves to remain competitive in changing marketplaces. Dividend paying stocks give investors an additional measure of safety in today's volatile markets. And the best ones offer an attractive combination of moderate p/e's (the ratio of a stock's share price to its per-share earnings), steady or rising dividend yields (annualized dividend divided by the share price), and promising growth prospects. For a true measure of stability, focus on dividend paying stocks that have maintained or raised their dividends during a recession or stock-market downturn. That's because these firms leave themselves enough room to handle periods of earnings volatility. By continually rewarding investors, and retaining enough cash to finance their businesses, they also provide an attractive mix of safety, income and growth. For the best long-term stock-market returns, follow TSI Network and use our three-part Successful Investor strategy:
Discover how to put extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
When an investor refers to dividend-per-share, they are talking about dollar amount distributed to shareholders per share they own. Dividend paying companies pay out a dividend based on the number of shares you own. Companies that pay dividends disperse dividend payments on a predetermined schedule, such as monthly, quarterly, or annually.
Offering a dividend-per-share gives investors an additional measure of safety in today’s volatile markets. And the best ones offer an attractive combination of moderate p/e’s (the ratio of a stock’s price to its per-share earnings), steady or rising dividend yields (annual dividend divided by the share price), and promising growth prospects.
For a true measure of stability, focus on dividend paying stocks with a dividend-per-share that has been maintained or raised during an economic or stock-market downturn. That’s because these firms leave themselves enough room to handle periods of earnings volatility. By continually rewarding investors, and retaining enough cash to finance their businesses, they also provide an attractive mix of safety, income and growth.
Maximize you stock market gains by following TSI Network and using our three-part Successful Investor strategy:
Discover the nuts and bolts of buying dividend stocks when you download our FREE report, The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks. You see how to benefit from knowing your dividend dates, and why one highly-touted strategy built around dividend dates is something most investors should avoid!
Dividend reinvestment plans (or DRIPs) are plans that permit shareholders to reinvest dividends to purchase additional shares (or fractions of shares). These plans bypass brokers, enabling shareholders to save on commissions.
A DRIP can also eliminate the nuisance effect of receiving small cash dividend payments. Second, some DRIPs let you reinvest your dividends in additional shares at a 5% discount to current prices. Third, many DRIPs also allow optional commission-free share purchases on a monthly or quarterly basis.
Generally, investors must first own and register at least one share before they can participate in a dividend reinvestment plan. Registration will generally cost $40 to $50 per company. The investor must then notify the company that he or she wishes to participate in the company’s DRIP.
There are also separate DRIPS that are available through most discount brokers (these are called “synthetic DRIPs”). The bookkeeping is simpler with these DRIPs. Under these plans, brokers will reinvest dividends on shares that you hold in your account. Not all your dividend stocks may be eligible for these plans.
Using a dividend reinvestment plan can be very profitable in the long-term. In addition to enrolling in a dividend reinvestment plan, please keep TSI Network’s three-part Successful Investor philosophy in mind:
Discover how to put extra strength in your portfolio with our advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, and it’s yours FREE! Download Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing.
Dividend stocks make cash payouts that serve as a way for companies to share the wealth they've accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.
Dividends can produce as much as a third of your total return over long periods, and you can even retire on dividends.
There are 4 key stock dividend dates that are involved with dividend payments:
We think very highly of stocks that have been paying dividends for five or more years, at TSI Network. Many of these stocks fit in well with our three-part Successful Investor philosophy:
Discover how to put extra strength in your portfolio with our advice on how to identify high-quality dividend stocks. It's all in our newly updated report. And it's yours FREE! Download Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing.
The dividend yield is one of the important ratios to calculate for dividend stocks. It is calculated as the total annual dividends paid per share, divided by the current stock price. Movements in the stock price will change the dividend yield. When you're looking for income-producing stocks, dividend yield is typically your most important consideration. The best companies to invest in for a high dividend yield have strong positions in healthy industries. They also incorporate strong management that makes the right moves to remain competitive in changing marketplaces.
Dividend yields are a sign of investment quality. Some good companies reinvest profit to spur growth instead of paying dividends. But fraudulent and failing companies are hardly ever dividend-paying stocks. So if you only buy stocks that pay dividends, you'll automatically stay out of almost all the market's worst stocks.
For a true measure of stability, focus on those companies that have maintained or raised their dividend yields during a recession or stock-market downturn. That's because these firms leave themselves enough room to handle periods of earnings volatility. By continually rewarding investors, and retaining enough cash to finance their businesses, they also provide an attractive mix of safety, income and growth-and are a big part of a successful long term investment strategy
High dividend yields can be a warning sign, however
When looking for high dividend stocks, you should avoid the temptation of "reaching for yield." That is, choosing investments purely because they offer a high current yield. That's because a high yield may signal danger rather than a bargain, if it reflects widespread investor skepticism that a company can keep paying its current dividend. Dividend cuts always undermine investor confidence, and can quickly push down a company's stock price.
While a high-and safe-yield dividend is generally favourable, be aware that it is only one of many indicators that we look for in a good stock. You need to look at the big picture, so you get a realistic view of a company's long-term prospects. As well, at TSI Network, we recommend our three-part Successful Investor strategy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report. Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing.
The dividend yield is one of the important ratios to calculate for dividend stocks. It is calculated as the total annual dividends paid per share, divided by the current stock price. Movements in the stock price will change the dividend yield. When you're looking for income-producing stocks, dividend yield is typically your most important consideration. The best companies to invest in for a high dividend yield have strong positions in healthy industries. They also incorporate strong management that makes the right moves to remain competitive in changing marketplaces.
Dividend yields are a sign of investment quality. Some good companies reinvest profit to spur growth instead of paying dividends. But fraudulent and failing companies are hardly ever dividend-paying stocks. So if you only buy stocks that pay dividends, you'll automatically stay out of almost all the market's worst stocks.
For a true measure of stability, focus on those companies that have maintained or raised their dividend yields during a recession or stock-market downturn. That's because these firms leave themselves enough room to handle periods of earnings volatility. By continually rewarding investors, and retaining enough cash to finance their businesses, they also provide an attractive mix of safety, income and growth-and are a big part of a successful long term investment strategy
High dividend yields can be a warning sign, however
When looking for high dividend stocks, you should avoid the temptation of "reaching for yield." That is, choosing investments purely because they offer a high current yield. That's because a high yield may signal danger rather than a bargain, if it reflects widespread investor skepticism that a company can keep paying its current dividend. Dividend cuts always undermine investor confidence, and can quickly push down a company's stock price.
While a high-and safe-yield dividend is generally favourable, be aware that it is only one of many indicators that we look for in a good stock. You need to look at the big picture, so you get a realistic view of a company's long-term prospects. As well, at TSI Network, we recommend our three-part Successful Investor strategy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report. Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing.
Dividend-paying companies are businesses that take a portion of their earnings and cash flow and pay it out to their shareholders as dividends. Investors can learn how much a company pays by checking its dividend yield in the newspaper and on the Internet.
A dividend-paying company may pay their dividends annually, quarterly or even monthly.
We’ve always placed a high value on dividend paying companies, mainly because it provides something of a pedigree for stocks we recommend. After all, you can’t fake a record of dividends. However, at the same time, Investors should know that unusually high dividend yields can indicate that a company may be performing poorly—and that investors are anticipating a subsequent dividend cut.
Above all, we like to see dividend-paying businesses that have strong positions in healthy industries. We also like to see a strong management team that makes the right moves to remain competitive in changing marketplaces.
We feel that dividend-paying stocks should be a part of every portfolio—and for the safest investments, follow TSI Network’s three-part Successful Investor strategy:
Discover how to build long-term profits with the right dividend stocks and put extra strength in your portfolio. Download our specific advice on how to identify high-quality dividend stocks when you get our report, The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks FREE!
formerly Toronto symbol DFS, is Canada's second-largest steelmaker after Stelco. The company was taken over by Arcelor SA in 2006.
The Dogs of the Dow are the lowest-priced, highest-yielding stocks in the Dow Jones Industrial Average. It is also the name of an investing strategy.
The Dogs of the Dow trading strategy works as follows: At the end of each year, you pick the 10 stocks from the 30-stock Dow with the highest dividend yields. You then invest an equal dollar amount in each, hold them for one year and repeat these steps annually.
The Dogs of the Dow strategy worked well in the 1990s because interest rates were going down. This tended to raise all stock prices. But high-yielding stocks were affected more than most, because they attracted former bond investors who were switching into stocks.
Interest rates are now likely to remain steady, or move upward. So we see little appeal in a Dogs of the Dow approach.
For that matter, we see little appeal in following any formulaic approach to investing. The one basic rule about strategies like this is that if it sounds too good to be true, then it likely isn’t.
To determine which stocks are best to invest in, use our three-part Successful Investor philosophy:
Discover how to build a winning stock market portfolio in this free special report, Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada, from TSI Network
By investing a fixed sum at regular intervals throughout their working years, perhaps increasing that sum from time to time as their income rises, investors can largely forget about market trends. That's because they'll automatically buy more shares when prices are low, and fewer when they are high, and they'll benefit from the long-term rising trend in the market. This investing technique is called dollar cost averaging. It's a little like systematic saving, except that money is put into stocks (or mutual funds) instead of a bank account.
However, some investors try to apply the dollar cost averaging principle to the investment of lump sums, by spreading their buying out over a period of time. That's different. This gradual buying is sometimes referred to as "averaging in". For instance, suppose an investor wants to purchase $50,000 in stocks, but feels uncomfortable doing so all at once. The investor might resolve to average in by investing $12,500 every six months over two years.
However, an averaging-in program will improve financial results only if the investor happens to begin it when the market is headed down. Since the market goes up around two thirds of the time, on average, gradual buying is likely to cost you money. But gradual buying may still be worthwhile, if it lets you sleep easy.
For guaranteed success in investing, apply our three-part Successful Investor strategy.
Discover how to build a winning stock market portfolio in this free special report, Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada.
New York symbol DPZ, operates a network of franchised and company-owned pizza delivery stores in the United States and in more than 60 countries.
Toronto symbol DII.B, makes a range of products: ready-to-assemble furniture for home and office use; juvenile products such as infant car seats, strollers, high chairs, toddler beds and cribs; home furnishings including chairs, tables, bunk beds, futons and step stools; and recreational products.
The Dow Jones Industrial Average (DJIA) is an index measuring the stock values of the 30 largest and most widely held companies in the United States (and it's no longer limited to just "industrial companies"). The Dow Jones Industrial Average was first calculated in 1896. This is the most widely known index run by Dow Jones & Company, and is informally known as the Dow. The Dow Jones average is unusual in that it only uses the price of one share of each of the companies that make it up. Other indexes' weightings rise and fall with the "market capitalization" or "market cap" of companies that make them up. A company's market cap is what you get when you multiply the stock price times the number of shares the company has outstanding. There are many ways for investors to invest in the Dow Jones Industrial Average. There are ETFs, mutual funds, options, and futures contracts and even a short fund that bets against the DJIA. When choosing stocks, including those on the Dow, we recommend using our three-part Successful Investor approach:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Drug companies are companies that develop, manufacture, and market pharmaceutical drugs.
The major drug companies are more speculative than most investors realize. They need a continuing flow of successful new products to maintain their earnings. They face increasing litigation and aggressive competition from generics as drugs come off patent. Unlike tech stocks, they have formidable regulatory burdens, and unlike other manufacturing stocks such as, say, auto companies, they do not benefit from customer loyalty.
The general view on these stocks seems to be that they are can’t-miss investments because the baby boomers are reaching an age when they will need drugs for a number of medical conditions, and are willing to pay for them.
Drug companies need to spend heavily to create new drugs, and spend even more to gain regulatory approval. Even then, they only get to profit for a limited time before patents run out and generic products appear. Then too, their research spending may lead to dead ends, rather than new drugs that fill a need and can overcome the regulatory hurdles.
If you want to invest in drug companies, we think you should focus on those that have high cash holdings and a number of drugs in the pipeline. And all the better if they have access to fast-growing markets, like China, India and Latin America.
Drug companies may have a place in your portfolio, and at TSI Network, we recommend using our three-part Successful Investor philosophy to decide how:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
What are drug stocks? Drug stocks are shares in pharmaceutical companies that create drugs. One of the largest drug companies is Pfizer (symbol PFE on New York), a stock we cover in our Wall Street Stock Forecaster newsletter. A few years ago, investors valued drug stocks the way we value the top software growth companies like Symantec, bidding them up to 30 or more times earnings. Drug stocks can show fantastic profits, but it might be more appropriate to value drug makers the way you value companies that are trying to bring new mineral discoveries into mines: at 10 times earnings or less. Drug buyers have no brand loyalty; when a better drug comes along, use of the old standby collapses overnight. Drug companies face horrendous investment requirements to bring new drugs to market, and great risk that their new drugs will fail to clear all the necessary hurdles. When a new drug fails to clear the hurdles, it can leave the developer with a zero return. In addition, even if they pass all of the hurdles and successfully bring a drug to market, drug makers eventually face the competition of generic manufacturers. Generic producers can duplicate their drugs after the trademark period without the original research-and-development expenses. We've often warned that drug stocks are riskier than investors realize. The cost of developing a new drug is huge, and the payoff, if any, is uncertain. As well, if investors come around to common-sense views, such as the best treatment for diabetes is a combination of improved diet, more exercise and fewer calories, they may lose their appetite for the higher risks and costs of drug stocks. When buying drug stocks, or any stock for that matter, we recommend that you follow TSI Network and use our three-part Successful Investor strategy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
New York symbol DNB, provides credit reports on individual companies. Clients use these reports to make lending and buying decisions.
Toronto symbol DC.A, is a holding company with subsidiaries in three main areas: wealth management, real estate and resources. Its main asset is its 49% stake (63% voting interest) in DundeeWealth Inc.
Toronto symbol DW, provides investment management, securities brokerage, financial planning and investment advisory services.
Dunkin’ Donuts stock is share ownership in Dunkin’ Brands Group Inc. (symbol DNKN on Nasdaq), which has two main restaurant chains—Dunkin’ Donuts and Baskin-Robbins.
Dunkin’ Donuts is responsible for 75% of revenue, while Baskin-Robbins accounts for 25%. The Massachusetts-based company has more than 11,900 Dunkin’ Donuts outlets and over 7,700 Baskin-Robbins locations in 60 countries. Franchisees operate nearly all of these stores.
Dunkin’ Donuts stock first sold shares to the public at $19.00 each on July 27, 2011.
The company’s sales rose 29.1%, from $628.2 million in 2011 to $810.9 million in 2015. Earnings jumped 84.8%, from $101.7 million to $187.9 million. Due to fewer shares outstanding, per-share earnings gained 105.3%, from $0.94 to $1.93.
Dunkin’ Donuts stock is benefiting from its 2015 deal with Green Mountain Coffee Roasters (symbol GMCR on Nasdaq) to make Dunkin’ Donuts single-serve coffee pods (called K-Cups).
The company recently launched a new mobile app that lets customers use their smartphones to pay for their purchases. Mobile ordering has been a huge hit for rival Starbucks.
Most of the company’s Dunkin’ Donuts outlets are concentrated in New York and New England, so it has lots of room to expand across the U.S. Baskin-Robbins is pursuing international growth prospects, most notably in Japan, South Korea and the Middle East.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to build greater wealth with less risk, claim your FREE digital copy of How to invest in stocks: Canada investor advice on building a balanced stock portfolio now.
Founded in January 1927, the Economic Investment Trust (Toronto symbol EVT) is a closed-end fund that holds a portfolio of Canadian, U.S. and foreign stocks. A sampling of the companies it includes are Apple Inc, McDonald's Corporation, and Unilever plc. The Economic Investment Trust is an investment holding company that has the objective of earning an above-average rate of return, primarily through long-term investment gains and dividend income. Note that at TSI Network we have moved away from recommending closed-end funds like Economic Investment Trust in favour of exchange-traded funds (ETFs). Some ETFs have a number of advantages over closed-end funds that invest in the same general area. They are more liquid than most closed-end funds, and have lower management fees. Moreover, ETFs consistently trade at or very close to net asset value, unlike closed-end funds, which often go through wide swings in their discounts or premiums to the value of their assets. That discount could widen just when you need to sell your shares. Invest wisely by following TSI Network and using our three-part Successful Investor strategy:
We invite you to download a Special Report with our compliments: Your 12-Step Countdown to the Retirement You Want. We employ these strategies on behalf of our Wealth Management clients, who have entrusted hundreds of millions of dollars to our care.
Toronto symbol EMA, generates and distributes electricity to customers in Nova Scotia and Bangor, Maine.
Emerging markets are countries or geographic regions with economies that are for the most part are growing rapidly—but they are also riskier.
India, Brazil, Mexico, Russia, Malaysia, Thailand, Indonesia, the Philippines, Poland and Turkey are all examples of emerging markets.
Buying stocks of companies based in emerging markets is risky because many are still in the early stages of establishing the rule of law in which property rights are respected. Corporate governance is in its infancy and control of corruption is sporadic. The legal and political climate can change quickly in countries that do not have a tradition of the rule of law. When changes occur, you can bet that foreign investors will suffer more than well-connected locals.
Because of this, they are typically only suitable as aggressive investments.
However, we think that most conservative investors could hold up to 10% of their portfolios in foreign stocks (apart from the U.S.)—and emerging markets could make up part of that component.
The best way to invest in stocks in emerging markets is through exchange-traded funds (ETFs).
One example is the Vanguard Emerging Markets ETF (New York symbol VWO) which aims to track the Financial Times Stock Exchange (FTSE) Emerging Index, which is made up of common stocks of companies in developing countries. The fund’s MER is just 0.15%.
Investing in emerging market ETFs or stocks is most suitable for the aggressive segment of your portfolio. For your overall portfolio, we recommend using our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Toronto symbol ECA, and New York symbol ECA, is a leading North American producer of natural gas and oil.
Energy investments include a variety of stocks or ETFs that hold Resources sector companies that produce, process, transport or store energy.
For instance, businesses engaged in the extraction, refining and delivery of energy sources such as natural gas, oil, uranium and coal, are considered energy stocks.
Investing in energy shares could provide attractive long-term returns for your portfolio. As well, we recommend that most investors maintain some exposure to the Resources sector—and energy stocks—as part of a well-balanced portfolio.
Most investors who are looking at an energy investment would likely think of oil and gas first. But energy stocks also include green energy, power from renewable resources like solar power, wind power, geothermal power, generating electricity from ocean waves, plus nuclear power.
The theme of renewable energy has become more popular in the past few years, as concern over the environment has grown. However, we’ve always recommended that you choose green energy investments very carefully. That’s because many of these companies have only limited investment appeal.
The direction of energy prices depends on a lot of things, particularly economic growth rates around the world.
Improve your portfolio, including the energy investments from the Resources sector, by following TSI Network and using our three-part Successful Investor strategy:
Discover how to profit from the coming changes in the Canadian oil and gas industry when download your FREE digital copy of Canadian Natural Resources Stock Guide: What to look for in Canadian Energy Stocks.
Energy mining is the process of producing or exploring for energy commodities such as oil, natural gas, coal and uranium.
Energy mining stocks are affected by fluctuating commodity prices in addition to their own business and operating risks.
While sometimes risky, energy mining stocks can also be strong performers when energy prices move up.
You will often find energy mining stocks in the form of Canadian penny mines. Unfortunately they are some of the riskiest stocks you can buy. Note that we automatically rule out investing in penny mines that promote themselves too aggressively or do so misleadingly. The mine-finding effort is more likely to succeed if the managers focus on finding a mine rather than hyping their stock.
Energy mining stocks can generally be broken up into two categories, majors and juniors. Majors are typically energy mining companies that have been in the mining business for many years and more often than not they operate on a global scale. Majors have proven methods for exploration and mining, and have consistent output year over year.
Junior energy mining stocks are mining companies that are new or have been in business for a short time. They are usually smaller companies and take on risky energy mining exploration. But if a junior mining stock is successful at finding a deposit that leads to building a mine or producing field, it can mean huge returns for investors.
Maximize your stock market gains by following TSI Network and using our three-part Successful Investor strategy:
Discover how to spot better energy stocks with our Canadian Natural Resources Stock Guide. Download it today for FREE!
An equity fund is a type of mutual fund or exchange-traded fund (ETF) that invests mostly in stocks.
Also known as stock funds, equity funds can be managed both actively and passively. They may be categorized by geography, either domestic, international, or global.
There are also market capitalization equity funds, which put a specific limit on the size of companies. These include mega-cap, large cap, medium cap, small cap, and micro cap firms.
Some investors in equity funds choose specialty funds which target specific economic sectors. The five main economic stock sectors are: Resources & Commodities, Finance, Manufacturing & Industry, Utilities and Consumer.
Spreading your holdings out across most if not all of the five sectors helps you avoid overloading yourself with stocks that are about to slump because of industry conditions or a change in investor fashion.
Prices of an equity fund are typically determined from the fund’s net asset value (NAV).
While you don’t want to buy and hold an equity fund or mutual funds indefinitely (we prefer buy and "watch closely"), frequent mutual fund or ETF trading can be risky—and hurt your long-term returns. Many mutual fund and ETF investors have lost sight of this risk. Mutual funds or ETFs can make good long-term investments, but sometimes investors get caught up in mutual fund or ETF trading and the risky practice of momentum investing.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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An ETF distributor enters into agreements with large brokers/dealers to maintain the liquidity of ETFs on the market. They also ensure that the market price of the ETFs is equal to the net asset value of the shares in the ETF.
Investors use ETFs in a variety of ways, and some investors work only with ETFs and no other type of investment when building a portfolio.
ETF is an acronym for exchange traded fund. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright. This is where ETF distributors come into play.
ETF investments trade on a stock exchange throughout the day, much like ordinary stocks. So you can buy them through a broker whenever the stock market is open, and generally you pay the same commission rate that you pay to buy stocks. In contrast, you can only buy most conventional mutual funds at the end of the day. What’s more, commissions vary widely, depending on negotiations with your broker or fund dealer.
The best exchange-traded funds offer well-diversified, tax-efficient portfolios with exceptionally low management ETF fees. They are also very liquid.
Control your ETF investing risk by following TSI Network and using our three-part Successful Investor strategy:
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ETF is an acronym for exchange traded fund. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.
Exchange traded funds trade on stock exchanges, just like stocks. Investors can buy them on margin, or sell them short. The best exchange-traded funds offer well-diversified, tax-efficient portfolios with exceptionally low management ETF fees. They are also very liquid.
Investors use ETFs in a variety of ways, and some investors work only with ETFs and no other type of investment in portfolio creation.
An amazing aspect of ETFs is their diversity. Some investors may create an entire portfolio solely from a few well-diversified ETFs.
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.
As well, shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital gains taxes generated by the yearly distributions most conventional mutual funds pay out to unitholders.
ETFs have a place in every investor's portfolio, at TSI Network we also recommend using our three-part Successful Investor strategy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our free investing guide, The 10 Best Practices of Successful Investors.
Ethanol is a liquid alcohol obtained from fermenting sugar, or starch converted to sugar. In Canada and the U.S., fuel ethanol is made from grains such as corn, wheat and barley. Small quantities have been made on an experimental basis from low-cost agricultural cellulosic biomass, like trees and grasses.
Ethanol can be used as a fuel for cars in its pure form, but it is usually used as a gasoline additive to increase octane and improve vehicle emissions.
Relative to gasoline, ethanol fuels reduce greenhouse gas emissions. Ethanol is made from plants, which absorb carbon dioxide during their growth. On a full fuel cycle (i.e. from plant growth to use of the fuel in a vehicle), a 10% ethanol-gasoline blend is estimated to reduce greenhouse gas emissions by up to 4% if the ethanol is made from grains, and up to 8% if it is made from cellulosic biomass. Blends with 85% ethanol can reduce emissions by 60% to 80%.
Ethanol as fuel has a lot of conceptual appeal, especially with investor interest rising for non-hydrocarbon (coal, oil and gas), lower-polluting energy sources. However, many companies focusing on ethanol will have difficulty showing profits for a number of years. Several new ethanol plants will open in the next few years, which could lead to oversupply and lower prices. A drop in oil prices could also undercut ethanol’s appeal.
There's room for ethanol stocks in your portfolio, but at TSI Network we recommend our three-part Successful Investor strategy:
Discover how to make the most of your commodity investing in this free special report, Commodity Investments: Fertilizer Stocks and Potash Stocks That Will Profit from Rising Food Demand, from TSI Network.
The ethanol boom was the rise in the early 2000s in ethanol demand due to rising gasoline prices and pollution concerns.
Ethanol is a liquid alcohol obtained from fermenting sugar, or starch converted to sugar. In Canada and the U.S., fuel ethanol is made from grains such as corn, wheat and barley. Small quantities have been made on an experimental basis from low-cost agricultural cellulosic biomass, like trees and grasses.
Ethanol can be used as a fuel for cars in its pure form, but it is usually used as a gasoline additive to increase octane and improve vehicle emissions.
Relative to gasoline, ethanol fuels reduce greenhouse gas emissions. Ethanol is made from plants, which absorb carbon dioxide during their growth. These environmental factors are the second component of the ethanol boom.
However, one big drawback to the ethanol boom is that increasing demand for crops to produce ethanol has driven up crop prices and food prices for consumers. However, at the same time, these increased prices have provided farmers with cash to buy more fertilizer to achieve higher yields and protect soil fertility. This is in turn pushing up fertilizer prices, which benefits fertilizer stocks and other related commodity investments.
Whatever stocks you choose to buy, you can enhance your profits by following TSI Network and using our three-part Successful Investor strategy:
Discover how to build a winning stock market portfolio in this free special report, Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada, from TSI Network.
Ethanol stocks are share issues of companies that extract and store ethanol, the liquid alcohol obtained from fermenting sugar, or starch converted to sugar.
In Canada and the U.S., fuel ethanol is made from grains, such as corn, wheat and barley. Small quantities have been made on an experimental basis from low-cost agricultural cellulosic biomass, like trees and grasses. This has led to two different types of ethanol stocks.
The first group of ethanol stocks are those working to produce ethanol from more traditional sources. However, they face competition from food companies, as they both consume food products, in particular corn.
The second group of ethanol stocks are the ones working on experimental methods of extracting ethanol from biomass. But while their raw materials are cheaper and face little competition, they are still working with unproven technologies.
Ethanol can be used as a fuel for cars in its pure form, but it is usually used as a gasoline additive to increase octane levels and improve vehicle emissions.
At TSI Network, we think you should avoid ethanol stock futures and options, despite ethanol booms, and invest in companies that directly produce ethanol like Archer Daniels Midland. We also recommend using our three-part Successful Investor philosophy:
Discover how to make the most of your commodity investing in this free special report, Commodity Investments: Fertilizer Stocks and Potash Stocks That Will Profit from Rising Food Demand, from TSI Network.
New York symbol EEA, is a closed-end fund that invests mainly in large-capitalization European stocks in the 15 countries that use the Euro currency. It may invest up to 20% of its assets in countries that do not use the Euro currency.
Toronto symbol EGU, holds a 95% interest in Hellas Gold. Hellas owns three gold and base metal deposits in Northern Greece. The deposits are the Stratoni zinc/ lead/silver property, the Olympias gold/zinc/lead/silver project and the Skouries copper/gold property.
An exchange traded fund (ETF) tracks indexes as closely as possible, since it’s not practical for investors to actually buy an index outright.
Exchange traded funds trade on stock exchanges, just like stocks. Investors can buy them on margin, or sell them short. The best exchange-traded funds offer well-diversified, tax-efficient portfolios with exceptionally low management ETF fees. They are also very liquid.
Investors use ETFs in a variety of ways, and some investors hold ETFs and no other type of investment in their portfolios.
ETFs offer a lot of choices for investors. Some investors may create an entire portfolio solely from a few well-diversified ETFs.
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.
Additionally, shares are only added or removed when the underlying index changes. As a result of this low turnover, you won’t incur the regular capital gains taxes generated by the yearly distributions most conventional mutual funds payout to unitholders.
Canadian ETFs are some of the best ETFs on the market. They are a great way for investors to own a wide range of stocks with a single investment. Canadian exchange traded funds are also eligible for the Canadian dividend tax credit, although this only applies to Canadian ETFs that pay dividends.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to maximize your profits when you read this FREE report, Best Canadian ETFs.
Exchange-traded funds (ETFs) are set up to mirror the performance of a stock-market index. They also offer much lower fees than mutual funds. Fees are as low as 0.10% a year for ETFs vs. mutual funds that can charge you 2% to 3% or higher on their funds. ETFs can save you a lot of money and boost your returns over time.
Exchange-traded funds hold baskets of stocks that represent stock indexes. These indexes include the S&P/TSE 60 Index. Like stocks, exchange-traded funds trade on stock exchanges, and their ETF prices are quoted daily in newspaper stock tables. Although the investor pays brokerage commissions to buy and sell them, these are offset by lower management fees. Most indexes add or remove shares only when the underlying index changes. This low turnover is more tax efficient for investors, who don't incur the regular capital gains taxes from annual distributions made by conventional mutual funds.
Exchange-traded funds have a place in every investor's portfolio, and at TSI Network we also recommend using our three-part Successful Investor strategy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our free investing guide, The 10 Best Practices of Successful Investors. Like stocks, exchange-traded funds (ETFs) trade on stock exchanges, and their prices are quoted daily in newspaper stock tables. Although the investor pays brokerage commissions to buy and sell them, these are offset by lower management fees. Most index funds add or remove shares only when the underlying index changes. This low turnover is more tax efficient for investors, who don't incur the regular capital gains taxes from annual distributions made by conventional mutual funds.
Exchange traded receipts (ETRs) are issued by the Royal Canadian Mint (the Crown Corporation responsible for minting and distributing Canada’s circulation coins).
Royal Canadian Mint Gold Reserves Exchange Traded Receipts (ETRs), symbol MNT on the Toronto exchange. Exchange traded receipts let investors own gold bullion stored in the Royal Canadian Mint Gold Reserves.
The value of an exchange traded receipt can vary with the price of gold. Investors can trade their exchange traded receipts on the stock exchange, or once a month they can redeem them for gold coins or bullion with a minimum purity of 99.99%. This requires at least 10,000 exchange traded receipts plus redemption and fabrication fees for the gold coins or bars.
Instead of physical gold, investors can choose to redeem their units for cash equal to 95% of the lesser of: a) the ETR price on the redemption date; or b) the volume-weighted average price of the exchange traded receipts for five trading days prior to and including the redemption date.
In general, we advise against buying gold bullion, gold coins (unless you collect them as a hobby), or certificates representing an interest in bullion. We feel you are better off investing in the shares of well-established gold mining companies
However, if you do want to hold bullion, Royal Canadian Mint Gold Reserves ETRs are a relatively low-cost and liquid way to do it.
For your total portfolio, we at TSI Network recommend using our three-part Successful Investor philosophy:
Discover how to make the most of your gold investments in this free special report, Gold Investing: 7 Profitable Strategies for Investing in Canadian Gold Stocks, from TSI Network.
Facebook operates the world's leading social networking service through its flagship facebook.com web site. The company's web site lets users connect and communicate with each other. Based in Menlo Park, California, Facebook is a platform where people can share photos, videos, and status updates about what they are doing, with their friends, families and the world. As of December 2015, Facebook had over a billion active daily users. Facebook first sold shares to the public in 2012 at $38. The stock jumped to as high as $45 on its first day of trading, but subsequently plunged to as low as $17.55 at the beginning of September. However, the shares have rebounded strongly since then. Facebook has a huge following, and it will be difficult for a competitor to upset its dominance. But the main challenge for the company is to continue to attract advertisers in a market that includes major competitors such as Google, Yahoo, Yelp, Twitter and Pinterest. A big part of that challenge will involve spending heavily on technology to develop ways to let advertisers to target relevant ads on a large scale, especially to its most active users. This will let it charge more for ads. It's uncertain whether Facebook can make enough money from mobile ads (on devices such as smartphones) to justify its huge market cap. That's because these devices have smaller display space to sell to advertisers. As well, while Facebook is attracting more mobile users, it's also at the same time taking users away from higher-priced ads they might have instead viewed while looking at Facebook on their desktop computers. When investing in tech companies, make sure you follow TSI Network's three-part Successful Investor strategy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
New York symbol FIC, provides products and services that help businesses make better decisions on customer creditworthiness around the world.
Toronto symbol FFH, is a financial services holding company. Fairfax engages in insurance, reinsurance and investment management.
formerly Toronto symbol FHR, owns or operates luxury hotels and resorts with in North America, Barbados and the United Arab Emirates. It also owns Delta Hotels, a chain of business class hotels. The company went private in 2006.
Toronto symbol FAL, is a major producer of metals, including nickel, copper and aluminum. The company was acquired by Xstrata in August 2006.
New York symbol FDX, provides door-to-door delivery of packages and documents in the United States and to over 220 other countries.
Fertilizer stocks are stocks of a company that sells, manufactures and develops agricultural fertilizer. Fertilizer plays a large role in world food production. Without fertilizer, the world would need 50% more farmland to meet this need. The world's population keeps rising which increases food demand. These factors contribute to the demand of cheaper, safer and more effective fertilizers. This demand also drives up the price of fertilizer stocks.
Fertilizer stocks like other commodity investments are subject to wide and unpredictable swings in the prices. In the rising phase of the business cycle, when business is booming, resource demand expands faster than resource supply, so resource prices shoot up. This balloons profits for commodity investments. When the economy slumps, resource prices fall, and this drags down resource stock prices.
Fertilizer stocks and other commodities have slightly more risk than other market sectors. Look for fertilizer stocks, for example, seed sales, that protect it from commodity fluctuations. We also love to see fertilizer stocks with a history dividend payments too.
At TSI Network we recommend using our three-part Successful Investor philosophy for investing:
Our free report reveals how you can increase your profits — and cut your risk — in commodity investments. Download Commodity Investments: Fertilizer Stocks and Potash Stocks That Will Profit from Rising Food Demand today.
Operating in Canada since 1987, Fidelity Investments Canada is a part of the Fidelity Investments Organization of Boston. In Canada, they manage both mutual funds and corporate pension plans.
Financial goals are milestone achievements people set for their finances. Most financial goals revolve around saving or gaining more money during a certain period of time. A long-term financial goal may be saving enough money to retire on. A long term financial goal may also be made up of smaller financial goals. For instance, a small financial goal may be to deposit a predetermined portion of your paycheck into a savings or brokerage account every pay period. The larger financial goal could be retiring early. With our TSI Network Successful Investor strategy, our first rule is that you should mainly invest in well-established companies that have a history of sales and earnings (see the other two rules below). Following this rule can boost your investment returns and help you reach your long-term financial goals. Developing realistic financial goals is often the first step investors need to take when they're entering the market. We encourage investors to be realistic about what their long term needs may be. You may also want to consider the needs of parents or loved ones who may need special care when they become older. Cut you stock market risk-and boost your returns-by following TSI Network and using our three-part Successful Investor strategy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Financial investments are assets that investors buy with the expectation of income or capital gains. Stocks, bonds, and ETFs are examples of financial investments.
Here are 4 tips for making a sound financial investment:
Look beyond financial indicators: Many investors decide to focus their stock market research on a handful of measures. For instance, they may want to see a p/e ratio below 15.0, say, along with an earnings growth rate of 20% or more a year, and perhaps a 2% dividend yield.
If you find a stock with this (or any comparable) combination of favourable ratios, you still need to watch out for some more-or-less hidden drawback not covered by your system.
Think like a portfolio manager: A good portfolio manager tries to build their client a portfolio that makes money if things go well, but won’t lose too much if the opinions turn out to be faulty.
Hold a reasonable portion of your portfolio in U.S. stocks: We recommend that Canadian financial investors diversify part of their portfolio in well-established U.S. stocks. That’s because the U.S. market features major multinational opportunities that simply aren’t available anywhere else.
Give your financial investments time to pay off: Resist the ever-present urge to buy and sell. A sound portfolio, built through careful research, needs surprisingly few changes over the years.
Bonus financial investing tip: Take a sound fundamental approach to investing in stocks.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to build greater wealth with less risk, claim your FREE digital copy of How to invest in stocks: Canada investor advice on building a balanced stock portfolio now.
Financial ratios are ratios that give you an idea of how under- or over-valued a stock may be in terms of its earnings and cash flow, as well as how sound its balance sheet is and so on. Using financial ratios can't tell you everything about a stock, but they well help you determine which stocks are worth taking a closer look at. A few examples of financial ratios are: Price-earnings ratios (or P/E ratio): The p/e is the ratio of a stock's market price to its per-share earnings. As a general rule, the lower the p/e, the better, and generally a p/e of less than 10 represents value. Price-to-book-value ratios: The book value per share of a company is the value that the company's books place on its assets, less all liabilities, divided by the number of shares outstanding. Book value per share gives you a rough idea of the stock's asset value. Price-cash flow ratios: Simply put, it's earnings without taking into account non-cash charges such as depreciation, depletion and the write-off of intangible assets over time. It's actually a better measure of a company's performance than earnings. Debt-to-equity: When a company loses money, it still has to pay the interest and eventually repay the debt. Generally it does so by dipping into shareholders' equity. A high ratio of debt to equity increases the risk that the company (that is, the shareholders' equity in the company) won't survive a business slump. Once we've found a company that looks attractive using the financial ratios detailed above, we look to see if it has a solid business in an attractive industry, with a history of rising sales and earnings, if not dividends. Even a stock whose financial ratios look good can stagnate if the company or its industry is in a difficult period. But if it's a high-quality company, it's likely to hold up better than other alternatives. Better still, it may be first to move up when conditions improve. We often receive questions about planning and enjoying a successful retirement. Our answers to those questions, based on decades of investment experience, are all located in this FREE report: 12 Steps to the Retirement You Want.
Toronto symbol FTT, is one of the world's largest dealers of heavy equipment made by Caterpillar Inc. Products include tractors, bulldozers, pavers and trucks.
Toronto symbol FSV, operates in the real estate services market, providing services in the following areas: commercial real estate; residential property management; and property improvement.
Fixed income investing is an investment strategy designed to provide a fixed stream of current interest income. Fixed income instruments can include T-bills, GICs, bonds and bond ETFs and mutual funds.
Though fixed-return investments don’t offer the same growth prospects as equities, they can act as an offset to the volatility of a stock portfolio. They can help stabilize you portfolio’s value. They serve as reserves you can use to buy more stocks when prices are down. For that matter, when stock prices are down, you can use your reserves for personal spending to avoid having to sell at a low.
In the end, the right equities/fixed return split depends on your financial circumstances and your temperament. If you are older and planning your retirement investing strategy, you may want to hold some fixed-income investments. But with interest rates at current low levels, stick with T-bills, GICs of government bonds that have terms of, say, two or three years or less.
At TSI Network we feel that fixed income investments should only make up a very small part of your portfolio. If you’d like to increase your long term profits we recommend buying stocks using our three-part Successful Investor strategy is the smartest approach for value investors:
An undervalued stock can signal a real bargain – or a dangerous risk. Knowing how to spot quality bargain stocks can be the key to long-term investing gains. Download our FREE report, Bargain Stocks: Your Guide to Finding the Best Undervalued Stocks, today!
Flow-through limited partnerships developed out of a Canadian government plan to encourage the exploration and development of Canada’s natural resources. Under the plan, companies involved in oil and gas, mining and base metals and other natural resource industries are permitted to fully deduct specific exploration expenses, known as the Canadian Exploration Expense (CEE). They can pass these deductions on to investors, through flow-through shares.
Investors buy units of a limited partnership, which then invests in flow-through shares of public resource companies. In turn, the partnership passes the Canadian Exploration Expenses through to its unitholders.
Typically, initial investors buying flow-through limited partnerships are able to deduct 100% or more of their investment against income by the end of the second year.
One big drawback in a flow-through limited partnership is that many of the flow-through mining and energy stocks they invest in are highly speculative. The partnerships are also usually in a hurry to invest their money to pass the tax deductions on to their investors as quickly as possible. That can lead to some hasty stock selections.
Another drawback with flow-through partnerships is their lack of liquidity. In most cases you can’t get your money out until the partnerships convert into mutual funds, or limited partnership trading on a stock exchange, after 18 months to 24 months.
Like all new issues, flow-through partnerships have upfront fees.
We don’t recommend investing in flow-through limited partnerships.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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Flow-through shares refer to the investment in public resource companies that occur in flow-through limited partnerships. These partnerships were developed out of a Canadian government plan to encourage the exploration and development of Canada’s natural resources. Under the plan, companies involved in oil and gas, mining and base metals and other natural resource industries are permitted to fully deduct specific exploration expenses, known as the Canadian Exploration Expense (CEE). They can then pass these deductions on to investors, through flow through shares.
Investors buy units of a limited partnership, which in turn invests in flow-through shares of public resource companies. Most of these companies trade on the Toronto exchange or the TSX Venture exchange. In turn, the partnership passes the Canadian Exploration Expenses through to its unitholders.
Most flow-through issuers are junior companies that are short on financing, or don’t have enough income to make full use of the tax benefits associated with their exploration. That’s why they sell these benefits to investors.
One big drawback in flow-through shares is that many of the flow-through mining and energy stocks they invest in are highly speculative. The partnerships are also usually in a hurry to invest their money to pass the flow-through shares’ tax deductions on to their investors as quickly as possible. That can lead to some hasty stock selections.
At TSI Network, we recommend using our three-part Successful Investor philosophy when investing:
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Toronto symbol FDG.UN, is a major producer of metallurgical coal, a key ingredient in steelmaking. The company was acquired by Teck Cominco in October 2008.
Forex, or foreign exchange, investments involve dealing in foreign currency futures or options. This can make a lot of sense for an operating business or individuals that are forced to take on currency risk-say a farmer or an import/export firm. Futures or options let the business pass that risk on to speculators who wish to accept it. However, textbooks often fail to emphasize that most speculators who succumb to the lure of forex investments wind up losing money. It doesn't matter if they trade foreign currency or a traditional commodity, such as wheat. In the end, they almost always wind up losing. Here's how things typically work out: Suppose an investor starts out with the intention of losing no more than, say, $15,000. After a few months of trading on futures in foreign-exchange investments, the investor will typically have broken even on his futures trading-if you ignore commissions. But if you count commissions, which obviously have to be paid, the investor will have lost about $15,000. In other words, the futures trades on forex investments work out like bets on a series of random events, such as coin tosses. You'll win a few and you'll lose a few, but you won't win enough to pay your commissions, let alone leave yourself with a profit. Maximize your investment returns by following TSI Network and using our three-part Successful Investor strategy:
The key to finding the "hidden gems" in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough's decades of experience-and his specific recommendations-in our special report, Canadian Penny Stocks: What You Need to Know about Handling the Risks and Reaping the Rewards, on TSI Network. Claim your FREE copy right now!
Forex investments are investments that deal in foreign currency futures or options trading.
Forex contracts can make a lot of sense for an operating business or individuals that are forced to take on currency risk based on their job, like a farmer or an import/export firm. These let businesses pass that risk on to speculators who wish to accept it.
However, investors need to be wary or the advertisements on the Internet for forex investment systems and training courses. These courses fail to emphasize that most speculators who succumb to the lure of forex investments wind up losing money. It doesn't matter if they trade foreign currency or a traditional commodity, such as wheat. In the end, they almost always end up losing.
Here's how things typically work out: Suppose an investor starts out with the intention of losing no more than, say, $15,000. After a few months of trading on futures in foreign-exchange investments, the investor will typically have broken even on his futures trading — if you ignore commissions. But if you count commissions, which obviously have to be paid, the investor will have lost most of the $15,000. In other words, the futures trades on forex securities work out like bets on a series of random events, such as coin tosses. You'll win a few and you'll lose a few, but you won't win enough to pay your commissions, let alone leave yourself with a profit.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discovering the key to finding the “hidden gems” in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough’s decades of experience—and his specific recommendations—in our special report, TSX Penny Stocks: Hot Canadian Penny Stocks and How to Invest in Penny Stocks in Canada, on TSI Network. Claim your FREE copy right now!
Toronto symbol FTS, distributes electricity to customers in Newfoundland, Prince Edward Island, Ontario, Alberta and British Columbia. The company also owns power utilities in the United States and the Caribbean, plus hotels and commercial real estate, mainly in Atlantic Canada.
The Four Year Rule gets its name from the length of a U.S. president's term of office. The rule says that an attractive buying opportunity appears in the stock market about every four years, in the year of the mid-term U.S. congressional election, often in the fall of that year. According to the Four Year Rule, the market generally begins going up soon afterwards, and peaks two to three years later. According to the Four Year Rule, the U.S. stock market - and in turn the Canadian market - generally has a below-average performance during the first two years of a four-year U.S. presidential cycle. That's because newly elected or re-elected presidents use the first two years of their terms to clean up any lingering problems. That way, they face fewer problems in the second half of the term, and improve the chances of an election victory for themselves or their chosen successor. According to the Four Year Rule, this pattern creates uncertainty in the first two years of the term, and holds the market down or leads to a setback. Often, this period of sluggishness or retreat culminates in an attractive buying opportunity, which materializes around the time of the mid-term election, between the two presidential elections. In the second half of the term, the administration reaps the gains it earned through harsh action in the first half. Political and economic conditions improve, so the market generally has an above-average performance in the election year and the pre-election year.
Toronto symbol FPL, makes a wide range of seafood products containing groundfish (cod, flounder, haddock, sole, turbot) and shellfish (shrimp, scallops, crab and lobster). The company changed its name to FP Resources Ltd. as part of a reorganization in 2007.
These include the company's balance sheet, statement of cash flows, and income statement, as well as other qualitative and quantitative measurements that can highlight the health and growth prospects of a company.
Focusing on fundamentals is the way proven long-term investors Warren Buffett and his colleague Charlie Munger look at and analyse stocks.
Using a stock's fundamentals is also known as “bottom-up” analysis. Using the bottom-up approach, you focus on understanding what's going on, rather than trying to predict what happens next.
You could call this descriptive finance. You delve into earnings, dividends, sales, balance sheet structure, competitive advantages and so on. From there, it quickly becomes obvious that there's an awful lot you don't know about the risks in the investments you are considering. So you try to design a portfolio in which the risks offset each other.
Over periods of five years and beyond, top investment honours usually go to members of the bottom-up crowd. That’s partly because bottom-uppers tend to make fewer big mistakes. This lets their gains accumulate. This also leads to longer holding periods, which provide greater tax deferral and lower brokerage costs.
At TSI Network we start our analysis of any stock by looking at its fundamentals. But above all, we recommend that you follow our three-part Successful Investor philosophy:
Invest mainly in well-established companies;
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In general terms, a fund is a collection of securities bundled together and marketed to investors. There are many different types of funds available to investors.
For instance, there are mutual funds. Mutual funds are a handpicked selection of securities created by a mutual fund manager. Often, these funds have a theme. There are also categories of mutual funds like asset-allocation mutual funds and balanced mutual funds.
Another type of fund you may be familiar with is an exchange traded fund, otherwise known as an ETF.
Exchange-traded funds trade on stock exchanges, just like stocks. Investors can buy them on margin, or sell them short. The best exchange-traded funds offer well-diversified, tax-efficient portfolios with exceptionally low management fees. Compared to mutual funds, ETFs are less expensive to hold.
ETFs also give you a low-cost way to invest in a narrow market segment. That’s typically cheaper than investing in a mutual fund with a similar focus. ETFs can have fees as low as 0.10% a year, compared to mutual funds that can charge you 2% to 3% or higher on their funds. ETFs can save you a lot of money and boost your returns over time.
For the best investment gains, we recommend using our three-part Successful Investor philosophy:
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New York symbol GCI, publishes newspapers in the United States and UK, including USA Today. Gannett also owns over 20 TV stations in the U.S.
NASDAQ symbol GRMN, is a market leader in navigation devices using GPS. This includes consumer products such as GPS receivers, portable automotive navigation devices, and fixed-mount GPS/sounder products, which are used in automotive, marine, and recreation applications. Aviation products include GPS and VHF navigation enabled receivers.
Gas stocks are shares of companies that explore for and produce natural gas. Interestingly, gas deposits are often found near oil deposits—and so it’s not uncommon for oil producers to also be gas producers. That means there is typically a lot of overlap between gas shares and oil shares.
Something you should know about gas stock investing is that the price of natural gas is very hard to predict. As a general rule: if investors generally believe the price of gas stocks are sure to go up, the reverse often happens. That’s because suppliers and users of natural gas also read the newspapers, and they both take steps to protect themselves and profit from that situation. The suppliers try to increase supplies, and the consumers of gas try to become more efficient or find alternatives to natural gas.
The direction of natural gas stock prices depends on a lot of things, particularly economic growth rates around the world, Meanwhile, though, well-established companies in the energy industry can take advantage of price setbacks to pick up properties and employees who might be harder to find in more prosperous times.
Gas stocks may be suitable for the resources component of your portfolio. To profit from gas stocks and use them as part of a successful long term retirement investing strategy, incorporate our three-part Successful Investor philosophy:
Discover how to profit from the coming changes in the Canadian oil and gas industry in this free special report, Canadian Natural Resources Stock Guide: What to look for in Canadian Energy Stocks, from TSI Network.
Toronto symbol GIB.A, provides information technology and business-process services to a wide range of business and government clients.
New York symbol GE, is one of the world's largest industrial companies. It operates in six main segments: Infrastructure; Commercial Finance; Consumer Finance; Healthcare; Industrial; and Media.
New York symbol GIS, is the second-largest cereal maker in the United States after Kellogg. Leading brands include Cheerios, Total and Wheaties. The company also makes a variety of other foods, including baking mixes, dinner mixes, canned and frozen vegetables, and yogurt.
Toronto symbol GND, makes equipment that lets broadcasters store, manipulate and transport video signals without losing picture quality. It also makes chips that improve the speed and reliability of transmissions in computer networks.
New York symbol GPC, distributes automotive replacement parts to over 4,800 independent outlets in North America. It also operates over 1,100 auto parts stores under the NAPA banner. As well, the company distributes industrial parts, office furniture and electrical equipment.
Toronto symbol WN, operates two distinct business divisions: Weston Foods, which includes fresh and frozen bakeries in North America; and a 62% interest in Loblaw Companies, Canada's largest food distributor.
Global X Copper Miners ETF is an exchange traded fund on the New York Stock Exchange. It trades under the symbol, COPX. Global X Copper Miners ETF 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 Sandfire Resources at 10.4%; Southern Copper, 7.9%; Oz Minerals, 7.7%; Grupo Mexico, 6.9%; Vedanta Resources, 6.8%; Lundin Mining, 6.3%; Antofagasta plc, 5.9%; KGHM Polska Miedz, 5.7%; Turquoise Hill, 5.6%; Jiangxi Copper, 5.2%; and Freeport- McMoRan, 4.4%. Global X Copper Miners ETF is an investment option for those investors looking to holding multiple copper stocks in one investment. You can learn more about Global X Copper Miners ETF on their website www.globalxfunds.com. Boost your stock market returns by following TSI Network and using our three-part Successful Investor strategy:
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Gold has special appeal for a lot of investors. That’s because gold is different from other commodities, due to its scarcity, its special physical characteristics like freedom from tarnishing and malleability (the ability of a metal to be hammered into thin sheets), its unique suitability for use as a medium of exchange, and its place in the world's financial history.
But that specialness doesn't make gold an attractive investment. In fact, we think it detracts from gold's investment appeal. Because of the strong attachment that gold enthusiasts feel to the metal, they typically bid up the price of gold-producing stocks out of proportion to the profits those mines are likely to produce.
If you do want to invest in gold, we recommend that you do it through gold-mining stocks. Unlike gold bullion, which comes with a continuing cash drain for management, insurance and so on, gold stocks at least have the potential to generate income. They can also build new mines and raised their production, even if gold goes sideways for a lengthy period.
But keep in mind that no matter how appealing they look, you should limit gold stocks to a modest part of your portfolio. The best way to boost your long-term investment results is to follow TSI Network and use our three-part Successful Investor strategy:
Discover how to make the most of your copper investments in this free special report, Gold Mining: How to Choose the Best Stocks and ETFs to Profit from the Reconstruction of Japan, from TSI Network
Gold bullion is physical gold that for investment purposes can come in the form of gold bars, gold coins (unless you collect them as a hobby) or certificates representing an interest in gold bullion.
At TSI Network, we generally advise against investing directly in gold bullion. Unlike stocks, commodity investments such as gold bullion do not generate income. Instead, gold bullion investments entail costs that dramatically eat into your returns. For example, gold bullion and gold coins cost you money for insurance, storage fees and so on.
However, if you want to own gold bullion, there are easy and low cost ways to do it. Look into investments like SPDR Gold Trust (symbol GLD on Nasdaq). SPDR Gold Trust is an investment trust that aims to reflect the performance of the price of gold bullion, less the trust’s costs. Its sole assets are gold bullion and, from time to time, cash. SPDR Gold Trust’s expenses are just 0.4% of its assets per year.
The 2005 Canadian federal budget made investment-grade gold and silver coins, as well as gold or silver bullion bars, eligible to be held in a registered retirement savings plan (RRSP).
In summary, we see gold bullion as an impractical way to invest in gold. We think investors would do far better to invest in shares of gold mining companies than gold bullion bars. And overall, for the best investment returns, you should follow TSI Network and use our three-part Successful Investor strategy:
Discover how to make the most of your copper investments in this free special report, Gold Mining: How to Choose the Best Stocks and ETFs to Profit from the Reconstruction of Japan, from TSI Network.
Gold investing involves buying gold bullion, or shares of gold-mining companies.
When you invest in gold stocks, look at how long the company’s reserves are likely to last. Those with low reserves will need to have consistent future success in their exploration programs to prolong the production of their mines. That success is far from guaranteed.
Even if the company has strong reserves, the best gold stocks with the least risk also have a diversified reserve base. That way they are not dependent on a single mine’s production or political stability in any one country. Top gold companies can also increase their reserves by making acquisitions.
Gold investing through bullion does not generate income. Instead, bullion and coins come with a continuing cash drain for management, insurance, storage and so on. We think you should limit your gold investments to gold-mining stocks. Unlike bullion, gold-mining stocks at least have the potential to generate income.
So, in our view, the best way to profit from gold is by investing in the stocks of gold-mining companies. That way, you benefit from increases in the price of gold, and you give yourself the potential for capital gains and income.
The best gold stocks will generate positive cash flow even with low gold prices—and also offer rising production outlooks.
Due to their volatile nature, we continue to recommend that gold stocks only make up a limited portion of your portfolio’s Resources segment.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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Gold investments include buying gold bullion, coins, gold-mining stocks, or certificates representing an interest in bullion. It can also include shares of gold companies.
Investing in gold bullion does not generate income. Instead, bullion and coins come with a continuing cash drain for management, insurance, storage and so on.
We recommend that you limit your gold investments to gold-mining stocks. Unlike bullion, gold-mining stocks at least have the potential to generate income. By investing in gold-mining stocks you benefit from increases in the price of gold, and you give yourself the potential for capital gains and income. You also save on the higher brokerage fees and commissions associated with other types of commodity investments.
A gold investing mistake you should avoid is gold futures or options. Rising gold prices can make trading gold futures and options look more attractive. However, you can only profit in future-linked deals by out-guessing other futures or options traders by a wide enough margin to cover commissions and other trading costs. When you dabble in commodity futures or options, you are betting against professionals who make a full-time occupation of studying these markets, who have better access to information than you do, and pay much lower commissions.
Due to their volatile nature, we continue to recommend that gold investments only make up a limited portion of your portfolio’s resources segment.
Learn more about gold investments, and other investments as well, by following TSI Network and using our three-part Successful Investor strategy:
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Gold mining is performed by extracting gold ores underground or open-pit mine. Once mined, the ore is crushed, heated, smelted and refined into gold bars. Gold is most profitably mined on a very large scale. That's because unless ore grades are exceptionally high, most mining companies need to dig up a lot of ore to extract enough gold to make it worthwhile to build a mine. The best way to profit from rising gold prices is by sticking with top-quality gold mining stocks, particularly shares of companies with rising production and strong prospects. Even so, because of their volatile nature, we continue to recommend that gold stocks make up only a limited portion of your portfolio's resources segment. We recommend staying away from buying gold bullion, coins (unless you collect them as a hobby) or certificates representing an interest in bullion. We also advise staying out of promotional penny mines that are merely prospecting for gold. Also stay out of investment vehicles (like options or futures) that will only make money for you if gold goes up in the short term. Gold mining stocks are worth considering for your portfolio, but for the bulk of your investments, we recommend following TSI Network and using our three-part Successful Investor strategy:
Discover how to make the most of your copper investments in this free special report, Gold Mining: How to Choose the Best Stocks and ETFs to Profit from the Reconstruction of Japan, from TSI Network
Gold mining stocks are investments in companies that explore for and produce gold.
A gold mining stock can generally fit into one of two categories: majors and juniors. Majors are gold mining companies that have typically been in the mining business for many years and more often than not they operate on a global scale. Majors have proven methods for exploration and mining, and have consistent output year over year.
Junior gold mining stocks are mining companies that are new or have not been in business for very long. They are usually smaller companies and take on risky mining exploration. If a junior mining stock is successful at finding a deposit, and then building a mine, it can mean huge returns for investors.
Most investors should stay away from gold penny mines. They almost all trade on hopes and expectations, rather than realistic financial projections. Few, if any, will ever find a mineral deposit that can support a profitable mine.
If you feel that you must hold gold in your portfolio, we think that gold mining shares are much better than holding gold bullion. For your portfolio as a whole, at TSI Network we feel that most investors should hold a blend of value and aggressive stocks. We also recommend using our three-part Successful Investor philosophy:
Discover what you need to know about gold mining stocks in the 21st century. Download the complete guide to picking the best Canadian mining stocks on the TSX, Best Canadian Mining Stocks TSX: Plus Gold Stocks, Canadian Diamond Mines and More, FREE.
Gold is often viewed as a safe investment, so prices of these stocks will often increase in response to political or economic worries, which increase the price of gold.
Gold stocks are sometimes a speculative investment with a number of unique characteristics that make it very different from other areas of investing. That means that there are a number of unique risks associated with gold investing. But there is also immense opportunity for profit. To avoid the risks and maximize and protect your gains, it’s absolutely essential to have the right information and advice close at hand at all times.
To profit in gold stocks, we recommend looking for well-financed companies with no immediate need to sell shares at low prices, since that would dilute existing investors’ interests. We also like to see gold stocks with strong balance sheets with low debt. Another key ingredient to a solid gold stock is if they have an experienced management team with a proven ability to develop and finance a mine.
Gold stocks can have a place in your portfolio, and at TSI Network we recommend our three-part Successful Investor philosophy for investing:
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A company's "goodwill" value would only appear on the balance sheet if it was acquired rather than built up by the company's operations.
Generally speaking, when one company acquires another as a going concern, it pays more than the value of the tangible assets that it acquires as part of its acquisition.
This excess of acquisition price over tangible-asset value is treated as "goodwill" on the buyer's financial statements. If an acquisition turns out to be a dud and the acquired operations suffer a plunge in earnings or start losing money, the acquiring company has to write off goodwill acquired in an unwise acquisition against its current year's earnings, some or all of the value of goodwill that it acquired as part of the acquisition.
Write-offs like these may seem to come out of nowhere when they are announced, and they can spur a deep drop in the acquirer's stock price. It generally pays to stay out of stocks in which goodwill represents a big part of their net assets per share. If these companies have to write off just part of that goodwill, it can have a devastating impact on their earnings and stock prices.
In most cases, particularly if the goodwill comes from the acquisition of a handful of big, ambitious purchases, the risk often isn't worth it. When we do our in-depth stock market research for stock recommendations, goodwill is just one of the important factors we take into account. At TSI Network, we think you should take a conservative portfolio approach to investing. We also recommend using our three-part Successful Investor philosophy:
We often receive questions about planning and enjoying a successful retirement. Our answers to those questions, based on decades of investment experience, are all located in this FREE report: 9 Secrets of Successful Wealth Management.
Google stocks are investments in Alphabet Inc. (Nasdaq symbols GOOG and GOOGL), the new parent company for Google’s Internet search business (still called Google) and other operations, such as self-driving cars and home thermostats. Each of these subsidiaries functions independently.
Alphabet was one of our stock pick of the year for 2016. The company has held on to its lead because its well-developed search technology provides a big advantage over its competitors. This is one reason investments in Google stock are popular.
Additionally, Google does not charge for its searches. Instead, it makes money by selling advertising on its websites. It mainly does this through its AdWords program. That lets advertisers bid on certain search words or phrases. The company then charges advertisers when users click on their ads. Google gets around 97% of its revenue from advertising.
The company also offers free access to all or part of its other services, including Gmail (email), YouTube (videos), Google Talk (Internet-based phone calls), Google+ (social networking) and Google Chrome (an Internet browser). These services help draw more users to Google’s sites, allowing the company to sell more ads and charge higher ad rates.
In 2008, Google launched Android, its operating system for smartphones and tablet computers. Android has been a huge success: It now powers around two-thirds of the mobile devices in use worldwide.
Google provides this software to smartphone makers for free. But thanks to the rapid growth in the number of Android users, Google continues to increase its share of the mobile search market and attract more advertisers, allowing Google stock to increase.
Google stocks are one of the world’s most visible technology stocks.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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Graphite is a soft, greyish-black mineral with a metallic sheen. A graphite crystal is made up of loosely stacked one-atom-thick layers, much like a deck of cards. These layers can slide around, which makes graphite a good lubricant. Graphite is increasingly used in flexible heat spreaders in electronic devices, such as smartphones, flat-panel displays, laptops and tablets. For example, Apple's iPhone contains a heat spreader made from an ultra-thin layer of graphite that distributes heat evenly throughout the device and keeps the touch screen cool. Traditionally, aluminum and copper have been used for heat spreaders, but graphite is lighter, and it conducts heat better than either of these metals. Another developing use for graphite is in graphene sheets. Two Manchester University scientists discovered graphene in 2004 and subsequently won the Nobel Prize in Physics. Graphene sheets are so thin that it takes three million of them to make a layer one millimetre thick. It's estimated that a sheet of graphene as thick as cling wrap could hold the weight of an elephant. Graphene also conducts electricity better than copper or aluminum and can stretch by up to 20% without being damaged. Once it's fully developed, graphene could have many commercial, military and aerospace uses. Right now, though, graphene is not developed enough to be used commercially. One major problem is that graphene adheres to almost nothing. As well, it can't be glued to anything, because there are no glues that work at that level of thinness. But meanwhile, the best way to invest in graphene at this early stage is through major technology companies like IBM, who are funding the next stage of its research into graphene computer chips. Graphene's extremely high conductivity would make it ideal for this use. For the best investment results, follow TSI Network and use our three-part Successful Investor strategy:
Discover how to make the most of your resource investments in this free special report, Mining Stocks: How to Spot the Best Uranium Stocks, Metal Stocks and Junior Mines, from TSI Network.
Toronto symbol GLH.UN, owns 26 hydroelectric generating stations located on eight river systems in four distinct geographic regions: Quebec, Ontario, British Columbia and New England.
Toronto symbol GWO, is Canada's largest insurance company. It also provides retirement planning and wealth management services.
Green energy is power from renewable resources like solar power, wind power, geothermal power and generating electricity from ocean waves. Green energy is considered an investment theme, as over the last few years, concern for the environment has grown. However, as with all investment themes, we've always recommended that you choose green energy stocks very carefully to profit.
That's because many of these companies have only limited investment appeal. Investors that are interesting in green energy should know that these firms often need a long time to move from the research or concept stage to profitability.
As well, many governments are cutting subsidies for renewable energy development as they struggle with high budget deficits. Green energy power has also become less appealing lately. That's because falling oil and gas prices have cut the need for more high-cost renewable energy sources
To cut your risk, we recommend that you focus on green energy stocks that already have a sound base of other operations, preferably businesses that provide steady revenue streams. That helps offset the risks of expanding into renewable-power production. Reduce your risk in green energy stocks by following TSI Network and using our three-part Successful Investor strategy:
Discover how to make the most of your commodity investing in this free special report, Commodity Investments: Fertilizer Stocks and Potash Stocks That Will Profit from Rising Food Demand, from TSI Network.
The category of green stocks is broad and can include wind power stocks, solar power stocks, geothermal and wave power. Green stocks have a lot of conceptual and emotional appeal as clean and renewable power sources. However, almost all green stocks rely heavily on government subsidies. These subsidies may suffer as governments grapple with the economic slowdowns, and as the cost of conventional energy sources, like oil and natural gas, stays low.
Green stocks often need a long time to develop in light of high start-up costs and uncertain government subsidies. Pat McKeough believes investors should use care when investing in these companies, and focus on those that have strong business models and long-term growth prospects. Wind power stocks, solar power stocks and other green stocks are very tempting to environmentally minded investors. The idea of making money while helping the environment is has a lot of conceptual appeal, but it shouldn't distract you from your core financial goals. After all, if you don't care if you lose the money, you might as well donate it to an environmental charity and get a tax receipt for it.
If you stick to investment fundamentals rather than the promises of green stocks, you will likely gravitate towards investments that have a strong history of increasing sales and profits, have strong balance sheets and pay dividends. Above all, at TSI Network, we recommend using our three-part Successful Investor philosophy:
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Toronto symbol GIS, is an Internet-based automated vehicle location and mobile data services provider for the fleet management market.
Grey sheets involve trading in stocks that for various reasons don’t trade on any stock exchange.
Most commonly, they are associated with unofficial trading in a company’s stock just before it issues shares in an initial public offering (IPO) or perhaps in a spinoff.
This lets the stock get a symbol, transfer agent and a small base of shareholders before it issues shares to the public. Trading on the grey market may also help the company gain some idea of what price it can set in its IPO or spinoff.
Grey sheets are traded through select brokers, but have no Securities and Exchange Commission (SEC) registration and also little SEC regulation.
The grey sheets in some cases include stocks that have been suspended by the SEC. Many of these stocks start out on a major stock exchange, but either suffered financial problems or failed to meet SEC listing conditions.
Although the grey market is technically an unofficial market, it is not illegal. However, there is a lot of risk involved with grey sheets, which stops many investors from trading in the grey market.
Since trading takes place before it officially starts, this can lead to renegotiations and failed trades. Grey sheets are also extremely illiquid. They are hard to sell and aren’t traded very often. Many investors stay away from grey sheets because there isn’t sufficient history or information on the stocks.
Learn more about investment topics, like grey sheets, by following TSI Network. As well, build a sound portfolio by using our three-part Successful Investor strategy:
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Growth by acquisition is a strategy used by companies to grow via buying other companies. Growing by acquisitions is an inherently risky strategy.
Many acquisitions come on the market when it’s a good time for the owners to sell. That may not be, and often isn’t, a good time to buy. Insiders and managers at the selling company know a lot more than the buyers about the company itself, and its business strengths and weaknesses.
Some takeovers work out well for the buyers, of course. This doesn’t diminish the inherent risk. More important, risk multiplies as takeovers become an established strategy.
Takeovers are more likely to succeed when the buyer is already a successful company and is under no pressure to buy anything. That way, the buyer can take its time and wait for a truly attractive, low-risk opportunity to come along.
A growth by acquisition strategy is far from foolproof; even the best managed companies stumble and fail. The best companies cut the risk by only making takeovers that help expand their core business. They are also willing to walk away from a purchase if the price is too high.
We think investors can benefit by following TSI Network and using our three-part Successful Investor strategy:
Dividend stocks are your most reliable investments in all markets—and this free report is your complete guide to successful dividend investing in top Canadian dividend stocks. Download The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks FREE.
Growth dividend stocks are a unique type of investment that deliver strong earnings quarter after quarter—and yet at the same time pay dividends. Apple Inc. (symbol AAPL on Nasdaq) could be considered a growth dividend stock because of its years of rapid growth as well as its ability to start paying a dividend.
Growth stocks can hold the potential for greater gains than conservative selections. However, they typically also expose you to a higher level of risk—whether or not they are dividend-paying stocks.
That’s why we recommend that you look beyond the dividend yield when making investments in growth dividend issues, and look for dividend stocks that have also established a business and have at least some history of building revenue and cash flow.
A growth dividend stock may offer shareholders the opportunity to participate in its dividend reinvestment plan (DRIP). This lets investors use their dividends to buy new shares, sometimes at a 5% discount to the average market price.
We feel that growth dividend investments can be a part your portfolio if they have strong business models and balance sheets. For the best investment results, follow TSI Network’s three-part Successful Investor strategy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
Growth investing is the process of investing in companies that have above-average growth prospects. These growth stocks are firms whose earnings growth has been above the market average, and is likely to remain above average. It is also often the case that they pay small dividends or none at all. Instead, they re-invest their cash flow in the business, to promote their growth.
Growth investments tend to be more volatile than value stocks. At TSI Network we still use a long term investment approach when it comes to growth investments.
Investors should avoid growth stocks that carry too much debt or where there are any doubts about the integrity of insiders. Also, your aggressive growth stock holdings shouldn’t exceed more than 30% of your portfolio holdings.
Growth investing, along with value investing, together makes for a well rounded portfolio. At TSI Network, we feel that investors should have a blend of value and growth stocks in their portfolios. We also recommend using our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. These practices also work well for growth investing. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
A growth stock is a company that has sales and earnings growth well above the market average. Growth stocks can be found in all different industries, but you’re probably most familiar with tech growth stocks. Growth shares do not typically pay any dividends. Instead they usually reinvest any extra cash flow to promote further growth.
Although growth stock picks can be volatile, they can make good long-term investments. They may be well-known stars or quiet gems, but they do share one common attribute—they are growing at a higher-than-average rate within their industry, or within the market as a whole, and could keep growing for years or decades.
Keep in mind that we focus on growth stocks which have a good long-term history and favourable prospects. We downplay momentum stocks that tend to attract many investors simply because they are moving faster than the market averages, but are liable to fall sharply when their momentum fades.
There’s room for growth stock investing in most portfolios, but make sure you follow our TSI Network three-part Successful Investor strategy for your overall portfolio.
Maximize you long-term investment gains by following TSI Network and using our three-part Successful Investor strategy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. These practices also work well for growth investing. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Growth stocks are companies that are likely to have sales and earnings growth well above market average. Frequently they pay few, if any, dividends. Instead they typically reinvest any extra cash flow to promote further growth.
Chosen wisely-according to Pat McKeough's advice-high-quality growth-oriented stocks can be worthwhile additions to most well-diversified portfolios. Although growth stock picks can be highly volatile, they can make good long-term investments. They may be well-known stars or quiet gems, but they do share one common attribute-they are growing at a higher-than-average rate within their industry, or within the market as a whole, and could keep growing for years or decades. And keep in mind that we focus on growth stocks, which have a good long-term history and favourable prospects.
We downplay momentum stocks that tend to attract many investors simply because they are moving faster than the market averages, but are liable to fall sharply when their momentum fades. There's room for growth stock investing in your portfolio, but make sure you follow our TSI Network three-part Successful Investor strategy for your overall portfolio:
The most successful investors don't just "buy and hold," they "buy and watch closely." This strategy has been one of the foundations of success for us and our wealth management clients for decades. Download 10 Stocks to Buy and Hold Forever for FREE, right now.
What is a growth strategy? A growth strategy is a plan a company uses to grow larger-and one of the most common strategies is growth by acquisition. For example, Alimentation Couche-Tard (symbol ATD.B on Toronto) has grown rapidly-and successfully-by acquisition. Couche-Tard is a recommendation of our Stock Pickers Digest newsletter. Couche-Tard operates 8,006 convenience stores throughout North America and 2,217 in Europe, including Scandinavia (Norway, Sweden and Denmark), Poland, the Baltic States (Estonia, Latvia and Lithuania) and Russia. As part of its growth strategy the company recently bought Ireland's Topaz chain. The price was not disclosed but was likely in the $400-million range. Topaz is the country's leading operator of gas stations and convenience stores. This purchase was smaller than Couche-Tard's $2.7-billion purchase of Norway's Statoil Fuel & Retail gas station chain in June 2012 and The Pantry, which it bought for $1.7 billion in March 2015. The Pantry operates 1,500 convenience stores in the U.S. However, acquisitions of all sizes are a key part of Couche-Tard's growth strategy. Expanding using a growth by acquisition strategy in this way adds risk, but the company does a good job of integrating the businesses it buys. At TSI Network, we buying companies with smart growth strategies-and we also recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Investing in growth tech stocks focuses on trying to identify and buy rising technology stocks when they have further growth ahead.
Growth stocks may trade at higher-than-average multiples of earnings, cash flow, book value and so on. Ideally, though, they also have above-average growth prospects, compared to alternative investments.
The best growth tech stocks often hold hidden value that only savvy investors can spot.
When a company’s assets are wholly or partially hidden, the stock trades for less than it’s really worth, so you get to buy at a bargain price.
When we pick stocks in the more volatile technology field, one of our favourite hidden assets is high research spending. That’s because technology stocks have to treat their research spending as a day-to-day expense, much like salaries or taxes. So research spending comes out of the current year’s sales, and it lowers the current year’s earnings.
As a result, many growth tech stocks’ earnings per share may look lower than those of stocks in other industries. That causes some investors to overlook promising tech firms, or to see them as overpriced.
Not all tech growth stocks are good investments, of course. So, before investing in a growth tech stock, at TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to invest in growth stocks when you claim your FREE digital copy of Canadian Growth Stocks: WestJet Stock, RioCan Stock and more now.
New York symbol HRB, offers income tax preparation services in the United States, Canada and Australia. It also provides tax, accounting and consulting services to businesses.
Toronto symbol HR.UN, holds interests in office properties, industrial properties and retail properties. Over half of H&R's properties are in the Greater Toronto Area. The rest are elsewhere in Ontario, in Quebec, western Canada and the United States.
New York symbol HHS, provides direct marketing services to businesses. It also publishes shopper newspapers in California and Florida.
Healthcare investments are stocks, mutual funds or ETFs involved in the healthcare industry. Healthcare involves a variety of industries, including hospitals, health insurance providers, medical devices and technologies, and pharmaceuticals.
Drug stocks have a special appeal for many investors looking for healthcare investments. They assume that as the baby-boom generation goes through late middle age and beyond, demand for drugs will skyrocket. That's undoubtedly true.
However, pharmaceutical companies are more speculative than many investors in healthcare investments realize.
Drug companies often invest tens if not hundreds of millions of dollars to create, test and secure regulatory approval for a single new drug. Even then, it may not manage to recover its investment before its patent expires.
Even when pharmaceutical industry research succeeds and creates new products worthy of healthcare investments, drug companies have to live with the constant threat of competition from breakthrough products that work better and/or are cheaper. But sometimes, drug company research fails to produce the hoped-for results. This failure may only become apparent with unsatisfactory results from the lengthy, costly drug trials required to gain regulatory approval.
If you are adding a healthcare investment such as a drug stock to your portfolio, you may want to consider a drug company that has been paying dividends.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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A hedge is a position established to offset the risk of adverse price movements in an investment or asset. For example, an investor might purchase a put option (the right to sell a stock at a set price) to hedge against the risk of a stock they own moving sharply down.
Most investors have heard of hedge funds. They take the concept of a hedge and instead of offsetting price movements to cut risk, they actually aim to profit from those movements.
Here’s the strategy behind hedge funds: If the market goes up, the good stocks the fund holds “long” should rise more than the weak ones fall, so the gains on the good stocks should exceed losses on the “short” sales. Alternatively, if the market falls, the bad “short” stocks should fall more than the good “long” stocks, so gains on the short sales should exceed losses.
However, profitable short selling requires superhuman timing, and the inevitable mistakes can be super expensive.
Sectors of investing can be viewed as hedges as well. Resource stocks in particular will provide a hedge against inflation, because they gain directly from rising prices for the commodities they produce.
While we think it’s important for investors to know how hedges work, we feel you are far better off investing mostly in sound, dividend-paying stocks. And to pick those stocks, follow TSI Network’s three-part Successful Investor strategy:
Get the complete guide to Investing for Beginners and build wealth with a conservative investing approach—this free report. Find out what they are in our FREE investing guide, How to Invest in Stocks: Canada investor advice on building a balanced stock portfolio
Hedge fund investing aims to buy good stocks and sell bad stocks “short” (that means borrowing bad stocks, selling them, and only buying them back to repay the loan after prices have dropped) in hopes of making money regardless of the market’s direction.
Here’s the strategy of hedge funds: If the market goes up, the good stocks should rise more than the weak ones, so the gains on the good stocks should exceed losses on the short sales. If the market falls, the bad stocks should fall more than the good, so gains on the short sales should exceed losses. But profitable short selling requires superhuman timing, and the inevitable mistakes can be super expensive.
In 1999 and 2000, a number of hedge funds collapsed because they shorted Internet stocks that went on to soar. The fund managers were “early rather than wrong,” as the saying goes, but they still lost huge sums. After all, short selling turns the traditional market odds upside down. When you buy, your profit potential is unlimited and the most you can lose is 100%. When you sell short, the most you can make is 100%, but your potential for loss is unlimited.
Hedge fund operators and promoters claim that by combining an inherently conservative technique (buying stocks) with an inescapably speculative technique (selling short), you can somehow produce risk-free or at least low-risk profits.
Hedge funds also claim they can use sophisticated computer models to tell good stocks from bad and hedge against risk. This way, the sales literature explains, they profit regardless of whether stocks rise or fall.
However, at TSI Network, we feel that investors should stay away from hedge fund investing and use our three-part Successful Investor philosophy:
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Hedge fund managers aim to buy good stocks and sell bad stocks “short” (that means borrowing bad stocks, selling them, and only buying them back to repay the loan after prices have dropped) in hopes of making money regardless of the market’s direction.
Hedge fund managers aim to put their funds in a “market-neutral” position. By buying good stocks and shorting bad ones, they believe that they have hedged away their stock market exposure. Theoretically, this means they make money regardless of whether the overall stock market moves up or down.
If the market goes up, all or most of the stocks the funds owns or have shorted are likely to gain as well. However, if they have chosen their buys and short sales correctly, the stocks they own are likely to gain more value in total than the stocks they’ve sold short. However, profitable short selling requires superhuman timing, and the inevitable mistakes can be super expensive.
At TSI Network, we feel that investors should stay away from hedge fund investing and hedge fund managers, and instead use our three-part Successful Investor philosophy:
The key to finding the “hidden gems” in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough’s decades of experience—and his specific recommendations—in our special report, Canadian Penny Stocks: What You Need to Know about Handling the Risks and Reaping the Rewards, on TSI Network. Claim your FREE copy right now!
If the market goes up, the good stocks should rise more than bad, so gains on the good stocks should exceed losses on the short sales. If the market falls, the bad stocks should fall more than the good, so gains on the short sales should exceed losses. But profitable short selling requires superhuman timing, and the inevitable mistakes can be super expensive.
In 1999 and 2000, a number of hedge funds collapsed because they shorted Internet stocks that went on to soar. The hedge-fund managers were "early rather than wrong", as the saying goes, but they still lost huge sums. After all, short selling turns the traditional market odds upside down. When you buy, your profit potential is unlimited and the most you can lose is 100%. When you sell short, the most you can make is 100%, but your potential for loss is unlimited.
Fund companies are still eager to launch hedge funds, especially now that new rules make it easier to sell them to the public. Hedge funds, long associated in the public's mind with reclusive offshore millionaires, are a prestige item. In addition, they're hugely profitable for the sponsors, due to incentive fees-investors pay extra if the fund performs well. Brokers are also happy to sell the funds and earn commissions. In addition, hedge funds trade heavily, and they usually trade through brokerage firms that sell their fund to investors. It's a common investment situation.
The fund makes money; the broker makes money; sometimes even the client makes money. Of course, some investors lose heavily, due to the fees and risks. But, as they say in the investment business, "two out of three ain't bad".
Our advice: stay out. Rather than invest in hedge funds, we think you should build a portfolio of high-quality, mostly dividend-paying stocks and follow our TSI Network three-part Successful Investor strategy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
New York symbol HNZ, makes a wide variety of processed foods, including condiments, sauces, soups, baked beans, pastas and infant food.
New York symbol HPQ, is one of the world's leading makers of computers and electronic devices. Products include printers and digital cameras, personal computers; business computers; computer services; financing; and software.
By definition, a stock's hidden value has not had much impact on its price. If you paid little if anything for the assets, you have little to lose. But the best hidden assets will eventually expand a company's profit, grab investor attention, and push up its stock price. Hidden value might show up on balance sheet in the form of real estate.
For instance, when a company buys real estate, the purchase price goes on its balance sheet as the value of the asset. Over a period of years or decades, the market value of that real estate may climb substantially. But the historical purchase price remains unchanged on the balance sheet. You have to look closely to spot this hidden value. At times, the hidden value in a company's real estate can come to exceed the market value of its stock. This hidden value may only become apparent to investors when the company upgrades the use of the real estate.
Another example of hidden value is in relationship a business has with a clientele of loyal customers. After a series of satisfactory dealings, long-time customers develop a level of trust that makes them receptive to related offerings from the company. For example, Apple Computer was able to move into the digital music player and smartphone businesses as quickly as it did in the past decade because it had an established core of fans for its Mac computers.
Spotting hidden value can be very profitable for investors. At TSI Network we aim to find this hidden value in conjunction with our three-part Successful Investor strategy:
Discover how to pick the best undervalued stocks for your portfolio in this free special report, 7 Pro Secrets to Value Investing, from TSI Network.
High dividend stocks are those whose dividend payouts are high in relation to their stock price. We've always placed a high value on dividend stock investing at TSI Network, mainly because it provides something of a measure of safety for stocks we recommend. After all, you can't fake a record of dividends.
It takes a lot of success and high-quality management for a company to have the cash to declare and pay a dividend every year for five or 10 years or more. It's not something you can create on the spur of the moment. When looking for high dividend stocks, you should avoid the temptation of "reaching for yield." That is, choosing investments solely because they offer a high dividend yield.
That's because a high dividend yield may signal danger rather than a bargain, if it reflects widespread investor skepticism that a company can keep paying its current dividend.
Dividend cuts will always undermine investor confidence, and can quickly push down a company's stock price. Above all, for a true measure of stability, focus on high dividend companies that have maintained or raised their dividends during a recession or stock-market downturn. That's because these firms leave themselves enough room to handle periods of earnings volatility.
By continually rewarding investors, and retaining enough cash to finance their businesses, they also provide an attractive mix of safety, income and growth. High dividend stocks should be a big part of your overall portfolio. As well, we also suggest applying our three-part Successful Investor strategy.
Our new report, 10 Stocks to Buy and Hold Forever, identifies 10 stocks you can hold for the long term and shows you exactly how to profit from a portfolio that's built to last. And it's yours FREE!
High dividend yield refers to a higher-than-average dividend paid per share, divided by the current stock price. With today's low interest rates, investors are paying more attention to dividend yields. Dividends are far more reliable than capital gains. A stock that pays a $1 dividend this year will probably do the same next year. It may even increase its dividend payment.
Two examples of Canadian stocks with a high dividend yield include: 1. Telus (symbol T on Toronto) has a high 4.5%yield 2. TransCanada Corp. (symbol TRP on Toronto) pays dividends that give it a 4.5% yield. Note that when looking for high dividend stocks, you should avoid the temptation of "reaching for yield." That is, choosing investments purely because they offer a high current yield. A high yield may signal danger rather than a bargain, if it reflects widespread investor skepticism that a company can keep paying its current dividend.
Dividend cuts always undermine investor confidence, and can quickly push down a company's stock price. For a true measure of stability, focus on those companies that have maintained or raised their dividends during the recession and stock-market downturn.
We think investors will profit most-and with the least risk-by buying shares of well-established, dividend-paying stocks with strong business prospects. Follow TSI Network's three-part Successful Investor strategy: 1. Invest mainly in well-established companies; 2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities); 3. Downplay or avoid stocks in the broker/media limelight.
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
High return investments are investments that return or produce large gains for investors. A high return investment is what every investor hopes to invest in.
Watch out though. Riskier investments tend to promote themselves as higher return investments. These aggressive stocks—if they are worth investing in at all—are best suited to investors who can accept substantial risk in the portion of their portfolios that they devote to these types of investments. You can be wrong on any of your stock picks, of course. But when you’re wrong on a speculative stock, your losses are likely to be bigger than they would be with a well-established company.
You’ll want to avoid loading your aggressive portfolio with “penny mines” (speculative mining stocks that have not yet proven they have a mineral deposit that can be mined at a profit). You’ll also want to buy few, if any, “concept stocks”— junior industrials that have a business plan but have not yet established a business, much less made a profit or paid any dividends. Stocks like these expose you to a serious risk of total loss.
Cut your stock market risk by following TSI Network and using our three-part Successful Investor strategy:
The key to finding the “hidden gems” in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough’s decades of experience—and his specific recommendations—in our special report, TSX Penny Stocks: Hot Canadian Penny Stocks and How to Invest in Penny Stocks in Canada, on TSI Network. Claim your FREE copy right now!
High risk investments are those with a lot of volatility that have a greater chance of losing money-but also have the potential for greater gains. Penny stocks, stock options and very aggressive stocks would be considered high risk investments.
These high risk investments are for investors who are comfortable with the prospect of losing a big part of their investment. Mortgage investment corporations, or MICs, that invest in high-yield mortgages, are another example of a high risk investment. MICs invest in pools of mortgages and distribute most of their profits to their shareholders. However, lending to higher-risk real estate borrowers mainly tends to be profitable only during real estate booms. Even if you invest at the start of a boom, it will eventually give way to a slowdown or setback that can last for months or years.
When a company adds a lot of new debt, it increases the chances of not being able to pay off that debt or meet its interest payments, making it a higher risk investment. A company's rapid growth by acquisition adds considerable risk. As well, any industry that is subject to constantly changing political and regulatory constraints. Drug companies are one such industry that is subject to stringent industry regulation. At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to make the most of your stock investments in this free special report, Stock Market Investing Strategy: Pat McKeough's Conservative Investing Guide for Making Money & Cutting Risk, from TSI Network.
High-yield stocks pay a dividend with a higher yield than most shares—but it can be a danger sign.
When looking for stocks with high dividend yields, you should avoid the temptation of seeking out stocks with the highest yield—simply because they have above-average yields.
That’s because a high yield may signal danger rather than a bargain if it reflects widespread investor skepticism that a company can keep paying its current dividend.
Dividend cuts will always undermine investor confidence, and can quickly push down a company’s stock price.
Above all, for a true measure of stability, focus on stocks that have a high dividend yield—but at the same time have maintained or raised during an economic or stock-market downturn. That’s because these firms leave themselves enough room to handle periods of earnings volatility. By continually rewarding investors, and retaining enough cash to finance their businesses, they also provide an attractive mix of safety, income and growth.
A track record of dividend payments is a strong sign of reliability and a strong indication that investing in the stock will be profitable for you.
Set your portfolio up for the best long-term resturns by following TSI Network and using our three-part Successful Investor strategy:
Discover advice on dividend-paying corporations with strong business prospects when you download our FREE report Canadian Blue Chip Stocks now.
A holding company discount is a well-known phenomenon in finance. It represents a special kind of hidden asset and source of potential profit for investors in holding companies. A holding company is a company that owns all or a substantial part of a variety of different businesses. These businesses may be private companies, or publicly traded. Holding companies may own all, or a majority or a minority, of companies in which they invest. The one thing most holding companies have in common is that they trade for less than the combined value of their holdings. A holding company discount comes into play when holding companies sell assets or break themselves up into their constituent parts. In other words, holding companies can usually sell their assets for fair market value, rather than at a discount. In addition, fair market value may turn out to be more than analysts figured they were worth. Savvy investors can take advantage of a holding company discount and benefit from the fact that even without a break-up, buying a holding company at a discount to its asset value puts more assets to work for you for each dollar you invest. Investors should note, though, that this holding company discount strategy can take years if not decades to be realized, so it's only for long-term investors. At TSI Network, we recommend using our three-part Successful Investor philosophy for long-term investing:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
Toronto symbol HCG, is the parent company of Home Trust Company, a federally regulated trust company that specializes in residential first mortgages to small business owners, the self-employed and others who don't meet the stricter criteria of larger, traditional lenders.
New York symbol HMC, is Japan's third-largest carmaker, and the world's largest producer of motorcycles.
Early in their investing careers, beginner investors have only a vague idea of the value of building an investment portfolio. Ideally, they would learn how to invest by making a lot of money in a few shrewd stock picks, then switch to a conservative, well-balanced portfolio.
If you are a new investor learning how to invest, our Successful Investor method can give you above-average results when you practice it on a consistent basis. If you think of and plan your investments as a portfolio, your investment results will become more consistent, less time-consuming, and more satisfying than ever before.
No one has ever been able to consistently pick stock-market winners over long periods, even among people that devote their entire lives to it. But that shouldn't surprise you. After all, if you could always guess right about the stock market, you could acquire ever-larger sums of money to invest, from lenders and investors, not to mention your own profits.
Eventually you'd acquire control over a large proportion of all the money in the world. And nobody ever succeeds in that. On the other hand, it's relatively easy to acquire a balanced, diversified portfolio of mainly high-quality stocks. You'll still experience a wide variation in results among your holdings.
But you'll find that at the worst of times, you won't lose much by holding a portfolio answering that description. When times are good, this kind of portfolio will pay off nicely.
Pat McKeough has been teaching new investors how to invest, and helping all investors make big gains, for more than 25 years. His advice to beginning investors is the same as it is for all investors: buy high-quality, mostly dividend paying stocks (or ETFs that hold these stocks) and evenly spread your investments over the five main economic sectors (Resources, Manufacturing, Finance, Utilities and Consumer). Pat also believes investors should avoid stocks in the broker/media limelight and focus on those with hidden or little-noticed assets.
Discover how to make the most of your stock investments in this special report, Stock Market Investing Strategy: Pat McKeough's Conservative Investing Guide for Making Money & Cutting Risk, from TSI Network. And it's yours FREE!
Hulbert Financial Digest is well-respected publication that tracks the performance of over 180 stock and mutual fund newsletters and over 500 recommended portfolios. The publication helps to highlight the long-term performance of individual newsletters and portfolios, showing which ones have achieved the highest gains.
NASDAQ symbol IDXX, makes equipment that veterinarians use to detect disease in pets and livestock. It also makes systems that detect contaminants in water and milk.
Toronto symbol III, is a Vancouver-based mining company that explores for and produces base and precious metals. Its producing assets include a 100% interest in the Mount Polley open-pit copper/gold mine in central British Columbia.
Toronto symbol IMO, is Canada's largest integrated oil company. It also operates over 1,900 retail gas stations under the "Esso" banner. ExxonMobil owns 69.6% of Imperial's stock.
An in-trust account is an informal, low-cost and flexible way to build up an investment portfolio for children investing.
Investment accounts in the name of a child must be set up in trust because minors are not allowed to enter into binding financial contracts. An adult will then be responsible for providing investment instructions and signing the contract on the child’s behalf. Index funds or ETFs are a great starting point for an in-trust account.
An informal in-trust account has a donor (or “settlor”) who contributes funds to the trust. The trustee is the person in charge of the account, and is responsible for managing the funds for the child (the “beneficiary”). The settlor should not act as the trustee. The settlor’s spouse can be a trustee, however.
The money belongs to the child, but only the trustee can make withdrawals if the child is under the age of 18. Once the child reaches 18, the money is theirs to do with as they wish.
If you’re creating an in trust account, follow TSI Network and use our three-part Successful Investor strategy:
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Toronto symbol N, is a leading producer of nickel, a mineral used to make stainless steel and batteries. Inco also mines other base metals like copper and cobalt, as well as precious metals. The company was acquired by Brazil's Companhia Vale do Rio Doce in 2006.
An income fund is an ETF (exchange traded fund) or mutual fund that aims to generate income for its unitholders. This additional income typically comes from dividend payments, but it can also come from bond interest. Dividends are generally more dependable than capital gains as a source of investment income. You can improve your investment safety by focusing on stocks-or ETFs and mutual funds-with long histories of dividends. Picking a high quality income fund can help supply a significant percentage of your total return portfolio returns. But even if you don't need current income from your portfolio, you still may want to invest in income funds. When you pick the best income funds, you are, for the most part, investing in well-established, blue-chip companies. That's in large part because of the dividends that the best income funds pay. Dividends, after all, are much more stable than earnings projections. More important, dividends are impossible to fake-either the company has the cash to pay dividends or it doesn't. Income funds are also worth considering for those investors looking to add to their retirement income. Not all income funds are created equal, so invest in funds that have a history of increasing or maintaining their dividends and ones that have a reasonable dividend yield. Note that when a dividend yield is too high, it can be a danger sign. It could mean that the fund price has dropped because investors anticipate an upcoming dividend cut. Invest wisely with income funds by following TSI Network and using our three-part Successful Investor strategy:
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Income funds are mutual funds or ETFs that aim to generate high current income—from high dividend paying stocks, preferred shares, bonds or other investments.
An income fund often includes stocks that pay above-average dividends. Dividends are typically cash payouts that serve as a way for companies share to the wealth they’ve accumulated through operating the company. These payouts are drawn from earnings and cash flow, and are paid to the shareholders of the company. Commonly, these dividends are paid quarterly, although they may be paid annually as well as monthly.
Income ETFs and mutual funds may also aim to boost yields by investing in high yield “junk” bonds. Many of these bonds are from heavily indebted issuers. In corporate bonds, high yields may signal danger rather than a bargain. You risk capital losses as bond prices fall along with the share price of the underlying issuer.
For the safest investments, follow TSI Network’s three-part Successful Investor strategy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
An emphasis on income investing-as opposed to growth-stock investing, where cash flow is reinvested in a business rather than paying dividends-is often chosen by individuals living off the income from their investment portfolios.
Income investment is a practice often used by investors who are approaching or are currently in retirement. Their investment portfolios are designed to provide them with enough income to live off of, or at very least, supplement other forms of retirement income such as pensions.
Income investing portfolios usually include stocks that pay above-average dividends. Dividends are typically cash payouts that serve as a way for companies share to the wealth they've accumulated through operating the company. These payouts are drawn from earnings and cash flow and are paid to the shareholders of the company. Commonly, these dividends are paid quarterly, although they may be paid annually as well as monthly.
Most important, dividends can produce up to a third of your total return over long periods. If you're interesting in creating an income investing portfolio, look for stocks have a history of dividend payments for 5 or 10 years or more and not just recently started up dividend payments. At TSI Network, we think highly of companies that have paid out dividends for 5 or more years. We also recommend using our three-part Successful Investor philosophy for investing:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report. Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
Income investments are investments that investors use to generate income such as dividends, in addition to capital gains. Normally a stock that rises in price from the initial price that you purchased it from is considered to have accrued a gain—a capital gain to be exact. However, this is not considered income.
Income investments can play an important role in your portfolio. The main types of income producing investments are:
Dividend-paying stocks typically make cash payouts that serve as a way for companies to share the wealth they’ve accumulated through operating the company. These payouts are drawn from earnings and cash flow paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.
Real estate investment trusts (REITs) are a form of income trust, but with a key difference: REITs invest in income-producing real estate, such as office buildings and hotels. The best REITs have good management and balance sheets strong enough to weather an economic downturn. They also have high-quality tenants, and they carefully match their debt obligations with income from their leases.
Royalty Trusts were a form of income trust. They generally profited from royalties associated with the sale of oil, natural gas or minerals. Most have now changed to conventional corporations, but many still have very high dividend yields.
Enhance you long-term investment returns by following TSI Network and using our three-part Successful Investor strategy:
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Income stocks are stocks that produce above-average income, usually in the form of dividends.
An income stock usually has two distinct traits. The first is a high dividend yield. You can identify income stocks by their high dividend yields (the percentage you get when you divide a company’s current yearly payment by its share price). For example, stocks with a dividend yield higher than, say, 3% would typically be attractive to an income-seeking investor. Investors should note that a very high dividend yield can also be a warning sign of trouble (such as an imminent dividend cut).
Apart from a high dividend yield, you should look for a second trait: stocks that have a long history of paying (and raising) their dividends. For a true measure of stability, focus on those companies that have maintained or raised their dividends during economic downturns or recessions.
If you’re an income stock investor, you may wish to place more emphasis on Utilities and Canadian banks. That’s because these firms generally pay high, secure dividends, and have long histories of raising their payments, even during downturns. However, you’ll still want to make sure your portfolio is well-diversified across most if not all of the five sectors.
We feel that income stocks have a role to play in most investors’ portfolios. For the safest investments, follow TSI Network’s three-part Successful Investor strategy:
Discover how to build long-term profits with the right dividend stocks and put extra strength in your portfolio. Download our specific advice on how to identify high-quality dividend stocks when you get our report, The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks FREE!
Income trust units trade on stock exchanges, but they flow much of their income through to unitholders as "distributions." Canada offers special tax treatment for income trusts. When they flow their income through to their unitholders, they don't pay much if any corporate tax.
Investors pay tax on most of the distributions as ordinary income (although some distributions qualify as a tax-free return of capital). Today, there are far fewer income trusts available to investors than in the early part of the last decade. That's because the federal government's new tax on income-trust distributions took effect on January 1, 2011.
Most trusts have already converted to conventional corporations. However, real estate investment trusts (REITs) are exempted from the new income-trust tax. They are now the primary source of income trusts available for investors. Real estate investment trusts, or REITs, can be lower risk, because they invest in income-producing real estate such as office towers or hotels. Even so, real estate still has risks-its value rises and falls with changes in the economy, interest rates and occupancy levels.
Investing in other types of income trusts can be risky as well, as the businesses that underpin them may have steady cash flow, but could stagnate as the economy changes. Pat McKeough believes investors should look for trusts with low capital expenditures and mature businesses. Chemtrade Logistics (Toronto symbol CHE.UN) is one of Canada's last remaining non-real estate income trusts. They're one of North America's largest providers of removal services for resource firms, such as oil refineries and base metal processors, whose operations create sulphur, acid and other by-products.
Chemtrade converts these substances into useful chemicals, like sulphuric acid. At TSI Network, we think a conservative portfolio is great way to start investing in securities. We also recommend using our three-part Successful Investor philosophy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, 7 Winning Strategies for Dividend Investors. And it's yours FREE!
To increase shareholder value means to increase the attractiveness and profitability of a company so that owners of stock in the company benefit. It also generally pushes up the price of the shares on the stock market and attracts potential investors. There are two common ways that companies can increase shareholder value. The first is through dividends. Dividends are typically cash payouts that serve as a way for companies to share the wealth they've accumulated through operating the company. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Commonly, these dividends are paid quarterly, although they may be paid annually or even monthly as well. Sometimes a company may issue a special one-time dividend. This added payout increases the attractiveness of a stock and can entice new investors to buy it. A second way that a company can increase shareholder value is through a stock buyback program. Stock buybacks raise a company's earnings per share. It's simple arithmetic: buybacks reduce the number of shares outstanding. To get earnings per share, you divide total earnings by the number of shares outstanding. When buybacks reduce the divisor-because the company now has fewer shares outstanding-it pushes up earnings per share. Companies who use a stock buyback program can also bid up the price of the stock while they're buying it back. That can also instantly increase shareholder value. At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
Index funds are mutual funds or exchange-traded funds (ETFs) that invest to equal the performance of a market index, such as the S&P/TSX 60.). Index funds do show better long-term performance than about two-thirds of actively-managed mutual funds with long-term track records.
That's partly because index fund fees run as low as 0.12% of assets per year. In our view, the big advantage of Canadian index funds is that they can help you avoid the risk of choosing a fund with a management style that virtually guarantees below-average long-term performance.
In that category we'd place mutual funds that pursue a market timing or sector-rotation approach to investing. Managers of these funds try to out-perform the market by betting on relatively short-term trends, rather than putting their investors in a position to profit from long-term growth in the economy. In any one year, the top fund is often run by a market timer who is having his or her proverbial 'day in the sun'. However, in any one decade, the top funds are run by conservative managers who focus on long-term growth in the economy.
We still feel that most investors will profit the most by holding a well-balanced portfolio of high-quality stocks that follow our three-part Successful Investor strategy. However, if you don't want to build a portfolio, then index fund mutual funds or ETFs can provide a good alternative. Here is our three-part strategy:
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An index-linked GIC or index-linked guaranteed income certificates (GICs) promise to safeguard a portion of an investor’s portfolios. Index-linked GICs provide the buyer with a return that is “linked” to the direction of the stock market in a given period. The link depends on a formula or set of rules that is buried in the fine print.
A quick look at the rules on these deals may give you the impression that you can profit substantially with little risk. However, the payout may depend on the average level of the index over the course of a year, rather than the year-end value. This will tend to diminish the performance that determines investor returns. In volatile markets like the ones we’ve been experiencing, these products may seem like an appealing place to put some of your money.
Banks and insurance companies are not in the business of giving away something for nothing. Index linked GICs were created to give investors a false sense of security. If you want to succeed at investing, we recommend that you follow TSI Network and use our three-part Successful Investor strategy:
The key to finding the “hidden gems” in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough’s decades of experience—and his specific recommendations—in our special report, TSX Penny Stocks: Hot Canadian Penny Stocks and How to Invest in Penny Stocks in Canada, on TSI Network. Claim your FREE copy right now!
Toronto symbol IDG, is Canada's largest bookseller. It also sells its products over the Internet.
In economic terms, inflation is the steady increase of the price of goods and services that accompanies an increase in the supply of currency. The average inflation of a developed country is generally near 2%. This means that if your investments see a 10% gain in a year, you need to account for inflation which reduces it to a 8% gain in today's dollars.
The major source of economic inflation is today's fiat money system. Governments around the world can create new money whenever it suits them. They can do that directly, by printing banknotes. Or they can do it indirectly, by allowing central banks to expand their credit by writing cheques on bank accounts whose only asset is the government's borrowing capacity. Whenever a government creates new money, it increases the potential for inflation in its home country. When the U.S. does it, it increases the potential for worldwide inflation, since the U.S. dollar serves as one of the main assets of central banks around the world.
Our view is that inflation soared in North America in the 1970s and 1980s, partly due to the maturing of the baby boomers. As baby boomers entered the workforce and replaced older workers, they had to be trained in their new jobs. This hurt productivity and spurred businesses to raise prices. As the boomers formed families, they borrowed to buy their first homes, so they were bidding up both real-estate prices and interest rates.
The inflationary effect of their home buying spread out and pushed up prices throughout the economy. There are a number of different investments that aim to offset inflation. This includes real return bonds that pay you a rate of return that is adjusted for inflation. However, we don't recommend them, unless you are very concerned about inflation.
Discover how to put extra strength into your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
Infrastructure stocks are shares of companies that build highways, bridges, airports, ports and so on. Most infrastructure stocks depend heavily on government spending.
Infrastructure investments can also be companies that do consulting and project management services for the firms that actually build various public works projects.
Infrastructure stocks are a good example of what we call theme investing—and the appeal of theme investing can lead you to overlook risks. Some investors expect infrastructure spending to be a winning theme in the next few years, in view of plans by governments around the world to continue to make use of infrastructure spending as an economic stimulant.
However, infrastructure spending is still a highly cyclical business. It has huge capital demands and high vulnerability to government meddling, budget cutbacks and so on. It’s a big mistake to overlook the risks with infrastructure stocks that could suffer from these drawbacks.
Infrastructure company stocks may be suitable for your portfolio. However, they should make up only a limited part of a well-balanced portfolio. Overall, to make profits in any market, use TSI Network’s three-part Successful Investor philosophy:
Discover how to invest the best Canadian growth stocks in this free special report, Canadian Growth Stocks: WestJet Stock, RioCan Stock and more, from TSI Network. It’s your complete guide to investing in Canadian growth stocks and profiting from a long-term growth strategy.
Inheritance planning is the management of who will inherit your wealth after your death.
When you’re doing this kind of retirement planning, it’s always good to have clear arrangements in place and keep them up to date as your circumstances inevitably change. Most people who accumulate wealth during their lifetime either leave their inheritance to their children, loved ones or donate a portion to charity.
Investors should talk with their loved ones about the money they may inherit some day. If they are inexperienced with money and financial matters you may wish to have someone manage the money for them. Having inheritance plans in place can make for a smooth transition as well as help you worry less as you age.
There is also nothing wrong with not leaving your heirs with any inheritance (or a small one). Some people feel an inheritance can hold children back from achieving. It’s your wealth—you can plan for it as you like.
Your own inheritance plan is a core concept of the managing your wealth. To continue to manage your wealth conservatively, use our three-part Successful Investor strategy:
Discover how to turn capital gains taxes to your advantage in this free special report, Capital Gains Canada: 7 Secrets for Managing your Canadian Capital Gains Tax Liabilities, from TSI Network.
An initial public offering or IPO, is the first sale of stock by a company as it goes public. Initial public offerings often have a turbulent start on the stock market. Stakeholders often sell a portion of their shares to recoup their investment during the first weeks and months the stock begins trading. We advise investors to watch IPOs carefully before investing. Another phenomenon that investors should know about is initial public offerings receive an excessive amount of hype from what we call the "broker/media limelight." This can cause expectations to be raised to often unrealistic heights-and the fall from those heights can be swift. Even with attractive new issues, it's best to stay out of them. If a new issue has genuine long-term investment appeal, it will be an attractive buy for months or years after it reaches the market. After six months to a year, check back to see how new initial public offerings have performed. You may be surprised at what you find. This would be the time to re-evaluate the stock to see if it has a place in your portfolio. Some investment observations are so basic and indisputable that in our opinion they deserve to be referred to as "laws". One good example is what we call "McKeough's Law on IPO Timing," which is this: IPOs come to market when it's a good time for the company and/or its insiders to sell, but that's not necessarily a good time for you to buy. Control your stock trading risk by following TSI Network and using our three-part Successful Investor strategy: 1. Invest mainly in well-established companies; 2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities); 3. Downplay or avoid stocks in the broker/media limelight. Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Insider trading is the buying and selling of shares in a company’s insiders. While insider trading can sometimes be an interesting indicator for investors, there are also times when it can be misleading.
The value of insider buying and selling as a market indicator seems obvious. Company insiders—officers, directors, or owners of 10% or more of a company’s stock—are bound to know more than outsiders do about what’s going on in their business.
Some investors claim that studying insider data can lead them directly to the best investments. But the deeper you look, the more you’ll find that this data often leads to ambiguous conclusions. That’s why insider trades are only one aspect we consider when we identify the best stocks to recommend in our newsletters and investment services.
We think it’s a mistake to put too much weight on insider trading, since insiders can delude themselves about their employer just as easily as outsiders. However, it pays to remember that insiders may sell for a variety of personal reasons that have nothing to do with the company. On the other hand, insiders only make substantial buys for one reason they think the company has attractive investment appeal.
At TSI Network we feel that monitoring insider trading is just one small factor to use in conjunction with many other indicators. All in all, we believe our three-part Successful Investor strategy is the best approach for investors:
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New York symbol IBM, is the world's largest computer company. It specializes in large mainframe computers for governments and corporations.
Toronto symbol IRD, is a highway traffic management technology company specializing in supplying products and systems to the global intelligent transportation systems industry. This includes automated toll road systems, automated truck weigh station systems, WIM (Weigh-in-Motion) systems, advanced traffic control, driver management systems and data collection systems.
New York symbol IVC, makes wheelchairs, motorized scooters and other mobility and home care products.
Pat McKeough has been making investing for beginners simple-and profitable-by helping investors make big gains for more than 25 years.
His advice to beginning investors is the same as it is for all investors: buy high-quality, mostly dividend paying stocks (or ETFs that hold these stocks) and evenly spread your investments over the five main economic sectors (Resources, Manufacturing, Finance, Utilities and Consumer). Pat also believes investors should avoid stocks in the broker/media limelight and focus on those with hidden or little-noticed assets.
In addition, Pat thinks then beginner investors should cultivate two important qualities: a healthy sense of skepticism and patience. 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.
If you want to learn more about investing for beginners, our FREE report reveals how to build a winning stock market portfolio: Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada.
Investing in real estate involves not just your personal residence, but also income-producing real estate such as houses, condos or office buildings.
Many individuals have grown rich through part-time involvement in real estate investing—probably more than have done so through the stock market. However, that’s mainly because of three easily-overlooked factors: leverage, sweat equity and higher risk.
It’s easier to start investing in real estate and get financing than for stocks because real estate tends to be less volatile and easier to appraise. It also generally produces more current income. It also rarely drops drastically overnight, as some stocks do from time to time.
Real estate investing enthusiasts say that if you buy a property with a 10% down payment, then a 10% rise in its value means you have doubled your money. However, that claim neglects the costs of selling (up to 5% or 6% for real estate commissions, plus lawyer’s fees and related expenses). It also overlooks any negative cash flow you may have experienced when you owned the property, because rents failed to cover expenses.
Eventually, rents can rise to a point where they cover the mortgage, taxes, maintenance and other expenses. By then, you may have a big capital gain. But that can take many years. Meanwhile, you have to “feed” your property, as real estate investors say—that is, invest additional funds to cover the shortfall between rents and expenses.
Maximize your stock market gains by following TSI Network and using our three-part Successful Investor strategy:
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Investing income is earned through three main forms: dividends, interest, and capital gains.
Dividend income is a portion of a company’s earnings and cash flow which is distributed to its shareholders. The amount of the dividend is decided upon by the company’s board of directors. Dividends are primarily offered as cash payments, but can include shares of stock.
Interest is income generated from fixed-income instruments such as bonds or GICs.
Capital gains can occur when an investor sells an asset. To calculate capital gains, the total of the adjusted cost base (ACB) is subtracted from the proceeds of the sale. The adjusted cost base of the shares is equal to the cost of the shares plus any costs associated with buying and selling them, such as brokerage commissions. If the remainder is positive, the investor has a capital gain. If the remainder is negative, the investor has a capital loss.
You must pay capital gains tax if you’ve made a profit on the sale. The exception is if the stock is a Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF).
Enhance you long-term investment returns by following TSI Network and using our three-part Successful Investor strategy:
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An investing system describes the type of stock strategy an investor uses to pick stocks. There are many different types of investing systems, including penny stock investing systems, stock option investing systems, value stock investing systems, and growth stock investing systems, among others.
Investors are continually deluged with promises of superior financial gains with penny stock investing systems. Some of these systems make legitimate—if overly optimistic claims. Others are frankly deceptive or fraudulent. However, either way, there is no penny stock investing “formula” to financial security.
Many aggressive investors find stock option investing systems hard to resist. However, the vast majority of investors lose money with options.
Value stock investing systems focus on stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets. Value stocks are stocks trading lower than their financial fundamentals suggest. Many of these are in fact undervalued, and have the potential to rise.
A value stock is often traded at a more affordable rate than a growth stock. They have low price-to-earnings and price-to-book ratios—which is why they’re less expensive than growth stocks.
Investors see companies that fall into this category as undervalued. These investors are less likely to invest in a growth stock because they feel that the value stock will eventually reach its full potential once it is recognized by the market.
Our TSI investment system follows a conservative, reduced-risk strategy that works especially well in unpredictable markets.
Maximize your own investing system gains by following TSI Network and using our three-part Successful Investor strategy:
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A do-it-yourself approach to investing can be more than overwhelming – it can cost you money. This is one of many reasons professional help is an important part of any investing strategy. The best place to start is with an investment advisor.
When you decide you want to invest on your own in the stock market, you begin with one simple decision. You have to choose the person through whom you will invest your money.
You have to choose whether to use a full-service stockbroker, a discount broker, or a portfolio manager. This decision is no formality; it will play an important role in the way you approach your investments.
A full-service investment advisor is a traditional stock broker (although brokers also sell bonds, mutual funds and other investments). Stock brokers are now more commonly referred to as “investment advisors.” But in fact, most brokers or investment advisors are commissioned sales people who make investment recommendations that you can accept or reject.
Unlike full-service investment advisor, discount brokers simply carry out buy and sell orders for their clients, and charge lower commission rates than full-service brokers.
Portfolio managers, on the other hand, don’t simply present you with investment advice that you can accept or reject, they generally make and carry out investment decisions for you, for a fee.
Having a trusted investment advisor like a portfolio manager can help you formulate a well rounded plan for you, and at TSI Network we recommend our three-part Successful Investor strategy:
Discover how to make the most of your stock investments in this FREE special report: Stock Market Investing Strategy: Pat McKeough’s Conservative Investing Guide for Making Money & Cutting Risk.
Investment analysis is the research process an investor undertakes to determine if a particular stock is worthy of investment.
Investment analysis is different for investors but some core concepts remain the same. Investment analysis generally includes looking at the finances of a company and determining how healthy they are.
For example, when you’re analysing a stock that appears to be undervalued, you should focus on measures such as a consistent history of sales and earnings, as well as a strong hold on a growing clientele.
Investors may want to use financial ratios to help them analyse a stock. For example, the p/e is the ratio of a stock’s market price to its per-share earnings. Up to a point, the rule on p/e’s is “the lower, the better”. However, a suspiciously low p/e can signal danger rather than a bargain. But a p/e around 10.0 often represents excellent value, assuming there are no danger signs such as a failure to keep up with the competition, or signs that the company has made an expensive mistake with an unwise major expansion or acquisition.
Investment analysis is a process that involves both quantitative and qualitative judgements. At TSI Network we help you to develop your own investment analysis strategy. To continue to manage your wealth conservatively and for the best long-term returns, use our three-part Successful Investor strategy:
Discover how to turn capital gains taxes to your advantage in this free special report, Capital Gains Canada: 7 Secrets for Managing your Canadian Capital Gains Tax Liabilities, from TSI Network.
An investment portfolio is a group of stocks you’ve invested in that you think will give you diversification—and maximize your investment returns.
At TSI Wealth Network, the type of investment portfolio we recommend is one where you are invested in most if not all of the five economic sectors, and mostly in well-established, mostly dividend-paying stocks. Of course, an individual's investment portfolio can be made up of anything they like. But if you overindulge in any one sector, or latch on to a trendy theme, like social media, say, it will very likely hurt your results
Some investors set up investment portfolios for their children and then manage those portfolios for them until they reach a certain age.
But with whatever kind of portfolio they have built, investors should always be keeping an eye on their investments. At the same time, though, they should refrain from selling and buying too often.
Your investment portfolios should match your financial goals and risk tolerance. If you’d like to increase your long term profits, we recommend our three-part Successful Investor strategy as the smartest approach for investors:
An undervalued stock can signal a real bargain – or a dangerous risk. Knowing how to spot quality bargain stocks can be the key to long-term investing gains. Download our FREE report, Bargain Stocks: Your Guide to Finding the Best Undervalued Stocks, today!
Investment services are services for investors to help them research, trade and manage their portfolios. Investment services could be as simple as trading online through a discount broker. This is the most common investment service you will likely use.
The main advantage of a discount stock broker service is low commission rates. This is a fee you pay every time you buy or sell a stock. However, although lower commissions are a plus, you should still be cautious. Low commission rates sometimes lead investors to trade a great deal more than they should—and sometimes sell their best picks way too early.
Another type of investment service is portfolio management. This service involves hiring a portfolio manager to choose investments for your portfolio. These selections are based on your investment objectives, risk tolerance, age and personal circumstances. If you’re interested you learn about our portfolio management service.
Financial planning is also considered an investment service. It’s often one that focuses on your affairs to cut your taxes. This can be done through life insurance, spousal RRSPs and various other means.
Financial planners can complement your portfolio management by helping you estimate how much you need to save, or the investment return you’ll need, to achieve a particular level of income at some future point.
For a sound long-term investing strategy, we recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio.
An IPO is an initial public offering. It’s when a company first sells shares to the public.
IPO investing issues typically come to market when it’s a good time for the company or its insiders to sell. It’s often a bad time for investors to buy—a finding confirmed by many academic studies of IPO investing performance.
Initial public offerings often have a turbulent start on the stock market. Insiders and other original stakeholders often sell a portion of their shares to recoup their investment during the first weeks and months the stock begins trading. That puts downward pressure on the share price.
Investors should avoid IPO investments and instead try investing in corporate spin-offs. That’s because, in one sense, a spinoff is the antithesis of IPO investing. Companies sell new issues to the public when they feel it’s a good time to sell. They do spin-offs when they feel it isn’t a good time to sell, often resulting in undervalued stocks. That probably means it’s a good time to buy.
Investing in IPOs is not for risk averse investors. If you do want to invest in IPOs, then you need to thoroughly research the company to determine what, if any, long term growth prospects it may have.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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An IPO (Initial Public Offering) stock is the first sale of shares by a company as it goes public.
New issues (also known as Initial Public Offerings or IPO stocks) come to market when it’s a good time for the company or its insiders to sell. That’s not necessarily—and often isn’t—a good time for you to buy. In addition, the underwriting brokerage firms try to spark investor interest in the new issue. They hire public relations firms to get the media interested. They also pay extra commission (double or more the regular rates) to spur their salespeople to sell the new issue.
This tends to create a high-water mark in the price of IPO stocks. After it hits the market and the hype dies down, its price may languish for months or years.
Your best course as an investor is to stay out of most new issues, even those that seem to have serious appeal. It’s better to hold off on buying in IPO stocks until a new issue has been trading for a few months if not years, and has shown some of the potential that the initial hype promised. You’ll also want to only look at buying IPO stocks if they have survived a recession then participated in the following recovery.
In the past, however, we have made money by making one exception to our IPO investing rules. IPOs are more attractive and often easier to obtain when they are part of a privatization effort—when a government sells a government-owned enterprise to investors.
Rather than invest in IPOs, use our three-part Successful Investor strategy:
Discover how to turn capital gains taxes to your advantage in this free special report, Capital Gains Canada: 7 Secrets for Managing your Canadian Capital Gains Tax Liabilities, from TSI Network.
Toronto symbol XBB, is an exchange-traded mutual fund that mirrors the performance of the DEX Universe Bond Index.
American Exchange symbol EWC, is similar to a market-cap based index fund, but it tinkers with the index fund formula to try and improve performance by using its proprietary Morgan Stanley Capital International Canada Index.
American Exchange symbol EWJ, is an exchange-traded mutual fund that tries to match the return of the MSCI Japan Index (Morgan Stanley Capital International Japan Index). The MSCI Japan Index is a benchmark for Japanese equity performance.
Toronto symbol XIU, is an exchange-traded mutual fund that holds a basket of stocks that represent the S&P/TSX 60 Index. The index is made up of the 60 largest and most heavily traded stocks on the TSX.
New York symbol JEQ, is a closed-end fund that invests mostly in large capitalization stocks on the Tokyo Stock Exchange.
Toronto symbol JNY, designs clothing, accessories and footwear under several brands, including Jones New York, Gloria Vanderbilt and Nine West.
New York symbol JPM, provides a wide range of banking and other financial services in the United States and over 60 other countries.
A junior mine is typically a mining company with a single, small mining operation. That adds to risk, because it will need to successfully maintain production at high levels—otherwise its single source of cash flow will dry up.
Because of this, junior mining stocks are highly speculative investments, and are can easily cost you money. Investing in junior mines is risky because it’s relatively cheap and easy to launch a penny mine company and sell stock to the public. So the junior mines promotion business attracts more than its share of unscrupulous operators and stock promoters.
When investing in junior mines, we look for well-financed junior mines with no immediate need to sell shares at low prices. That’s because doing so would dilute existing investors’ interests. The best junior mining firms have a major partner who has agreed to pay for mine expansion, further drilling, or other exploration or development, in exchange for an interest in the property.
A well, when investing, we always look at the market cap of junior mines versus the estimated value of the mineral resource they have in the ground. Sometimes, a company’s marketing efforts are so successful that they drive the stock up too high in relation to the size of its ore body.
We like a junior mine’s market cap to be no more than half the value of the gold or other minerals in the ground. We assume that the company will be able to expand its ore reserves after the mine opens, but if the mineral reserves are double the junior mine stock’s market cap, it provides a margin of safety.
For more long-term investing strategies, consider following TSI Network and using our three-part Successful Investor strategy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Junior oils are stocks in smaller companies that explore for, develop and produce oil. Junior oils can be particularly risky and should only be held by aggressive investors. Most have dropped considerably along with falling oil and gas prices—but the best have the potential to rebound.
Two examples are Delphi Energy (symbol DEE on Toronto), and Bellatrix Exploration (symbol BXE on Toronto.)
The best junior oils are embracing new technologies. This includes multi-well pad drilling (or “octopus” drilling). Here’s how the technology works: oil exploration companies—including junior oils—set up a well pad and then install a multi-well rig. The drill from that rig then literally “crawls” on hydraulic tentacles to numerous drill locations within its range.
We continue to advise against overindulging in junior oils. That’s because the Resource sector (including oil) is highly volatile, and no one can accurately predict future prices. Junior oil companies are also subject to various environmental regulations and royalties that can eat into their profits.
Investors should also seek out junior oil stocks that have sound balance sheets. This will let them easily borrow money when oil and gas prices rebound. That will let them rapidly increase their production to take advantage of the higher prices.
When investing in junior oils or anything else, you should follow TSI Network and use our three-part Successful Investor strategy:
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Toronto symbol KFS, offers automobile insurance for drivers that standard auto insurers have rejected. This could be because of their poor driving record, vehicle type, place of residence, age or credit rating.
New York symbol KF, is a closed-end fund that invests at least 80% of its assets in Korean equities. Currently, 99% of its assets are in South Korean stocks.
Kroger Co. stock is ownership in Kroger Inc., which is the largest grocery store operator in the U.S. by sales.
Kroger Inc. started in 1883. The company operates mainly in the U.S. South, Midwest and West Coast regions. In addition to Kroger, its banners include City Market, Dillons, Food 4 Less, Fred Meyer, Fry’s, Harris Teeter, Jay C, King Soopers, QFC, Ralphs and Smith’s.
Kroger’s other operations include convenience stores, jewellery stores and plants that make its private-label baked goods and dairy products.
Kroger has grown through acquisitions. For example, the company purchased the Harris Teeter supermarket chain for $2.4 billion in January 2014. In December 2015, Kroger paid $866 million for the Roundy’s supermarket chain.
The company’s sales rose 21.5%, from $90.4 billion in 2012 to $109.9 billion in 2016 (fiscal years ended January 31). Earnings jumped 70.9%, from $1.2 billion to $2.0 billion. Thanks to fewer shares outstanding, per-share earnings gained 106.0%, from $1.00 to $2.06 (all per-share amounts adjusted for a 2-for-1 stock split in July 2015).
The symbol for Kroger Co. stock is KR on New York.
Learn more about stocks like Kroger Co. stock trading risk by following TSI Network and using our three-part Successful Investor strategy:
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Large cap stocks are stock issues of companies that have a market capitalization of, say, a billion dollars or more. Market capitalization, or “market cap”, is the total value of all of a company’s shares outstanding. A big cap stock can be seen by some investors as a sign of strength but it can also be a sign of an aging company in a mature industry.
3M Company, New York symbol MMM, makes over 55,000 consumer and industrial products, including Post-it notes, Scotch tape, Scotch-Brite cleaning products, Scotchguard fabric protection and Thinsulate insulation. 3M is an example of a large-cap stock, and a top-quality large cap stock.
A large cap stock can have a high or low price per share. Remember, a company’s market cap is equal to the total number of shares outstanding multiplied by the price per share. So a large cap stock can have a low price per share if it has many shares outstanding.
Successful investors could own both large and small cap companies. We recommend both at TSI Network, and we also recommend using our three-part Successful Investor philosophy:
Discover how to make the most of your stock investments in this free special report, Stock Market Investing Strategy: Pat McKeough’s Conservative Investing Guide for Making Money & Cutting Risk, from TSI Network.
formerly Toronto symbol LGY.UN, owns luxury hotels in Canada and the United States. The company went private in 2007.
There are a number of ETFs and other types of investments that aim to offer a two-for-one leveraged bet on the direction of oil prices and other commodity or stock market indexes. These are called leveraged ETFs.
For example, if the S&P 500 index is up 1% on any given day, some leveraged ETFs are designed to move up 2%. Others offer an inverse bet—they aim to go twice as fast as the underlying commodity, index or whatever, but in the opposite direction.
Leveraged ETFs use debt and financial derivatives to amplify the returns of the underlying index.
The big risk with leveraged ETFs is that inevitably, investments like these will go down more readily than they go up. That’s because investors have to absorb the costs of borrowing, entering into agreements with counterparties and so on, on top of the high MERs.
As a general rule, we advise against investing in leveraged ETFs, or anything that requires successful market timing. That includes short selling, options trading, or short term trading of any sort. In all of these activities, it’s a rare investor who makes enough profit to compensate for the risk involved.
Our long-standing advice is to invest in well-established companies—not financial products like leveraged ETFs. This way, while you may experience modest losses when markets drop, you should show overall positive results over time.
Above all, build a sound portfolio by following TSI Network and using our three-part Successful Investor strategy:
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What are limit orders and is it the best way to place a stock order? Limit orders specify the highest price you are willing to pay for a stock. The main risk here is that your order will go unfilled if there is no stock available at or below your price. This introduces a filtering mechanism that can cost you money, especially if you set your limit below the current market price. That's because a limit order can create an unfortunate dilemma: an unfilled order is much more likely with your best choices, since they are far more likely to shoot up faster than you guessed. But you'll always get a fill on your worst choices; they'll come down to meet your price, then go lower. In general, most investors should use market orders when buying or selling widely traded shares. The market-order risk of occasionally paying too much is more than offset by the limit-order risk of missing out on your best ideas. Thin-trading shares trade a few hundred to a few thousand shares daily, compared to hundreds of thousands, if not several million, like a Canadian bank. Thin traders are often more volatile than actively traded stocks, especially in reaction to unforeseen news. When you invest in thin-trading shares, you may want to use a limit order on the price you are willing to pay if you are buying, or the price you are willing to accept if you are selling. But if you use limit orders, make the limit a fairly wide one. It's better to pay a little more or receive a little less than to miss out entirely on your best investing ideas. All in all, using limits won't provide protection against serious losses, but it may prevent you from investing in serious winners. That's a costly combination. That's why we say you should generally place buy and sell orders without limits. At TSI Network, we recommend using our three-part Successful Investor philosophy:
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New York symbol LTD, operates two main retail chains: Victoria's Secret (lingerie) and Bath & Body Works (soaps and bath oils). It also operates the La Senza (lingerie) chain.
Toronto symbol LNR, is Canada's second-largest maker of automobile parts after Magna International Inc. It specializes in precision-machined components, assemblies and systems for the North American and European car and truck markets.
Liquidity is the ease with which a stock can be bought or sold without a big impact on the share price. In general, this can be determined by the average daily trading volume of the stock in a particular stock market. The more actively traded a stock is, the more liquidity it has, and hence easier to dispose of on a particular stock market.
A thin trader is a stock with a small average daily trading volume. Thin or low liquidity traders trade a few hundred to a few thousand shares daily, compared to tens if not hundreds of thousands for, say, a Canadian bank.
A lack of liquidity or being illiquid, can make it hard to sell any stock in a hurry without accepting a big cut in price. That’s why successful investors prefer liquidity over a lack of liquidity.
However, unexpected bad news can make liquidity dry up in a heartbeat.
For lasting investment safety, you need to buy well-established, prosperous companies—with high liquidity—like those we recommend in our publications, even Stock Pickers Digest (some of its recommendations do fit that description), and you need to diversify.
All in all, for a sound long term investing strategy we recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio.
New York symbol LIZ, designs a wide variety of clothing and accessories for men and women. It sells its products mainly through department stores, as well as its own retail stores.
NASDAQ symbol LOJN, sells vehicle theft recovery systems. The company has two main products: the LoJack Vehicle Recovery System and the LoJack Early Warning System.
A long term investing strategy is a plan to make your money grow over a long period of time. You are never too old to have a long term investing strategy. For example, a long term investing strategy for someone in retirement may be different than someone in their 20's. But at the same time, their strategies could be identical. For example, if you are retired, and yet have substantially more money than you'll need for the rest of your life, and you plan to leave the excess to your heirs, there is a long term investing strategy you should consider. It may make sense to invest at least part of your legacy on behalf of those heirs. That is, invest based on their time horizon, not yours. For instance, if your heirs are in their 40s, you should hold at least part of your portfolio in a selection of investments that would suit investors in their 40s. Of course, you'd still want to invest conservatively. But you'd want to take advantage of the many years that 40-somethings have until they reach retirement age. This is one examples of the many different long term investing strategies available to investors. Maximize your stock market gains by following TSI Network and using our three-part Successful Investor strategy:
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Long term stock growth is the investment goal of TSI Network. Long term stock growth is the gradual accumulation of stock market profits over decades. And because you're investing for a long period of time, short market fluctuations have very little effect on long-term gains.
Compound interest—earning interest-on-interest—can have an enormous ballooning effect on the value of an investment over the long term. This applies to equity investments like stocks, as well as to fixed-return, interest-paying investments like bonds. When you earn return-on-past returns, the value of your investment can multiply. Instead of rising at a steady rate, the number of dollars in your portfolio will grow at an accelerating rate.
There are two conclusions for long term stock growth you need to draw from this investment wonder.
First, you need to pay attention to steady drains on your capital, even seemingly small ones—like high brokerage commissions, say, or a high MER on a mutual fund. Losing (or missing out on a profit of) even 1% a year can have an enormous draining effect on your total return in a decade or two.
Second, you can't expect to earn an outsize return indefinitely. If you did, you'd wind up with a measurable fraction of all the money in the world, and nobody ever does that. All the same, the best way to maximize your long term stock growth is to follow TSI Network and use our three-part Successful Investor strategy:
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At TSI Network, we advise our subscribers to pursue a long-term investing strategy. A long-term investing strategy is one where a person invests their money over a long period of time, with say a five-, ten- or even 20-year time horizon. Savvy long-term investors will profit in good times, but also not suffer too badly during inevitable market setbacks. Many investors take a short-term view and sell shares too quickly or be easily influenced by day-to-day market news. This will cut into your long term investing profits. In fact, many investors with a short-term view try to cut their losses after a big market drop. This aims to protect them from further market declines-but it also stops them from cashing in on the inevitable market recovery that follows every market decline. With a long-term investing mindset and a little help from dollar cost averaging, these big market drops turn to buying opportunities-you are buying more shares when prices are down, and fewer shares when prices are up. When researching stocks for your long term-investing portfolio, we look for ones that have industry dominance. These types of companies are especially well positioned to weather economic downturns and fend off new competitors. Above all, at TSI Network, we recommend using our three-part Successful Investor philosophy:
We invite you to download a Special Report with our compliments: Your 12-Step Countdown to the Retirement You Want. We employ these strategies on behalf of our Wealth Management clients, who have entrusted hundreds of millions of dollars to our care.
A lump sum investment is made when an investor invests a single large amount of money all at once. This may come from an inheritance or the selling of other assets such as a house.
Lump sum investments are made all at once, as opposed to the dollar-cost averaging used by some investors.
When you practice a dollar-cost averaging investing strategy, you invest equal amounts of money (say $300 a month) over a number of periods, which is the opposite of a lump sum investment. It’s a little like systematic saving, except you put your money into stocks instead of a bank account.
Dollar-cost averaging works best when applied over long periods, ideally throughout your working years. It is much less effective, and can actually cut your returns, when you apply it over shorter periods. This type of gradual buying is sometimes referred to as “averaging in”, and is different than a lump sum investing strategy.
Lump sum investing could cause you to enter the market just prior to a market slump. However, holding off on going into the market at all means you generally invest in lower-yielding fixed-return investments for a longer period.
ETFs are a good lump sum investment because buying just one time cuts down on brokerage fees.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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The stock is a recommendation of our Wall Street Stock Forecaster newsletter. Most consumers still prefer to shop for clothes in stores, where they can try them on before buying. That's a plus for Macy's stores. The company also benefits from its strategy of tailoring its merchandise to local tastes. It's also doing a good job of blending its online business with its stores. For example, shoppers can now buy goods on the company's website and pick them up at any Macy's location.
Additionally, Macy's has formed a partnership with zTailors to provide tailoring services to customers who buy clothes from Macy's websites. For an extra fee, a tailor will come to the customer's home or office for a fitting and complete the alterations within a week. Macy's has also brought in new radio frequency identification tags that help it keep track of merchandise and avoid product shortages. In the longer term, Macy's earnings should benefit from its expansion to support its growing online operations. These moves include a warehouse in Arizona and installing terminals that let customers place orders for merchandise they can't find on the shelves.
In 2015, Macy's rejected a plan to spin off its stores and land holdings as a real estate investment trust (REIT). The company felt the added costs it would have to pay to rent these stores from the new REIT would offset any short-term gains. When investing in blue chip stocks like Macy's, TSI Network recommends using our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
The five main economic sectors are Finance, Utilities, Manufacturing, Resources and Consumer. Investing across most if not all of the five sectors is a key element in creating a well-diversified and profitable portfolio. You will improve your chances of making money over long periods, no matter what happens in the market if you invest in most if not all of these economic sectors. Each economic sector behaves differently-but by diversifying across them, you can enhance your overall portfolio gains. For example, Manufacturing stocks may suffer if raw-material prices rise, but in that case, your Resources stocks will gain. Rising wages can put pressure on manufacturers, but your Consumer stocks should do better as workers have more to spend. If borrowers can't pay back their loans, your Finance stocks will suffer. But high default rates usually lead to lower interest rates, which typically push up the value of your Utilities stocks. Conservative or income-seeking investors may want to emphasize utilities and Canadian banks in their portfolios, because of these stocks' high and generally secure dividends. More aggressive investors might want to increase their portfolio weightings in Resources or Manufacturing stocks. For example, more aggressive investors could consider holding as much as, say, 25% to 30% of their portfolios in Resources. Above all, balance your portfolio by investing most if not all of the five main economic sectors. That's a key part of our three-part Successful Investor strategy:
Discover how to put extra strength into your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
Toronto symbol MDI, is one of the world's largest drilling service companies serving the mining industry.
The management expense ratio (or MER) is the percentage charged by mutual funds or ETFs for the management of their funds. Management fees are taken from the assets of the funds, lowering the overall return for investors. Management expense ratios tend to be much lower on ETFs than on conventional mutual funds. That's because most ETFs take a much simpler approach to investment. Instead of actively managing their clients' investments, they generally try to invest so as to mirror the holdings and performance of a particular stock-market index. With that said, it's important for investors to research and review the management expense ratio of every mutual fund and ETF you intend on investing in. As always, take a long view on MERs and their impact on the overall lifetime of your investments. Management expense ratios are one aspect of investing everyone should know about. At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to make the most of your stock investments in this free special report, Stock Market Investing Strategy: Pat McKeough's Conservative Investing Guide for Making Money & Cutting Risk, from TSI Network.
Management fees or MERs are fees applied to mutual funds, ETFs (exchange-traded funds), and other funds by the institutions that manage them. At TSI Network we recommend investing in funds and ETFs that have low management fees. A management fee tends to be higher with mutual funds than with ETFs. That's because they are actively managed. This mean the managers are continuously buying and selling shares for the fund. This active management can be a detriment to the funds overall success-frequent trading can lead the fund to sell its best picks when they are just getting started. It also pushes up commission expenses and other trading costs. ETFs, on the other hand, are passively managed, in contrast to most mutual funds which are actively traded by managers who buy and sell in hopes of making money for clients. 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 are chosen to represent the holdings that go into the calculation of the index or sub-index.
Overall, high management fees eat into an investor's long term profits. That's especially true with mutual funds. ETFs are among the more benign investment innovations of our time. Unlike other innovations, they don't load you up with heavy management fees, nor tie you down with heavy redemption charges if you decide to get out before six years have passed. Instead, they give you a lower-cost and more flexible and convenient alternative to mutual funds.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to make the most of your stock investments in this free special report, Stock Market Investing Strategy: Pat McKeough's Conservative Investing Guide for Making Money & Cutting Risk, from TSI Network.
Toronto symbol MBT, is Manitoba's main provider of regular and wireless phone services. The company also owns Allstream, which provides communication services to businesses across Canada.
Toronto symbol MFC, sells life and other forms of insurance, as well as mutual funds and investment management services. It operates in 19 countries and territories worldwide.
Toronto symbol MFI, is Canada's largest food processing company. Its products include fresh and prepared meats and poultry, mostly under the Maple Leaf and Schneider brands. It also makes fresh and frozen bakery products through 89.8%-owned Canada Bread Co. Ltd.
Margin is a term used to refer to money borrowed from a broker or dealer to purchase securities. The purchase of shares in such a fashion is known as buying on margin.
The main cost involved with this investment strategy is interest on the money you borrow. And of course, when you sell a security that you’ve bought on margin, you must first pay back the loan from your broker.
The main risk of buying stocks on margin is that it increases your leverage. Leverage works two ways: It magnifies your profits when the market moves in your favour, but it magnifies your losses just as effectively when the market moves against you. That’s because the amount you owe on your investment loan stays the same, so every dollar your portfolio loses comes out of your equity.
Margin buying can help you cut your tax bill. That’s because you’ll be able to write off your margin interest in full against ordinary income in the current year. At the same time, you’ll pay less than ordinary income-tax rates on dividends from Canadian stocks. If you buy qualified Canadian stocks, you’ll pay taxes on dividends you receive at a rate that is well below the rate you pay on ordinary income. This tax break alone—getting a full deduction on your interest costs, and paying a lower tax rate on dividend income—adds appeal to margin investing.
All in all, we feel you should focus your efforts on long-term investing and building a well-balanced portfolio—and to do that, follow TSI Network and use our three-part Successful Investor strategy:
The key to finding the “hidden gems” in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough’s decades of experience—and his specific recommendations—in our special report, TSX Penny Stocks: Hot Canadian Penny Stocks and How to Invest in Penny Stocks in Canada, on TSI Network. Claim your FREE copy right now!
Margin investing involves borrowing money from a broker to buy securities.
Margin investing is a respectable investing strategy, but it carries more than the usual amount of risk.
The main cost involved with buying on margin is the interest on the money you borrow. Plus, when you sell a security that you’ve bought on margin, you must first pay back the loan from your broker.
Interest rates remain low in margin investing. That does add to the appeal of buying stocks on margin.
However, a big concern with buying stocks on margin is that it increases your leverage. Leverage works two ways: It magnifies your profits when the market moves in your favour, but it magnifies your losses just as surely when the market moves against you. That’s because the amount you owe on your investment loan stays the same, so every dollar lost in your portfolio comes straight out of your equity.
When you buy on margin, you’ll be able to write off your margin interest in full against ordinary income in the current year. However, you’ll pay less than ordinary income tax rates on dividends from Canadian stocks, thanks to the dividend tax credit.
Due to its increased risk, buying stocks on margin is certainly not for everyone. We continue to recommend that if you are going to use margin to invest, it’s all the more important to stick with our three-part investing strategy.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to build wealth with a conservative investing approach, claim your FREE digital copy of How to invest in stocks: Canada investor advice on building a balanced stock portfolio now.
Market analysis is essentially research into price movements and other technical data with the aim of predicting the direction of the markets. This research can consist of examining historical records, price charting, technical data and a host of other research elements.
Technical analysis is one of many market analysis techniques that use charts of previous stock price movements and trading volumes to help predict future price movements. Experienced investors know Pat McKeough for his insightful market analysis and his candid, unpretentious style. But Pat himself points out that "calling the market" is a seductive but potentially destructive market analysis activity for those who make a living by advising people about where and how to invest their money.
A few good calls on where the stock market is going through market analysis can establish an advisor's reputation for a decade or longer-if those calls happen to catch the attention of investors. But the funny thing is that among people who make a habit of calling the market, everybody has had at least a few good calls. The ones you never hear of just didn't have the good fortune to get noticed by investors while making a good call.
Some of the most dangerous advisors you'll ever find are those who have recently made a good stock market prediction or two, and are starting to believe in their own infallibility. Pat McKeough says that he always has an opinion on which way the market will move. But nobody calls it right every time. That's why he always stresses that opinions (his or anybody else's) should be at most a secondary part of the investment process.
Your primary goal should be to follow our three-pronged Successful Investor philosophy:
You'll still have plenty of decisions and judgment calls to make. But following the key points in our three-pronged formula will go a long way toward ensuring your success as an investor. Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, 7 Winning Strategies for Dividend Investors. And it's yours FREE!
While many numbers and statistics frequently prove to be of limited value in judging stocks, there is one that is often undervalued: market cap.
Instead of focusing on debt-to-equity [link to debt to equity tag page M6W1] financial ratios exclusively, we recommend that you also look at the ratio between a company’s debt and its market capitalization or “market cap” (the value of all shares the company has outstanding).
Like shareholders’ equity, market cap may differ widely from the net value of a company’s assets. However, a moderate debt-to-market-cap ratio will tend to provide a conservative starting point for analyzing a company’s chances of survival.
A great example is Coca-Cola Co. (symbol KO on New York). The company has long-term debt of $12.7 billion, which represents a moderately high 39% of its $32.6-billion shareholders’ equity. But that debt is just 8.1% of its market cap.
The difference reflects the fact that the company’s balance sheet doesn’t show the true value of its most valuable asset — its so-called intellectual property. In Coke’s case, one key asset is the secret formula for Coca-Cola, which is reputedly carried on the company’s books at one dollar. More important, the Coke brand name carries no value on the company’s balance sheet. However, these are reflected in its huge market cap of $157.2 billion. So, put into perspective, the company’s debt is very low.
We encourage investors to learn about market cap and invest in blue chip stocks like Coca-Cola, TSI Network recommends using our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
A market maker is a trader responsible for maintaining an orderly market in an individual stock by standing ready to buy or sell shares. The market maker’s job is to maintain a firm bid and ask price for their assigned securities. If a broker wants to buy a stock but there are no offers to sell it, the market maker fills the order himself by selling shares from his own firm's account. In turn, if a broker wants to sell but no one wants to buy, the market maker buys the shares.
Market makers accept the risk of the securities they buy in order to facilitate a block of stock orders. The transaction between market makers, brokerage firms and investors takes seconds.
In over-the-counter trading or penny stock trading, there are a limited number of market makers for thinly traded stocks. Bid and ask spreads, set by the market makers, are sometimes so wide that if you buy a stock, it may have to go up 50% or more before you’ll even begin to make money on a sale.
Market making is part of the stock trading process, and you can learn more about how stock markets work by reading TSI Network’s daily email and investing by our three-part Successful Investor philosophy:
Discover how to make the most of your stock investments in this free special report, Stock Market Investing Strategy: Pat McKeough’s Conservative Investing Guide for Making Money & Cutting Risk, from TSI Network.
What is a market order? Market orders are orders to buy or sell a specific number of shares at the best price available when you place your order. Market orders are almost always filled within a very short period of time-minutes or even seconds. However, you only learn the price you paid (for a purchase) or received (for a sale) after the order is filled. There is always the possibility that the market price may change, for or against you, between the time you place the order and the time it is filled. You can also place a limit order. With this type of order, you specify the highest price you are willing to pay to buy. However, you then risk not getting a fill for your order if there is no stock available at or below your price. In general, most investors should use market orders when buying or selling widely traded shares. That's because the market order risk of occasionally paying too much is more than offset by the limit-order risk of missing out on your best ideas. Market orders, limit orders and stop loss orders are widely available to investors through online discount brokers. Each one of these trading orders has specific uses and risks. Learning about all three can help you become a more profitable investor. At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how the secrets of successful investors can help you to a more profitable investment future in this special report, The 10 Best Practices of Successful Investors. Claim your FREE copy right now!
Market timing is the investment strategy of attempting to buy stocks or funds at a low and selling them at a high. Timing buys and sells always seems so obvious in hindsight, but keep in mind that if any investor knew just when to buy or sell, they would acquire a large proportion of all the money in the world, and nobody ever does that.
Many investors start out with an exaggerated idea of the value and importance of market timing. Most eventually become disillusioned with it, after they figure out that it's costing them money. Market timing can pay off sporadically, of course.
Although the results are largely random, successes and failures are apt to run in spurts. Good timing-based decisions often produce modest profits. However, they tend to be smaller than the losses you get from bad timing decisions.
The best market timing strategy is to buy steadily and carefully throughout your working years, and sell gradually in retirement. That approach is virtually certain to enhance your investing profits. For one thing, it stops you from selling all your stocks near a market bottom, which market timers do from time to time.
The worst market timing strategy you can adopt is to yield to hunches or jump to conclusions.
When it comes to stock trading advice, we pay close attention to market timing risk. That's because you can never get away from unpredictable market risk, and it can cost you money to try.
Instead, use our three-part Successful Investor strategy:
Discover how to make the most of your stock investments in this free special report, Stock Market Investing Strategy: Pat McKeough's Conservative Investing Guide for Making Money & Cutting Risk, from TSI Network.
Market turbulence is the unexpected rising and falling of the stock market. Market turbulence is often a time of wide swings, both up and down, in the stock market. Market turbulence can occur from geopolitical turmoil, poor earnings reports across many companies in a single market segment or even irrational investor fears.
Market turbulence is inevitably accompanied by a flood of economic statistics and analyses of government economic policies and how they may affect markets. At this point, you may, for example, feel tempted to try to figure out what the economy will do next, and invest accordingly. But economic forecasting is hard enough. When you try to forecast market trends based on economic forecasts, you are virtually certain to fail. Market turbulence is unpredictable, but rarely interrupts the broader movements of the market.
Market turbulence can also lead some investors to make drastic and not-well-thought-out changes in their portfolios. Although you can’t predict the market or economy with any consistency, you can definitely choose to buy and hold stocks that are best suited to your portfolio, regardless of how the market is performing.
All in all, your best defense against market turbulence is to follow TSI Network, and use our three-part Successful Investor philosophy:
We invite you to download a Special Report with our compliments: Your 12-Step Countdown to the Retirement You Want. We employ these strategies on behalf of our Wealth Management clients, who have entrusted hundreds of millions of dollars to our care.
Market turmoil is a series of sharp rises and declines in stock prices due to economic, political and other factors.
Stock market turmoil is often accompanied by a flood of economic statistics and analyses of government economic policies and how they may affect markets. You may feel tempted to try to figure out what the economy will do next, and invest accordingly. But economic forecasting is hard enough. When you try to forecast market trends based on economic forecasts, you are virtually certain to fail. As Peter Lynch (one of the world’s top mutual-fund managers from the 1970s through the early 1990s) wrote, if you spend 12 minutes a year worrying about the economy, you’ve wasted 10 minutes.
Investors should resist the urge to over-analyze and try to predict the future. If the situation continues to change rapidly, or if market turmoil takes an unexpected turn, you could find yourself stuck with costly and unprofitable investments in your portfolio.
Market turmoil will come during your investing career. We recommend not overreacting. Instead, focus your efforts on long-term investing—and follow TSI Network and use our three-part Successful Investor strategy:
The key to finding the “hidden gems” in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough’s decades of experience—and his specific recommendations—in our special report, TSX Penny Stocks: Hot Canadian Penny Stocks and How to Invest in Penny Stocks in Canada, on TSI Network. Claim your FREE copy right now!
Toronto symbol MSY, explores for and produces oil and natural gas in northern Alberta's North Peace River Arch region and southern Alberta's Little Bow district.
New York symbol MKC, is the world's leading maker of spices, herbs, seasonings, flavorings, sauces and extracts.
New York symbol MHP, has three main operations: financial information under the Standard & Poor's brand; school textbooks; and media (magazine publishing and TV stations).
New York symbol MCK, is the largest wholesale distributor of pharmaceutical drugs in the United States and Canada. It also provides software and services that help pharmacies and clinics manage their drug inventories.
Toronto symbol MDS, operates in three medical-related fields: contract drug research, analytical devices and medical isotopes for cancer treatments.
MERs are also known as Management Expense Ratios. MERs let you know how much mutual funds and ETFs charge for the management of their funds. These management fees come directly from the assets of the funds, so the investor gets a lower return.
Management expense ratios are one aspect of investing everyone should know about because they affect your long term gains. Management expense ratios are typically much lower on ETFs than on conventional mutual funds. That's because most ETFs take a much simpler approach to investment. Instead of actively managing their clients' investments, they generally try to invest so as to mirror the holdings and performance of a particular stock-market index.
With that said, it's important for investors to research and review the management expense ratio of every mutual fund and ETF you intend on investing in. Is the MER fee higher than other comparable funds or ETFs? Have the fees increased year over year? A fund with a high MER is definitely a negative unless the fund has shown exceptional performance over time.
As always, take a long view on MERs and their impact on the overall long-term returns on your investments. We recommend investing following our three-part Successful Investor philosophy to invest:
1. Invest mainly in well-established companies;
2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
3. Downplay or avoid stocks in the broker/media limelight.
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Metal stocks are shares in companies that explore for, mine and refine metals such as copper, nickel and zinc. Some metal stocks are unique because they are represented in a couple of industries: mining and energy. One example is uranium, which is a radioactive metal, and yet is included in the energy industry.
Other types of metal shares are copper stocks. Copper has a wide range of industrial uses (unlike gold and silver, which are thought of more as hedges against inflation). Copper is heavily used in the power-transmission and construction industries, in cables, wires and plumbing.
Gold and silver are two other “precious” metal stocks that are quite popular with investors. Most gold and silver firms’ stocks will continue to be heavily influenced by the direction of gold and silver prices. Investors should look for gold and silver stocks that will generate positive cash flow even with low gold and silver prices—and also offer rising production outlooks.
We think that most investors could hold some high quality Canadian metal stocks in their portfolios. For advice on your total stock portfolio, follow TSI Network and use our three-part Successful Investor strategy:
Discover how you can maximize your profits in this free special report, Best Canadian Mining Stocks TSX: Plus Gold Stocks, Canadian Diamond Mines and More, from TSI Network.
Microsoft (Nasdaq symbol MSFT) is the world's largest software company. It was founded in 1975 by Bill Gates and Paul Allen. Gates and Allen have since become some of the wealthiest people in the world. Microsoft’s Windows operating system runs roughly 90% of the world's computers. Microsoft's Office suite of programs dominates the business software field. Also included in its flagship product line is the Xbox gaming system.
In recent years the Microsoft company has been implementing a new business model for Windows.
Unlike previous editions, Microsoft will let users of older versions update for free. Sales to computer makers provide most of the revenue Microsoft gets from Windows, so giving it away to existing users will have little impact on its earnings. This will also help prevent users from switching to competing operating systems.
Microsoft aims to make up any lost sales by selling related services, such as online versions of its Office business programs.
Investors should consider adding Microsoft stock to their portfolios, but tech stocks may be more volatile than other market sectors, so keep them to a reasonable part of your total portfolio. For more advice on building a portfolio, follow TSI Network and use our three-part Successful Investor strategy:
Discover how to put extra strength into your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
Mining is the process in which minerals are extracted from the ground. The stages of mining include exploration, development and then building a mine. It can also involve the subsequent processing, smelting, shipping and marketing of the minerals.
Mining is inherently a politically vulnerable business; you can’t move the mine to another country. In developed countries, it is subject to changing regulatory and environmental constraints. In some jurisdictions, local citizens sometimes believe that a foreign mining company is robbing them of their birthright, even though they usually need the foreign company’s capital and expertise to get any value out of the ground.
Mining companies are can generally be broken up into two categories, majors and juniors. Majors are typically mining companies that have been in the mining business for many years, and more often than not they operate producing mines on a global scale. Majors have proven methods for exploration and mining, and have consistent output, and cash flow, year over year.
Junior mining companies typically have negative cash flow since they’re spending money in hopes of finding a mineable deposit.
While sometimes risky, mining stocks can be strong performers when commodity prices move up. However, due to the volatility of these stocks, Pat McKeough recommends that they only form a modest part of the Resources segment of a well-balanced portfolio. Above all, follow TSI Network and use our three-part Successful Investor strategy:
Discover how to make the most of your mining investments in this free special report, Best Canadian Mining Stocks TSX: Plus Gold Stocks, Canadian Diamond Mines and More. The complete guide to picking the best Canadian mining stocks on the Toronto Stock Exchange.
Mining companies explore for, develop and produce minerals, including uranium, coal, molybdenum (which is used in steelmaking), copper, silver and gold.
The best way to invest in mining companies is through high-quality mining stocks as part of the Resource sector of your portfolio.
Mining stocks are affected by fluctuating commodity prices in addition to their own business and operating risks. Still, while sometimes risky, mining stocks can also be strong performers when commodity prices move up. However, due to the volatility of these stocks, TSI Network recommends that they only form a modest part of a well-balanced portfolio.
Mining stocks can generally be broken up into two categories, majors and juniors.
A mining company considered a major would have typically been in the mining business for many years and more often than not operate on a global scale. Majors have proven methods for exploration and mining, and typically have consistent output year over year.
A mining company stock considered a junior mining stock is new or has been in business for a decade or less. They are usually smaller companies and take on risky mining exploration. If a junior mining stock is successful at finding a deposit that leads to building a mine, it can mean huge returns for investors.
Find the best mining companies to invest in by following TSI Network and using our three-part Successful Investor strategy:
Discover how to invest in mining stocks in the 21st century by claiming your FREE digital copy of Best Canadian Mining Stocks TSX: Plus Gold Stocks, Canadian Diamond Mines and More now.
Mining stocks are investments in companies that produce or explore for minerals. Some of these minerals include uranium, coal, molybdenum (which is used in steelmaking), copper, silver and gold. They are affected by fluctuating commodity prices in addition to their own business and operating risks.
While sometimes risky, mining stocks can also be strong performers when commodity prices move up. However, due to the volatility of these stocks, Pat McKeough recommends that they only form a modest part of a well-balanced portfolio.
Canadian penny mining stocks are some of the riskiest stocks you can buy. These companies are trying to find mineral deposits that mine at a profit and such a find are exceedingly rare. Because of this, it's even more important to look for investment quality in penny mines.
For example, we automatically rule out investing in penny mines that promote themselves too aggressively or do so misleadingly. The mine-finding effort is more likely to succeed if the managers focus on finding a mine rather than hyping their stock.
Junior mining stocks are usually smaller companies that typically take on riskier mining projects. However, if a junior mining stock is successful at finding and mining, it can mean huge returns for investors.
No matter what type of mining stocks, or other stocks you invest in, TSI Network recommends following our three-part Successful Investor strategy:
Zero in on the mining stocks (including uranium stocks, metal stocks and junior mines) that are in the best position to take advantage of rising resource demand. Download Mining Stocks: How to Spot the Best Uranium Stocks, Metal Stocks and Junior Mines for FREE!
Toronto symbol TPX.A, Toronto symbol TPX.B and New York symbol TAP, is the world's fifth-largest brewer by volume. It operates mainly in the United States, Canada and Europe.
Molybdenum is a chemical element that is usually found with other minerals. It is primarily used within stainless steel and construction steel to create high-performance “superalloys”. This
metal is used as an anti-corrosive and a strengthening agent in alloys and high-temperature steels. Alloy uses of Molybdenum currently consume about 80% of annual global molybdenum production.
Molybdenite is the ore that molybdenum is found in. Molybdenum is usually not the primary metal a mining company is mining for. Molybdenum is typically recovered as a by-product of copper mining. The metal strengthens and prevents rust in alloys and high-temperature steels.
Molybdenum prices generally follow copper prices because of its use in industry. Traditionally, investors have bought copper as a way to profit from general economic growth. That’s because, unlike gold, silver and many other precious metals, copper has a wide range of industrial uses.
Molybdenum miners and copper miners may fit into your resource portfolio. At TSI Network, we recommend using our three-part Successful Investor philosophy for long-term investing:
Discover how to make the most of your copper investments in this free special report, Gold Mining: How to Choose the Best Stocks and ETFs to Profit from the Reconstruction of Japan, from TSI Network
Momentum investing theory can be summed up as "buy high, sell higher". The trouble is that when a stock's rise falters, momentum investors also try to get out as a group, but there are never enough buyers. This leads to violent price fluctuations—and often big losses.
Momentum investors often will view a “negative earnings surprise”—lower-than-expected earnings—as a sell signal. They use a variety of computerized formulas to make buy and sell decisions, but all come down to “Buy on strength and sell on weakness”. So they tend to pile into the same stocks all at once, and the gains that follow (and the losses) are something of a self-fulfilling prophecy.
We don’t see momentum investing as a good strategy for investors. They end up selling way too early and never realize the long-term potential of the stocks they own. As well, this investing style racks up an absurd amount of commissions and brokerage fees from all that trading.
At TSI Network, we feel that momentum investing is unprofitable in the long term and the momentum investor mindset should be avoided. For a sound long term investing strategy we recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Momentum stocks are stocks that are bought by investors who focus on growth stocks- but they want to hold only while prices are rising. They don't mind paying a high price, because they plan to sell as soon as the rise begins to falter. A momentum stock's price moves up faster than market averages-usually ahead of the release of its latest earnings. Momentum investors are particularly keen on the so-called "positive earnings surprise", when a company outdoes brokers' earnings estimates. They view a "negative earnings surprise"-lower-than-expected earnings-as a sell signal. They may also use a variety of computerized formulas to make buy and sell decisions. But in the end, they all come down to "Buy on strength and sell on weakness". So they tend to pile into the same stocks all at once, and the gains that follow are something of a self-fulfilling prophecy. The trouble is that when the stock's rise wanes, momentum investors also try to sell their momentum stocks as a group. But there are never enough buyers to accommodate them. That leads to violent fluctuations in the stock's price. At TSI Network, we feel that treating growth stocks as momentum stocks is unprofitable in the long term we recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Moody’s (New York symbol MCO) provides independent credit ratings and other information on bonds and other securities issued by over 200,000 commercial and government entities in over 100 countries. The company also provides credit assessment services and software to banks and other lenders. Moody’s was founded in 1909 by John Moody in New York City.
Securities regulators in the United States recognize just five credit rating providers, including Moody’s. New legislation aimed at opening up this field to more companies could hurt Moody’s 40% share of the credit rating market. But the company’s strong reputation should help it fend off any new competition.
Moody’s was also the parent company of another popular financial institution called Dun & Bradstreet. Moody’s and Dun & Bradstreet separated off into two companies in 2000.
Moody’s and Dun & Bradstreet are two well-established financial institutions. Both companies have been recommended by TSI Network in the past and we continue to analyse them as stocks picks from the financial sector. For the best long-term returns, at TSI Network we recommend using our three-part Successful Investor philosophy for investing:
Discover how to build a winning stock market portfolio in this free special report, Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada, from TSI Network
Mortgage investments are securities—generally know as Mortgage Investment Corporations or MICs—that invest in pools of mortgages and distribute most of their profits to their shareholders.
Some MICs yield 9% or more annually. They sound like conservative investments because they invest in mortgages rather than equity. But mortgage investments can vary widely in their investment quality and risk. MICs can earn high profits because they take on riskier mortgages.
Conservative mortgage lenders, such as banks and mortgage investment funds, mainly invest in top-quality first mortgages on commercial, industrial and/or residential properties.
However, MICs may offer mortgage financing to real estate developers who are renovating existing properties or building new ones. Real-estate development is generally more profitable than real-estate investment when it succeeds, but it is inherently riskier and more speculative.
Managers of MICs typically believe they can manage the risk in their investments by paying close attention to certain factors. However, lending to higher-risk real estate borrowers mainly tends to be profitable during real estate booms, because that’s when property prices tend to go up. But real estate is a cyclical field. Booms eventually give way to a slowdown or setback that can last for months or years.
MICs generally expose investors to risks that are above average or worse, so we advise against investing in them.
To find the best investments for your portfolio, follow TSI Network’s three-part Successful Investor strategy:
Dividend stocks are your most reliable investments in all markets—and this free report is your complete guide to successful dividend investing in top Canadian dividend stocks. Download The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks for FREE today!
Mortgages are loans that buyers take out to raise funds for the purchase of real estate. The collateral for the loan is the property itself.
Conservative mortgage lenders, such as banks and mortgage funds, mainly invest in top-quality first mortgages on commercial, industrial and/or residential properties.
Mortgage investment corporations, or MICs, invest in pools of mortgages and distribute most of their profits to their shareholders. Some MICs yield 6% or 7% or more annually. They sound like conservative investments because they invest in mortgages rather than equity.
However, mortgages vary widely in their investment quality and risk. MICs can earn high profits because they take on riskier mortgages.
Reverse mortgages in Canada let homeowners who are 55 years of age or older borrow on their home equity. Typically, the loan-to-value ratio is up to 40%. But depending on their age and property, some borrowers may qualify for a loan of up to 55% of the value of their home. The loan and accumulated interest are repaid only after the house is sold or from the proceeds of the homeowner’s estate.
One of the biggest reverse mortgage pitfalls is that their immediate appeal can lead real estate owners to not consider all of their lending options available to them. Make sure you look at all other housing or financial options open to you. If none of these are more appealing, only then consider taking out a reverse mortgage.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to build greater wealth with less risk, claim your FREE digital copy of How to invest in stocks: Canada investor advice on building a balanced stock portfolio now.
New York symbol MOT, is a major maker of mobile phones. It also makes equipment for telecommunication networks, and consumer products such as modems and personal video recorders.
NASDAQ symbol MTSC, makes equipment and software that carmakers and other manufacturers use to test the mechanical behavior of materials, machines and structures. The company also makes sensors that improve the performance of automated industrial machinery.
Multi-manager funds are investments that hold more than one specialized fund or have more than one manager, often with varying investment strategies.
Multi-manager investing is sold as a way to keep a portfolio diversified. Making sure you balance your investments so they are not tied to one industry, geographic area, or investment type is the main goal of multi-manager funds. Multi-manager funds believe that portfolio diversification gives you the greatest chance for safety and profit.
As an alternative, many investors see asset allocation funds as an easy and profitable way to diversify between stocks, bonds and cash equivalents. However, instead of asset allocation funds, we continue to recommend that you invest in a portfolio of well-established, high-quality dividend-paying stocks.
Moreover, you can eliminate a lot of market-timing risk by spreading your money out across most, if not all, of the five main economic sectors (Manufacturing & Industry; Resources; Consumer; Finance; and Utilities). This way, you avoid overloading yourself with stocks that are about to slump simply because of industry conditions or changes in investor opinion.
A lower-risk way to add international exposure to your portfolio, instead of buying multi-manager funds, is to hold multinational U.S. stocks, such as IBM, McDonald’s and Wal-Mart. These stocks are active in markets around the world.
Stay out of multi-manager investments and instead follow TSI Network and use our three-part Successful Investor strategy:
Discover how to find the best growth stocks, claim your FREE digital copy of Canadian Growth Stocks: WestJet Stock, RioCan Stock and more now.
A mutual fund is a portfolio with a collection of equities, bonds and other investments in which small investors can easily invest in. Mutual funds are investment products that are comprised of a pool of money collected from many investors for investing in a diversified portfolio of stocks, bonds, money-market instruments and similar assets. Mutual funds let small investors access professionally managed, diversified portfolios that would be difficult for them to create on their own. Individual shares of mutual funds are called units.
Buying a mutual fund is typically done with the long term in mind—find a sound fund that holds good stocks and stick with it.
There are, of course, thousands of mutual fund choices available at any time. But remember that most funds are set up because a fund sponsor has a saleable idea.
Mutual funds charge an MER or Management Expense Ratio fee. MERs let you know the mutual fund management fee the mutual fund management team is charging.. These management fees come directly from the assets of the funds, so the investor gets a lower return.
Mutual funds may have a place in your portfolio, but at TSI Network we generally advise investing in exchange-traded funds (ETFs). For a sound long term investing strategy we recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Mutual funds are diversified portfolios of equities and investments in which small investors can take part. They are an investment product, with individual shares being called units.
Mutual funds, which include asset allocation funds, can shift their portfolio allocations between stocks, bonds and cash in order to capitalize on perceived investment opportunities in any one of those classes.
For example, if the managers feel that the bond market is depressed and poised for an upswing, they may invest heavily in fixed-income investments for a few months to take advantage of the change.
Some managers make their own judgments when choosing between stocks, bonds and cash. Others use a so-called “black box” — a computer program that makes trading decisions based on a preselected set of rules for interpreting financial statistics.
Computer modelling makes this investment approach sound scientific, but it is just as likely to detract from a portfolio’s long-term return as it is to add to it.
Many investors see mutual fund investing as an easy and profitable way to diversify between stocks, bonds and cash equivalents.
Mutual funds may suit your investing needs, we suggest some long-term and short-term investing goals to round out your portfolio. For guaranteed success, apply our three-part Successful Investor strategy.
We receive many questions on the subject of planning and enjoying a successful retirement. Our answers to those questions are based on decades of investment experience are all located in this free report: 12 Steps to the Retirement You Want.
The NASDAQ is an American stock exchange. It is the second-largest exchange in the world ranked by market capitalization. The New York Stock exchange is the largest stock exchange in the world.
NASDAQ also refers to the Nasdaq Composite, an index of more than 3,000 stocks listed on the Nasdaq exchange. Companies listed in the NASDAQ composite index include Apple, Google Microsoft and Intel.
The NASDAQ-100 is an index made up of the 100 largest and most heavily traded stocks on the Nasdaq Exchange. The index reflects firms across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not include financial companies.
Stocks that trade on NASDAQ, or ETFs that hold the stocks in NASDAQ indexes, can be good holdings in the portfolios of most investors. But whatever way you choose to invest in the NASDAQ market, we think you would benefit by following TSI Network and using our three-part Successful Investor strategy:
Discover how to put extra strength into your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
NASDAQ symbol QQQQ, is an exchange-traded fund that holds the stocks that represent the Nasdaq 100 Index. This index is made up of the 100 largest and most heavily traded stocks on the Nasdaq exchange.
Natural gas stock prices are the cost of shares in companies that explore for, produce, process, transport and store natural gas.
Natural gas stock prices, like the price of oil, are highly volatile—and influenced both up and down by a wide range of factors. It’s a bad idea to base investment decisions on predictions of future natural gas prices, and their effects on natural gas stock prices, because these predictions are simply not reliable.
Some of the main factors that push natural gas stock prices up and down include:
You can profit nicely over long periods by investing in well-established or well-managed companies that are active in businesses that involve highly volatile commodities like oil and gas.
Cut your natural gas stock trading risk by following TSI Network and using our three-part Successful Investor strategy:
Discover how to profit from the coming changes in the Canadian oil and gas industry, claim your FREE digital copy of Canadian Natural Resources Stock Guide: What to look for in Canadian Energy Stocks now.
Natural gas stocks are shares in companies that explore for, produce, process, transport and store natural gas. The price of natural gas, like the price of oil, is highly volatile-and influenced both up and down by a wide range of factors. So it's a bad idea to base investment decisions on predictions of future natural gas prices, and their effects on natural gas stock prices, because these predictions are simply not reliable. If investors generally believe the price of natural gas stocks are sure to go up, the reverse often happens. That's because suppliers and users of natural gas also read the newspapers, and they both take steps to protect themselves and profit from that situation. The suppliers try to increase supplies, and the consumers of gas try to become more efficient or find alternative natural gas shares. However, you can profit over the long term by investing in well-established or well-managed companies that are active in businesses that involve highly volatile commodities like oil and natural gas. You will profit all the more if you buy these companies when they are cheap in relation to cash flow and the value of their reserves. Natural gas stocks may have a place in your portfolio. To get the maximum returns from your portfolio, follow TSI Network and use our three-part Successful Investor strategy:
Discover how to make the most of your commodity investing in this free special report, Commodity Investments: Fertilizer Stocks and Potash Stocks That Will Profit from Rising Food Demand, from TSI Network.
New York symbol NCR, is a leading supplier of ATMs (automated teller machines), cash registers and bar code scanners, mainly to banks and retailers.
The total of a company's assets less any liabilities. This amount is also referred to as Shareholder's Equity.
New ETFs are exchange-traded funds that go beyond widely followed indexes and instead pursue narrower strategies.
Many new exchange-traded funds are marketed as ways to broaden investment opportunities for investors—and at the same time are aimed at creating new profit opportunities for the financial companies that sponsor them.
Many new ETFs focus on narrower indices and higher-risk strategies, instead of giving you a low-cost way to copy the results of a standard market index, such as the S&P/TSX 60.
For example, they may give you a way to invest in a particular foreign stock market—coupled, in many cases, with an arrangement that hedges against movements in the foreign currency in which that foreign market carries on its trading. Or they may give you a way to participate in a particular stock-market theme such as solar power or water stocks.
However, new ETFs typically carry higher MERs than old ones. Based solely on MERs, they’re still cheaper to invest in than conventional mutual funds—but some new ETFs also need to delve into frequent trading or hold derivatives of various sorts to accomplish their stated objectives.
We believe investment quality varies just as widely with new ETFs as it does with new stock issues. Only a handful of them are worth holding, and only if you find their investment premise irresistible. Otherwise, you are better off investing in more traditional ETFs.
Find out more about ETFs by following TSI Network and using our three-part Successful Investor strategy:
Discover how to get the maximum returns from your ETF investments, claim your FREE digital copy of Best Canadian ETFs, Canadian ETFs vs Mutual Funds, Canadian Index Funds and More now.
New York symbol GF, is a closed-end fund that invests mostly in middle-market (small and mid-cap) German equities.
Toronto symbol NGD, operates three mines: the Peak gold/copper mine in Australia, the Cerro San Pedro gold/silver mine in Mexico and the Amapari gold mine in Brazil.
A new issue, also known as an initial public offering (IPO) investment, is the first sale of a stock by a company after it goes public. We usually don’t recommend them.
Companies sell new issues to the public when they feel it’s a good time to sell. However, that may not be, and often isn’t, a good time for you to buy.
New issue offerings often have a turbulent start on the stock market. Stakeholders often sell a portion of their shares to recoup their investment during the first weeks and months the stock begins trading.
Another phenomenon that investors should know about is initial public offerings receive an excessive amount of hype from what we call the “broker/media limelight.” This can cause expectations to be raised to often unrealistic heights—and the fall from those heights can be swift.
Even with what looks like attractive new issues, it's best to stay out of them. If a new issue has genuine long-term investment appeal, it will be an attractive buy for months or years after it reaches the market.
At TSI Network, we recommend using our three-part Successful Investor philosophy when investing:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. These practices also work well for growth investing. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
New tech stocks are investments in recently formed companies that use high research and development budgets to produce profitable new technology, often electronics or software.
Many new tech stocks are brought to the public through major investment banks, but are still unknown to most investors. This makes new tech stocks even more intriguing to some investors.
The best tech stocks are on a rapid growth path and will continue growing. Some of the best technology companies become so successful that they start paying dividends. Investors should also scour a technology stock’s financial statements to glean any hints of hidden value such as research and development or other valuable long-term assets.
Successful tech stocks can experience enormous growth. However, technology stocks are also susceptible to lots of market volatility—and negative news can throw tech stocks into steep declines.
High cash and low debt aids product development for a new tech stock.
Fast-changing technology offers huge opportunities when investing in new tech stocks. However, fast change can also bring dangers. Technology stocks may have a role in your portfolio, but you should be well aware of the risks involved with high growth securities like tech stocks.
The best technology stocks have exponential growth and continue growing. The best technology companies may also become so successful that they start paying dividends.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to find the best growth stocks, claim your FREE digital copy of Canadian Growth Stocks: WestJet Stock, RioCan Stock and more now.
New York symbol NWL, makes a wide variety of household products, such as plastic storage bins, tools and pens.
New York symbol NEM, is one of the largest gold producers in the world with major operations in the United States, Canada, Peru, Australia, Indonesia and Ghana.
New York symbol JWN, operates upscale department stores, as well as smaller stores that sell shoes and clearance merchandise.
Toronto symbol NT, is one of the world's largest makers of telecommunications equipment. The company sells its products mainly to telephone companies, cable TV operators and large organizations.
formerly Toronto symbol NB, is one of the largest insurers in Canada. The company provides auto, general liability and commercial insurance through its Lombard Canada, Markel Insurance of Canada, Commonwealth Insurance Co. and Federated Insurance Co. of Canada units. Northbridge was acquired by Fairfax Financial Holdings in 2009.
Toronto symbol NCX, makes industrial plastics that manufacturers use to make a wide variety of products including auto parts, construction materials and packaging.
formerly Toronto symbol NVL, makes rolled aluminum products, including beverage cans, packaging and automotive parts. The company was acquired by India's Hindalco in 2007.
An “offshore account” is an investing account that is generally lightly taxed, or not taxed at all, by the country where the bank or brokerage account is located. This includes jurisdictions like Switzerland or the Cayman Islands.
An offshore account may help you defer or avoid taxes on investment profits, legally or otherwise. However, when you invest money with any offshore investing company, you need to carefully investigate and make sure you have adequate safeguards. Otherwise, you may have losses rather than profits.
Canadian residents are obliged to report any income they earn through foreign investments on their Canadian tax returns. (You can only claim tax-exempt “non-resident” status without giving up your citizenship by staying outside of Canada for more than half of a tax year.)
We strongly advise against doing anything illegal to cut taxes. Moreover, when you engage in offshore investing with the intention of evading taxes, you may be risking losses that exceed the taxes you would have paid.
Also, if you discover that you’ve been cheated while offshore investing, you may not be able to complain to authorities without admitting your own involvement in tax evasion.
Invest wisely by following TSI Network and using our three-part Successful Investor strategy:
We invite you to download a Special Report with our compliments: Your 12-Step Countdown to the Retirement You Want. We employ these strategies on behalf of our Wealth Management clients, who have entrusted hundreds of millions of dollars to our care.
What is offshore investing? Offshore investing is the process of structuring your business affairs using offshore investing companies or trusts that can cut or defer your taxes. Offshore investing could also mean you've transferred funds to an offshore investment account. These offshore accounts may be protected from legal judgments rendered in Canada. Earnings in an "offshore account" are generally lightly taxed, or not taxed at all, by the country where the bank or brokerage account is located. This includes jurisdictions like Switzerland or the Cayman Islands. Remember that Canadian residents are obliged to report any income they earn through foreign investing on their Canadian tax returns. (You can only claim tax-exempt "non-resident" status without giving up your citizenship by staying outside of Canada for more than half of a tax year.) Investors interested in offshore investing should consult a tax advisor or lawyer in order to structure offshore tax shelters correctly. Note, however, that some law firms and tax advisors sell tax shelters to their clients as part of their businesses, and other lawyers or tax advisors may disagree with the legality of those shelters. What's more, the fees involved in setting up and maintaining offshore accounts may offset a lot of your tax savings. It's also harder to evaluate and obtain adequate information on an offshore investment. Let us put it this way: we advise against doing anything illegal to cut taxes. Moreover, when you invest with the intention of evading taxes, including through offshore investing, you may put yourself at risk of losses that exceed what the taxes would cost you. At TSI Network, we recommend using our three-part Successful Investor philosophy:
We often receive questions about planning and enjoying a successful retirement. Our answers to those questions, based on decades of investment experience, are all located in this FREE report: 12 Steps to the Retirement You Want.
Offshore investments are investments made in other countries, typically where tax laws and reporting are lax.
An offshore investment account may help you defer or avoid taxes on investment profits, legally or otherwise. However, when you invest money with any offshore investing company, you need to carefully investigate and make sure you have adequate safeguards. Otherwise, you may have losses rather than profits. There is no telling how large your losses could be.
Let’s put it this way: we strongly advise against doing anything illegal to cut taxes. Moreover, when you engage in offshore investing with the intention of evading taxes, you may be risking losses that exceed the taxes you would have paid.
Something else to consider: If you discover that you’ve been cheated while offshore investing, you may not be able to complain to authorities without admitting your own involvement in tax evasion.
We recommend keeping your investments legitimate and paying your taxes as required, and using our three-part Successful Investor philosophy to invest:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Oil and gas stocks are one of the types of stocks that make the energy industry. Oil and gas stocks can be volatile to hold. Their share prices are influenced by supply and demand, as well as governments, environmentalists, and cost of exploration and development—and even the weather.
We think most investors could invest a portion of their portfolios in oil and gas shares—and that includes Canadian oil stocks. But if you do invest in those stocks, resist the urge to go overboard, particularly in high-risk oil investments such as junior oils. They are as risky as ever, and they may especially fail to thrive in a slow oil recovery.
Oil and gas holdings will continue to be volatile in the future. Meanwhile, you can boost your portfolio returns by following TSI Network and using our three-part Successful Investor strategy:
Discover how to build a winning stock market portfolio in this free special report,How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio, from TSI Network. This complete guide to investing in stocks for Canadians will help you build wealth with a conservative investing approach.
Oil exploration stocks are investments in companies that explore for crude oil—and many also produce oil. This is also known as “upstream” exploration, in contrast to “downstream” refining and retail gas station companies.
Many oil exploration stocks have adopted a new technique called multi-pad drilling, or “octopus drilling”. It lets producers drill as many as 50 wells from a single pad. This is different than the traditional approach, which involved finding a pad, or land site, for each crude oil well drilled. Octopus drilling speeds up the exploration and extraction of crude oil.
Oil is a key factor in a lot of industrial activity, as a raw material for plastics, rubber and so on, or as fuel for transportation. Oil is also concentrated in a few locations around the world, particularly the Middle East, so it’s vulnerable to transport or other bottlenecks that can that result in supply shortages.
Shale oil discoveries have turned up all around the world as well. New technology that comes with oil exploration stocks can bring these finds to production in as little as eight months, compared to two years or so for many conventional finds. Stocks in oil companies are considered commodity investments.
The diversification of oil supplies tends to smooth out oil prices. When periodic high oil price shocks become a thing of the past, the world economy can grow even faster.
Maximize your stock market profits—including your oil stock gains—by following TSI Network and using our three-part Successful Investor strategy:
Discover how to get the maximum profits from the strongest stocks in the market, claim your FREE digital copy of Canadian Blue Chip Stocks: Bank of Nova Scotia Stock, CP Rail Stock, CN Rail Stock, Royal Bank Mutual Funds and more now.
Oil sands stocks are shares in companies that explore for, extract and transport oil from oil sands deposits.
Canada’s reserves of oil sands are vast. However, extracting oil from oil sands is expensive. Oil sands projects typically run way over budget. That adds to the risk of construction delays and other problems. Moreover, petroleum from oil sands needs more processing than regular crude oil.
Oil sands stock companies have been lowering the high costs of oil-sands production by using more efficient technology that injects steam into wells to loosen the heavy oil, and makes it easier to pump to the surface.
Onshore oil-sands production remains much more reliable than offshore oil well operations.
One indirect way investors can profit from oil sand stocks is by investing in blue chip stocks with large oil-sands operations. These could be traditional oil stock companies that also operate an oil sands development division.
Boost your long-term investment gains by following TSI Network and using our three-part Successful Investor strategy:
Discover how to make the most of your copper investments in this free special report, Copper Mining: How to Choose the Best Copper Stocks and ETFs to Profit from the Reconstruction of Japan, from TSI Network
Oil stocks are share issues of companies that explore for, develop and produce oil.
At TSI Network, we continue to advise against overindulging in oil stocks. That’s because the Resource sector (including oil) is highly volatile, and no one can accurately predict future oil prices. As well, oil companies are subject to various environmental regulations and royalties that can eat into their profits.
However, you can profit nicely over long periods by investing a reasonable portion of your portfolio in well-established or well-managed oil stocks, especially those with high-quality reserves and rising production. These companies are well-positioned to profit during periods of high oil prices, and are able to at least partly offset price declines by producing more oil.
Investors should also seek out oil company stocks that have strong balance sheets and the financial strength to take advantage of low oil prices to pick up properties and employees who might be harder to find in more prosperous times.
Junior oil stocks can be particularly risky and should only be held by aggressive investors. But you can integrate them into a well-balanced portfolio by following TSI Network and using our three-part Successful Investor strategy:
Discover how to build a winning stock market portfolio in this free special report, Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada, from TSI Network.
Online trading is the buying and selling of stocks through an online brokerage account. Trading online also allows for quicker transactions compared to calling a broker on the phone. Some investors may look on online trading as a quicker and more convenient way to build wealth, but there are hidden dangers that may not be easy to spot at first.
The main risks of online trading come from the fact that it all may seem deceptively easy. The lower costs and higher speeds of online trading can lead otherwise conservative investors to trade too frequently. As a result, you could wind up selling your best picks when they are just getting started. However, carrying out trades in two seconds instead of 20 seconds or 20 minutes is unlikely to have any real effect on your returns. Price changes in that time frame are largely random. You will never get in or out quickly enough to have an advantage over a professional trader who has a direct link to the exchange.
It is far more important to focus on high-quality, well-established companies and how they fit in your portfolio. The longer you hold these stocks, the greater the chance that your profits will improve. This ties in well with our three-part Successful Investor strategy:
Discover how to make the most of your stock investments in this free special report, Stock Market Investing Strategy: Pat McKeough's Conservative Investing Guide for Making Money & Cutting Risk, from TSI Network.
An open end index fund is a mutual fund that holds a diversified portfolio of stocks, chosen by fund managers who get a fee for their services. Open-ended funds stand ready to sell new fund units, or redeem existing fund units, on demand.
This is unlike closed end funds, which also invest in a portfolio of securities but work with a fixed asset base. The value of their assets rises and falls, depending on how they invest. Their units trade like stocks, and mostly on a stock exchange.
If a broker sells you a conventional open end index fund, the broker can earn a steady stream of yearly trailer fees of 0.5% to upwards of 1.0%. Sometimes they get an immediate front-end load of up to 6% of your investment.
So you shouldn’t be surprised that brokers and brokerage-firm analysts respond to these incentives by favouring open-end mutual funds over closed-end mutual funds.
To succeed as an investor, you need to stay alert for these conflicts of interest. You need to keep in mind that some brokers will resolve them by favouring their own interests over those of their clients.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Get the complete guide to Investing in Canadian ETFs—learn how to get the maximum returns from your ETF investments. Download Best Canadian ETFs, Canadian ETFs vs Mutual Funds, Canadian Index Funds and More: The Rewards and Risks of Canadian ETFs for FREE.
An option offers its holder the right to buy or sell a particular security at a specific price within a specific time frame. Two kind of options are put options and call options.
Option trading involves a contract between buyer and seller based on an underlying security, usually a stock. The buyer pays the seller a fee, or premium, in exchange for certain rights to the stock. In exchange for the premium, the seller assumes certain obligations.
Options trade through stock exchanges, with prices quoted each day online or in the financial section of newspapers. Each options contract is for 100 shares of stock.
Each contract has a limited lifespan, or time to expiry—usually less than nine months. The expiry date is the date on which the contract expires.
Option trading often involves illiquid investments. They don’t trade a lot of volume on any given day. So it may be impossible to simultaneously execute transactions in all of the options involved in the combination, when you want to close out a trade.
Or if you can execute the trades, it may not be at the prices you need to make money. Even more risky is if you’re only able to close out one side of a transaction and not the other. That leaves one side of the trade open, and that entails a higher level of risk than expected in a combination.
Options trading is a major profit source for many brokers, since you pay commissions each time you buy or sell stock options. Most investors involved with options trading wind up losing money.
Rather than trade options, at TSI Network, we recommend using our three-part Successful Investor philosophy to build a portfolio of stocks:
Discover how to build greater wealth with less risk, claim your FREE digital copy of How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio now.
An option is a contract between a buyer and a seller, based on an underlying security, usually a stock. Options trading is when the buyer pays the seller a fee, or premium, in exchange for certain rights to the stock option. In exchange for the premium, the seller assumes certain obligations.
Options trading occurs through stock exchanges, with prices quoted each day in the financial section of newspapers. Each options contract is for 100 shares of stock. So one contract quoted at $5 will cost you $500 (before commissions).
Calls give the holder or buyer the right to buy the underlying security at a specified strike price until the expiration date. Puts grant the holder or buyer the right to sell the underlying security at the strike price until the expiry date.
Each options trading contract has a limited life span, or time to expiry—usually less than nine months. The expiry date is the date on which the contract expires. The strike, or exercise price, is the price at which the rights granted to the buyer can be exercised.
In options trading, we think that you will eventually lose. That’s the key difference between most aggressive investing methods and stock option investing. If you want to invest aggressively, our best advice is to avoid options and buy stocks like those we recommend in our Stock Pickers Digest newsletter.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover our complete guide to Canadian wealth management and making the most out of your savings. It’s all in our newly updated report, Wealth Management & Retirement Planning: Canada RRSP Contribution Limit, RRSP Interest Rates, TFSA Contribution Limit and More. And it’s yours FREE!
Out of favor stocks are investments that are currently unpopular with investors— and sometimes offer good bargains.
Some out of favor stocks trade at low price/earnings multiples because even though they have steady profits, they are in unpopular or unfashionable industries. Examples right now might be resource stocks, or even some manufacturing firms making ball bearings or fasteners and so on.
A P/E (Price to Earnings) ratio is the ratio of a stock’s price to its per-share earnings. The standard P/E ratio involves using a stock’s current price and its earnings for the previous 12 months. These financial ratios are widely followed, and are an important part of many investors' decision making. The general rule is that the lower a stock’s P/E ratio, the better, but you should never use this metric as your sole barometer for quality stocks.
Some value investors look for out of favor stocks in the hope that these low p/e out of favor stocks will become good selections for long-term investing.
One of the key principles of successful investing is to buy some high-quality “value stocks”—that is, stocks that are reasonably priced, if not cheap, in relation to their sales, earnings or assets. Well-informed investors who recognize this value while the stock lingers at a cheaper price should reap the benefits of their foresight.
Well-established but out of favor stocks can provide great opportunities for gains.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how hidden value turns into explosive profits, claim your FREE digital copy of Canadian Value Stocks: How to Spot Undervalued Stocks & Our Top 4 Value Stock Picks now.
The over the counter market (OTC) is a centralized information network that includes services designed to benefit market makers, issuers, brokers and OTC investors.
A company that trades over the counter is usually one that doesn’t meet the minimal criteria for capitalization and number of shareholders that are required by most stock exchanges.
Most stocks that trade on over-the-counter markets are penny stocks or “pink sheet stocks,” a holdover from the days when the quotes for these speculative stocks were printed on pink paper.
Over the counter markets are generally of low quality and limited trading activity. Over-the-counter stocks rarely get much attention from analysts or investment publications and newspapers. That adds to the difficulty of attracting a buyer for your shares at a higher price.
We'd have to see an extraordinary opportunity to recommend anything in the over-the-counter market—and nothing we have yet seen comes close.
While we think it’s important for investors to know about the over the counter exchange, we also feel it’s far too risky for investors to dabble in. To invest wisely, follow TSI Network’s three-part Successful Investor strategy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Over-the-counter stocks are shares of companies that are traded on the over the counter market by “market makers” or traders who maintain an orderly market in a particular stock by standing ready to buy or sell shares. When a company does not meet the listing requirements of an exchange like Nasdaq or New York they will typically be traded on over the counter markets.
Most companies who trade over-the-counter don’t meet the minimum criteria for capitalization and number of shareholders that are required by major stock exchanges. An over-the-counter stock (OTC) could also usually be considered a penny stock.
In the end, over-the counter trading is typically for investors who are not afraid of losing the money they invest.
U.S. based over the counter stocks are also known as “pink sheet stocks,” a holdover from the days when the quotes for these speculative stocks were printed on pink paper.
Because of their generally low quality and limited trading activity, over-the-counter stocks rarely get much attention from analysts or investment publications and newspapers. That adds to the difficulty of attracting a buyer for your shares at a higher price. We'd have to see an extraordinary opportunity to recommend anything in the U.S. over-the-counter market. Nothing we have yet seen comes close.
Trading over the counter stocks is very risky. We think you are better off buying stocks by following TSI Network and using our three-part Successful Investor strategy:
The key to finding the “hidden gems” in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough’s decades of experience—and his specific recommendations—in our special report, Canadian Penny Stocks: What You Need to Know about Handling the Risks and Reaping the Rewards, on TSI Network. Claim your FREE copy right now!
They do this by standing ready to buy or sell shares-instead of one the major exchanges like the TSX, NYSE, and Nasdaq. Most companies who trade over-the-counter don't meet the minimum criteria for capitalization and number of shareholders that are required by major stock exchanges.
Most stocks that trade over-the-counter (OTC) are considered penny stocks. In the end, over-the counter trading is typically for investors who are not afraid of losing the money they invest.
Companies that trade on the U.S. over-the-counter market are said to trade as "pink sheet stocks," a holdover from the days when the quotes for these speculative stocks were printed on pink paper. Because of their generally low quality and limited trading activity, over-the-counter stocks rarely get much attention from analysts or investment publications and newspapers.
That adds to the difficulty of attracting a buyer for your shares at a higher price. We'd have to see an extraordinary opportunity to recommend anything in the U.S. over-the-counter market. Nothing we have yet seen comes close. We think the best way to invest in stocks is to follow our three-part Successful Investor strategy:
Discover how the key to finding the "hidden gems" in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough's decades of experience—and his specific recommendations—in our special report, Buried Treasure: Canada's Penny Stock Guide.
P/E ratios, also known as Price to Earnings ratios, are widely used financial ratios that compare a stock’s price to its per-share earnings. You’ll see that most stocks have their P/E ratio listed regularly in newspapers and on the Internet. This particular financial ratio is widely followed, and is an important part of many investors’ decision-making.
The standard P/E ratio involves using a stock’s current price and its earnings for the previous 12 months. The general rule is that the lower a stock’s P/E ratio, the better. A P/E of less than, say, 10, typically represents excellent value. A low P/E implies more profit for every dollar you invest.
But you need more than one reliable measure to be a successful investor. It’s always a bad idea to base your investment outlook on any one indicator or tool. It’s a particularly bad idea to base your outlook on a single idea that is in fashion with investors.
Savvy investors use a whole host of financial fundamentals to aid them in their investment decisions. They also use our three-part Successful Investor philosophy when investing in any market:
Get the complete guide to how to build wealth with a conservative investing approach in our FREE investing guide, How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio.
Paper trading refers to using practice accounts, these days usually online, to simulate buying and trading on the stock market without any money being exchanged. Paper trading is common when new investors want to fine-tune their skills in trading.
The online brokerage industry has been getting a lot of attention and goodwill by offering “practice accounts” where investors can get into paper trading. A practice account is supposed to be identical to a real account in all but one respect: you buy stocks online in them with imaginary or “play” money rather than the real thing.
The industry says paper trading gives would-be traders a free opportunity to learn how to trade online without risking any money.
With paper trading you can learn online trading essentials, such as how to enter an order to sell or buy stocks online; how to double-check your order before submitting it so you avoid obvious but common mistakes, like buying 10,000 shares when you only meant to buy 1,000; and so on. In doing so, you can choose what stocks to buy, but the only feedback you’ll get on your choices is the price changes they go through after you buy.
Paper trading with a practice account that lets you buy stocks online without real money may seem to be a convenient way to learn investing. But it can lead investors to take an investment approach that puts their money at risk.
At TSI Network, we recommend a long-term trading strategy using our three-part Successful Investor philosophy instead:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio.
A parent company is a company that holds sufficient voting stock to have control over another corporation. This can occur through the creation of a now publicly traded subsidiary or through the purchase of stock in another company.
Parent companies are also formed via corporate spin offs. The parent company typically starts by selling a portion of the new company to the public, to establish a market and a following among investors. That way, by the time of the spin-off, stock in the new company is liquid enough to be sold relatively easily, and held with some confidence as a worthwhile investment.
In our experience, and in most academic studies of the subject, this helps the parent and the spin-off. Both generally do better than comparable companies for at least several years after the spin-off takes place. We would never invest purely because of a spin-off, of course, because there is no guarantee of this “spin-off bonus”. However, it’s certainly a plus.
Parent companies and spinoffs are just one example of the stocks we look to recommend for investors. Overall, though, for a sound long term investing strategy we recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Toronto symbol PSI, rents instrumentation and provides data services to oil and gas companies and drilling contractors throughout Canada, the U.S., Mexico and Argentina. Its services include data acquisition, well-site reporting software, remote communications and Internet information management tools.
Pat McKeough is TSI Network’s editor and publisher. He offers portfolio management and authors a series of investment advisories, including our flagship newsletter, The Successful Investor.Pat McKeough is TSI Network’s editor and publisher, offers portfolio management, and authors a series of investment advisories including our flagship newsletter, The Successful Investor. TSI Network is based on Pat’s rock-solid investing system and his unflinching focus on helping North American investors make the right choices for their own unique investment needs.
A professional investment analyst for more than 25 years, Pat McKeough has developed a stock-selection technique that has proven reliable in both bull and bear markets. His proprietary ValuVesting System™ focuses on stocks that provide exceptional quality at relatively low prices. Many savvy investors and industry leaders consider it the most powerful stock-picking method ever created.
As early as 1980, Pat was recognized as #1 in the world of published investment advice by the Washington, DC–based Newsletter Publishers Association, and he was the first multi-year winner of The Globe and Mail’s stock picking contest.
Both CBS MarketWatch and The Hulbert Financial Digest [link to Hulbert article page from this week] recognize Pat as one of North America’s top stock analysts. The Wall Street Journal calls him “one of only four investment newsletter advisors who have managed to serve their readers well over the long haul.”
Pat McKeough is also a best-selling Canadian author, he wrote Riding the Bull, his 1993 book that predicted the 1990s stock-market boom. Through his many television appearances, he is well-known to investors for his insightful analysis and his candid, unpretentious style.
Pat has a proven track record of helping investors like you make money by finding low-risk, high-yield investment opportunities. To learn more about Pat’s investment advisories, click here.
Pat McKeough’s conservative, reduced-risk strategy is a proven approach to safe investing. He recommends a three-part investing philosophy:
Discover how to build a winning stock market portfolio in Pat’s FREE special report, The Canadian Guide on How to Invest in Stocks Successfully.
The "pendulum theory" grew out of Sir Isaac Newton's 17th-century studies of gravity and physics, particularly his second law of motion. Yet the theory turns up in discussions of all sorts of non-mechanical topics. This includes investors' efforts at understanding the stock market. You could sum up the investment version of the theory like this: stock prices alternate between periods of overvaluation and undervaluation; the degree and duration of each period of overvaluation is related to the degree and duration of the subsequent period of undervaluation, and vice versa. In other words, the theory says that when stocks head downward after a period of overvaluation, they won't stop at fair value. Instead, they'll keep dropping until they hit lows that are in some sense as out-of-whack as previous highs, or close to it. Pendulum theory is a handy way to label the past, and it gives you a sense of how stock prices behave. But it's useless for predicting the future or timing the market. That's why it generally plays a small part in successful investing. If you qualify as a "successful investor," you probably recognize that the market never gets so high that it can't go higher, nor so low that it can't drop some more. This is a key part of understanding the stock market. The Pendulum theory gives you an interesting hypothesis on the market and its movements up and down. But for the best investment success, at TSI Network we recommend using our three-part Successful Investor philosophy:
Discover how to make the most of your stock investments in our free special report, Stock Market Investing Strategy: Pat McKeough's Conservative Investing Guide for Making Money & Cutting Risk.
Toronto symbol PGF.UN, produces oil and natural gas in western Canada, as well as offshore Nova Scotia.
Buying penny shares can lead to a big payday when you make the right choice. But the odds against success in penny shares are high. Penny stocks are almost always involved in riskier ventures, such as finding mineral deposits that can be mined at a profit, commercializing unproven technologies or launching new software.
At TSI Network, we think allocating a significant percentage of your portfolio to penny shares is a mistake. Buying low-quality penny shares is one of those things that can appear to be successful before it goes badly wrong. Some get hooked on it, since low-quality stocks can be highly profitable over short periods. That’s because they are generally more volatile than high-quality stocks.
In general, you should only buy penny shares with money you can afford to lose. For the bulk of your portfolio, you can put the odds in your favour by following our three simple rules:
Unlike with penny shares, this three-part strategy puts time in your favour. The longer you stay invested in high quality stocks, the more likely you are to come out ahead.
The key to finding the “hidden gems” in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough’s decades of experience—and his specific recommendations—in our special report, Canadian Penny Stocks: What You Need to Know about Handling the Risks and Reaping the Rewards, on TSI Network. Claim your FREE copy right now!
It’s much easier to launch and promote a stock than it is to start a successful, cash flow positive business. As a result, penny stocks do attract more than their share of stock promoters and shady dealers. Penny stock promoters love to make deals with major, household-name companies. They’re sure the public is far more likely to buy penny stocks that have agreements with a major mining company to finance exploration of their mining claims, or if a big tech firm has agreed to make them a “channel partner” and perhaps someday sell their revolutionary software or “cloud” application. The link with a major gives them instant credibility, especially with investors who are willing to buy penny stocks.
However, when stock promoters manage to make a deal with a major firm, they often go to great lengths to make it seem bigger than it is. Instead of announcing that the big company has invested, say, $50,000, a stock promoter may issue a press release saying the two companies have entered into a “multi-stage development plan.” The release may say the major company has agreed to spend “up to $10 million” or some other exalted figure.
If the big company agrees to spend $50,000 to study the mining property, new technology or pioneering program, it will also insist on a series of options that let it invest ever-larger sums on favourable terms. But the big company will always reserve the right to drop out and cut its losses.
A major mining company will gladly spend $50,000 many times, and lose every penny of it, if this means it will get a chance to develop the one rare project that’s ultimately worth an investment of, say, $500 million. If it waits till the property, technology or program has proven itself, development rights will be far more costly. So it gets in early by investing what are really just token amounts of money for a major firm. That’s why big-company involvement by itself is never a good reason to buy penny stocks.
There’s room for penny stocks in a small part of your portfolio, but at TSI Network we recommend using our three-part Successful Investor strategy:
The key to finding the “hidden gems” in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough’s decades of experience—and his specific recommendations—in our special report, Canadian Penny Stocks: What You Need to Know about Handling the Risks and Reaping the Rewards.
A penny stock promotion is launched by penny stock promoters, usually by their marketing department or public relations firm. Penny stock promotions are created to make a penny stock appear more valuable than it actually is. That’s because it’s much easier to launch a penny stock promotion than it is to create a successful, lasting business.
Penny stock promotions often try and tie a penny stock to major household names because penny stock promoters have an easier time selling a penny stock when a major mining company has agreed to look at their mining claims, or if a household-name multinational has agreed to evaluate their revolutionary software or “cloud” application.
When they get any kind of deal with a major, penny stock promoters go to great lengths to make it seem bigger than it is. In fact, when a penny stock shoots up on the news of big-company involvement, and the property/program/revolutionary software is still in the early stages of development, it’s often a good time to sell.
Control your stock trading risk by following TSI Network and using our three-part Successful Investor strategy:
Discover how to pick more promising penny stocks when you download TSX Penny Stocks: Hot Canadian Penny Stocks and How to Invest in Penny Stocks in Canada for FREE.
A penny stock typically trades for under five dollars, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or in speculative markets like mining exploration or concept technologies, or some newly emerging business.
Buying Canadian penny stocks can lead to a big payday when you make the right choice. But the odds against success are high. Penny stocks are almost always involved in riskier ventures, such as finding mineral deposits that can be mined at a profit, commercializing unproven technologies or launching new software.
What’s more, it’s hard for any new company to grow into a profitable business, and it’s even harder in pioneering fields. But it’s relatively easy to launch a stock promotion that purports to have answers to social problems or ways to profit from emerging technology.
That’s why penny stock promotions are always more common than legitimate start-ups. Penny stock promoters love to make deals—however small or indirect—with major, household name companies. They find it far, far easier to sell stock to the public if Teck, BHP Billiton or some other major mining company has agreed to finance exploration of their mining claims, or if Apple or Intel or some other household-name multinational has agreed to evaluate their revolutionary software or “cloud” application. The link with a major gives them instant credibility, especially with investors who are willing to buy penny stocks.
In fact, when a penny stock shoots up on the news of big-company involvement, and the property/program/revolutionary software is still in the early stages of development, it’s often a good time to sell.
There's room for penny stocks in a small part of your portfolio, but at TSI Network we recommend using our three-part Successful Investor strategy:
The key to finding the “hidden gems” in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough’s decades of experience—and his specific recommendations—in our special report, Canadian Penny Stocks: What You Need to Know about Handling the Risks and Reaping the Rewards.
New York symbol PEP, is the world's second-largest maker of soft drinks after Coca-Cola. Other businesses include Frito-Lay snack foods, Tropicana fruit juices and Quaker Oats.
Toronto symbol PCA, is Canada's second-largest integrated oil company, after Imperial Oil. Most of its production comes from properties in Western Canada, as well as offshore platforms near Newfoundland. It also operates 1,500 retail gas stations and two petrochemical refineries in Canada.
The pharmaceutical industry researches, develops, produces and markets drugs. The pharma industry is heavily regulated by various laws and organizations like the U.S. Food & Drug Administration (FDA). Major pharmaceutical companies are more speculative than most investors realize. They need a continuing flow of successful new products to maintain their earnings. They face increasing litigation and aggressive competition from generics as drugs come off patent. Unlike tech stocks, they have formidable regulatory burdens, and unlike other manufacturing stocks such as, say, auto companies, they do not benefit from customer loyalty. Even when pharmaceutical industry research succeeds and creates new products, drug companies have to live with the constant threat of competition from breakthrough products that work better and/or are cheaper. But sometimes, drug company research fails to produce the hoped-for results. This failure may only become apparent with unsatisfactory results from the lengthy, costly drug trials required to gain regulatory approval. If you are adding a drug stock to your portfolio you may want to consider a drug company that has been paying dividends. We think very highly of companies that have been paying dividends to its investors for at least 5 to 10 years. At TSI Network, high quality companies from the pharmaceutical industry may have a place in your portfolio. One great example is Pfizer Inc., a recommendation of our Wall Street Stock Forecaster newsletter. We also recommend using our three-part Successful Investor philosophy for long-term investing: Invest mainly in well-established companies; Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities); Downplay or avoid stocks in the broker/media limelight. Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
New York symbol PHG, makes consumer electronic products, such as TV sets, DVD players and kitchen appliances. The company also makes lighting equipment and high-end medical equipment.
Pink sheets are companies that trade on the U.S. over-the-counter market, a holdover from the days when the quotes for these stocks were printed on pink paper. They are for investors looking for high-risk investments.
Today, OTC Markets Group (formerly Pink OTC Markets Inc.), a private company, is the main provider of pricing and financial information for the over-the-counter (OTC) securities markets.
OTC Markets Group operates a centralized information network that includes services for issuers, brokers and OTC investors, as well as “market makers”. Pink Sheets’ information aims to make OTC trading more efficient and improve access to capital for OTC issuers.
Companies that trade as “pink sheets stocks” usually don’t have sufficient market caps, or enough shareholders, to meet most stock exchanges’ minimum criteria.
Over-the-counter shares are often sporadically or inactively traded. That can make buying penny stocks and pink sheet stocks (and selling them) more difficult and expensive than shares on larger stock exchanges.
Stocks trading over the counter may at times seem to offer extraordinary opportunities, but this can be an expensive illusion. Most legitimate companies with substantial growth potential will want to leave the over-the-counter market as quickly as possible and move their stock to the major markets, where financing is more plentiful and less expensive. This tilts the odds against you.
That’s why we’ve stayed out of the over-the-counter market and are likely to continue to stay out. There are just too many attractive buying opportunities in major markets, where risk is lower and your chances of making money are better.
The key to finding the “hidden gems” in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough’s decades of experience—and his specific recommendations—in our special report, Canadian Penny Stocks: What You Need to Know about Handling the Risks and Reaping the Rewards, on TSI Network. Claim your FREE copy right now!
Portfolio diversification is the process of making sure you balance your investments so they are not tied to one industry, geographic area, or investment type. Portfolio diversification gives you the greatest chance for safety and profit and is a key part of our three-part Successful Investor philosophy. You can start to diversify your portfolio by spreading your money out across the five main economic sectors (Finance, Utilities, Manufacturing, Resources and Consumer).
The proportions should depend on your objectives and the risk you can accept. The Finance and Utilities sectors generally involve below-average risk. Manufacturing and Resources tend to be riskier, and the Consumer sector is in the middle. Diversifying your portfolio can also mean balancing your investments geographically. Avoid focusing your portfolio on any one country or region. As well, a lower-risk way to add international exposure to your portfolio is to hold multinational U.S. stocks, such as IBM, McDonald's and Wal-Mart, which are active in markets around the world.
In summary, investors should never have all their money tied to one investment idea, location, industry or type. At TSI Network we recommend our three-part Successful Investor philosophy for investing:
We often receive questions about planning and enjoying a successful retirement. Our answers to those questions, based on decades of investment experience, are all located in this FREE report: 9 Secrets of Successful Wealth Management.
Portfolio management is the process of choosing and monitoring the investment holdings for an individual or institution. Portfolio managers choose from a range of investments, including stocks and bonds, to maximize returns for their clients. Pat McKeough's professional portfolio management service is ideal for conservative investors who want to devote their time to other uses, such as business or travel, or want to make sure their families have competent financial management when they can no longer provide it. It is also perfect for those who have little interest or experience in investing.
In 1999, Pat began providing personalized portfolio management to a small group of his readers. He wanted to give them the benefit of our Successful Investor philosophy, with its focus on investment quality, diversification and risk aversion. But, just as important, his portfolio management had to be free of broker-related conflicts of interest, just like his newsletters.
Connections with the brokerage industry, common among portfolio management firms, can lead to transactions that are good for the brokers but less so for the clients. That's why we don't accept referrals from brokers. We rely strictly on our newsletter subscribers and client referrals to market our management services.
One of our core recommendations is a sound portfolio diversification strategy. Our approach gives you strong potential for long-term gains. If you diversify as we advise, you improve your chances of making money over long periods, no matter what happens in the market.
Above all, we recommend following our three-part Successful Investor strategy:
Discover how to make the most of your stock investments in this FREE special report: Stock Market Investing Strategy: Pat McKeough's Conservative Investing Guide for Making Money & Cutting Risk.
Portfolio turnover is the rate and frequency at which investors buy and sell stocks in their portfolios. Portfolio turnover can be a big problem, for new or established investors.
Investors often wonder how often they should sell investments they own and buy new ones. Our answer: as rarely as possible. That’s because a portfolio turnover cuts into your profit.
Every time you buy and sell a stock you face three costs. 1). Brokerage commissions. Every transaction involves brokerage commissions or similar costs, even if these costs are hidden or built into the price you pay or receive. 2.) Losses to the bid-ask spread. If you want to carry out a transaction right away, you have to accept the highest available ‘bid’, or pay the lowest ‘offer’. You can enter your own bid or offer. But this means you have to wait for another investor who is willing to do business at your price. Meanwhile, prices could move against you. 3).Taxes. If you sell at a profit in your taxable account (outside your RRSP), you usually have to pay capital gains taxes.
To be successful, investors should limit their portfolio turnover. Instead, maximize your stock market gains by following TSI Network and using our three-part Successful Investor strategy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio.
Portfolio turnover rate is the yearly frequency at which you buy and sell stocks in your portfolio. Investors wonder how often they should sell investments they own and buy new ones. Our answer: as rarely as possible. That's because high portfolio turnover rates cut into your profit. Every time you buy and sell a stock, and when you increase your portfolio turnover rate, you face three costs: 1- Brokerage commissions: Every transaction involves brokerage commissions or similar costs, even if these costs are hidden or built into the buying or selling price. 2- Losses to the bid-ask spread: If you want to carry out a transaction right away, you have to accept the highest available "bid", or pay the lowest "offer". You can enter your own bid or offer. But this means you have to wait for another investor who is willing to do business at your price. Meanwhile, prices could move against you. 3- Taxes: If you sell at a profit in a taxable account (outside your RRSP), you usually have to pay capital gains taxes. At TSI Network, we think having a high portfolio turnover will hurt your returns. We recommend using our three-part Successful Investor philosophy instead:
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Potash stocks are stocks of companies that explore for, mine, and process potash. Potash is a compound of mineral and chemical salts that contain potassium. It’s used to make fertilizer.
Potash mining companies sometimes use solution mining to extract potash. This process uses water to dissolve a mineral (potash, in this case) into a solution that is then pumped out of the deposit through vertical boreholes or abandoned mine workings. It is then crystallized and purified into the finished product. Solution mines are cheaper to build than conventional potash mines, mainly because they do not require a shaft.
Potash is a key component in solving the need for increased and improved crops around the globe, especially in still-developing nations. This will continue to drive long-term demand for potash and push up the profits of potash stocks. Without fertilizer, the world would need 50% more farmland to meet this need.
Holding potash stock in your portfolio could be a good idea for many investors if you’re looking to fill out your resource sector stocks. You can maximize you long-term returns by following TSI Network and using our three-part Successful Investor strategy:
Discover how to build a winning stock market portfolio in this free special report,How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio, from TSI Network. This complete guide to investing in stocks for Canadians will help you build wealth with a conservative investing approach.
Toronto symbol POW, is a diversified holding company. Power Corp. controls one of Canada's largest mutual-fund companies, IGM Financial, as well as Great-West Lifeco, one of the largest life insurers.
The online brokerage industry is winning a lot of attention and goodwill by offering “practice accounts.” A practice account is supposed to be identical to a real account in all but one respect: you buy stocks online in them with imaginary or “play” money rather than the real thing.
The industry says a practice account gives would-be traders a free opportunity to learn how to trade online without risking any money. To us, this appears to be a misstatement—an example of the essence of marketing, which is to describe a feature in such a way that the prospect comes to see it as a benefit.
Practice-account users aren’t learning how to invest. They are just learning how to enter orders online. Using an online broker’s practice account, you can learn online trading essentials, such as how to enter an order to sell or buy stocks online; how to double-check your order before submitting it, so you avoid obvious but common mistakes, like buying 10,000 shares when you only meant to buy 1,000; and so on. In doing so, you can choose what stocks to buy, but the only feedback you’ll get on your choices is the price changes they go through after you buy.
A practice account that lets you buy stocks online without real money may seem to be a convenient way to learn investing. But the big risk with practice accounts is that you’ll try out a risky and ultimately unwinnable investment approach, like day trading or options trading, and hit a lucky streak. This could embolden you to put serious money at risk just when your results are about to regress to the mean and deliver losses instead of profits.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio.
Toronto symbol PD.UN, is Canada's largest provider of contract drilling and related services to the oil and natural gas exploration industry.
There are generally two types of stock issued by a company: common and preferred. Preferred stocks typically have no voting rights (unless a specified number of dividend payments have been missed). Instead, preferred shares are entitled to a fixed dividend payment. In the event of company bankruptcy, preferred shareholders have a higher priority claim on company assets than common shareholders.
Dividends on preferred shares must be paid out before dividends to common shareholders. Sometimes preferred dividend payments are cumulative—all preferred dividends in arrears must be paid out before common dividends are resumed in a troubled company. But sometimes preferreds are non-cumulative.
There are ETFs that hold preferred shares. For example, the BMO S&P/TSX Laddered Preferred Share Index ETF, symbol ZPR on the Toronto stock exchange, holds floating-rate preferred shares that pays dividends that fluctuate with changes in interest rates. The dividend rate may range from 50% to 100% of (usually) the prime bank rate. As interest rates rise, so do floating-preferred dividend yields.
Sometimes the floating-rate feature only kicks in several years after the issuer sells the preferreds to investors. For example, the preferreds may pay dividends at a fixed rate for five years, and then the payout floats with interest rates.
High-quality preferred shares are okay to hold in your portfolio, although we think that the best common shares can offer both high yields and growth prospects. All in all, we think you should follow TSI Network and use our three-part Successful Investor strategy:
Get the complete guide to Investing in Canadian ETFs—learn how to get the maximum returns from your ETF investments. Download Best Canadian ETFs, Canadian ETFs vs Mutual Funds, Canadian Index Funds and More: The Rewards and Risks of Canadian ETFs for FREE.
Prepaid funerals funerals are when a person pays for their own funeral service expenses years or even decades before they die.
When you prepay a funeral, you are investing money in a highly specialized fixed-return investment. You pay now, and get a fixed return consisting of preselected funeral services at an indeterminate point in the future—the few days or weeks after your death.
There are a few downsides that need to be considered. You don’t get any return on the money you’ve paid, while the funeral home (or the insurer) may hold your money for decades. Depending on the prepaid funeral plan, you may be stuck with your initial choice of funeral home, even if its service has deteriorated. You may also be stuck with your initial funeral plan, even if it’s hopelessly out of date in relation to community standards or the personal circumstances of you or your survivors.
Knowing that you are largely a captive customer, the funeral home may drive a harder bargain on related services than it would if it had to win your business as a new customer.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to put extra strength into your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
What is a price/earnings ratio? P/E (Price to Earnings) ratios-the ratio of a stock's price to its per-share earnings-are published regularly in newspapers and on the Internet. These financial ratios are widely followed, and are an important part of many investors' decision making. The standard P/E ratio involves using a stock's current price and its earnings for the previous 12 months. The general rule is that the lower a stock's P/E ratio, the better. A P/E of less than, say, 10, generally represents excellent value. A low P/E implies more profit for every dollar you invest. But you need more than one reliable measure to be a successful investor. Successful investors treat P/E's as one of many tools, not a deciding factor. By themselves, P/E's can steer you wrong on individual stocks, and on the market in general. You need to ask yourself if a P/E is telling you something about the "quality" of a company's earnings by being unusually high or low. In the worst cases, buying stocks with low P/E's, and thinking that alone means you're buying value, is often like boarding a train before it derails. Price/earnings ratios are just one of the many measures successful investors use in analysing stocks. At TSI Network we also recommend using our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our free investing guide, The 10 Best Practices of Successful Investors.
The P/E (Price to Earnings) ratio - the ratio of a stock's price to its per-share earnings-are published regularly in newspapers and on the Internet. These financial ratios are widely followed, and are an important part of many investors' decision-making.
The standard P/E ratio involves using a stock's current price and its earnings for the previous 12 months. The general rule is that the lower a stock's P/E ratio, the better. A P/E of less than, say, 10, generally represents excellent value. A low P/E implies more profit for every dollar you invest. But you need more than one reliable measure to be a successful investor.
Successful investors treat P/E's as one of many tools, not a deciding factor. By themselves, P/E's can steer you wrong on individual stocks, and on the market in general. You need to ask yourself if a P/E is telling you something about the "quality" of a company's earnings by being unusually high or low. In the worst cases, buying stocks with low P/E's, and thinking that alone means you're buying value, is often like boarding a train before it derails.
The Price/earnings ratio is just one of the many measures successful investors use in analysing stocks. At TSI Network we also recommend using our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our free investing guide, The 10 Best Practices of Successful Investors.
formerly Toronto symbol PWI.UN, produces oil and natural gas in western Canada. The trust was acquired by Abu Dhabi National Energy Co. in 2007.
A private REIT is real estate investment trust that is not publicly traded on a stock exchange, unlike a conventional REIT. That means that private REITs calculate the value of their own units, and needn’t reveal all the information that’s available to the public from publicly traded investments.
A private real estate investment trust typically portrays this feature as a benefit—since it avoids what it sees as the volatility and speculation of public markets.
But at the same time, private REITs lack the scrutiny from nosy outsiders and analysts who will find out about, and draw attention to ,hidden risks and problems that the REIT happens to suffer from.
Top-quality REITs are among the most stable and highest yielding real estate investments. That's because many REITs hold high-quality, non-depleting assets, and can lock in lease rates and financing costs for long terms.
The best of the REITs, private or not, have good management, and balance sheets strong enough to weather long economic downturns. They also have high-quality tenants, and carefully match their debt with their leases.
However, we think investors should stay away from private REITs. Instead, stick with publicly traded REITs—and benefit from the full scrutiny of investors and regulators.
Use our three-part Successful Investor philosophy when investing in conservative as well as aggressive investments:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
New York symbol PG, is one of the world's largest makers of household and personal care products.
Procter and Gamble stock is an investment in Procter and Gamble, one of the world’s best-known consumer products brand.
Procter & Gamble Co. (New York symbol PG) makes products in five main categories: fabric and home care items, such as Tide laundry detergent; baby goods, including Pampers diapers; beauty products, like Olay cosmetics; grooming items, including Gillette razors; and health care products, such as Crest toothpaste.
Procter has sold many of its less profitable brands, including its recent deal to transfer 43 beauty product lines, including Wella, Clairol, Max Factor and CoverGirl, to Coty Inc. (New York symbol COTY).
Procter and Gamble is using the cash from its asset sales to boost its efficiency, including streamlining its supply networks and distribution channels. It feels this will cut $3.0 billion from its annual costs. These savings will give Procter more cash for share buybacks and dividends. The company has raised its payout for 59 straight years.
International markets supply two-thirds of Procter’s sales. Procter and Gamble stock trades at a reasonable price/earnings multiple, in light of its well-known brands and improving long-term profitability.
Find more investments like Procter and Gamble stock by following TSI Network and using our three-part Successful Investor strategy:
Discover how to build long-term profits with the right dividend stocks, claim your FREE digital copy of The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks now.
A proxy is a written authorization or ballot provided by a shareholder that permits another individual to exercise the voting rights of the shareholder at company meetings. Proxy ballots sent to shareholders typically list the issues that will be raised at the shareholders meeting, as well as the directors up for election. Shareholder meetings are often in far off cities. It may not make sense for shareholders to incur the travel expenses and use their valuable time to be present at shareholder meetings. Submitting a proxy lets them vote without having to physically be at the shareholder meeting. Incidentally, some shareholders meetings can be interesting events. Shareholders of Warren Buffett's Berkshire Hathaway holding company are invited to a 3-day conference that features a shopping day, various prominent keynote speakers, a picnic and dinner at Warren Buffet's favourite steak house. A company called Broadridge FinancialSolutions serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. The company processes 90% of all proxy votes in the U.S. and Canada. Broadridge is recommendation of our Stock Pickers Digest newsletter. At TSI Network, we recommend using our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Toronto symbol PSD, is a seismic data library firm specializing in acquiring, selling and licensing seismic data to clients in Western Canada.
Put options grant the holder or buyer of the put stock options the right to sell the underlying security at the strike price until the expiry date. In turn, the seller or writer of the put has the obligation to buy or take delivery of the underlying security until expiration.
Suppose you hold a high-quality stock in your portfolio that you believe will rise in price over the long term. But you’re concerned about a possible downturn in the market in the short term. You can buy a put option for the stock. This will give you the right to sell your stock at a set price (the strike price) within a certain time frame (before the expiry date).
If the stock price stays above the strike price, you would let the option expire unexercised—you only lose the cost of the put. But if the market declined drastically, you could exercise your option and sell your shares to the writer of the put at the strike price. You could then, if you wanted to, buy the shares back again at the lower market price.
Note, though, that buying put options for insurance is like betting against yourself. You’re better off just selling the stock if you think it’s going to drop in price. Furthermore, you may be right about a market decline, but you have to hope it happens before your put expires. If the decline takes a while to occur, you could continue to buy puts for a considerable period of time. That would eat steadily into your eventual profits.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover our complete guide to Canadian wealth management and making the most out of your savings. It’s all in our newly updated report, Wealth Management & Retirement Planning: Canada RRSP Contribution Limit, RRSP Interest Rates, TFSA Contribution Limit and More. And it’s yours FREE!
New York symbol KWR, makes lubricants and specialty chemicals that protect industrial machinery from corrosion.
A quarterly earnings call reviews financial results of a public company four times each year. A company’s earnings per share, or EPS, are discussed and analyzed during a quarterly earnings call.
This earnings call has traditionally been conducted by a company’s management via teleconference, although the use of webcasts has grown for many earnings calls.
Participants engaging in quarterly earnings calls typically include investors, managers of the company, analysts, and relevant media reporters.
A quarterly earnings call typically takes place after an earnings report is sent out to investors or sent out in press releases or on news feeds.
The investment world often responds to earnings with stock price movements. Shares can rise and fall almost instantaneously on a good or bad report.
It is certainly in the interests of a company to make its earnings look as attractive as possible, and many will do anything they can to dress up their reports. This includes adding one-time items. That’s why we look very carefully at company earnings reports—and factor out those one-time items.
Boost your long-term investment returns by following TSI Network and using our three-part Successful Investor strategy:
Discover how to get the maximum profits from the strongest stocks by claiming your FREE digital copy of Canadian Blue Chip Stocks: Bank of Nova Scotia Stock, CP Rail Stock, CN Rail Stock, Royal Bank Mutual Funds and more now.
Rare earth element investing focuses on rare earth stocks, which are shares of companies that explore for, mine and refine rare-earth elements.
Rare earth elements and minerals are a group of metals with unique characteristics. These include Scandium, Ytterbium, Lanthium and Samarium.
Uses of rare earth element investments include: 1) catalytic converters, 2) magnets in small and large motors, 3) glass additives and glass-polishing compounds, 4) rechargeable batteries and 5) TV and computer screens, lighting, x-ray machines and lasers.
China accounts for around 95% of global production of all rare earth investments. Most of its output is from mines in Inner Mongolia. However, there are potentially mineable rare-earth deposits in Australia, Africa and North America.
Rare earth element stocks typically have very labour-intensive mining operations. These mines are best suited for countries with low wages and weaker environmental standards, which is the main reason why few significant new mines have opened in other parts of the world.
The total global market for investing in rare earth element stocks is rising. It has the potential to go substantially higher, with the expansion of technology sales to an expanding middle class in emerging markets, but that could take years if not decades.
Learn more about rare earth element investing—and building a successful portfolio—by following TSI Network and using our three-part Successful Investor strategy:
Discover how to pick the best Canadian mining stocks when you download this FREE Special Report, Best Canadian Mining Stocks TSX: Plus Gold Stocks, Canadian Diamond Mines and More.
Rare earth mining stocks are shares in companies that mine for rare earth minerals like Scandium, Yttrium, Lanthanum, Cerium, Praseodymium, Neodymium and Promethium.
Rare earth minerals are used in a variety of modern devices and applications, including catalytic converters and petroleum refining; magnets in small and large motors; glass additives and glass polishing compounds; rechargeable batteries; television and computer screens; lighting; X-ray machines; and lasers.
Prices of rare earth miners are highly volatile. That’s mainly because China, which accounts for around 95% of global production, periodically imposes cuts in export quotas. China regularly imposes these quotas on exports of rare earths to boost prices internationally and ensure enough supplies for Chinese companies.
However, rising prices also sparks smuggling operations of rare earth metals. Smugglers use a range of methods, including injecting rare earths into pottery, which they then ship out of the country. The metals are later extracted when the pottery reaches its destination.
Investors should know that rare earth mining stocks are subject to fluctuating environmental restrictions. Rare earth mining and refinement processes are very toxic and run up against increasing strict environmental regulations in many jurisdictions.
To lower your risk in mining stocks, follow TSI Network and use our three-part Successful Investor strategy:
Discover how to make the most of your copper investments in this free special report, Gold Mining: How to Choose the Best Stocks and ETFs to Profit from the Reconstruction of Japan, from TSI Network.
Toronto symbol RC, provides software and hardware products for electronic payment processing, mainly in the United States.
Real estate is property you can invest in, whether it’s personal like a home, or for business like an office building or shopping mall.
Many individuals have grown rich through part-time involvement in real estate investing—probably more than have done so through the stock market. However, that’s mainly because of three key factors that are easy to overlook: leverage, sweat equity and higher risk.
It’s easier to get financing for real estate investments than for stocks because real estate tends to be less volatile and easier to appraise, and it generally produces more current income. It also rarely drops drastically overnight, as some stocks do from time to time.
Eventually, rents can rise to a point where they cover the mortgage, taxes, maintenance and other expenses. By then, you may have a big capital gain. But that can take many years. Meanwhile, you have to “feed” your property, as real estate investors say—that is, invest additional funds to cover the shortfall between rents and expenses.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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Real estate investing is the strategy of investing in real estate for profit. Many investment products, such as real estate investment trusts (or REITs), let you gain access to such investments without outright purchase of a piece of real estate and the management issues associated with such a purchase. Other types of real estate investments could include condos, timeshares, commercial real estate, and income properties like apartment buildings and residential complexes.
Investing in real estate often involves special types of loans to purchase property called mortgages. Reverse mortgages in Canada let homeowners who are 55 years of age or older borrow on their home equity-the minimum age was 60 until a year ago. (If it is a married couple, both spouses must be above age 55). Direct real estate investing-buying and managing your own properties-can be very profitable for investors who work hard and accept the risky nature of the real estate business. But if you decide to invest in real estate indirectly, say though real-estate stocks or REITs, you'll want to make sure these securities fit into a well-balanced portfolio. So when investing, we recommend using our TSI Network three-part Successful Investor strategy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
A real estate investment trust or REIT is a type of income trust—an investment trust that holds income-producing assets. Their units trade on stock exchanges, but they flow much of their income through to unitholders as “distributions.”
REITs were first set up like mutual funds for real estate, created by the U.S. Congress in 1960. They’re usually publicly traded, and investors like REITs because REITS have a high dividend yield, based on at least 90% of their taxable income.
Canadian REITs must be a corporation that’s taxable, and follow all the rules of being a corporation. They must invest 75% or more of their total assets in real estate and make at least 75% of their gross income from their properties, including rent, financing and sales. Like most stocks that are publicly traded, they live by the rules of exchanges, and require no less than 100 shareholders.
Real estate investment trusts can be lower risk, because they invest in income-producing real estate such as office towers, shopping malls or hotels. Even so, real estate still has risks—its value rises and falls with changes in the economy, interest rates and occupancy levels. Investing in other types of income trusts can be risky as well, as the businesses that underpin them may have steady cash flow, but could stagnate as the economy changes.
Still, REITs are popular among investors seeking income. For you overall portfolio, follow TSI Network and use our three-part Successful Investor strategy:
Discover our complete guide to Canadian wealth management and making the most out of your savings. It’s all in our newly updated report, Wealth Management & Retirement Planning: Canada RRSP Contribution Limit, RRSP Interest Rates, TFSA Contribution Limit and More. And it’s yours FREE!
High quality real estate investment trusts are among the most stable of the royalty and investment trusts. That's because many real estate investment trusts hold high-quality, non-depleting assets, and can lock in lease rates and financing costs for long terms.
In contrast, other investment trusts may hold low-quality assets in speculative industries such as resources, sugar production and refrigerated warehouses. These investments are subject to hidden business risks that could have a sudden, devastating effect on cash flow and yields.
Of course, real estate investment trusts are not without risks, which include losing tenants in a prolonged economic slowdown. Real estate investment trusts concentrated in one geographic area or one type of real estate can suffer if one region or industry sector slows down. Additionally, rising interest rates make it more costly to refinance debt as it comes due.
The best of the real estate investment trusts have good management, and balance sheets strong enough to weather a long economic downturn. They also have high-quality tenants, and carefully match their debt with their leases. The best real estate investments do well in spite of an economic slowdown, and take advantage of low rates to refinance long-term mortgages.
If you’re looking to invest in real estate investment trusts, please keep TSI Network’s three-part Successful Investor philosophy in mind:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
Real estate investments are investments in homes and commercial properties. Returns include rental income and capital gains when the property is sold for a profit.
Rental real estate investing enthusiasts say that if you buy a property with a 10% down payment, then a 10% rise in its value means you have doubled your money. However, that claim neglects the costs of selling (up to 5% or 6% for real estate commissions, plus lawyer’s fees and related expenses). It also overlooks any negative cash flow you may experience when you own the property, if rents fail to cover expenses.
Eventually, rents can rise to a point where they cover the mortgage, taxes, maintenance and other expenses. By then, you may have a big capital gain. But that can take many years. Meanwhile, you have to “feed” your property, as real estate investors say—that is, invest additional funds to cover the shortfall between rents and expenses.
Real estate investing may be an excellent way for you to turn a profit but it takes skill, capital, financing, and a little bit of luck to make it truly worthwhile.
Real estate investing can be profitable, although for most investors, their personal residence may be all the real-estate exposure they need. For your overall portfolio, we recommend using our three-part Successful Investor philosophy for long-term investing:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
Realized capital gains occur when you sell an asset for more than you paid for it.
With stocks, you only incur a capital gains tax liability when you sell or “realize” the increase in the value of the stock over and above what you paid for it. (Although mutual funds generally pass on their realized capital gains each year.)
In contrast to realized capital gains, interest and dividend income are taxed in the year in which they are earned.
You have to pay the capital gains tax liability you incur on profit you make from the sale of an asset. An asset can be a security, such as a stock or a bond, or a fixed asset, such as land, buildings, equipment or other possessions. However, you only pay capital gains tax on a portion of your profit. The “capital gains inclusion rate” determines the size of this portion.
In Canada, the capital gains inclusion rate is 50%. That means that capital gains are taxed at a lower rate than interest.
One of the main advantages capital gains have over other forms of investment income is that you control when you pay capital-gains tax. This amounts to a very simple and highly effective way of deferring tax—and it’s perfectly legal.
Learn more about realized capital gains and other tax matters by following TSI Network. Boost your investment returns by using our three-part Successful Investor strategy:
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A recession is defined as as two consecutive quarters of negative economic growth. A recession is less severe than a depression. Sometimes when Canadian stock market news in a recession seems particularly bad, it might be the good time to buy stocks at bargain levels.
At TSI Network, we like high-quality blue chip consumer product companies because they can provide stability during a recession. Typically, consumer products companies sell staples, like soap, soup and beverages that consumers must buy no matter what the economy is doing.
Strong consumer product companies survive recessions because they have geographic diversity to protect them from regional economic difficulties, a record of rising cash flow and strong balance sheets.
To protect yourself from recessions, we recommend investing in blue chip stocks and stocks that pay dividends. We also recommend using our three-part Successful Investor philosophy for long-term investing to choose them:
For a true measure of stability, focus on those companies that maintained or raised their dividends during the recent recession and stock-market downturn.
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Registered Retirement Income Funds (RRIFs) are tax-deferred retirement plans used to generate income from the savings accumulated from your RRSP plan. The government requires that everyone with a Registered Retirement Savings Plan (RRSP) must convert it into a RRIF by December 31st of the year they turn 71 or earlier.
Individuals are then required to make minimum annual withdrawals from the RRIF. Converting to a Registered Retirement Income Fund is the best retirement investing option for most investors. That's because Registered Retirement Income Funds offer more flexibility and tax savings than annuities or a lump-sum withdrawal. Like an RRSP, a Registered Retirement Income Fund can hold a range of investments.
You don't need to sell your RRSP holdings when you convert-you just transfer them to your RRIF. When you hold a Registered Retirement Income Fund, you must withdraw a minimum each year and report that amount for tax purposes. (You may withdraw amounts above the minimum at any time.) Revenue Canada sets your minimum withdrawal for each year according to a schedule that starts at 7.38% of the RRIF's year-end value at age 71, reaches 8.75% at age 80, and levels off at 20% at age 94.
Note that when you make a RRIF withdrawal above the minimum requirement, Revenue Canada requires your financial institution to withhold tax at the time of withdrawal. Tax is withheld at the rate of 10% for amounts up to $5,000, 20% up to $15,000 and 30% on $15,001 and up. While saving for retirement, we suggest some long-term and short-term investing goals to round out your portfolio. For guaranteed success, apply our three-part Successful Investor strategy.
We receive many questions on the subject of planning and enjoying a successful retirement. Our answers to those questions, based on decades of investment experience, are all located in this FREE report: 12 Steps to the Retirement You Want.
Registered Retirement Savings Plans, or RRSPs, are a form of tax-deferred savings plan. RRSP account contributions are tax deductible, and the investments grow tax-free. When you later begin withdrawing the funds from your RRSP, they are taxed as ordinary income. RRSPs are the best-known and most widely used tax shelters in Canada.
However, not all investments belong in Registered Retirement Savings Plans. And RRSP tax advantages come at a cost. As mentioned, RRSP withdrawals are taxed as ordinary income. In an RRSP, you don't get any benefit from the lower rate of tax on capital gains (half the rate you pay on ordinary income), and the dividend tax credit doesn't apply to dividend income you get in an RRSP. There's no direct way to take money out of an RRSP without paying income tax at the rate on ordinary income. However, you can make your contributions to a spousal RRSP so that when the money is withdrawn years later, it is taxed in the hands of your spouse who may be in a lower tax bracket than you are.
So it's a good idea to plan things so that you use spousal RRSPs to split your retirement income between yourself and your spouse. That can lower the total tax burden on your retirement income as a couple.
While saving in your Registered Retirement Savings Plans, we suggest applying our three-part Successful Investor strategy.
We receive many questions on the subject of planning and enjoying a successful retirement. Our answers to those questions are based on decades of investment experience are all located in this free report: 12 Steps to the Retirement You Want.
REIT stands for real estate investment trust. REITs typically own income producing real estate, and flow most of their earnings through to unitholders. REITs are usually publicly traded, and investors like REITs because they generally have high yields. That’s because they flow at least 90% of their taxable income through to their unitholders.
A REIT company owns real estate and produces income from it. This includes shopping malls, office buildings, hotels and so on. They may also manage real estate for third parties, such as providing property management for condominiums or apartments.
Canadian REITs must be a corporation that’s taxable, and follow all the rules of being a corporation. They must invest 75% or more of their total assets in real estate and make at least 75% of their gross income from their properties, including rent, financing and sales. Like most stocks that are publicly traded, they operate by the rules of exchanges, and require no less than 100 shareholders, and must have more than 50 shareholders.
Like anything in real estate, hidden risks often come dressed up as “investor benefits.” For example, “small town” may sound like a benefit, but small towns often depend on at most a handful of employers. If one of the town’s main employers reduces its operations or shuts down, tenants leave town. As populations shrink, the town’s rental accommodation vacancy rate can go up and stay high indefinitely. Small-town real estate has to provide above-average returns in good times to offset the higher risk of loss when the market turns downward.
If you’re looking to invest in REITs, please keep TSI Network’s three-part Successful Investor philosophy in mind:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
REIT stands for real estate investment trust. These trusts invest in income-producing real estate such as office buildings, shopping malls and hotels. That’s a segment of the market that is difficult for most investors to access through the direct ownership of property. Moreover, a REIT saves you the cost, work and risk of owning investment property yourself.
The best real estate investment trusts have good management and balance sheets strong enough to weather an economic downturn. They also have high-quality tenants, and they carefully match their debt obligations with income from their leases. The best ones do well even through economic slowdowns. They have also taken advantage of low interest rates to refinance long-term mortgages.
Investors should focus on investing in the best real estate investment trusts. This includes wide geographic diversification, as well as room to expand their existing properties with new condos, restaurants or cinemas. To be profitable in any market, use TSI Network’s three-part Successful Investor philosophy:
Discover how to invest the best Canadian growth stocks in this free special report, Canadian Growth Stocks: WestJet Stock, RioCan Stock and more, from TSI Network. It’s your complete guide to investing in Canadian growth stocks and profiting from a long-term growth strategy.
Research and development includes the expenses incurred to develop new products or improve the efficiency of existing products. It's also commonly known as R&D. Today's best hidden asset is research and development spending. Companies have to treat this spending as a day-to-day expense, much like maintenance or tax payments. So research spending comes out of the current year's sales, and it lowers the current year's earnings. But when you do it right, research and development spending pays dramatic long-term dividends. Note that we don't say that all companies that spend money on research and development are "more profitable than they appear"- far from it. Nor would we say that all these companies offer or are building up hidden value. We only say that about companies that we feel are: 1- Probably spending their research dollars in a prudent and potentially profitable fashion, and 2- Sufficiently well-managed, well-financed and well-situated (in relation to competitors, their market and so on) to be able to exploit whatever advances their researchers come up with. Spotting these companies is an art, not a science. Predictions on which company will spend its research and development money productively and which will waste it are matters of opinion. At times we'll guess wrong. But some companies obviously are building up a hidden asset, because their research and development outlays are akin to buying a building that will stand for years or decades, rather than heating a building for a single winter. When investing, we recommend using our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Resource stocks produce and sell a range of commodities. These include oil, copper, tin, uranium and aluminum, as well as fertilizers. It’s hard for resource producers to bring a distinct product to market, but they can distinguish themselves by how efficiently and profitably they find and produce their commodities.
Today’s top resource projects call for a great deal of engineering, financial and regulatory expertise. The top resource stocks—like Imperial Oil or Encana—acquire a lasting competitive advantage by developing industry-leading expertise in these areas.
The resource sector is subject to wide and unpredictable swings in the prices it gets for its products. In the rising phase of the business cycle, when business is booming, resource demand expands faster than resource supply, so resource prices shoot up. This balloons profits at resource companies. When the economy slumps, resource prices fall, and this drags down resource profits and stock prices.
In addition to rising and falling with the business cycle, however, resource stocks have a history of rising along with long-term inflationary trends. This gives them a rare ability: they provide a hedge against inflation.
Most investors will profit by holding a portion of a well-diversified portfolio to resource stocks. To find the right resource stocks, follow TSI Network and use our three-part Successful Investor strategy:
As part of their portfolio diversification strategy, most investors should have investments in most, if not all, of these five sectors. The proper proportions for you depend on your temperament and circumstances. More aggressive investors could consider holding as much as, say, 25% to 30% of their portfolios in Resources.
Discover how to make the most of your resource investments in this free special report, Mining Stocks: How to Spot the Best Uranium Stocks, Metal Stocks and Junior Mines, from TSI Network.
Registered education savings plans (RESPs) are one of the best ways to save for a child’s post-secondary education. RESPs are a government-assisted form of savings, similar to registered retirement savings plans (RRSPs).
Canadian index funds can be a good starting point for a RESP. Many investors also consider them when they invest funds in their tax-free savings accounts (TFSAs).
Contributions to RESPs aren’t tax-deductible like RRSP contributions, but the money does grow on a tax-sheltered basis. When the student withdraws the plan’s earnings, they are taxable to the student, not the contributors. However, students usually have little income and pay little or no tax.
All income earned in RESPs—whether it is in the form of dividends, interest or capital gains—grows on a tax-sheltered basis with no attribution back to the contributor. Contributions and Canada Education Savings Grants (CESGs) from the federal government are not taxable when withdrawn for the student’s education.
RESPs must be wound up by the end of the 25th year following the setup of the plan. At that time, any unused money in the plan must be distributed.
Principal contributions to RESPs can be withdrawn at any time with no tax implications. However, if the withdrawal is not used for post-secondary education, the CESG received on these contributions must be returned to the government at the time of the capital withdrawal.
When managing your wealth for the future and your children's’ future, we recommend using our three-part Successful Investor philosophy:
Our new report gives you 12 steps that make it easier to plan and enjoy the retirement you want. And it’s yours FREE! Download 12 Steps to the Retirement You Want.
formerly NASDAQ symbol RSTO, is a specialty retailer of high-quality home furnishings, linens, bath fixtures and bathware, plus functional and decorative hardware, gifts and related merchandise that reflect classic or period designs. The company was acquired in June 2008.
Retirement is a period of time in the life of most Canadians where they stop working and live off the investments they made during their working career.
Retirement is becoming more difficult for Canadians because they’re living longer and need larger retirement nest eggs to fund their twilight years. This often manifests itself in “pre-retirement financial stress syndrome.” That’s the malady that strikes when it dawns on you that you may not have enough money saved to be able to earn the retirement income stream you were banking on.
Note, though, that if you’re heading into retirement and are short of money, you should move your investing in the direction of safer, more conservative investments. That’s a far better option than taking one last gamble.
Most investors thinking about retirement should start by doing a detailed study of how you spend your money now. Then, analyze your findings to see what personal expenses you can cut or eliminate. This too can have fringe benefits, especially if it helps you break unhealthy habits such as smoking and so on.
Understanding what you want from retirement is one of the most important things you can do while you’re still working. Our best retirement planning advice is to invest early and often—and don’t forget to use our three-part Successful Investor philosophy:
Discover our complete guide to Canadian wealth management and making the most out of your savings. It’s all in our newly updated report, Wealth Management & Retirement Planning: Canada RRSP Contribution Limit, RRSP Interest Rates, TFSA Contribution Limit and More. And it’s yours FREE!
Retirement calculations help you determine the amount of money you need to save to live comfortably after you retire.
If you plan to retire at 65, and you’re 50, you won’t be dipping into your investments for 15 years. If you are in reasonably good health, you could live well into your 80s—possibly longer.
Let’s say you have $200,000 in your RRSP, and expect to add $15,000 in each of the next 15 years. To determine if this is enough, you need to make some realistic retirement calculations about investment returns and income needs.
Instead of taking on extra risk, take the safe route to retirement planning. Save more now, work longer, or plan to spend less. Retirement leaves you with lots of free time, and filling it costs money. But postponing retirement, or working part-time as long as you’re able, can pay off in higher current income, more contentment and greater long-term security.
At TSI Network, we feel that realistic retirement calculations are an essential part of investing. We encourage all investors to take a close look at their retirement savings plan and goals as early as possible. To achieve these retirement goals, you should also use our three-part Successful Investor philosophy:
Our new report gives you 9 steps that make it easier to plan and enjoy the retirement you want. And it’s yours FREE! Download 9 Secrets to Successful Wealth Management.
Retirement income is the money you use for your daily life and expenses after you retire. Retirement income can come from many different sources, such as personal savings, Canada Pension Plan, Old Age Security, company pensions, RRSPs, RRIFs, and other types of investment accounts. When you work out a plan for your retirement, make sure that you aren't basing your future income on overly-optimistic calculations that will end up leaving you short. Your retirement income plan should build in contingencies for long-term medical needs and supplemental health insurance. As well, you should factor in caring for loved ones who are unable to take care of themselves. Investors who want to start building their retirement income should consider using one of these two types of accounts: RRSPs are a form of tax-deferred savings plan. RRSP contributions are tax deductible, and the investments grow tax-free. (Note that you can currently contribute up to 18% of your earned income from the previous year. March 1 is the last day you can contribute to an RRSP and deduct your contribution from your previous year's income.) Tax-free savings accounts (TFSAs) let you earn investment income-including interest, dividends and capital gains-tax free. But unlike registered retirement savings plans (RRSPs), contributions to TFSAs are not tax deductible. However, withdrawals from a TFSA are not taxed. Increase your retirement income by following TSI Network and using our three-part Successful Investor strategy:
We invite you to download a Special Report with our compliments: Your 12-Step Countdown to the Retirement You Want. We employ these strategies on behalf of our Wealth Management clients, who have entrusted hundreds of millions of dollars to our care.
Retirement investing is the process of investing money in stocks or other securities with the goal of using the funds to pay for living expenses in retirement.
Many investors who are approaching retirement worry that their retirement investing won’t generate enough income to live on once they’ve stopped working.
We recommend that retirement investors start by building a sound financial plan. Most accountants or tax preparers can do the math for you, based on numbers you provide. Coming up with realistic numbers is the hard part. It depends on your personal preferences.
As for the return you expect from your retirement investing, it’s best to aim low. If you invest in bonds, assume you will earn the current yield; don’t assume you can make capital gains by buying bonds.
Over long periods, the total return on a well-diversified portfolio of high-quality stocks runs around 10%, or around 7.5% after inflation. However, aim lower than that in your retirement planning— 6.5% a year, say —to allow for unforeseeable problems and setbacks.
Above all, it’s important to remember that while finances are important, the happiest retirees are also those who stay busy.
To profit from a long term retirement investing strategy, incorporate our three-part Successful Investor philosophy:
Invest mainly in well-established companies; Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities); and downplay or avoid stocks in the broker/media limelight.
Discover how to turn capital gains taxes to your advantage in this free special report, Capital Gains Canada: 7 Secrets for Managing your Canadian Capital Gains Tax Liabilities, from TSI Network.
These days, more investors suffer from what you might call "pre-retirement financial stress syndrome." That's the malady that strikes when it dawns on you that you don't have enough money saved to be able to earn the retirement income stream you were banking on. The best way to overcome this is with sound investing.
For example, if you want to pay less tax on dividends while you're still working, investing in an RRSP (Registered Retirement Savings Plan) is a great idea. Annuities may also be worth considering for part of your assets, depending on your age, investment experience, the time you want to devote to your investments, your desire to leave an estate to your heirs and other aspects of your retirement investing. But a key drawback to annuities is that annuity rates are closely linked to interest rates, which are at historic lows. In addition, annuities have no liquidity. If interest rates and inflation move up, your annuity payments would remain fixed and you would lose purchasing power. Plus, you would have no way to rearrange your portfolio. This is why we generally advise against investing in Canadian annuities. Retirement planning is an essential part of investing and should start as early as possible.
At the same time, you should keep TSI Network's three-part Successful Investor philosophy in mind:
We invite you to download a Special Report with our compliments: 9 Secrets of Successful Wealth Management. This comprehensive report on retirement is based on many decades of investment experience. These proven investment strategies have stood the test of time. We employ them on behalf of our Wealth Management clients, who have entrusted hundreds of millions of dollars to our care.
Reverse mortgages in Canada typically let homeowners who are 55 years of age or older borrow on their home equity with a maximum 40% loan-to-value ratio. But depending on their age and property, some borrowers may qualify for a loan of up to 55% of the value of their home. The loan and accumulated interest must be repaid only when the borrower no longer lives in the home, either at the time of their death or if they move or sell the home. We see reverse mortgages as appealing only in highly specialized circumstances. You'd want to use a reverse mortgage only if you feel that selling your home is out of the question, AND if you've exhausted all sources of income or funds that do not involve heavy costs such as loss of tax deferral or a big tax bill. Before taking out a reverse mortgage, make sure you consider all other housing or financial options open to you. If none of these are appealing, you should then consider the costs of the reverse mortgage. What are the initial costs such as the application fees and the house appraisal? What are the ongoing costs and the interest rate? What are the exit costs (i.e., is there a penalty for getting out of the plan early, are there additional legal fees or real estate fees)? You'll need to seek out and pay for independent legal advice, as well. Control your stock trading risk by following TSI Network and using our three-part Successful Investor strategy:
We invite you to download a Special Report with our compliments: Your 12-Step Countdown to the Retirement You Want. We employ these strategies on behalf of our Wealth Management clients, who have entrusted hundreds of millions of dollars to our care.
A reverse stock split is when a company decides to consolidate a number of shares into one new share. For instance, a reverse stock split may take five, 10 or more “old” shares and convert them into a single share.
A company may undertake a reverse stock split if the value of its stock collapses to pennies a share or if investors may think it is headed for zero. It’s a measure to bring its share price back up to more respectable levels. This “reverse split” process is also called a “share consolidation.” It’s what usually happens to penny mining companies that have spent all their money without finding any valuable mineral deposits.
After a reverse stock split, stock prices often fall back down again. Some investors sell because the stock seems more expensive than it was, even though a given holding represents the same percentage ownership of the company. Others sell because they fear the company will raise money by selling new shares, and this will drive down its stock price.
Remember, reverse stock splits or consolidations are a minor investing detail. Don't let them distract you from more important matters, such as a company's fundamental value and how well it suits your investment objectives. To best profit as an investor, we encourage you to use our three-part Successful Investor strategy:
Discover how to turn capital gains taxes to your advantage in this free special report, Capital Gains Canada: 7 Secrets for Managing your Canadian Capital Gains Tax Liabilities, from TSI Network.
Toronto symbol REI.UN, is Canada's largest REIT. It specializes in large, Big Box-style retail shopping centres.
Toronto symbol REI.UN, is Canada's largest REIT. It specializes in large, Big Box-style retail shopping centres.
Investors are always looking for rising stocks that have yet to reach their peak price. But when it comes to adding value to your investing efforts, one of the least productive things you can do is to try to "time" the market. By that, I mean attempting to sell good stocks at what looks to you like a price peak, in hopes of buying those no longer rising stocks back at lower prices.
Sometimes they’re right, and they sell rising stars at exactly the right time to make a huge return. Other times, they’ll sell rising stocks at what looks like a high price, only to find that some new information comes along that spurs the rising stock to much higher prices. Sometimes, they’ll sell rising stocks that look “high,” then use the money to buy something else that looks cheap. But your cheap stocks get even cheaper while the rest of the market continues to rise.
You’ll often meet investors who are eager to tell you in great detail how they determined a rising stock was a bust. And that the particular stock, or the market as a whole, was over-priced, and how they sold just in time to avoid a 10% or 20% downturn. Avoiding a downturn feels good and makes a good anecdote, but that’s not the same as making money.
It's all too easy to sell a stock that looks like it's headed for a downturn, only to buy another that is headed for a collapse. For that matter, if you make a habit of selling whenever you feel the market's risk has gone up, you will wind up selling your best stocks way too early.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Dividend stocks are your most reliable investments in all markets—and this free report is your complete guide to successful dividend investing in top Canadian dividend stocks. Download The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks FREE.
On January 1, 2011, Ottawa imposed a tax on distributions of income trusts and royalty trusts. (Royalty trusts are a form of income trust. They profit from royalties associated with the sale of oil, natural gas or minerals.) The new tax put income and royalty trusts on an equal tax footing with regular corporations.
Virtually all royalty trusts then converted into conventional corporations.
Royalty trusts derived income from royalties associated with the sale of oil, natural gas or minerals. These trusts often promised high yields compared to stocks and bonds, and involved far more risk than most investors realized. We recommended very few royalty trusts here at TSI Network, but we did manage to find some real gems among the ones we recommended.
If you are looking for high yields, just like royalty trusts, consider dividend-paying stocks.
The best companies to invest in for a high dividend yield have strong positions in healthy industries. They also incorporate strong management that makes the right moves to remain competitive in changing marketplaces.
Dividend yields are a sign of investment quality. Some good companies reinvest profit to spur growth instead of paying dividends. But fraudulent and failing companies are hardly ever dividend-paying stocks. So if you only buy stocks that pay dividends, you’ll automatically stay out of almost all the market’s worst stocks.
Invest in the best dividend stocks by following TSI Network and using our three-part Successful Investor strategy:
Discover how to build a winning stock market portfolio in this free special report, Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada, from TSI Network.
A RRIF is a Registered Retirement Income Fund, a tax-deferred retirement plan for your Registered Retirement Saving Plan (RRSP). RRIFs are used by those who don’t plan to cash out their RRSP as a lump sum when they retire, and prefer to extend their investment and take smaller withdrawals by converting to a RRIF. Registered Retirement Income Funds offer more flexibility and tax savings than annuities or a lump-sum withdrawal.
Like an RRSP, a RRIF can hold a range of investments. You don’t need to sell your RRSP holdings when you convert—you just transfer them to your RRIF.
The government requires that everyone with a Registered Retirement Savings Plan must convert it into a RRIF by December 31st of the year they turn 71 or earlier. You start making withdrawals from your RRIF in the year following the year in which the RRIF is established. For example, if you open a RRIF in 2016, you have to make your first withdrawal by December 31, 2017.
You can receive RRIF payments on any schedule, though most investors choose to receive them either monthly or yearly. However, unless you need monthly payments to live on, it’s best to request only one payment per year, near year-end, to prolong your tax deferral. For practical purposes, though, set a date such as December 15 to allow for delays. Just contact the broker or institution that holds your RRIF to set up your yearly payment.
Note that when you make a RRIF withdrawal above the minimum requirement, Revenue Canada requires your financial institution to withhold tax at the time of withdrawal
At TSI Network, we recommend using our three-part Successful Investor philosophy when investing for your retirement:
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RRSP gold investing is now easy, but it may not be the best way for you to invest in gold or to save for your retirement.
The 2005 Canadian federal budget made investment-grade gold and silver coins, as well as gold or silver bullion bars, eligible to be held in an RRSP. To be considered investment grade, gold coins must be at least 99.5% pure, and silver coins must be at least 99.9% pure. As well, only legal-tender coins produced by the Royal Canadian Mint are eligible for RRSP gold investing.
When RRSP gold investing, we suggest avoiding buying gold bullion, gold coins (unless you collect them as a hobby) or certificates representing an interest in bullion. That’s because commodity investments such as gold bullion do not generate income. Instead, they come with a continuing cash drain for management, insurance, storage and so on.
Bullion bars are eligible for RRSP gold investing, as long as they are produced by a metal refinery that is accredited by the London Bullion Market Association. Accredited metal refineries include the Royal Canadian Mint and Johnson Matthey.
However, to hold the coins or bullion bars in your RRSP you need to find a third-party custodian of your coins or bars who will verify that you indeed hold the amount of bullion claimed, and report that to the Canada Revenue Agency on your behalf.
For the best overall portfolio returns, we recommend following TSI Network and using our three-part Successful Investor strategy:
Discover how to spot better mining stocks with our Canadian Natural Resources Stock Guide. Download it today for FREE!
An RRSP meltdown is a strategy put forward by some financial advisors as a means of drawing money out of a Registered Retirement Savings Plan (RRSP) with little or no income tax obligation. In the simplest form of an RRSP meltdown, the investor sets up an investment loan and makes the interest payments from RRSP withdrawals (equivalent to the interest payment). Since the interest on the loan is tax-deductible, the RRSP withdrawal taxation is canceled out. This RRSP meltdown strategy results in zero tax, owing to the RRSP withdrawal. Moreover, the investment loan can be used to purchase dividend paying stocks to provide income during retirement. On which, you pay a lower rate of tax on dividends from Canadian companies than on interest. However, often the arrangements that financial advisors suggest, involve taking RRSP withdrawals and placing the money in business or real estate deals that generate large tax deductions, in order to offset the taxable income from the RRSP withdrawals. The risk is that the investor can be left holding an illiquid investment. To generate the tax deductions, he may have to guarantee a large debt. Sometimes the RRSP meltdown deal 'guarantees' the investor a steady income. But the guarantee is sure to be full of holes. The only reliable guarantee in RRSP meltdown deals is the huge fees and commissions generated for the sales people and financial institutions involved.
American Exchange symbol SPY, are commonly called 'Spiders'. This fund holds the stocks in the S&P 500 Index. This index is comprised of 500 major U.S. stocks chosen for market size, liquidity, and industry group representation.
Safe investing is a concept we embody here at TSINetwork. Safe investing means taking a careful and methodical approach to investing which does not jeopardize your savings or your investment goals. There will always be some inherent risk when investing, so making safe investing decisions minimizes that risk greatly.
One way that new investors can make safe investing decisions is to stop basing your decisions to buy or sell a stock on past stock-price performance alone. Rising and falling trends come in many shapes and sizes, depending on what’s going on in a company, its industry, and the world. But in the end, a stock never gets so high that it can’t keep rising, or so low that it can’t keep falling.
Safe investors are those who think about their investing from a long-term point of view. Safe investing means not over reacting to short term market corrections and downturns.
To profit from safe investing and to build a long term investing strategy, incorporate our three-part Successful Investor philosophy:
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Safe investments are stocks, bonds and funds that are come with a reasonably high degree of stability, and lower risk. A safe investment can mean different things to each investor. For instance, government treasury bills (T-Bills) are considered extremely safe investments. You are virtually guaranteed to make your money back plus interest. The interest T-Bills pay is low, however, so for many investors, they are too safe.
At TSI Network we feel that stocks that have been paying dividends for over 10 years are some of the safest investments you can make. Dividends are a sign of quality and a company’s financial health. Types of stocks that we consider to be safe investments include Canadian banks and utilities.
There are also a host of key indicators to determine if a security is a safe investment, like management integrity, its growth prospects and its stock price in relation to its sales, earnings, cash flow and so on.
For a true measure of stability, focus on those companies that have maintained or raised their dividends during an economic or stock-market downturn. We think investors will profit most—and with the least risk—by buying shares of well-established, dividend-paying stocks with strong growth prospects.
For the safest investments, follow TSI Network’s three-part Successful Investor strategy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
Safety-conscious stocks are investments in well-established companies with attractive business prospects—but with a particular emphasis on preservation of capital.
The safest investments come with a high degree of stability and lower risk.
Safety-conscious investors utilize these four tips:
There are also a host of key indicators to determine if a security is a safe investment, like management integrity, its growth prospects and its stock price in relation to its sales, earnings, cash flow and so on.
Safety-conscious stocks that pay a consistent dividend can be found through these five ways:
For a true measure of stability, focus on those companies that have maintained or raised their dividends during an economic or stock-market downturn. We think investors will profit most—and with the least risk—by buying shares of well-established, dividend-paying stocks with strong growth prospects.
Maximize you stock market gains and find safety-conscious stocks by following TSI Network and using our three-part Successful Investor strategy:
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Toronto symbol SAP, is Canada's largest producer of dairy products including milk, butter and cheese. Its main dairy brands include Saputo, Stella and Dairyland. Saputo also makes snack cakes and tarts.
The savings rate measures income minus consumption - nothing more. It ignores capital gains, realized or unrealized, on investments, homes, businesses or anything else. It also ignores any buildup in the value of pensions.
A secondary offering is used by a company to sell more stock to the public after it has already undertaken its initial public offering.
There are two types of secondary offerings:
In the first type of secondary offering, current major shareholders of the company choose to sell all of part of their holdings to the public to reduce their interest in the company. This kind of secondary offering is non-dilutive to current shareholders.
Note that we think it’s a mistake to put too much weight on insider selling, since insiders can delude themselves about their employer just as easily as outsiders can. However, it pays to remember that insiders may sell for a variety of personal reasons that have nothing to do with the company. On the other hand, insiders only make substantial buys for one reason—they think the company has attractive investment appeal.
In the second type of secondary offering, the company chooses to sell new shares from treasury to the public. This kind of secondary offering is dilutive to current shareholders. However, it is often of benefit to those shareholders because it lets the company raise capital for investment, growth and expansion.
Secondary offerings are typically underwritten by an investment bank or multiple investment banks.
Secondary offerings are primarily much smaller than the initial public offering made by a company.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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A Sector fund is a mutual fund or exchange-trade fund (ETF) devoted to a specific economic sector (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; or Utilities); or industry group such as technology, pharmaceuticals and so on. Buying sector funds entails special risks. That's especially true if they are in emerging fields, such as biotechnology or renewable energy. Sector funds entail special risks, but at the same time they are safer than investing in one or two issues in riskier fields, such as technology.
Should you choose to invest in sector funds, limit your investment to modest quantities. And above all, invest only in funds with proven management and high-quality holdings. As well, we generally advise against investing in funds that concentrate in one economic sector. For example, a fund concentrating in Finance is particularly vulnerable to any setbacks in the sector or interest-rate rises. You need to look closely at sector funds before investing. Find out what companies they are invested in, and how often there is portfolio turnover.
For the best investment results, at TSI Network we recommend that investors invest the bulk of their portfolios using our three-part Successful Investor philosophy:
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A sector rotation is a strategy that relies on selling shares from your portfolio in one stock market sector and buying shares from another stock market portfolio.
So-called “sector rotators” try to predict which sectors will outperform other sectors. But trying to pick winning sectors—and staying out of losing sectors—seldom works over long periods. That’s because you need to guess right three times to succeed. You have to pick the top sectors, then pick the stocks that will rise within those sectors, and then sell before the sector stumbles. It’s virtually impossible to consistently succeed at all three over long periods.
There are many theories about which sectors will outperform at any given stage of the economic cycle. But investors who attempt to pick winning sectors often wind up in the end with big holdings in the worst-performing sectors. That would be devastating to any diversified stock portfolio, even if you confine your investments to well-established companies.
Always maintain a diversified stock portfolio—and avoid the temptation of a sector rotation strategy. Enhance your long-term investment returns by following TSI Network and using our three-part Successful Investor strategy:
Dividend stocks are your most reliable investments in all markets—and this free report is your complete guide to successful dividend investing in top Canadian dividend stocks. Download The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks FREE.
A sector rotation strategy is a way of investing where you try to predict which stock market sectors will be in next be in favour. You then rotate or sell shares in the falling sectors, and buy stocks in the rising sectors.
However, in order for you to get profit from a sector rotation strategy, you need to guess right three times:
You have to pick the top sectors, and then pick the stocks that will rise within those sectors, and then sell before the sector stumbles. It’s virtually impossible to consistently succeed at all three over long periods. But that’s not the only problem with a sector rotation strategy.
Sector rotation could inadvertently push you into the worst-performing sectors. There are many theories about which sectors will outperform at any given stage of the economic cycle. But trying to pick winning sectors—and staying out of other sectors—seldom works over long periods. Investors who attempt to do so often wind up with heavy holdings in the worst-performing sectors. That would be devastating to your portfolio, even if you confine your investments to well-established companies.
Sector rotation strategies cost money. Every time you move to a new sector you get charged fees twice. Once when you sell your holdings in the old sector, and then again when you purchase holdings in the new sector. This may not be seem like a big deal for investors who use discount brokers, but trading fees and commissions add up. These fees will eat into your profits.
We recommend that you avoid using a sector rotation strategy. Instead, at TSI Network we feel that investors should use our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Securities lending is when mutual funds, index funds and exchange traded funds (ETFs) lend securities to third-party borrowers, mostly hedge funds and investment firms. These borrowers then mainly use them for short selling. That is, after borrowing, they sell the securities with the hope of buying them back at a lower price. This is, of course, a way of speculating on a share price decline.
The lending institution or fund receives all the dividends and interest it was entitled to as an investor in the security, plus a fee for making the securities loan.
There is negligible risk of losing money on the loan, since the borrower puts up collateral of at least 102% of the borrowed securities’ value. This collateral typically consists of cash, T-bills or highly rated short-term debt instruments. The borrower is liable for any shortfall between the value of the collateral and the value of the securities. If the value of the securities rises, the borrower has to add to the collateral on a daily basis to maintain coverage at 102%.
Our view is that if a mutual fund or ETF owns high-quality investments, securities lending won’t hurt its value or performance, but it will add slightly to its total return.
For a sound long term investing strategy we recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
What are segregated funds? Segregated funds or Seg funds are a type of Canadian life insurance mutual fund that includes certain guarantees that are enacted upon the policyholder's death. Segregated funds guarantee that you'll get back all, or part of, your initial capital after a period of years-this could be 10 or 20 years in some cases. Segregated funds also provide a death benefit. If you were to die before the end of the 20-year term, your beneficiaries would get a 100% guarantee of the initial investment, or the market value of the fund, whichever is higher. What's more, because segregated funds are insurance products, you can name a beneficiary. Since it's paid directly to your beneficiary, it's not considered part of your estate, so you avoid paying probate fees. Segregated funds are also protected from creditors under certain conditions. However, these benefits come at a higher cost: segregated funds tend to have higher MERs than traditional mutual funds. More to the point, most stock markets have historically risen over any given 10-year or 20-year period, so a segregated fund's guarantee of your initial capital has limited value. (However, older investors may profit from segregated funds' death benefits and estate-planning features). Enhance your stock market returns by following TSI Network and using our three-part Successful Investor strategy:
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A self-directed RRSP is a registered retirement savings plan that the holder manages on their own, including the mix of assets and what stocks to own
Beyond the owner’s investment decisions, a self-directed RRSP is otherwise similar to a basic RRSP.
Generally speaking, it’s best to hold interest-bearing investments inside an RRSP. That’s because, of the three forms of income (interest, dividends and capital gains), interest is the highest taxed. Dividend-paying investments, and those expected to yield capital gains, are best held outside (unless that’s all you own, and then they are okay to hold in the RRSP). Some investors only invest RRSP funds in interest-paying securities, because they hate to see tax advantages go to waste.
The owner of a self-directed RRSP must abide by all legal requirements for the holdings in the RRSP. There are still holdings that are not permitted in a self-directed RRSP just like we see in a normal RRSP.
Before developing a self-directed RRSP, we recommend you base your retirement planning on a sound financial plan. Here are the four key variables that your plan should address to ensure you have sufficient retirement income:
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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Shale gas stocks are shares in companies that produce oil and gas by “fracking” so-called “tight rock” formations.
Shale gas stocks depress the profit margins of current oil producers, and that’s a good thing. Many of today’s top oil-producing countries have been corrupted by their oil wealth. Oil gave them all the money they needed, and provided little incentive to build the legal and physical infrastructure for other types of economic activity.
When these countries find their concentration on oil is hurting them, they may start to modernize their politics and business practices. Meanwhile, they may raise their oil production to force oil prices down. This will cut the incentive, at least temporarily, for western countries to invest in shale gas and oil commodity investments.
New technology can bring shale developments to profitability in as little as eight months, compared to two years or so for many conventional finds.
Of course, environmental opposition could also slow the rise of shale oil and gas production, and shale gas stock profits. The shale industry, like any new industry, needs to develop environmentally safe operating procedures.
The most controversial procedure is the hydraulic fracturing, or fracking, of hydrocarbon-bearing shale. This process involves pumping a mix of water, chemicals and other materials into shale rock formations that contain oil or natural gas. This fractures the rock and releases the oil and gas.
Control your shale gas stock investing risk by following TSI Network and using our three-part Successful Investor strategy:
Discover how to find the best growth stocks in Canadian Growth Stocks: WestJet Stock, RioCan Stock and more.
A share consolidation is action taken by a publicly traded company in which a company converts several “old” shares into one “new” share. Companies will do this in order to bring their share price back up to more respectable levels—or levels required by stock exchanges.
A share consolidation is also known as a reverse split. It’s what usually happens to penny mining companies that have spent all their money without finding any valuable mineral deposits. If the value of a stock collapses to pennies a share, investors may think it is headed for zero.
In most cases, after a stock consolidation, stock prices often fall back down again. Some investors sell because the stock seems more expensive than it was, even though a given holding represents the same percentage ownership of the company. Others sell because they fear the company will raise money by selling new shares, and this will drive down its stock price.
A company share consolidation is something all investors should know. If you’d like to increase your long term profits, we recommend our three-part Successful Investor strategy as the smartest approach for value investors:
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Share prices are what it costs to buy single shares of a security. Share prices fluctuate throughout the day on the stock market.
Share prices rise 10% to 12% a year over long periods, on average, but individual cases and time periods vary widely. Even good stocks sometimes go sideways for years, while others turn out to be “ten-baggers” with gains of 1000%. To make serious profits, you need to hang on to your best performers for years. If you are too quick to sell stocks that have gone up, you may avoid some 20% setbacks, but you’ll also miss out on some 200% gains.
Keeping an eye on share prices is part of stock investing. But at the same time, you’ll need to also watch a stock’s fundamentals, such as debt, sales and profits, and cash flow. For the highest long-term gains follow TSI Network and use our three-part Successful Investor strategy:
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A shareholder is person or a corporation that owns at least one share of a company’s stock. They are considered the “owners” of a company, and will see share price gains only if the company sees financial success. They also have rights to audited statements of the company’s books, and can vote on important matters.
Companies are always trying to increase shareholder value. That means they aim to increase the attractiveness and profitability of a company so that owners of stock in the company benefit.. It also generally pushes up the price of the shares on the stock market and attracts potential investors.
Successful investors know that there is more to good stock investing than simply looking for stocks that will let them realize capital gains. You can add a great deal of value to your portfolio when you also select stocks that are prepared to distribute their profits to the shareholders.
One way a company might increase value for a shareholder is with dividends. Dividends are typically cash payouts that serve as a way companies share the wealth they’ve accumulated through operating the company. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company.
Another way that companies increase shareholder value is through a stock buyback program. Stock buybacks raise a company’s earnings per share. It’s simple arithmetic: buybacks reduce the number of shares outstanding. To get earnings per share, you divide total earnings by the number of shares outstanding. When buybacks reduce the divisor—because the company now has fewer shares outstanding—it pushes up earnings per share.
As well, stock buyback programs bid up the price of the stock while the company is buying it back. This instantly increasing shareholder value.
All in all, at TSI Network we feel that every shareholder should familiarize themselves with our three-part Successful Investor strategy—we think it’s the smartest approach for value investors:
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Toronto symbol SCL.A, makes sealants and coatings that protect onshore and offshore oil and natural gas pipelines from corrosion.
New York symbol SHW, is the largest paint maker in the United States. It also operates more than 3,300 paint stores throughout North America.
Toronto symbol SGF, owns 100% of the Star diamond project in the Fort a la Corne area of Saskatchewan, which hosts one of the most extensive kimberlite fields in the world.
Short ETFs are exchange-traded funds (ETFs) that are set up to move in the opposite direction of particular stock indexes. For example, a short ETF is designed to rise in value as the underlying market index falls: if the index falls by 1%, the shares of the ETF should rise by 1% and vice versa. Known as “short ETFs” or “bear market ETFs” they aim to appeal to some investors during volatile markets.
As a general rule, we advise against short selling as much as we advise against options trading, leverage, currency speculation and bond trading. In all of these activities, it’s a rare investor who makes enough profit to compensate for the risk involved. Our view is that if you like the outlook for a market index, you should invest in stocks that will profit from a rise in that index—and at the same time, if you think an index will fall, stay out of stocks.
Institutional investors, particularly hedge funds, carry out around 60% of all trading in leveraged and inverse-leveraged investments. They generally use them as part of a complicated multi-investment trading strategy. They also trade frequently, and in large quantities. This reduces the percentage costs of this kind of trading. However, the trading costs still tend to eat into their invested capital.
One added concern is counterparty risk. That’s the chance the other party in a contract to repurchase securities will default on their obligations. Counterparty risk increases during times of extreme market volatility.
Control your stock market risk by steering clear of short exchange traded funds and following TSI Network and using our three-part Successful Investor strategy:
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A short sale involves an investor selling securities that they do not own. A short sale is performed in the belief that the price of the security being sold will go down. The seller can then cover the sale by purchasing the security at a lower price, making a profit based on how far the price has fallen. Short sellers face specific regulations in the markets.
However, you eventually have to buy back the stock on the market, to return it to its owner. If the stock falls in price while you are “short”, you can buy it back at a lower price. You have then made a profit. But if the stock rises in price, then you must buy it back at a higher price than you sold it, and you lose money.
Short selling is pure speculation. It's what a mathematician calls a “negative sum game”, since the winners have to outguess the losers by a large enough factor to pay associated costs. It doesn't enjoy any of the advantages of conservative investing. Then too, the returns are upside down. When you buy stocks, gains are theoretically unlimited and the most you can lose is 100%. When you sell short, your maximum gain is 100% (if the stock you've shorted goes to zero). But a short seller's potential losses are limitless.
Profitable short selling requires superhuman timing, and the inevitable mistakes can be super expensive for investors.
As a general rule, we advise against short selling much as we advise against options trading, leverage, currency speculation and bond trading. In all these activities, it’s a rare investor who makes enough profit to compensate for the risk involved.
To maximize your stock market returns, we recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
Short selling stocks is when you decide to sell a stock short in the hope that the price will drop. To do that you borrow that stock from a broker and then sell it.
Note that you eventually have to buy the stock back on the market in order to return it to its owner. If the stock falls in price while you are “short,” you can buy it back at a lower price. You have then made a profit. But if the stock rises in price, you’re obliged to buy it back at a higher price than you sold it at, and you lose money.
Before you sell a stock short, your broker has to be able to borrow the stock for you. The stock lender can demand the return of the stock with little notice. Failing or troubled stocks can go through stunning but temporary “rallies” or stock-price increases. When you sell a stock short and it rallies, you have to put up additional cash with the broker, so there is enough value in your account to “cover” your short—that is, buy the stock back and return it to the lender.
If the lender demands return of the stock, and your broker can’t find another lender of the stock, you have to buy it back in the market. If you and other “shorts” are bidding against each other because your borrowed stock has been “called” by its owner, the stock can soar.
Short selling shares is a gamble at best. Investors should avoid selling short. If you want to succeed at investing, follow TSI Network and use our three-part Successful Investor strategy:
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What is a short-term bond fund?
A short-term bond fund is a mutual fund or exchange traded fund (ETF) holding bonds with maturities between one and three years. Short-term bond funds can invest their assets in government or corporate bonds. As a general rule, the safest bonds are issued by or guaranteed by the federal government. Next come provincial issues or bonds with provincial guarantees.
If you need steady income and want to hold bond funds, we advise you to focus on those with short-term maturity dates. That’s because short-term bond funds face a lower risk from interest-rate increases (changing interest rates influence the value of existing bonds inversely. When interest rates fall, bond prices rise, and vice versa. The longer the term to maturity on the bond, the bigger the effect of a change in interest rates).You should also avoid funds that take part in any kind of speculative trading.
Interest rates are near historic lows, so bond funds that hold long-term bonds simply can’t go a lot higher than they already are. Right now, it seems more likely that interest rates will continue to hold steady or rise slightly in the short term, and move higher in the long run. This means the funds would only earn interest income on their bonds; instead of capital gains, their bond holdings could produce capital losses.
In general, short-term bond fund ETFs charge considerably lower MERs than bond mutual funds. That’s why, if you want to find and hold the best bond funds, we recommend taking the low-MER approach offered by a bond ETF.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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One thing to consider about short-term investing is that heightened volatility doesn’t make it easier for in-and-out traders to make money—it makes it harder.
Then too, there is no denying the immediate appeal of taking a profit. However, most successful investors find over long periods that much of their profit comes from a handful of their best investments—stocks that went up much more than they ever expected. If you are too quick to take profits, you’ll wind up selling your best picks when they are just beginning to rise.
What’s more, holding stocks for long periods lets you take advantage of compounding—earning dividends on dividends. This can have an enormous ballooning effect on the value of an investment over the long-term
“Buy and hold” is a bad way to describe what we do. We prefer “buy and watch closely.” We think short-term investing, including frequent trading of investments is apt to only make money for your broker.
A buy-and-watch-closely orientation can be extremely profitable in the long term. That's because you are more likely to hang on to your best picks, rather than selling them prematurely. After all, your best picks are those that do way better than you ever expected. Frequent trading will lead you to sell your best picks when they are just getting started. It also pushes up your commission expense.
At TSI Network, we recommend using our three-part Successful Investor philosophy when investing:
Discover how to invest like the experts when you download this FREE special report, How to Invest in Stocks.
formerly Toronto symbol ALE, is a leading Canadian brewer. The company was acquired by Sapporo Breweries in 2006.
formerly Toronto symbol SMU.UN, is the largest retailer of mattresses in Canada. The company was taken private in August 2008.
Slippage is the difference between the bid and the ask price when you place an order with your broker. You pay commissions when you buy and sell stock options, and every trade costs you money in "Öslippage'. That difference is quite large with options. Slippage also occurs in foreign exchange, or forex trading, when your fill on a limit or stop loss order ends up at a lower price than originally intended. In order to avoid slippage, investors may avoid market orders, orders to buy or sell a specific number of shares at the best price available when you place your order. Market orders are almost always filled within a very short period of time-minutes or even seconds. However, you only learn the price you paid (for a purchase) or received (for a sale) after the order is filled. There is always the possibility that the market price may change, for or against you, between the time you place the order and the time it is filled. The difference is the slippage fee. At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how the secrets of successful investors can help you to a more profitable investment future in this special report, The 10 Best Practices of Successful Investors.
Small cap investing is when you invest in companies with a “market cap” (the value of shares they have outstanding) below $250 million, or some other arbitrary figure.
Small cap investors often feel that small cap stocks have the potential for strong gains, but they are generally more volatile than large-cap stocks. Temporary setbacks, such as a poor quarterly earnings report or the loss of a contract, can quickly cut their share prices. That’s why we view even the best small cap stocks as aggressive, and advise investors not to overindulge in small caps.
Sometimes small cap stocks rise so high that we advise selling simply because they have gone too high in relation to their current prospects. As a general rule, it pays to be quick to sell at least part of your holdings of aggressive or speculative winners. At the same time, you should be slower to sell your conservative winners.
Small cap investments could play a role in most investors’ portfolios. But overall, we think investors can benefit by following TSI Network and using our three-part Successful Investor strategy:
Discover how to put extra strength into your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
Small caps stocks are companies with a “market cap” (the value of shares they have outstanding) below, say, $250 million, or some other arbitrary figure.
Many investors think of the “small cap group” as the place to look for aggressive investments, such as junior companies that will develop into seniors and make huge gains for investors. Some small caps will indeed turn out that way, but you’ll need to choose carefully. That’s because small cap stocks vary widely in quality.
The top small caps are well-established firms in growing fields with a least a record of rising sales. However, many small caps are start ups that have yet to make their first profit. Some succeed brilliantly, and these are the hot small cap stocks we aim to help you spot in our Stock Pickers Digest newsletter, but lots of others go broke. Then too, some small caps are former large-cap companies that have serious problems. These stocks now trade as small caps, but may be on their way to zero.
If you’re going to hold a small cap stock in your portfolio, we recommend that you only hold the very best. We also recommend using our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
formerly Toronto symbol SBY, is Canad''s second-largest food retailer after Loblaw. The company was acquired by parent Empire Co. in July 2007.
Socially responsible investing is an investing practice where an investor chooses not to invest in certain companies, due to their personal, political, or spiritual beliefs. From time to time, we are asked about socially responsible investments. I'd say it works as a marketing angle for a handful of small investment companies, and it may make you feel better about your investments. But it won't do much to improve your investment results, or cut down on what you see as unethical corporate behaviour. If you refuse to invest in an ethically questionable company, you don't hurt the company. But you do help others who are willing to invest in the company, because they get to buy it a little cheaper. We, of course, avoid companies that may be breaking the law, or doing anything that's likely to get them sued in any meaningful way. That's not just ethical investing-it's also successful investing. Companies that would cheat or harm their employees or the public may also feel free to abuse their stockholders. However, it's all too easy to treat distaste with a perfectly legal activity as an ethical question, even when it's more of a political disagreement. If you want your investing to help the environment, or support some ethical or socially desirable cause, it's more effective to follow our three-part Successful Investor strategy (see below). This should enhance your investment returns. That way you'll have more profits to share with charities that directly support your favourite causes. Don't let social responsible investing limit your potential investment gains. Instead, use our three-part Successful Investor philosophy:
We invite you to download a Special Report with our compliments: Your 12-Step Countdown to the Retirement You Want. We employ these strategies on behalf of our Wealth Management clients, who have entrusted hundreds of millions of dollars to our care
Solar power stocks are also considered green energy stocks. Solar energy has been used to warm buildings for thousands of years by combining building materials that absorb and slowly release the sun's heat. Design features, like large, sun-facing windows, have also been used. New solar technologies use the sun to heat water, provide daytime lighting and generate electricity. Many people already own a solar-powered device-a solar-powered calculator, for example. Modern solar cells with practical uses were invented in the early 1950s, and have been used to power satellites since 1958.
Solar panels began to be used for general applications in the mid-1970s, mostly for remote telecommunications, navigational aids and other rugged, remote industrial uses. Since the mid-1980s, they have powered devices that work in more urban settings, such as roadside emergency telephones and traffic sign boards.
Investing in solar energy stocks has key drawbacks: solar power is heavily dependent on government subsidies. Many of these subsidies seem likely to continue, at least for now, in China, Japan and the U.S., fuelling demand from utilities for large-scale solar plants. However, subsidies are losing support in many countries.
Meanwhile, low prices for oil, natural gas and coal make solar power less cost-competitive. We look at solar power stocks and ETFs from time to time in response to questions from members of our Inner Circle and give our buy/sell/hold advice. But meanwhile, for your overall portfolio, we think you should follow our three-part Successful Investor strategy.
Discover how to build a winning stock market portfolio in this FREE special report, Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada.
New York symbol SNE, is one of the world's leading makers of consumer electronics. Products include TV sets, computers and its PlayStation video game console. It also owns Columbia Pictures.
A sovereign wealth fund is a state-owned investment fund. These funds are usually financed from an economic surplus, such as from the sale of oil, and have been in existence since the 1950's.
A speculative investment is typically an investment in a company with very strong growth potential-but with risk to match. We do sometimes recommend speculative investments that have not yet begun making money, mainly in our advisory for more aggressive investing, Stock Pickers Digest. As long-time readers know, we have had some standout successes, including speculative investments taken over at a rich premium. Most investors understand the chances you take with a speculative investment. Along with the potential to produce higher returns than more conservative stocks, they also bring the risk of bigger losses. As well, they are often more highly leveraged and volatile than conservative stocks. A speculative stock usually has a very high per-share ratio of price-to-earnings-if it's making money at all. That high price-to-earnings or p/e ratio is a sign of a riskier, more volatile investment. Focus on finding a speculative investment that has established a business and has at least some history of building revenue and cash flow. Also look for companies that stand to benefit as the economy improves, and have proven management and sound long-term growth plans. That's very different from so so-called concept stocks, many of which are start-ups or companies that look to profit from next week's or next year's investor fad. These companies can generate big returns in a good year. In the long run, though, they are likely to cost you money. Because speculative stocks expose you to a greater risk of loss, we recommend limiting your speculative investments to no more than about 30% of your overall portfolio. That number can vary. Ultimately, this percentage depends on your personal circumstances and risk tolerance. An investor with a longer time horizon or without the need for current income from a portfolio can invest more money in speculative stocks. But we think 30% is a good rule of thumb. Limit your risk with speculative investments by investing in most if not all of the five main economic sectors. Also, follow our three-part Successful Investor strategy: 1. Invest mainly in well-established companies; 2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities); 3. Downplay or avoid stocks in the broker/media limelight. Discover how to put extra strength into your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
Speculative markets are areas of investing with the promise of high returns—but also with high risk to match
Speculative investors engage with these risky investments because they have expectations for substantial returns—returns well above the market averages. To do that, they will often look to areas like biotech, mineral exploration, technology and so on.
Speculative markets are typically ones that have a lot of volatility with sudden share price movements up and down.
Speculative stocks are always a risk; the key to profiting from them is to understand the nature of those risks.
Every investment comes with a random element. Even the most unsuitable and least probable investments can on rare occasions turn into a winner. But any successful investor can tell you that when you determine you have bought a stock in a speculative market that is unsuitable for you, it’s generally best to sell it right away. No rule says you have to win your money back in the same place where you lost it.
Most of the time penny stocks involve young firms, or start-ups in speculative markets. As mentioned, these include mining or technology.
Some speculative stock investing tips:
Learn more about investing in speculative markets by following TSI Network and using our three-part Successful Investor strategy:
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A speculative stock is a higher-risk, more aggressive stock with uncertain prospects. Speculative stocks may offer significant returns to investors—but they will also have risk to match.
High-risk, high-reward investors are typically drawn to speculative stocks.
The odds are against you when you invest in speculative stocks and companies that are not yet making money. Some if not many of these companies will never make any money.
Our “sell-half” says that if you own a stock and you have doubled your money in it, you should sell half—so you get back your initial stake. By recovering your initial stake, you'll be able to think more clearly about the stock.
However, the sell-half rule applies mainly to stocks we rate as speculative. Every case is different, but generally you should hold on to high-quality stocks even if they have doubled in price.
When investing in speculative stocks, limit speculative holdings to at most 30% of your overall portfolio. Also, focus on investment quality as much as possible when looking for aggressive stocks with the potential for higher returns.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to avoid speculative stocks and build the financial future you dream of, claim your FREE digital copy of Wealth Management & Retirement Planning: Canada RRSP Contribution Limit, RRSP Interest Rates, TFSA Contribution Limit and More now.
A spinoff is a new company broken off from an existing company to create more value for shareholders.
You might be familiar with Kraft Foods Group and Hewlett-Packard, two major brands who have done it with great success.
To create a spinoff, a company sets up one or more of their divisions or subsidiaries as an independent company, then hands out shares in that company to their own shareholders, as a special dividend or spinoff'.
Often, the parent company starts by selling a portion of the new company to the public, to establish a market and a following among investors. That way, by the time of the spin-off, stock in the new company may be liquid enough to be sold relatively easily, or retained with some confidence as a worthwhile investment.
As a general rule, you'd be better off to buy more of any stock you receive as a spinoff, rather than selling. In fact, many studies have shown that after an initial adjustment period of a few months, spinoffs tend to outperform groups of comparable stocks for several years.
You can contrast a corporate spin-off with a new stock issue, which is when a company first sells shares to the public.
The two situations are like two sides of a coin—one favourable to investors, the other unfavourable. The motivations of the companies are nearly the opposite.
To determine which stocks are best to invest in, use our three-part Successful Investor philosophy:
Discover how to build a winning stock market portfolio in this free special report, Canadian Stock Market Basics: How to Trade Stocks and Make Good Investments in Canada, from TSI Network
A split share is where a company issues two classes of shares. The capital shares get all or most of the capital gains and losses; the preferred shares get most of the dividend income.
For example, Dividend 15 Split Corp, symbol DFN on Toronto, is a split-share company that holds shares of 15 companies. These include: Bank of Montreal, BCE, TD Bank, TransCanada Corp., Telus, Enbridge and others. Dividend 15 Split Corp. has two share classes: Dividend 15 Split Corp. capital shares (Toronto symbol DFN), and Dividend 15 Split Corp. preferred shares (Toronto symbol DFN.PR.A).
We may like a lot of the stocks that a split share company holds-but our view is that it's a rare investor who needs dividend income but not capital gains, or vice versa. We think you are better off investing directly in the underlying firms. That way you'll avoid the yearly management fees and other costs.
We think split share companies just turn good investments into speculations. You get all the risk of an equity investment, but none of the long-term security of owning a stock. Avoid both classes of split shares.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
A spousal RRSP is a registered retirement saving program for your spouse that you can make contributions to. A spousal RRSP is one way to achieve equal retirement income. Suppose you are the higher-income spouse. You can make contributions to a spousal RRSP, and claim the tax deduction. Your contributions to the spousal RRSP will count toward your annual RRSP deduction limits. Your spouse can still contribute their full deduction to their own separate RRSP. When the money is withdrawn from the spousal RRSP years later, it is taxed in the hands of your spouse. That's an advantage if he or she is still in a lower tax bracket. A spousal RRSP is also a way to defer taxes if you are no longer able to contribute to a personal RRSP because of your age. As long as your spouse is 71 or younger, you can contribute to his or her spousal RRSP and still claim the tax deduction. Note that withdrawals from a spousal RRSP are generally subject to a "three-year rule." If a spouse withdraws funds from an RRSP within three calendar years after the higher-income spouse's last contribution, the higher-income spouse must declare the withdrawal as income on his or her tax return. The exceptions include spouses living apart due a marriage breakdown or the death of the contributor in the year a withdrawal is made. At TSI Network, we recommend using our three-part Successful Investor philosophy:
We invite you to download a Special Report with our compliments: Your 12-Step Countdown to the Retirement You Want. We employ these strategies on behalf of our Wealth Management clients, who have entrusted hundreds of millions of dollars to our care.
New York symbol SWK, makes a wide variety of hand and power tools for consumer and industrial users. It also provides building security systems and services.
Toronto symbol STN, offers clients a broad range of consulting, project delivery, design/build and technology services.
Starbucks is a leading American seller and roaster of specialty coffee. The Starbucks Corporation was founded in Seattle Washington in 1971. The beverage seller operates worldwide with more than 23,000 locations.
Stores in the Americas supply 74% of its sales, followed by Europe, the Middle East and Africa (8%), and China and the Asia-Pacific region (6%). It gets a further 6% of its sales by selling coffee and other beverages through supermarkets and 3% from other activities, like online sales.
Over the years, Starbucks has offered a wider range of coffee flavoured drinks, teas and even pre-packaged foods. They have also experimented with offering alcoholic beverages like beer and wine.
Companies like Starbucks are part of the consumer sector. Consumer sector companies can add stability to your portfolio. That’s because these companies sell items, like food, that consumers must buy regardless of the direction of the economy. The best consumer stocks have built brands that have strong customer loyalty and produce steady, predictable revenue streams.
Investors should consider adding consumer sector blue chip stocks like Starbucks to their portfolios. They can also boost their portfolio returns by following TSI Network and using our three-part Successful Investor strategy:
Discover how to put extra strength into your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
New York symbol STT, provides custodial, accounting and other services to large financial institutions, such as mutual funds and pension plans. Also provides asset management services.
A stock broker, also typically called an investment advisor, can help you manage your investments if you don't want to do it yourself. Most stock brokers are commissioned sales people who make investment recommendations that you can accept or reject. There's nothing inherently wrong with this arrangement, of course. But it can introduce conflicts of interest that can influence your broker's recommendations, and you should be aware that this might not always work in your favour. For instance, your stock broker's income is proportional to the frequency of your trading, but increased trading is likely to cost you money. Commission rates vary among investments, which gives brokers an incentive to sell the investments that pay the highest commissions. But a general rule is that the riskier an investment, the more commission a stock broker earns for selling it. In addition, stock brokers have no "fiduciary relationship" with their clients. They are not legally required to do what's best for the client. They are just supposed to try to make sure that the securities they sell are "suitable" for their clients. "Suitable," of course, can cover a wide range of desirable and not-quite-so-desirable securities. A good stock broker is one who understands investing and who has the integrity to settle conflicts of interest in the client's favour. Good stock brokers can provide an effective and economical way to manage your investments. But if you are going to use a full-service broker, take the time to find a broker you can trust. We think you will show the best long-term returns with the least risk by following TSI Network and using our three-part Successful Investor strategy:
Discover how the secrets of successful investors can help you to a more profitable investment future in this special report, The 10 Best Practices of Successful Investors.
Stock buybacks, also known as share buybacks, are when a company purchases outstanding shares of its own stock on the open market. Share buybacks typically raise the value of a given stock holding. Stock buyback programs also raise a company's earnings per share. It's simple arithmetic: buybacks reduce the number of shares outstanding. To get earnings per share, you divide total earnings by the number of shares outstanding. When you reduce the divisor-because the company has fewer shares outstanding, due to stock buybacks-the calculation gives you a higher number for earnings per share.
On the whole, buyers are willing to pay more for a stock with higher earnings per share. The funny thing is that, just as investors tend to underestimate the value of a buyback, they overestimate the value of a dividend reinvestment program. They put a high value on the fact that they can reinvest their dividends automatically, without paying brokerage commissions. They fail to recognize that brokerage commissions are now at historic lows. They also overlook the fact that they have to pay taxes on the full dividend each year they receive it, even if they reinvest it. That tax hit and the loss of an opportunity for tax-deferred compounding greatly outweigh what they save on brokerage commissions.
Don't get us wrong-cash dividends are a definite plus-buy don't overlook stock buybacks. Stock buyback can be huge win for investors. And you can make even bigger gains in the market by following TSI Network and using our three-part Successful Investor strategy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it's yours FREE!
Stock diversification in your portfolio helps cut risk by allocating funds across most if not all of the five sectors.
For proper portfolio diversification, investors should aim to initially invest in a minimum of four or five stocks—one from each of most, if not all, of the five main economic sectors: Finance, Consumer Goods & Services, Resources & Commodities, Manufacturing & Industry, and Utilities.
If they want, they can buy them one at a time, over a period of months or even years, rather than all at once. After that, they can gradually add new names to their portfolios as funds become available, taking care to spread stocks holdings out as mentioned.
Whatever the size of your portfolio, stock diversification through the spreading of your investments across the five main economic sectors is crucial. That way, you avoid loading up on stocks that are about to slump simply because of industry conditions or changes in investor fashion.
By diversifying stock purchases across the sectors, you also increase your chances of stumbling upon a market superstar—a stock that does two to three or more times better than the market average. These stocks come along every year. By nature, their appearance is unpredictable; if you could routinely spot them ahead of time, you’d quickly acquire a large proportion of all the money in the world, and nobody ever does that.
At TSI Network, we include stock diversification as part of our three-part Successful Investor philosophy:
Discover how to build the financial future of your dreams, claim your FREE digital copy of Wealth Management & Retirement Planning: Canada RRSP Contribution Limit, RRSP Interest Rates, TFSA Contribution Limit and More now.
Stock investing has grown in popularity with the advent of discount brokerages that reduced the fees involved in trading individual stocks. Along with investing, the appetite for stock advice surged, spawning books, newsletters and televisions shows related to the topic.
Stock markets are also known as equity markets. Pat McKeough publishes a range of investment publications that can help you successfully make money in Canadian, U.S. and global markets. There are five economic sectors in the stock market: manufacturing and industry, resources and commodities, consumer, finance and utilities.
Long-term studies show that the Canadian stock market as a whole generally produces total pre-tax annual returns of 10% to 11%, or around 7.5% after inflation.
Many investors and money managers find that it's hard to beat the market's long-term average returns over long periods (many years if not decades). But it's easy to fall below the average.
Investing in stocks can earn less than the market return for a variety of reasons. One is sheer randomness. Others include taxes; brokerage commissions (particularly if you trade more than absolutely necessary); mutual fund MERs; getting caught up in stock-market fads; buying speculative stocks that collapse; buying financial-industry creations that are virtually certain to produce meager profits if not losses for the bulk of participant's (stock options and hedge funds are a couple of key examples); loading up on risky investments at market peaks; selling out in despair at market bottoms; and every other market error you've ever thought or heard of.
If you've heard of it, you can bet that lots of investors have lost money to it, and many others will do so in the future. To maximize your gains, and minimize risk, at TSI Network we recommend using our three-part Successful Investor philosophy when investing in the stock market:
Discover how the secrets of successful investors can help you to a more profitable investment future in this special report, The 10 Best Practices of Successful Investors. And it's yours FREE!
We always look at stock market charts when we select stocks to recommend in our newsletters and investment services. However, technical analysis is a useful tool, but only if you recognize it as one of many tools. We don't look at charts for a prediction on what's going to happen.
We look to see if the pattern on the chart seems to support the view we've formed of the stock, based on its finances and other fundamental factors. The main problem with chart reading is that it is based entirely on a stock's past price movements. It's not concerned with other crucial parts of a company's business, such as financial statements, management strength or conditions in the company's industry.
It's encouraging if our analysis and the stock market charts seem to match. But sometimes they don't. If a stock looks promising, but its chart shows a lengthy falling trend, insiders may know something you don't. That's when you have to dig deeper, and perhaps wait until the situation clarifies itself.
One thing we have observed over the years is that charts always seem to provide a misleading answer just when it can do the most damage to those who rely on them. That's why we think it's a big mistake to base investment decisions exclusively on charts or technical analysis of any kind. At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
A stock market crash is a phenomenon where major stock markets experience large sell offs. A stock market crash can spark a turbulent period that might last for years.
The term stock market crash could also be referring to the market crash of 1929 that brought the U.S. into a deep economic depression. Thankfully today, unlike the 1929 market crash, major stock markets and government financial regulators firms can halt trading before panic sets in. Even so, two big crashes also occurred in 1987 and in 2008-2009.
The first stage of an economic slowdown after a stock market crash is called a recession, which can then lead to an economic depression. However, it’s only classified as a depression after two or more years of an economic recession. Note that it would take a major catastrophe to bring about a depression like that of the 1930s.
Most people know that the U.S. and other governments needlessly deepened and prolonged the 1930s market depression with poorly thought out legislation that hurt trade and hindered investment.
Since then, however, governments have created other programs—such as unemployment insurance, plus deposit and mortgage insurance, for instance—that tend to stabilize the economy in a recession after a stock market crash.
To prepare your portfolio for a stock market crash, we suggest a long-term investing strategy using our three-part Successful Investor philosophy:
Discover our complete guide to Canadian wealth management and making the most out of your savings. It’s all in our newly updated report, Wealth Management & Retirement Planning: Canada RRSP Contribution Limit, RRSP Interest Rates, TFSA Contribution Limit and More. And it’s yours FREE!
Stock market futures are legal contracts to buy stocks at a specific price at a specific date in the future. Futures differ from stock options because they are a binding commitment to purchase rather than the opportunity to do so. When you trade stock market futures, you are betting on the direction and speed of coming price changes. Nobody consistently wins these bets. Sometimes you guess right and sometimes you guess wrong, but you pay commissions and fees with every trade. You may feel you have a knack for predicting changes in prices of stock market futures. Many futures traders start out burdened with this belief. Most come to see they were wrong. The reason is simple. The markets determine price changes, and there are extremely intelligent and hard-working people on both the buying and selling sides of every futures market. As a result, most of the time, prices are about where they should be, based on existing information. Of course, new information comes along every second of every day. No one can consistently predict if the next tidbit of info will push prices up or down, or how much of a push it will deliver. However, professional futures traders have a big advantage over amateurs and hobbyists, just as in every other field. To make money in stock market futures, you have to overcome that advantage, and do so by a big enough margin to offset the fees and commissions. At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to make the most of your stock investments in our free special report, Stock Market Investing Strategy: Pat McKeough's Conservative Investing Guide for Making Money & Cutting Risk.
A stock market index aims to track the performance of a selected group of stocks. For example the S&P/TSX 60 is an index comprised of the 60 largest and most widely traded companies that trade on the Toronto Stock Exchange. Stock market indexes are also used to determine how well in general a stock market is performing and are reported on in all forms of media.
Another example is the Nasdaq Index, also known as the Nasdaq Composite. This is a market index of more than 3,000 stocks listed on the Nasdaq exchange. Companies listed in the Nasdaq composite index include Apple, Google Microsoft and Intel.
The Nasdaq-100 is another index made up of the 100 largest and most heavily traded stocks on the Nasdaq Exchange. The index reflects firms across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not include financial companies.
A stock market index is the cornerstone of ETF investing. However, it’s very important to choose the right index—and the right ETF—to invest in. Overall, we think investors can benefit by following TSI Network and using our three-part Successful Investor strategy:
Dividend stocks are your most reliable investments in all markets—and this free report is your complete guide to successful dividend investing in top Canadian dividend stocks. Download The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks FREE.
A stock market report may include company fundamentals, industry data, stock market data and analysis, risk factors and earnings forecasts, among other information.
Stock market reports will often include commentary on important general stock market advice. For instance:
It’s essential to invest mainly in well-established stocks with a history of sales and earnings, if not profits. If you break this rule and invest in, say, junior mines or Internet start-ups, you should only do so if you have a high opinion of the value of the junior’s assets and/or business plan. And you should buy the stock with money you can afford to lose. You could be mistaken about its value.
“Holding for the long term” only pays off with investments in high-quality, well-established companies. If you buy low-quality or speculative stocks, time tends to work against you. The longer you hold them, the likelier you are to lose money.
Beyond a stock market report, the fundamentals of investing are the same for newcomers as they are for established, successful investors. The goal is to stick with high-quality stocks and not let investing fads, the broker/media limelight or biased advice take you off course.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to build greater wealth with less risk when you download your FREE digital copy of How to Invest in Stocks: Canada investor advice on building a balanced stock portfolio now.
Stock market returns include profit (and losses) from buying and selling shares and through dividends.
To receive high returns from the stock market, it’s important to adopt a proper investing strategy.
If you invest mainly in well-established, dividend-paying companies, you’ll find that your investment mistakes rarely lead to serious or permanent losses. If your stock market returns strategy focuses on spreading your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources; Consumer; Finance; and Utilities), you’ll cut your vulnerability to market risk even more.
Dollar cost averaging is also a great stock market strategy for improving stock market returns.
Long-term studies show that the stock market as a whole generally produces total pre-tax annual returns of 8% to 10%, or around 6% after inflation. Over periods of a few years or less, the return is far more variable and always uncertain.
These errors will hinder your stock market returns:
At TSI Network, we recommend using our three-part Successful Investor philosophy to improve stock market returns:
Discover how to build greater wealth with less risk, claim your FREE digital copy of How to invest in stocks: Canada investor advice on building a balanced stock portfolio now.
Stock market timing is the idea that you can determine the right moment to buy a stock or to sell a stock.
However, in the end, the only really successful market timing discipline you can practice is to buy consistently during your working years, and sell your holdings off gradually in retirement. Meanwhile, collect dividends, and buy and sell only in response to clear changes in a stock’s fundamentals.
We don’t think you can successfully engage in stock timing. That’s because you can never get away from market risk, and it can cost you money to try. If you only buy when it seems market risk is low, you’ll wind up paying top prices (even though prices may well eventually exceed what you paid.)
Above all, overcome the temptation to think that you can succeed as a fair-weather investor—someone who is in the market when prices are going up and out of the market during the inevitable downturns. If you try to do that, you will wind up selling when much of the damage is done, and buying back in when much of the recovery has already taken place.
To minimize your stock market risk, and to eliminate the need for stock market timing, we recommend using our three-part Successful Investor philosophy:
Discover how dividend stocks are your most reliable investments in all markets—and this free report is your complete guide to successful dividend investing in top Canadian dividend stocks. Download The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks FREE.
Stock market trends are the general direction in which the stock market is heading. These market trends are dictated by what sector investors favour at the moment, economic and world news, interest rates and other trends from industries such as technology or resources. These trends could be positive or negative, and they could lead to a huge boom for a stock market or they could lead to a big downturn.
It pays to keep in mind that the stock market anticipates changes, and no stock trend lasts forever. Stocks can go on lengthy downturns due to business and economic problems. However, the market typically starts to go back up long before the problems get solved.
We think that in general, long-term investors should be cautious optimists. Don’t let media sound bites and self-serving short-term predictions dictate your decisions when you’re investing in stocks.
To hone your stock market investing skills, we encourage you to keep reading our daily investment emails. We also recommend using our three-part Successful Investor philosophy for long-term investing:
Discover our complete guide to Canadian wealth management and making the most out of your savings. It’s all in our newly updated report, Wealth Management & Retirement Planning: Canada RRSP Contribution Limit, RRSP Interest Rates, TFSA Contribution Limit and More. And it’s yours FREE!
Trading stock options generates a lot of brokerage commissions, which is why some young, aggressive brokers recommend them for their clients. A stock option is a contract between a buyer and a seller, based on an underlying security, usually a stock. The buyer pays the seller a fee, or premium, in exchange for certain rights to the stock. In exchange for the premium, the seller assumes certain stock option obligations. You pay commissions each time you buy or sell stock options. That means that commissions eat up a large part of any stock option profits you make, particularly if you trade in small quantities. In addition, every trade costs you money in "slippage," or the difference between the bid and the ask price. With options, this difference is wider than it is with stocks. To profit in stock options, you have to be right in three different ways: price direction, price-change magnitude, and time frame. There's a large element of risk in aggressive investments, but you can make money in them. In stock options, you will eventually lose. That's the key difference between aggressive investing and stock option investing. If you want to invest aggressively, our best advice is to avoid options and buy stocks like those we recommend in our Stock Pickers Digest newsletter. At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover which stocks to buy and hold forever in your portfolio in this FREE special report, 10 Stocks to Buy and Hold Forever.
Stock Pickers Digest focuses on the aggressive segment of the market. It looks at a number of small-cap stocks, including gold, junior oil, mining and high tech. These stocks are faster moving and less-well-established, so the service includes a weekly telephone/email hotline in addition to the monthly newsletter. The newsletter picks aggressive stocks, but at the same time it looks for above-average value - rising sales, good balance sheets and a strong hold on a growing market. It features both Canadian and U.S. stocks. You can subscribe on-line at www.stockpickersdigest.ca, or by calling 1-800-422-9550.
One of our key rules for successful investing is to maintain a diversified stock portfolio. This means to spread your money out across most, if not all, of the five main economic sectors: Manufacturing & Industry; Resources & Commodities; Consumer; Finance; and Utilities.
Note that when it comes to a diversified stock portfolio, stocks in the Resources and Manufacturing & Industry sectors expose you to above-average volatility.
Stocks in the Utilities and Canadian Finance sectors entail below-average volatility.
Profits of Canadian Finance and Utilities firms tend to be more stable than profits of Resources or Manufacturing companies.
Consumer stocks fall in the middle, between more volatile Resources and Manufacturing companies and more stable Finance and Utilities companies.
Most stock portfolios should include investments in most, if not all, of these five sectors. The proper proportions for you depend on your temperament and circumstances.
At TSI Network, we recommend using our three-part Successful Investor philosophy (which includes the five sectors):
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio.
Stock price is the amount of money it costs to purchase a single share of a company’s stock. A stock price fluctuates throughout the day based on a number of factors. Some of the factors that affect stock prices are company or industry news, political events, an opinion piece or editorial column, business TV shows, and the release of economic indicators such as housing or unemployment numbers.
Note though that It’s a mistake to base your decision to buy or sell a stock on past stock-price performance alone. Rising and falling trends come in many shapes and sizes, depending on what’s going on in a company, its industry and the world.
As well, a stock never gets so high that it can’t keep rising, or so low that it can’t keep falling. That’s why you have to look beyond price changes and focus on investment quality when deciding whether to buy or sell.
If you are a new investor learning how to invest, or a seasoned investor, our Successful Investor method can give you above-average results when you practice it on a consistent basis. At the same time, if you think of and plan your investments as a portfolio, your investment results will become more consistent, less time-consuming, and more satisfying than ever before.
Use our three-part Successful Investor philosophy when investing in any market:
Get the complete guide to Investing for Beginners and build wealth with a conservative investing approach—this free report. Find out what they are in our FREE investing guide, How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio.
Stock research is an analysis of investments to find stocks that you can profitably add to your portfolio.
When you analyze a stock, it’s important to have an idea of how likely it is to survive a business slump and go on to prosper when economic growth resumes.
A number of factors can help you to do that. These include how much debt it has, and the interest rate on that debt, how sensitive it is to economic cycles, its strengths and weaknesses in relation to competitors and so on.
One basic stock research rule is that a high p/s (price-to-sales ratio) tends to mean that a stock is 'expensive', and a low p/s tends to mean that a stock is 'cheap'. However, many individual stocks seem to run counter to this rule. Stocks with deservedly high p/s ratios can rise for lengthy periods, and stocks with deservedly low p/s ratios can fall.
That’s why it’s important to keep price-to-sales ratios in perspective in your stock research. They tend to provide hints rather than clear answers. However, don’t rule out a company solely because of its p/s ratio.
We recommend using these 4 stock market research tips. They can help you cut risk—and increase profits—in your stock portfolio:
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to build greater wealth with less risk, claim your FREE digital copy of How to invest in stocks: Canada investor advice on building a balanced stock portfolio now.
Stock sectors are the main categories we use to classify companies. The five main economic stock sectors are: Resources & Commodities, Finance, Manufacturing & Industry, Utilities and Consumer.
Spreading your holdings out across most if not all of the five sectors helps you avoid overloading yourself with stocks that are about to slump because of industry conditions or a change in investor fashion. By diversifying across the sectors, you increase your chances of stumbling upon a market superstar—a stock that does two to three or more times better than the market average. These stocks come along every year. By nature, their appearance is unpredictable: if you could routinely spot them ahead of time, you’d quickly acquire a large proportion of all the money in the world, and nobody ever does that.
Speaking very generally, stocks in the Resources & Commodities and Manufacturing & Industry sectors are apt to expose you to above-average volatility, while those in the Finance and Utilities sectors involve below-average volatility.
Consumer sector stocks fall in the middle, between the more volatile Resources and Manufacturing companies and more stable Finance and Utilities companies.
We generally feel that people who are investing in the stock market should hold a total of 10 to 20 mainly well-established, dividend-paying stocks, chosen mainly from our Average or higher TSI Network Ratings and spread their holdings out across most, if not all, of the five main economic sectors.
For a long-term investing approach, we recommend using our three-part Successful Investor philosophy:
Learn how to look for blue chip companies that are likely to pay off if business and the stock market are good, but that won’t hurt you too much during those inevitable periods when business or the markets are bad. Download Canadian Blue Chip Stocks: Bank of Nova Scotia Stock, CP Rail Stock, CN Rail Stock, Royal Bank Mutual Funds and More for FREE!
Bad stock tips are “hot stock” tips from friends or others. Good stock tips are valuable pointers or timeless advice for buying high-quality stocks.
When we select the best stocks for our newsletters and investment services, we use a number of different factors, of course. When you use these “tips” wisely, they can give you a distinct advantage in spotting the best stocks for your portfolio. Here are some examples:
Pat McKeough contributed his “best financial tip” to the Blog for Financial Literacy. Here’s a look at that relevant stock tip:
“My Best Financial Tip” is to take a sound fundamental approach to investing in stocks. That’s especially true at a time like today when interest rates are near historic lows and bonds and other fixed income investments offer sparse returns.
When stocks spend time in the limelight, they tend to become over-priced, and this leaves them vulnerable to a sharp downturn on any hint of bad news. Instead, use the stock tip of looking for stocks with hidden value that are less widely recognized as attractive investments.
Discover our stock tips by following TSI Network and using our three-part Successful Investor strategy:
Discover how to spot undervalued stocks when you download our FREE Special Report Canadian Value Stocks and Low Cost Index Funds.
Stock trading is when you buy or sell stocks, mutual funds, ETFs, and/or REITs. Trading stocks happens on an institutional level through investment banking firms and at an individual level through discount brokerage firms, portfolio managers and stock brokers.
In order to engage in stock trading, individuals need to open a brokerage account. Once they have money deposited in the account, they can begin to purchase and sell stocks. In almost every case a commission is charged for the purchasing and the selling of a stock.
New investors should note that these commissions will eat into your profits if you engage in a frequent trading, short-term investing strategy. A strategy of stock trading with aggressive securities can give you bigger gains than a more conservative approach. But it will also expose you to a greater risk of loss. That's why we recommend limiting your aggressive holdings to no more than, say, 30% of your overall portfolio.
Ultimately, the percentage of your portfolio that should be held in either conservative or aggressive investments depends on your personal circumstances and risk tolerance. An investor with a longer time horizon or without the need for current income from a portfolio can invest more money-say up to 30%-in aggressive stocks. We also recommend using our three-part Successful Investor strategy for your overall portfolio:
Discover how to make the most of your stock investments in this special report, The Canadian Guide on How to Invest in Stocks Successfully, and it's yours FREE!
Stocks are financial instruments that let you hold an ownership stake in a publicly traded company. A stock you own gives you an effective claim on the earnings and assets of a company.
Stocks trade on financial markets. The price of a stock usually fluctuates throughout the trading day depending a number of factors such as economic sector news, geo-political developments, and company-specific news.
There are no guarantees with stocks, but our view is that, today, stocks are the better financial choice for most investors than bonds—even if you hold those stocks in financial instruments like ETFs, mutual funds and index funds.
In fact, we'd say the only investors who should hold significant quantities of bonds are those who simply cannot stomach the thought of sitting through a noticeable decline in the value of their portfolios. If you fall in that category and want to own bonds, our advice is to keep the maturities on your bonds below three years.
That way, a rise in interest rates, and/or a rise in inflation, can't do too much harm to the value of your portfolio.
Understanding stocks and how they work the core of investing. Here at TSI Network, we thoroughly research stocks and how different stocks markets work. New investors—and established investors—should also consider using TSI Network as an investment resource and use our three-part Successful Investor strategy:
Discover how to put extra strength into your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
The question of whether to invest in stocks vs. bonds comes down to a simple choice: do you want to take an ownership stake in a company, or instead “lend” money to a company or to the government.
When building a portfolio of stocks vs. bonds, the first thing you need to do is to decide how much of your money you want to put in equities (that is, stocks and ETFs that invest in stocks), and how much you want to put in fixed-return investments such as bonds and money-market instruments.
Some investors try to base their choice of stocks vs. bonds on how they expect these two to perform in their portfolios. But, this requires the kind of foresight that no investor has. Far better to base the split between stocks or bonds on your own needs and on the characteristics of these investments.
In our opinion of stocks vs. bonds, bonds offer you a “heads-you-break-even, tails-you-lose” situation. That’s the exact opposite of our ideal investment, which offers odds that are more like “heads you break even, tails you win.”
Our investment advice on stocks vs. bonds: When it comes to choosing between stock or bonds and you’re reluctant to hold a 100%-stocks portfolio—and some investors are—then one alternative to consider is to keep a portion of your investment funds in relatively short-term fixed-return investments, with maturity dates of a few months to no more than three years in the future.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how hidden value turns into explosive profits, claim your FREE digital copy of Canadian Value Stocks: How to Spot Undervalued Stocks & Our Top 4 Value Stock Picks now.
A stop-loss order is a specific direction you give a broker to buy or sell a stock if it hits a specific price. A stop loss order is used to protect a profit or limit a loss on an investment.
For example: If you own a $12 stock, you might tell your broker to sell it “on stop” if it hits $10. This may limit your losses if you paid more than $10. If you paid less, it may preserve some of your profits. Some investors set up up stop-loss orders as a safety net for their investments. Note, however, that you will pay a commission for each buy or sell automatically triggered.
At times, mechanical investing aids like stops can work. But most investors who rely on them wind up losing money in the long run. That’s why we’ve long recommended that investors avoid using stop-loss orders with their stock brokerage firms, especially on any sort of habitual basis.
With speculative stocks, it might be better to use a stop-loss order than to buy the stocks and then forget about them. You can get away with the “buy-and-forget-it” approach for a time, if you buy high-quality stocks. But few speculatives ever reach that degree of investment quality.
Still, we think overall, for the best long-term gains, you should use our three-part Successful Investor philosophy:
If you’re like many investors, recent market volatility has made you more sensitive to risk. Discover how to make the most of your stock investments in this free special report, Stock Market Investing Strategy: Pat McKeough’s Conservative Investing Guide for Making Money & Cutting Risk
The investment industry periodically comes up with new income investments that offer better yields than bonds or GICs, and seem reasonably secure. However, these so-called "Structured products" inevitably come with hidden risks.
We think you are better off with "plain vanilla" fixed-income investments such as bonds, GICs or preferred shares. One example of structured investments that are popular with brokers are index-linked GICs. Supposedly these investments give you the capital-appreciation potential of a stock coupled with the safety of a GIC. We say "supposedly" because the first half of that claim is simply untrue.
The link between the investment and the performance of the index is weak at best. It is generally based on a complex formula that is cleverly designed to water down the value of the investment-to make it nearly impossible for the investment to provide a substantial return. That way, the sponsoring institution can afford to limit your losses on the investment, and still make a profit on its own operations.
You probably won't lose much money in an index-linked GIC-and they are certainly a better investment than, say, penny mines. You may actually make a modest gain after several years.
However, that gain will fall short of offsetting the risk you were exposed to and/or you sacrifice in yield. The return you lose goes to provide underwriting profits for the institution that created the investment, plus commissions and possibly a trailer fee for the broker who sold it to you. The problem is that the financial industry offers its salespeople incentives to give clients advice that may not be in the best interest of the client.
Brokers simply have too many opportunities to sell their clients investment products- like index-linked GICs, options, new issues, tax shelters and so on-that are designed to generate income for the industry and the broker, rather than gains for the client. You can't invest in equities and eliminate all risk without eliminating all the profit.
If you want to cut risk, our view is that the best way to do it is by following our three-part Successful Investor philosophy for investing:
We often receive questions about planning and enjoying a successful retirement. Our answers to those questions, based on decades of investment experience, are all located in this FREE report: 9 Secrets of Successful Wealth Management.
A successful investment is one that provides long-term gains for its investors. Profitability will mean different things to many investors. One key to making a successful investment is you need to disregard or at least downplay investment marketing messages.
This is especially true with new investment innovations. Investors need to be vigilant when looking at different types of investments because investment firms work hard on their marketing. They do this because it can attract customers and spur sales. But investment marketing can do damage when it makes an inherently risky investment look safe.
When it comes down to it, the four keys to investing successfully are:
Successful investors try to arrange their portfolios so that they more-or-less automatically tap into the profit and long-term growth that inevitably comes to well-established companies.
To be profitable in any market, use TSI Network’s three-part Successful Investor philosophy:
Get the complete guide to Investing for Beginners and build wealth with a conservative investing approach—this free report. Find out what they are in our FREE investing guide, How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio.
Toronto symbol SLF, offers savings, retirement, pension and life and health insurance products and services to individuals and corporations.
Switching brokers is the process of moving from one brokerage manager to another. Sometimes you want to switch brokers because you are unhappy with their service and other times it’s involuntary. If you face an involuntary broker switch, you need to be on your guard.
For example, when a broker retires, he can sell his clientele (or “book of business”, as it’s called) to another broker. The sale price of a “book” is based on assets in client accounts, and on commissions and fees those clients generated in the past few years. Both figures have been rising in recent years.
A truly ethical broker would be extremely choosy about who he sells to. On the other hand, the final sale price usually includes a percentage of commissions and fees the book generates for several years after the sale. If a retiring broker sells his book to a more aggressive buying broker, he may wind up receiving a higher total sales price.
By the time a broker puts his book up for sale, he may be more concerned with his own retirement than yours.
The buyer is often a younger broker who has to borrow the down payment, then follows it up with a series of payments. That usually means the new broker needs to wring a larger flow of commissions and fees out of the clients than the retiring broker ever did, just to service his debt.
It’s up to you to be vigilant during a broker switch. But overall, we think the best way to maximize your long-term investment returns is to use TSI Network’s three-part Successful Investor philosophy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
NASDAQ symbol SYMC, makes software that helps protect computers from viruses and electronic attacks. Its best-known product is the top-selling Norton Anti-Virus program.
New York symbol SYY, is North America's largest supplier of food and related products to restaurants, schools, hotels and hospitals.
T-Bills are fully backed by the U.S government and are considered one of safest investments you can make. One reason they are considered one of the safest investments, is that they are guaranteed to return their principal plus interest. This is guaranteed no matter what happens in the stock or bond markets. Most T-Bills are bought at $1,000. Up to $5 million worth of T-Bills can be bought at a time.
It’s easy to keep your money in T-Bills or other short-term, government-guaranteed investments. T-Bills avoid virtually all risk — but they also avoid most profit. In fact, at today’s interest rates, the pre-tax return on a T-Bill will barely keep you even with inflation. T-Bills should only be used by investors who seek a short-term home for their investments, while they recover from an illness or need more time to research and reinvest their money.
A T-Bill can be used as a short term investment safety net. For long-term investment goals that can pay huge dividends use the TSI Network we recommend our three-part Successful Investor philosophy for investing:
Discover how the secrets of successful investors can help you to a more profitable investment future in our special report, The 10 Best Practices of Successful Investors.
T-Bills are fully backed by the U.S government and are considered one of safest investments you can make. One reason they are considered one of the safest investments, is that they are guaranteed to return their principal plus interest. This is guaranteed no matter what happens in the stock or bond markets. Most T-Bills are bought at $1,000. Up to $5 million worth of T-Bills can be bought at a time.
It’s easy to keep your money in T-Bills or other short-term, government-guaranteed investments. T-Bills avoid virtually all risk — but they also avoid most profit. In fact, at today’s interest rates, the pre-tax return on a T-Bill will barely keep you even with inflation. T-Bills should only be used by investors who seek a short-term home for their investments, while they recover from an illness or need more time to research and reinvest their money.
A T-Bill can be used as a short term investment safety net. For long-term investment goals that can pay huge dividends use the TSI Network we recommend our three-part Successful Investor philosophy for investing:
Discover how the secrets of successful investors can help you to a more profitable investment future in our special report, The 10 Best Practices of Successful Investors.
formerly Toronto symbol TAH, explores for diamonds in Nunavut. The company ceased operations in 2008.
A takeover is a term used to describe the acquisition of one company by another company. Sometimes the takeover is hostile.
Some takeovers work out well for the buyers, of course. This doesn’t diminish the inherent risk. More important, risk multiplies as takeovers become a habit.
Takeovers are more likely to succeed when the buyer is already a successful company and is under no pressure to buy anything. That way, the buyer can take its time and wait for a truly attractive, low-risk opportunity to come along.
A hostile takeover is when a company wants to acquire another company—but the management of the takeover target does not want to be taken over. Sometimes the takeover is then facilitated by going directly to the company's shareholders. This typically provokes a fight with the target’s management.
At TSI Network, we recommend using our three-part Successful Investor philosophy for all of your investment decisions:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio.
Target-date funds are mutual funds that take advantage of the widely held view that bonds are inherently safer than stocks, so you should gradually shift your investments out of stocks and into bonds as you near retirement. Target date ETFs and mutual funds do this for you automatically. Assets invested in U.S. target-date funds have grown more than 10-fold in the past decade. Investors select a date for their target-date fund that is near the year when they plan to retire. Managers of target-date funds generally invest in a mix of stock and bond mutual funds from the company they work for. As years pass, the managers gradually reduce their stock-fund holdings and increase their holdings in bond funds, while remaining within the fund family. Investment gains in these funds have averaged around 5% a year. That's a modest return in view of the strong gains that U.S. stock and bond markets have enjoyed, overall, in the past decade. When interest rates and inflation move upward, as they eventually will, bond market returns will shrink or turn into losses. This will cut into the gains (or expand the losses) on the target fund's stock-market holdings. Target date funds aren't worth the risk. You are better off to follow TSI Network and use our three-part Successful Investor strategy:
We invite you to download a Special Report with our compliments: Your 12-Step Countdown to the Retirement You Want. This comprehensive report on retirement is based on many decades of investment experience and we employ them on behalf of our Wealth Management clients, who have entrusted hundreds of millions of dollars to our care.
Tax-loss selling occurs when you sell a security at a loss in order to use that loss to offset capital gains in Canada. By using these losses to offset your taxable capital gain, you can save on income tax.
For example, if the deadline for tax-loss selling on the Toronto Stock Exchange was December 24, 2016 and you sold at a loss on or before that date, you could deduct your loss against your 2016 capital gains. However, you can also carry your loss back for the previous three years to offset capital gains in Canada, or carry it forward indefinitely, to offset past or future capital gains.
If you are considering making use of a tax-loss sale to minimize capital gains in Canada, you should also be aware of the “superficial loss rule.” This rule states that if an investor, their spouse or a company they control, buys back a stock or mutual fund within 30 days of selling it, they are not permitted to claim the capital loss for tax purposes. Failing to obey the 30-day rule will result in the capital loss being disallowed.
Tax loss selling can be an effective way to lower your capital gains tax. To continue profiting from your investments in general, use our three-part Successful Investor strategy:
Discover how to turn capital gains taxes to your advantage in this free special report, Capital Gains Canada: 7 Secrets for Managing your Canadian Capital Gains Tax Liabilities, from TSI Network.
A tax shelter is any sort of investment that aims to reduce or eliminate your tax liability. In Canada, tax shelters are closely monitored and regulated.
Tax shelters are legal investment vehicles that let investors pay less tax. Some are very risky and should be avoided, like flow-through limited partnerships, but others, like RRSPs and TFSAs, are great ways for Canadian investors to cut their tax bills. In the United States, IRAs and 401ks are examples of retirement tax shelters.
Registered Retirement Savings Plans, or RRSPs, are the best-known and most widely used tax shelters in Canada. RRSP contributions are tax deductible, and taxes are deferred on growth in the value of investments you hold in an RRSP. You only pay taxes on RRSP withdrawals. However, RRSP tax advantages come at a cost. RRSP withdrawals are taxed as ordinary income. That means in an RRSP you don't get any benefit from the lower rate of tax on capital gains (half the rate you pay on ordinary income), and the dividend tax credit doesn't apply to dividend income you get in an RRSP.
RRSPs and TFSAs are two examples of legal tax shelters. At the same time, you'll want to consult your tax professional before utilizing any other tax shelters. Above all, stick with "plain vanilla stocks" and use our three-part Successful Investor philosophy for investing:
We often receive questions about planning and enjoying a successful retirement. Our answers to those questions, based on decades of investment experience, are all located in this FREE report: 9 Secrets of Successful Wealth Management.
What is a tax-free savings account? A tax-free savings account, or TFSA is a registered savings account. The account earns investment income without being subject to tax. Contributions to the account are not tax deductible, but at the same time, withdrawals are also not taxable. TFSAs have a contribution limit. They began at the start of 2009. The amount of money you can contribute to your TFSA changes year to year. For example in the year 2015, the maximum amount you could contribute was $10,000. However, if you have not contributed in the past, or did not meet maximum contributions in any given year, you can catch up on unused contributions (for a cumulative total of $41,000). Tax-free savings accounts let you earn investment income-including interest, dividends and capital gains-tax free. Unlike registered retirement savings plans (RRSPs), contributions to TFSAs are not tax deductible. However, withdrawals from a TFSA are not taxed. If funds are limited, you may need to choose between TFSA and RRSP contributions. RRSPs may be the better choice in years of high income, since RRSP contributions are deductible from your taxable income. In years of low or no income-such as when you're in school, beginning your career or between jobs-TFSAs may be the better choice. A tax-free savings account can benefit most investors. And when picking stocks to hold in your TFSA, we recommend following our three-part Successful Investor strategy:
Confused by TFSAs? Most Canadians are. That's why Pat McKeough and popular financial columnist and author Jonathan Chevreau have put together a free report called Make the Most of Your Tax Free Savings Account.
Tech stocks are companies that are involved in the research, development and production of technology such as electronics or software. With high research and development budgets tech stocks rarely pay dividends and are often classified as growth stocks.
The success or failure of any tech stock depends on a variety of factors. The company may start out with a promising business plan. But it needs all sorts of things to prosper in the long run: the right employees, a favourable economic and regulatory climate, a favourable competitive environment, favourable research outcomes, adequate financing, perhaps the right merger partner or acquisition—the list is long.
The best tech stocks have exponential growth and continue growing. The best technology companies become so successful that they start paying dividends. Investors should also scour a technology stock’s balance sheet to glean any hints of hidden value like real estate, research and development or other valuable long-term assets.
If you’re going to hold a tech stock in your portfolio we recommend that you only hold the very best—such as the stocks we recommend in our newsletters. We also recommend using our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
"Technical analysis can be a useful investment tool, but if you rely too heavily on it-or any other single facet of investing-you have little chance of profiting consistently." Focusing too heavily on technical analysis in our opinion is sure to lead you to lose money, in the long term if not in the short. But we'd say the same thing about focusing on p/e ratios, or dividend yields, or the number of patents a company owns.
You need to look at the overall picture, rather than confine your view to your favourite selection of easily accessible statistical information. That's the trouble with zeroing in on any single facet of investing. With a narrow view, you can get lucky and make a handful of brilliant trades. But to profit consistently in a long investing career, much less make any serious money, you have to take a broad view of the market and economy, you have to learn how to single out stocks that will go up and stay up, and you have to learn to diversify. Many investors are well past age 35 when they make that essential discovery. The key to profiting from technical analysis is to avoid looking to the pattern on the chart for a prediction of what's going to happen. Instead, see if the chart seems to support your view of the stock, based on its finances and other fundamentals.
To succeed as an investor, you have to take a broad view in making investment decisions. Technical analysis and other narrow views do sometimes seem to "work" for lengthy periods, of course. But they only work for a minority of the time, and they never work consistently. Instead, they run hot and cold. As with all random events, their successes occur in bunches.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our free investing guide, The 10 Best Practices of Successful Investors.
Technology stocks are stock issues of companies that operate in the technology sector. These are companies that make electronics or software and so on. Successful tech stocks can experience enormous growth. However, technology stocks are also susceptible to lots of market volatility and positive and negative news can throw tech stocks into steep declines.
There's a delicate balance between risk and reward with tech stocks. Fast-changing technology offers huge opportunities when investing in these stocks. However, fast change can also bring dangers. The success or failure of any technology stock is subject to many different factors.
The company may start out with a promising business plan. But it needs all sorts of things to prosper in the long run: the right employees, a favourable economic and regulatory climate, a favourable competitive situation, favourable research outcomes, adequate financing, perhaps the right merger partner or acquisition-the list is near endless.
Technology stocks may have a role in your portfolio, but you should be well aware of the risks involved with growth securities like tech stocks. Above all, make sure your tech stocks fit into a balanced investing approach. You can do this by applying our three-part Successful Investor strategy.
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Toronto symbol TCK.B, is the world's largest producer of zinc, which helps prevent steel from rusting. The company is also a major producer of copper and gold. It recently acquired Fording Canadian Coal Trust.
Toronto symbol T.A, provides local and long distance telephone service in B.C., Alberta and parts of Quebec, and wireless service across Canada.
For many investors today, the name John Templeton might not be familiar except as half the name of big U.S. fund company Franklin Templeton (and it’s Ben Franklin’s face on the company logo rather than Templeton’s). But until a decade or so ago, John Templeton was as well-known and as highly regarded as Warren Buffett is today, and he created the Templeton Growth Fund.
Templeton got his start as an investor during the Great Depression of the 1930s. Templeton focused his investment strategy on the low p/e ratios, high dividend yields and other value indicators he saw in the market. In a move that has become legendary, Templeton in 1939 ordered his broker to buy 100 shares of every New York Stock Exchange stock that traded for less than $1.
He based his approach on the assumption that the entire market was at bargain levels. He felt particularly confident about value in the lowest-priced stocks. They couldn’t be used as collateral for bank loans, and many investment professionals were prohibited from holding them. So there were lots of sellers and few buyers.
He was correct. Many of his purchases went to zero. But among those that survived, many rose fivefold, tenfold or more. Overall, this investment was a huge success. Templeton went on to launch his Templeton Growth Fund in 1954. It was a market leader for decades.
The Templeton Growth Fund aims to continue the approach that paid off so well for so long under its founder and long-time manager, John Templeton. His successors aim to look for bargains, avoid fads and pay close attention to a company’s fundamentals.
Templeton Growth Fund is generally well diversified, both among countries and economic sectors. Its attention to fundamentals such as earnings, cash flow and low debt, and its avoidance of fads, gives investors global exposure with reasonable risk.
Learn how to spot undervalued stocks and discover our top 4 value stock picks when you download Canadian Value Stocks today for FREE!
New York symbol TPX, makes and distributes Swedish Mattresses and Neck Pillows made from its proprietary Tempur pressure-relieving material.
New York symbol TNC, makes industrial floor cleaning equipment, including scrubbers, sweepers and polishers.
New York symbol TDC, makes computers and software that capture and store large quantities of a business' data, such as its sales and inventory. Analyzing this data for trends helps its clients expand their profits.
formerly Toronto symbol TF.UN, manages Ontario's electronic land registration system. The company was acquired by the Ontario Municipal Employees Retirement System in November 2008.
formerly Toronto symbol TER, distributes natural gas in B.C. It also provides consulting and engineering services. The company is now owned by Fortis Inc.
Tesla stock is common shares of Tesla Motors, which develops and builds fully electric vehicles.
Tesla Motors (symbol TSLA on Nasdaq) operates its own sales and service network in North America, Europe and Asia.
Tesla started deliveries of the Model S sedan in June 2012, and Model X sport utility deliveries started in the third quarter of 2015.
Tesla operates 615 Supercharger stations in North America, Europe, and Asia. It also works with a wide variety of hospitality locations, including hotels and popular destinations, to offer an additional charging option for its customers. There are now over 2,200 of these locations around the world.
The company’s sales keep growing, but its losses continue to rise as well, making Tesla stock risky.
Tesla is also investing considerable amounts to become a major electric-vehicle battery maker.
Tesla’s long-term operational success depends on its ability to maintain production on its growing fleet of vehicles, continue to build its international network of charging sites, and successfully profit in the fickle and continually evolving battery market.
So far, the company has lost money—and costs related to the company’s growth (its expanded sales team, higher production expenses and so on) will likely continue to generate losses for some time. We don’t recommend Tesla stock because we see shares of Tesla Motors as overvalued.
Lean more about Tesla stock and other risky investments by following TSI Network and using our three-part Successful Investor strategy:
Discover how to find the best growth stocks by claiming your FREE digital copy of Canadian Growth Stocks: WestJet Stock, RioCan Stock and more now.
New York symbol TXN, is the world's leading maker of chips for cellphones and other portable devices.
The Successful Investor service includes a monthly newsletter, weekly telephone/email hotline and a monthly portfolio supplement. The newsletter recommends high-quality, Canadian stocks that will surge ahead in good markets, and yet hold their own in the face of market declines. It focuses on lower-risk stocks with strong profit and growth potential. You can subscribe on-line at www.thesuccessfulinvestor.com, or by calling 1-800-579-4246.
A thin trader is a stock with a small average daily trading volume, making it less liquid. A stock that is a thin trader can produce good results if you can manage the risk and identify stocks with real growth prospects.
Many speculative or aggressive stocks may trade a few hundred to a few thousand shares daily. That’s why they are called “thin” or even inactive traders compared to the hundreds of thousands, if not several million shares trading daily for a Canadian bank or a major utility, for example.
You’ll find some stocks like these among our recommendations in Stock Pickers Digest, our newsletter for aggressive investing. Here’s what you should know about them.
With fewer transactions taking place in their shares, thin traders are often more volatile than actively traded stocks, especially in reaction to unforeseen news. These stocks may also have a wider spread between the bid (what you get if you sell “at the market”) and the “asked” (what you pay if you buy). The spread may be 2% to 4% or more, compared to 1% or less for an active trader.
The a strong thin trader has the potential to graduate into the ranks of the more actively traded, and this gives them slightly more profit potential than established stocks, albeit at a cost of extra risk.
There's room for growth stocks in your portfolio, and at TSI Network we recommend our three-part Successful Investor strategy for determining which ones make the most sense:
The most successful investors don’t just “buy and hold,” they “buy and watch closely.” This strategy has been one of the foundations of success for us and our wealth management clients for decades. Download 10 Stocks to Buy and Hold Forever for FREE, right now.
Toronto symbol THD, is a closed-end fund that holds 68% of its assets in units of Canadian General Investments. The rest of its holdings are mostly high-quality income trusts and stocks.
Toronto symbol TRI, divides its operations into two divisions: Markets, which provides financial information products to banks and other financial institutions; and Professional, which sells specialized information to professionals in the legal, accounting, scientific and healthcare fields.
Specialized fracturing techniques are used to release the gas by cracking the sand, coal or shale with high water pressure and sand. Fracturing, or fracking, involves pumping a mix of water, chemicals and other materials into shale rock formations that contain oil or natural gas. This fractures the rock and releases the oil and gas.
Tight gas formation deposits have hugely increased the production of natural gas and oil from shale in North America. This angers some environmentalists, even as it creates jobs and tax revenues at a time of economic uncertainty. For example, some environmentalists are worried that fracking chemicals will leak into drinking-water supplies.
Others worry that disturbing vast areas of shale can cause earthquakes. The obvious direct benefit of the huge increase in production from tight gas formation discoveries is that this new source of supply has pushed down oil and gas prices. This will act like a tax cut in countries that invest in shale production, and will spur economic growth. It will also spur capital investment in many countries, but particularly the U.S. and western Europe.
In addition to cutting prices, this diversification of oil supplies will tend to smooth out fuel prices, by eliminating bottlenecks. When periodic oil shocks become a thing of the past, the world economy can grow even faster. This will also depress the profit margins of current oil producers, and that's a good thing.
Many of today's top oil-producing countries have been corrupted by their oil wealth. Oil gave them all the money they needed, and provided little incentive to build the legal and physical infrastructure for other types of economic activity. They also failed to develop politically. They stuck with authoritarian government, and they had the money to buy all the political support they needed.
Worst of all, some used their wealth to finance terrorism. Resource stocks and green stocks may have a place in your portfolio. But above all, make sure you invest following TSI Network and using our three-part Successful Investor strategy:
Discover how to make the most of your commodity investing in this free special report, Commodity Investments: Fertilizer Stocks and Potash Stocks That Will Profit from Rising Food Demand, from TSI Network.
Toronto symbol THI and New York symbol THI, operates coffee-and-donut shops in Canada and the United States. Franchisees operate most of its stores.
What is a time-share investment? A time-share investment is a fractional real estate interest. For example, if you own a time-share in Florida, it would entitle you to stay at the residence during certain times in of the year. There are often monthly or annual maintenance fees that go along with ownership. Time-share investments are marketed as something of a cross between a real-estate investment and a hedge against inflation. But, generally speaking, only the land portion of any real-estate investment provides a hedge against inflation. The buildings and equipment are going to depreciate, just like your car, though maybe not as quickly. This depreciation poses a greater risk if you over-pay for the asset to begin with. You might look on a time-share investment as the vacationers' version of the new stock issue. Some of them seem to work out well for some people, at least for a while. But on the whole, it's a good idea to stay out of new issues, and an even better idea to stay out of time-shares. At TSI Network we recommend only a few investments-but we also see a lot to stay out of. Above all, we advise sticking with our three-part Successful Investor strategy:
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Toronto symbol TIH, is one of the world's largest Caterpillar dealerships. It also makes compression systems for natural gas, fuel gas and carbon dioxide in addition to process systems and industrial and recreational refrigeration systems.
Toronto symbol TS.B, publishes The Toronto Star, Canada's largest daily newspaper, and other dailies and community newspapers in Southern Ontario. It also owns Harlequin Enterprises, the world's largest publisher of romance novels.
Trading stocks online is a relatively recent phenomenon that has been made possible by discount stock trading and the Internet. Investors can now trade with ease from their home computers.
Trading stocks online is the process of buying or selling stocks via the Internet. Usually this is done through online discount brokers.
Some investors may look on online trading as a fairly quick and convenient way to build wealth, but there are many hidden dangers that may not be easy to spot at first. The main risks of online trading come from the fact that it all may seem deceptively easy. The lower costs and higher speeds of online trading can lead otherwise conservative investors to trade too frequently. As a result, you could wind up selling your best picks when they are just getting started.
The apparent ease of online stock trading may even encourage conservative investors to take up short-term trading or day trading. That’s just another danger of trading stocks online—there’s a large random element in short-term stock-price fluctuations that you just can’t avoid
Trading stocks online is an easy way for new investors to start investing. But to invest wisely, and cut your risk, follow TSI Network’s three-part Successful Investor strategy:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, How to Invest in Stocks: Canada Investor Advice on Building a Balanced Stock Portfolio.
Trading strategies are systems for investing that purport to predict future price movements from past data. A trading strategy generally has a central idea that guides the rest of the strategy. For example, a sector rotation strategy is a trading methodology whereby an investor tries to predict which market sectors will be in favour at a given time. They then aim to purchase the top performing stocks in that sector.
Automated trading strategies and systems make trading decisions for you. They do two core things for investors. First, they narrow down the data you use to make investment decisions. Second, they apply some fixed rule or rules to draw a conclusion or an investment decision from that selection of data.
The problem is that it’s easy to create software that would have made profitable investments in the past. That’s because the program has all the data for the past period, and can try various combinations of buying and selling rules to see if they would have worked.
However, markets are constantly changing. A rule that worked last year may fail miserably this year. Your black box has to compete against other black boxes created this year that also benefit from the latest software and up-to-date market data.
These systems often seem to work for a time, but that’s usually coincidental. If the market is going up and they tell you to buy volatile investments, they may generate a series of profitable trades. Then they quit working, and begin pumping out unprofitable trades. Often this happens just when they can do the most damage to their users.
It all comes down to a basic rule of the universe: if trading was as easy as promoters of trading systems make it out to be, why would anybody work?
For the safest long-term investments returns, follow TSI Network’s three-part Successful Investor strategy:
Discover how to put an extra strength in your portfolio with our specific advice on how to identify high-quality dividend stocks. It’s all in our newly updated report, Dividend Paying Stocks: How High Dividend Stocks Can Supercharge Your Income Investing. And it’s yours FREE!
TransAlta operates coal, wind, hydro, natural gas and geothermal power generation facilities. Coal-fired plants account for about 53% of the power it generates. Natural gas accounts for 25%, and the remaining 22% comes from hydroelectric and other renewable sources. TransAlta Renewables (Toronto symbol RNW) is a 65%-owned subsidiary of TransAlta and is Canada's largest source of wind power. Wind power now accounts for 12% of TransAlta's generating capacity. However, wind projects need government subsidies to be profitable. TransAlta now has long-term contracts to sell its wind power, but governments may try to change the terms of these deals as they cope with rising budget deficits. Alberta Premier Rachel Notley recently mandated that all coal power be phased out in the province by 2030. Two-thirds of the generating capacity will be replaced by renewable energy and one-third by natural gas. TransAlta has, as mentioned, roughly 53% of its generating capacity in coal-fired plants in Alberta, so it will need to move away from the fuel. The timing of the shift for the company and how much compensation it will get from the Alberta government are still to be negotiated and that uncertainty adds risk. But equally important right now is the fact that the near-term outlook for electricity prices in TransAlta's key Alberta market is weak. Whatever stocks you decide to invest in, we think you can minimize your risk by following TSI Network and using our three-part Successful Investor strategy:
Discover how to make the most of your commodity investing in this free special report, Commodity Investments: Fertilizer Stocks and Potash Stocks That Will Profit from Rising Food Demand, from TSI Network.
formerly Toronto symbol TPW.UN, owns a 49.99% interest in TransAlta Cogeneration, L.P., which in turn holds interests in five gas-fired plants in Ontario, Saskatchewan and Alberta. The company was acquired in 2007.
Toronto symbol TRP, operates pipelines that transport natural gas, mainly from Alberta to markets in central and eastern Canada. TransCanada owns or holds interests in over 20 power plants in Canada and the United States.
Toronto symbol TCL.A, provides direct marketing services, commercial printing services, and publishes magazines and newspapers, primarily in eastern Canada.
Toronto symbol TET.UN, holds oil and gas properties in the Kaybob and Grande Prairie areas of central Alberta.
NASDAQ symbol TRMB, makes GPS devices and technology for four main markets: Engineering and construction; Agriculture GPS products; Fleet products to track moving vehicles; and GPS components for major customers around the world.
The TSX is the abbreviated name for the Toronto Stock Exchange. You will often see our stock recommendations on TSI Network accompanied by a TSX symbol. The TSX is the largest stock exchange in Canada and the third largest in North America. Of note is that the Toronto Stock Exchange has more oil and gas companies listed on it than any other stock exchange in the world. The Toronto Exchange started on October 25, 1861. The TMX Group, operates a number of stock and commodity exchanges, including the TSX.
Like most other major stock exchanges, the TSX is highly regulated. The Toronto Stock Exchange lists common shares of companies, but also index securities like ETFs.
In fact, ETF investors may be interested to learn that the iShares S&P/TSX 60 Index ETF is a good low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the S&P/TSX 60 Index, which consists of the 60 largest, most heavily traded stocks on the exchange.
At TSI Network we analyze a lot of the stocks on the Toronto Stock Exchange—but we only recommend a few as buys. For long-term investment success, we think you should use our advice to build your portfolio—and we also recommend following our three-part Successful Investor strategy:
An undervalued stock can signal a real bargain—or a dangerous risk. Knowing how to spot quality bargain stocks can be the key to long-term investing gains. Download our FREE report, Bargain Stocks: Your Guide to Finding the Best Undervalued Stocks, today!
The TSX Venture Exchange is a Canadian stock exchange that operates as a public venture capital marketplace for emerging companies.
Both the TSX Venture Exchange and the Toronto Stock Exchange (TSX) are owned by the TMX Group. The TMX Group was originally known as the TSX Group.
TMX Group Inc., symbol X on Toronto, owns and operates Canada’s two national stock exchanges. The Toronto Stock Exchange lists senior equities and the TMX Venture Exchange lists junior equities.
The company also owns the Montreal Exchange, which specializes in derivatives, and the NGX, an exchange for trading and clearing natural-gas and electricity contracts. As well, TMX Group owns Shorcan Brokers, a fixed-income inter-dealer broker, and The Equicom Group, an investor-relations company.
In 2000, the Toronto Stock Exchange became the first exchange in North America to become a for-profit corporation (known as TSX Inc.). In 2001, the TSX bought the Vancouver Stock Exchange. The TSX Group first sold shares to the public at $9 (adjusted for a two-for-one split), and began trading on Toronto in November 2002.
In May 2008, the TSX Group paid $1.25 billion for Montreal Exchange Inc. As part of the deal, the TSX Group changed its name to the TMX Group.
Find out more about stocks on the TSX Venture Exchange by following TSI Network and using our three-part Successful Investor strategy:
Discover how to identify the risks before you win the rewards, claim your FREE digital copy ofTSX Penny Stocks: Hot Canadian Penny Stocks and How to Invest in Penny Stocks in Canada and More now.
Toronto symbol TC, provides domain name registrations and other services to web-hosting companies, Internet service providers (ISPs) and others.
New York symbol TUP, makes high-quality products for the home and kitchen, including plastic food and beverage containers and children's educational toys. The company also makes a wide range of beauty products, including cosmetics, bath oils and fragrances.
Undervalued stocks are companies that have strong fundamentals and are trading, for one reason or another, at a low share price. When you're looking for undervalued stock picks, focus on shares of quality companies that have a consistent history of sales and earnings, as well as a strong hold on a growing clientele. Undervalued stocks like these are hard to find, even when the markets are down. But when you know what to look for, you can discover them.
Finding undervalued stocks is very similar to finding hidden value or assets in a company. This hidden value could take the form of real estate, research spending or loyal customers. Companies often do spinoffs or create new companies from internal division or departments when they feel it isn't a good time to sell them outright. Instead, they choose to hand out shares of the new firm to their shareholders. That often results in undervalued stock -and buying opportunities.
When they look for undervalued stocks to buy, investors usually start by looking at a few basic ratios. For example: - Low price-to-earnings ratio-a sign of a cheap or undervalued investment. - Low price-to-book-value ratio-another sign that stock is cheap in relation to other stocks on the market. - High dividend yield-the stock's annual dividend divided by the share price.
A high dividend yield could indicate an undervalued stock that is set to rise. Control your risk by following TSI Network and using our three-part Successful Investor strategy:
Discover how to pick the best undervalued stocks for your portfolio in this free special report, Bargain Stocks: Your Guide to Finding the Best Undervalued Stocks, from TSI Network.
Toronto symbol UNC, is a closed-end fund that invests in a wide variety of average-quality to above-average quality Canadian and foreign stocks.
The United States Federal Reserve is the central banking system of the U.S. It sets interest rates, so it’s of great interest to investors.
The Federal Reserve, also known as “the Fed”, was created by the U.S. Congress on December 23, 1913, as then President Woodrow Wilson signed the Federal Reserve Act into law.
The Fed has three main functions: banking supervision, monetary policy, and financial services.
In terms of supervising banks, the United States Federal Reserve works with state and other federal institutions to establish the safe management of financial institution operations. This is to ensure that fair, equitable services are provided to their customers.
The monetary policy of the Federal Reserve System influences the amount of both money and credit circulating throughout the economy of the U.S.
The United States Federal Reserve provides its financial services to banks, credit unions, and savings and loans. Much like banks provide to customers, the United States Federal Reserve provides the distribution and reception of cash, collecting checks, and the electronic transfer of funds.
Making up the United States Federal Reserves are 12 District Reserve Banks and 24 Branches.
The Board of Governors is a federal agency that oversees the 12 District Reserve Banks. The Federal Advisory Council advises the Board of Governors on all relevant matters. The Board is comprised of banking industry representatives.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to build greater wealth with less risk, claim your FREE digital copy of How to invest in stocks: Canada investor advice on building a balanced stock portfolio now.
New York symbol UTX, has five main businesses: Carrier makes heating and air conditioning equipment; Otis makes and services elevators; Pratt & Whitney makes aircraft engines; Flight Systems makes helicopters and aircraft controls; and UTC Fire & Security provides security and fire protection services.
Uranium mining stocks are investments in companies that explore for, produce and refine uranium. A uranium mining stock is a specific type of mining stock, with unique supply and demand characteristics. Considerable profits can be made by investing in the right mining stocks.
Uranium stocks could be a worthwhile addition to your resource portfolio—but you need to be aware of the risks.
Uranium stocks pose a unique challenge for investors who are a looking to diversify their natural resource holdings. Apart from supply and demand issues that affect the price of uranium, the metal’s use in nuclear power plants makes it a controversial energy source.
Worldwide demand of uranium now totals approximately 180 million pounds a year, while primary world mine production is only about 100 million pounds.
The factors you need to assess for any uranium stock you consider buying include the cost of exploration, and the regulatory regime in the country where the deposit is located.
There are also environmental constraints of mining uranium, as uranium by its very nature is radioactive.
Further, we look for uranium stocks that have an experienced management team.
Lastly, we recommend that uranium stocks make up only a limited portion of your portfolio’s resource segment.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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Uranium stocks are shares in companies that explore for, mine and refine the metal uranium. With any mine, there is a long lead time from exploration and discovery to production. That's especially so with uranium stocks.
Uranium requires an extra level of regulatory and environmental permitting because of its radioactivity. Increased uranium supply will come on the market as new mines go into production. As well, there's no guarantee that planned nuclear facilities will ever be built.
Nuclear plants cost $2 billion or more each, and continued low oil and natural gas prices would cut the pressure utilities are under to build new reactors. That will have a corresponding effect on the prices of the uranium stock. In any event, it will likely take a number of years before new nuclear plants go into operation.
Our view is that uranium prices could move up only slowly as significant new primary mine production pushes up supply. In short, we feel that you need to be very cautious when investing in uranium stocks.
Even so, you can profit from buying selected uranium producers that will show rising production-and hence steady cash flow-even if uranium prices hold steady or rise only slowly. When investing in any uranium stock, we recommend making sure that investment fits into TSI Network's recommended three-part Successful Investor philosophy:
Discover how to put extra strength into your portfolio with our specific advice on how to identify high-quality dividend stocks. It's all in our newly updated report, 7 Winning Strategies for Dividend Investors. And it's yours FREE!
Utility stocks are shares in companies that provide electric power, telecommunications and pipeline services. At TSI Network, we continue to recommend that income-seeking investors buy high-quality utility stocks instead of bonds. Utility shares have always been great sources of tax-advantaged dividend income.
While most utility stocks are steady income producers, some utilities also offer opportunities for growth. This happens mostly when utilities want to expand into new markets or geographic regions.
When looking for investments in utility sectors, investors should avoid judging a company based solely on its dividend yield. That’s because a high yield can sometimes be a danger sign rather than a bargain. For example, a company’s dividend yield could be high simply because its share price has dropped sharply (because you use a company’s share price to calculate yield). That can be a sign of an imminent dividend cut.
Apart from a good dividend yield, the utility stocks you invest in should have a long history of paying (and raising) their dividends. For a true measure of stability, focus on those companies that have maintained or raised their dividends during economic and stock-market downturns.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover our complete guide to Canadian wealth management and making the most out of your savings. It’s all in our newly updated report, Wealth Management & Retirement Planning: Canada RRSP Contribution Limit, RRSP Interest Rates, TFSA Contribution Limit and More. And it’s yours FREE!
A valuation point is the point in time when the net asset value (NAV) per share of a mutual fund or an exchange-traded fund (ETF) is calculated. In Canada and the U.S., this is typically done after stock markets close at 4:00 p.m.
Net asset value per share is the total market value of the securities that a mutual fund or ETF holds (such as stocks, bonds or financial derivatives, plus cash), minus any liabilities, divided by the number of share or units outstanding.
Challenges arise when an ETF holds securities trading in different time zones, such as the U.K. or Asia. That’s because net asset value is based on the last price when an exchange closes. Generally, though, the last available closing price is used to determine the valuation point.
An ETF is said to trade at a premium when its price exceeds its net asset value. An ETF is said to trade at a discount when its price is below its net asset value. However, premiums and discounts are usually negligible for the majority of ETFs.
To maximize your stock market and ETF gains, we recommend following TSI Network and using our three-part Successful Investor strategy:
Discover how to how to spot undervalued stocks, claim your FREE digital copy of Canadian Value Stocks: How to Spot Undervalued Stocks & Our Top 4 Value Stock Picks now.
Value investing is an investment approach that follows the basic model set by the pioneers of conservative investing, Benjamin Graham and David Dodd. Value investing is also the preferred investing method of Warren Buffet, who’s a fabled modern-day investor.
At the core of the value investing approach is identifying well-financed companies that are well-established in their businesses and have a history of earnings and dividends. They are likely to survive any economic setback that comes along, and thrive anew when prosperity returns, as it inevitably does. Value investors have long-term mindsets when it comes to investing.
Another key point about value investing is you shouldn’t sell high-quality stocks just because their prices have dropped. Nor should you sell them just because they’ve gone out of investor favour. Well-established, but out-of-favour stocks, can provide great opportunities for patient investors.
If you balance and diversify your portfolio as we recommend, it should include both growth and value selections. In both areas, you should avoid extremes. Value investing is a key part of our investing philosophy at TSI Network, and we believe our three-part Successful Investor strategy is the best approach for value investors:
Our new report, 10 Stocks to Buy and Hold Forever, identifies 10 stocks you can hold for the long term and shows you exactly how to profit from a portfolio that’s built to last. And it’s yours FREE!
One of the sweetest and most profitable pleasures of successful investing is to buy high-quality "value stocks" (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as investors recognize the value and push up the share price.
Undervalued stocks are typically stocks trading lower than their financial fundamentals suggest. They are perceived as undervalued, and have the potential to rise. Many new tech stocks, for instance, start out as growth stocks and transition into these types of undervalued stocks. When they look for value stocks to buy, investors usually start by looking at a few basic ratios. For example:
Together, growth stocks and value stocks can form a winning combination. A growth stock can be a top performer while the company is growing. However, a single quarter of bad earnings can send it into a deep, though often temporary, slide. Value stocks can test your patience by moving sluggishly for months, if not years. But they can make up for it by rising sharply when investors discover their true value. Pat McKeough delves into a company's financial statements and identifies value stocks. That's important, because these stocks are the foundation of any long term investment strategy-and at TSI Network we recommend following our three-part Successful Investor strategy:
Discover how to pick the best undervalued stocks for your portfolio in this free special report, Bargain Stocks: Your Guide to Finding the Best Undervalued Stocks.
Early in their investing careers, beginner investors have only a vague idea of the value of building an investment portfolio. Ideally, they would learn how to invest by making a lot of money in a few shrewd stock picks, then switch to a conservative, well-balanced portfolio. However, that’s an approach doomed to failure. Instead, buy stocks using our ValuVesting system.
ValuVesting is our system for uncovering stocks that can deliver above-average returns—with the least amount of risk. Developed by Pat McKeough, the ValuVesting System™ has a proven record of success.
His proprietary ValuVesting System™ focuses on stocks that provide exceptional quality at relatively low prices. Many savvy investors and industry leaders consider it the most powerful stock-picking method ever created.
Our ValuVesting techniques have proven reliable in both bull and bear markets. If you are a new investor learning how to invest, or a seasoned investing veteran, our Successful Investor method can give you above-average results when you practice it on a consistent basis. As well, if you think of and plan your investments as a portfolio, your investment results will become more consistent, less time-consuming, and more satisfying than ever before.
Use our three-part Successful Investor philosophy when investing in any market:
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The Vanguard Emerging Markets ETF (New York symbol VWO) aims to track the Financial Times Stock Exchange (FTSE) Emerging Index, which is made up of common stocks of companies in developing countries. The fund’s MER is just 0.15%.
The Vanguard FTSE Emerging Markets ETF’s top holdings include Taiwan Semiconductor (Taiwan: computer chips), Tencent Holdings (China: Internet), China Mobile, China Construction Bank, Naspers Ltd. (South Africa: media), Industrial & Commercial Bank of China, Bank of China, Hon Hai Precision Industry (Taiwan: electronics), Infosys (India: information technology) and Housing Development Finance (India: banking).
The fund includes China, Taiwan, India, South Africa, Brazil, Mexico, Russia, Malaysia, Thailand, Indonesia, Philippines, Poland, Turkey and others, listed by largest percentage to lowest.
Pennsylvania-based Vanguard Group is one of the world’s largest investment management companies. In all, it administers almost $3 trillion U.S. in 170 mutual funds.
Vanguard, which went into business in 1975, offers low-fee index mutual funds. Generally speaking, Canadians can’t buy units of mutual funds that are registered in the U.S., because they aren’t registered with provincial securities commissions. For that matter, some Canadian funds aren’t available in all provinces. However, Canadians can buy Vanguard ETFs that trade on the New York Stock Exchange.
The Vanguard Emerging Markets Fund is for aggressive investors, and is a recommendation of our Canadian Wealth Advisor newsletter. For the best investment results, follow TSI Network and use our three-part Successful Investor strategy:
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New York symbol VZ, provides telephone services in 28 U.S. states. Through 55%-owned Verizon Wireless, a joint venture with UK-based Vodafone, it also provides wireless service in all 50 states.
Vermilion Energy stock is share ownership in Vermilion Energy, which produces oil and gas in Canada, France, Ireland, the Netherlands and Australia.
Vermilion Energy stock trades on Toronto Stock Exchange under the symbol VET.
In November 2013, Vermilion agreed to buy a 25% interest in four producing natural gas fields in northwest Germany, plus an exploration licence on the surrounding lands, for $170 million.
In the latest quarter, Vermilion’s production rose 13.0%, to 63,596 barrels of oil equivalent a day (including gas) from 56,280 barrels a year earlier. Cash flow per share rose 3.4%, to $1.21 from $1.17.
To conserve cash while it waited for oil and gas prices to recover, Vermilion cut its 2016 exploration and development spending by 27.8%, to $350 million from the $485 million it spent in 2015. It plans to spend $295 million in 2017.
Vermilion aims to grow across all of its main regions. In Western Canada, it plans to increase its conventional oil and gas production, including light oil and liquids-rich natural gas. It will also increase its exploration and development activities in Europe and produce more oil in Australia.
Vermilion Energy stock is okay for aggressive investors to hold.
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formerly Toronto symbol ICE.UN, operates public refrigerated warehouses in Canada, the United States, Australia, New Zealand and Argentina. The company was acquired by Iceland's Eimskip in 2007.
Wall Street Stock Forecaster includes a monthly newsletter, weekly telephone/email hotline and a monthly portfolio supplement. The newsletter recommends high-quality, mostly U.S. stocks that will surge ahead in good markets, and yet hold their own in the face of market declines. It helps investors build a well-balanced, diversified portfolio, whatever their particular risk/reward level. The newsletter also gives a clear, easy-to-read analysis of how you should build your portfolio. You can subscribe on-line at www.wssf.ca, or by calling 1-877-438-9773.
Wall Street stocks are stocks that trade on the New York Stock Exchange (NYSE) or the Nasdaq exchange. "Wall Street" is a street in New York City, but it also signifies the entirety of U.S. financial markets, including its world-leading stock exchanges.
The best Wall Street stocks include companies like Wal-Mart, AT&T, IBM and Boeing. These are also examples of blue chip stocks. We define a blue chip company as a well-established company with attractive business prospects. Well-established stocks have the asset size and the financial clout-including solid balance sheets and strong cash flow-to weather market downturns or changing industry conditions.
We feel most investors should hold the bulk of their investment portfolios in securities from blue chip companies. All these stocks should offer good "value"-that is, they should trade at reasonable multiples of earnings, cash flow, book value and so on.
Ideally, they should also have above average-growth prospects, compared to alternative investments. Wall Street stocks also include stock issues from foreign companies. An American Depositary Receipt, or ADR for short, is a certificate that represents a foreign stock that trades in the United States.
Banks and brokerage firms in the U.S. issue or sponsor ADRs, and investors buy and sell them on U.S. stock markets, just like regular stocks. Note that Canadian companies trade as stocks rather than ADRs in the U.S., just as they do on Canadian markets. We encourage investors to invest a portion, say 25% to 30%, of their portfolios in Wall Street stocks as well as strong companies on the Toronto Stock Exchange.
When investing in any of these stocks, TSI Network recommends using our three-part Successful Investor philosophy: Invest mainly in well-established companies; Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; and Utilities); Downplay or avoid stocks in the broker/media limelight.
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
A warrant gives its holder the right to buy a security at a set price for a specified time.
Warrants are frequently given as a “sweetener” along with new stock issues to persuade investors to buy them.
Stock warrants are very similar to stock options but they differ in a couple of ways. Stock warrants are issued by the company whose stock the warrant is exercisable into. In contrast, an exchange-traded stock option is trade between two investors and has no connection with the underlying company. Warrant issues are granted from the company itself. The longest term for an option is typically 2 to 3 years, while warrants can have an expiration of up to 15 years.
Warrants are also traded on stock exchanges such as the Toronto Stock Exchange or the New York Stock Exchange.
Unlike common shares, warrants have built-in drawbacks that add considerable risk. These include:
No ownership rights. While stock ownership provides the holder with a share of the company, voting rights and rights to dividends (if any), warrant owners participate only in the potential benefit of the stock's price movement.
Risk of total loss. Stocks can, and do, become worthless. But a warrant holder runs a much greater risk of losing the entire amount paid for the option in a relatively short period. This risk reflects the nature of an option as a wasting asset which becomes worthless if it expires without being exercised.
Limited room for error. Because a warrant has a fixed life, it loses some of that time value every day (that’s why it is considered a "wasting asset.").
We think you should invest directly in stocks by following TSI Network and using our three-part Successful Investor strategy:
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Warren Buffett is a fabled investor from Omaha, Nebraska. Mr. Buffett's investing success has always been based in value investing. Buffett's first great investing achievement was to sell all his holdings in 1969, just prior to the early 1970s market downturn. He felt that 1969 stock prices were simply too high, from a value investing point of view. He re-entered the stock market in 1974, after prices had collapsed by 40% or more. This alone established his investing-legend status. Since then, he has achieved a better-than-average investing record by buying large stakes in a handful of well-established companies. Mr. Buffett mainly invests through Berkshire Hathaway, a New York Exchange-listed holding company that he controls. Value investing played a role in Buffett's investment success, of course. But he owes a great deal to his one-time, 5-year departure from the market in 1969. However, the main contributor to his success is his history of strong stock-picking, and his practice of holding his top picks for a long, long time. At TSI Network we also follow a value investing philosophy. A big part of that is our three-part Successful Investor program for investing:
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Investors use wealth management services when they want professional help in managing their portfolios. Wealth management can help those investors with many different areas of investing, including long term investment planning and retirement planning.
Hiring a professional to help you with managing your wealth typically goes well beyond hiring someone who offers financial planning services. As well, unfortunately, many of today's financial planners seem mainly interested in selling high-commission investment and insurance products.
As we're sure you can guess, that goes against our Successful Investor business model. There are two main types of professional wealth management services you can use. Portfolio managers- A portfolio manager is someone who fully manages your wealth portfolio and has a fiduciary responsibility to make sound investment decisions on your behalf.
Portfolio managers are more stringently regulated than full-service or discount brokers. A full service stock broker-A good stock broker is one who understands investing and who has the integrity to settle conflicts of interest in the client's favour. Good stock brokers can provide an effective and economical way to manage your investments. But if you are going to use a full-service broker, take the time to find a broker you can trust.
Whether you use a full-service stockbroker or a portfolio manager, trust is obviously the key factor. Note, though, that portfolio managers, like lawyers and doctors, have to live up to a "fiduciary" standard. That is, rather than simply adhere to the much looser "suitability" standard, they have to do what's best for the client. They have to try to avoid profiting from any conflicts of interest with their clients.
At TSI Network we recommend our three-part Successful Investor philosophy for investing:
We invite you to download a Special Report with our compliments: Your 12-Step Countdown to the Retirement You Want. We employ these strategies on behalf of our Wealth Management clients, who have entrusted hundreds of millions of dollars to our care.
Wealth management planning is the process of deciding how to best save and develop money to be used in retirement or by your family. For instance, during your working years, you should put yourself on a savings and investing regimen. Each year, you should set aside a fixed sum to invest. It's important to continue investing the same sum (or raise it) through good years and bad. The same sum buys more shares in "bad" years, when prices are low. It buys fewer shares in "good" years, when prices are high. This cuts your long-term average cost per share. This process is also called dollar cost averaging.
Wealth management planning also extends into retirement. Using the example above, you reverse the process. You sell enough stock every year to raise the cash you wish to extract from your portfolio. You may sell more stock in years when you feel prices are high. You should sell less when prices are low. But either way, you should aim to sell in a way that leaves you with a stronger portfolio that is better suited to your goals and temperaments.
Wealth management planning for you and your family is an essential skill we aim to inform you about at TSI Network, which we pair with our three-part Successful Investor philosophy:
We invite you to download a Special Report with our compliments: Your 12-Step Countdown to the Retirement You Want. We employ these strategies on behalf of our Wealth Management clients, who have entrusted hundreds of millions of dollars to our care.
Founded by Henry Wells and William Fargo in 1852, Wells Fargo, New York symbol WFC, provides a wide variety of financial services in the U.S. Internationally, it operates in Canada, the Caribbean and Central America. Wells Fargo's corporate headquarters is now located in San Francisco.
In terms of market value, Wells Fargo is the largest bank in the world and one of the four big banks in the United States. The three other banks include Bank of America, JPMorgan Chase, and Citigroup. Wells Fargo operates through three divisions: Community Banking provides mortgages, loans, credit cards and other financial services; Wholesale Banking supplies business loans; and Wealth, Brokerage and Retirement offers wealth management, brokerage and trust services to individuals and institutions, such as pension plans.
With 95% of its revenues coming from the U.S., Wells Fargo stands to benefit from a recovering American economy, and from the higher interest rates that are likely in the future. Wells Fargo is financial institution that all investors should keep tabs on if they're interested in the U.S. financial markets. At TSI Network we especially like Canadian Banks and we also recommend using our three-part Successful Investor philosophy for investing:
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Toronto symbol WED, owns 74.5% of Nucryst Pharmaceuticals (Toronto symbol NCS), whose medical products prevent infection in burns.
WestJet stock is share ownership in WestJet Airlines. In the highly competitive airline market, WestJet has created a niche of its own, based in part on a company culture in which most employees are shareholders and passengers praise their friendlier service.
WestJet Airlines (Toronto symbol WJA) serves101 destinations in North America, Central America, the Caribbean and Europe. Its fleet of 114 modern Boeing 737s are 30% more fuel efficient than older jets.
In June 2013, the company launched WestJet Encore, its Canadian regional airline. This business now operates 30 Bombardier Q400 NextGen turboprop planes, which seat 78 passengers.
The company has a great hidden asset in its workforce, which continues to refrain from unionizing in favour of directly co-operating with management. Its pilots rejected unionization with a new agreement in December 2014.
And in June 2015 their almost 3,000 flight attendants voted 82% in favour of a five-year work agreement. The deal with the non-unionized Flight Attendant Association Board includes competitive wages, clearer work rules and a binding dispute mechanism.
WestJet stock has a long record of profitability and a dividend that appears secure.
Find out more about WestJet stock—and other growth stocks—by following TSI Network and using our three-part Successful Investor strategy:
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New York symbol WY, is a leading forest products company. It owns or leases over 30 million acres of timberland in the United States and Canada.
We are asked about a lot of stocks by Inner Circle members that we see as falling in to a grey area of “okay to hold” stock recommendations.
Of course, you may feel more positive about some of our okay-to-hold stock recommendations than we do. If you want to hold them in your portfolio, we can’t voice any strong objection. We simply don’t share your enthusiasm. We feel you’ll find better choices among the buys we currently recommend in our newsletters.
Note that when we say “okay to hold” in the Inner Circle Q&A, we mean something substantially different from when we recommend a stock as a “hold” in our newsletters or Hotlines. In our newsletters and Hotlines, our "hold" means that we recommended the stock as a buy in the past, and we may recommend buying it again in the future. But at the moment, we see better choices for new buying elsewhere in the newsletter.
If you mostly own stocks we see as “holds,” you should consider selling some of them and replacing them with stocks we see as buys.
At the same time, when you own good stocks, it generally pays to hold on until you have a good reason to sell.
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Actively-managed ETFs are different than most ETFs. Most ETFs practice “passive” fund management. Traditional ETFs stick with this passive management—they follow the lead of the sponsor of the index (for example, Standard & Poors). Sponsors of stock indexes do from time to time change the stocks that make up the index, but generally only when the market weighting of stocks change. They don’t attempt to pick and choose which stocks they think have the best prospects.
The MER (Management Expense Ratio) is generally much lower on passive ETFs than on conventional mutual funds or actively-managed ETFs. That’s because most passive ETFs take a much simpler approach to investing. Instead of actively managing clients’ investments, ETF providers invest to mirror the holdings and performance of a particular stock-market index.
Many brokers and portfolio managers have built a business around putting their clients into actively-managed ETFs—and making frequent changes in their ETF holdings. Their sales literature focuses on how easy it is to invest and profit in these investments.
It’s a great marketing gimmick, but it subverts the prime advantage of ETFs, which is low cost.
By the time the ETF specialists add their fees and commissions to actively-managed ETFs, their clients are paying the equivalent of mutual fund MERs to buy what amounts to a hodge-podge of index funds.
Learn about the costs of investments like actively-managed ETFs by following TSI Network. Maximize your investment gains by using our three-part Successful Investor strategy:
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ADRs are issued or sponsored in the U.S. by a bank or brokerage firm. If you own an ADR, you have the right to obtain the foreign stock it represents. However, investors usually find it more convenient to continue to hold the ADR.
One ADR certificate may represent one or more shares of the foreign stock. Or, if the stock is expensive, the ADR may represent a fraction of a share. That way the ADR will start out trading at a moderate price or be in the range of similar securities on the exchange where it trades.
Depositary banks that issue ADRs sometimes charge fees for their services, which they will deduct from the ADR dividends and other distributions on the ADRs. The depositary bank will also incur expenses, such as for converting foreign currency into U.S. dollars, and will usually pass those expenses on to ADR holders. Sometimes, however, the foreign firm pays the fees in return for the benefit of exposure to the U.S. market.
An ADR dividends’ price is usually close to the price of the foreign stock in its home market. There are no redemption dates on ADRs.
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Many of the stocks in renewable or alternative energy ETFs have only limited investment appeal, even though renewable energy ETFs are popular with socially conscious investors. This doesn’t make them good investments.
Many alternative energy funds are only profitable—if at all—because they receive government subsidies. But many governments around the world are cutting subsidies for renewable energy investments as they look for ways to deal with their ballooning budget deficits.
You may feel that investing in renewable energy ETFs has the added benefit of letting you support worthy social objectives. But again, you can’t let that dictate your investment decisions. At the same time, brokers like themed investments such as renewable energy ETFs because it gives them a rationale to recommend them to you.
We recommend that you focus on individual alternative energy stocks instead of an alternative energy fund or a renewable energy ETF. Above all, look for stocks that already have a sound base of other operations—such as a wind-farm operator that also operates natural-gas fired power plants. This diversification helps offset the risks of expanding into renewable-power production.
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The municipality issues the short-term arbitrage bonds and then invests the proceeds in treasury bills.
Issuing arbitrage bonds is only effective when current interest rates are well below the rates on existing bonds.
The strategy of using arbitrage bonds can only be effective in making money when bond yields and interest rates are on the decline. Arbs can make money on these tiny differences because they pay negligible commissions, but that’s not really an option for the average investor.
Arbitrage bonds may also be referred to as municipal bond arbitrage, municipal bond relative value arbitrage, municipal arbitrages, or muni arbs.
Arbitrage is a concept all investors should know about. Arbitrage is a technique used to take advantage of a difference in stock or bond prices based on stock or bond market inefficiencies. Arbitrage bonds utilize this technique.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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Blue chip securities are among the strongest and most stable stocks in the market. Blue chip companies are firms that also have strong management that will tend to make the right moves to compete in a changing marketplace.
The best blue chips offer both capital gains growth potential and regular dividend income. The dividend yield is certainly one of the most concrete indicators of a sound investment. It is the percentage you get when you divide the current yearly dividend payment by the share price of the investment. It’s an indicator we pay especially close attention to when we select stocks to recommend in our investment newsletters.
We feel most investors should hold the largest part of their investment portfolios in blue chip securities from blue chip companies. Ideally, these stocks should offer good “value”—that is, they should trade at reasonable multiples of earnings, cash flow, book value and so on. Ideally, they should also have above average-growth prospects in expanding markets.
The best blue chip investments have low debt; industry prominence if not dominance; hidden assets in the form of real estate; and a history of profits going back 5 to 10 years.
Learn about the best blue chip securities by following TSI Network and using our three-part Successful Investor strategy:
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Book value is the value that the company’s books place on its assets, less all liabilities. Book value per share is book value divided by the number of shares outstanding.
Book value stocks can give you a starting point in the search for undervalued shares.
A ratio connected to book value stocks is the price-to-book-value ratio. This ratio captures a “snapshot” of an instant in time, and could change the next day. That’s mostly because the price changes—the asset values on a company's books are the historical value of the assets when they were originally purchased, minus depreciation in some cases, so they change much more slowly.
When we find a stock with a low price-to-book value, we look to see if the price is too low, or if its book value per share is inflated. Often, we find that the stock price is too low. But, sometimes, the company’s assets are overpriced on the balance sheet, which means they may be in danger of being written down.
The price-to-book-value ratio is used to find top value stocks. Other basic financial ratios we use in spotting top value stocks are price-earnings ratios and price-cash flow ratios.
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A good stock broker may be worth the higher commissions that you are likely to pay. For instance, suppose your full-service stock broker charges an average of 2% for brokerage fees, and you replace one-third of your portfolio every year (both figures are on the high side). In this case, you’d pay 1.34% of your portfolio’s value each year in commissions. That’s less than the 2% to 3% management fee on a typical mutual fund.
However, it’s important to note that a good stock broker (one who is experienced, knowledgeable, and oriented toward the long term) is very hard to find,
The main advantage of using a discount stock broker instead of a full-service broker is lower commissions. And commission rates can be even cheaper if you trade stocks with your discount broker online, as opposed to placing orders over the telephone.
Although lower commissions are a big plus, there are several reasons to be cautious. Low commission rates sometimes lead investors to trade a great deal. They may assume they can’t lose because they can sell at the first sign of trouble.
Before using a discount broker, put yourself through a self-assessment. Are you able to single out a selection of investments that’s right for you, keeping investment quality and diversification in mind? If not, you may be better off with a full-service stock broker, provided you can find (the rare) one who puts your needs first.
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Canadian bank shares have long been one of our top choices for growth and income, and we recommend that most Canadian investors should own two or more of the big-five Canadian bank stocks. That’s mainly because of their importance to Canada’s economy.
Canadian bank shares have always been some of the best income-producing securities. We use dividends as a main barometer for picking Canadian bank stocks because they are a sign of investment quality, they grow, and they are usually consistent (be careful when investing in a Canadian bank stock, or any stock, if they’re not.)
So as mentioned, we’ve long recommended that most Canadian investors should own two or more of the Big Five Canadian bank stocks.
Banks remain key lower-risk investments for a portfolio. As well, the big five Canadian bank stocks all have long histories of annual dividend increases.
We also believe Canadian bank stocks are well positioned to weather downturns in the Canadian economy. They trade at attractive multiples to earnings and continue to raise their dividends.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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Canadian blue chip stocks are investments in companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.
The root of the term “blue chip” stems from the game of poker, as the blue chips represent the highest value. Investing in blue chip stocks can give you an additional measure of safety in today’s turbulent markets.
Most of the best Canadian blue chips offer both capital gains growth potential and regular dividend income. The dividend yield is certainly one of the most concrete indicators of a sound investment. It is the percentage you get when you divide the current yearly dividend payment by the share or unit price of the investment. It’s an indicator we pay especially close attention to when we select stocks to recommend in our investment newsletters.
Most of the Canadian blue chip stocks you hold in your portfolio should offer good “value”—that is, they should trade at reasonable multiples of earnings, cash flow, book value and so on. Ideally, they should also have above average-growth prospects in expanding markets.
Find the best Canadian blue chip stocks to hold in your portfolio by following TSI Network and using our three-part Successful Investor strategy:
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An example of a company dealing in Canadian oil royalties is Freehold Royalties Ltd. (symbol FRU on Toronto). Freehold Royalties Ltd. holds oil and natural gas rights on land in Alberta, Saskatchewan, B.C., Manitoba and Ontario. These reserves include natural gas, light crude oil, heavy crude oil, and natural gas.
Freehold collects royalties from oil and gas producers that operate on its land, in addition to holding royalty interests in potash mines in Saskatchewan. Long-life royalty properties account for the majority of Freehold’s cash flow, and wells it has a working interest in.
Canadian oil royalties differ from oil and gas royalty trusts.
Oil royalty trusts are a form of income trust. Income trusts were a type of investment trust that held income-producing assets. Canada offered special tax treatment for income trusts for many years. They flowed their income through to their unitholders, without paying much if any corporate tax. Investors paid tax on most of the distributions as ordinary income.
On January 1, 2011, Ottawa imposed a tax on distributions of income trusts and royalty trusts. Virtually all Canadian oil royalties then converted into conventional corporations.
Oil royalty trusts involved far more risk than most investors realized. This is why we recommended so few of them
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Commercial hedgers are usually companies that use commodities and buy the futures with the expectations of saving money and keeping the commodity affordable. An example would be an airline buying crude oil futures to hedge against a rapid rise in fuel prices.
Another example of a commercial hedger could be a baking corporation buying futures in wheat.
Futures started out as a convenience for commercial interests. Farmers sell wheat futures to fix their income from this year’s harvest. Bakers buy wheat futures to fix their flour costs. But most futures transactions take place between speculators who are simply betting that prices will rise or fall. Most contracts get closed out prior to delivery.
Commercial hedgers also buy futures in hopes of beating rises in interest rates or foreign-exchange risks.
Investing money in futures – but as a speculation rather than as a commercial hedger—gives you high leverage, but leverage magnifies losses as well as gains. Trading in futures is a long-established and perfectly legal way to bet on price changes in commodity, currency and financial markets. This attracts futures traders.
When you buy or sell a futures contract, you commit yourself to buy or sell a quantity of a commodity (or currency or financial instrument) in the future. The date and quantity are standard; you fix the price when you buy or sell the contract.
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Concept stocks can put on a great performance while investor interest is hot—but in the long run, though, they’re likely to cost you money.
Examples of concept stocks include various “penny mines” (speculative mining stocks that have not yet proven they have a mineral deposit that can be mined at a profit) looking for “hot” minerals such as rare earths or lithium for electric car batteries. You’ll want to buy few, if any, of this type of concept stock, like junior industrials that have a business plan but have not yet established a business, much less made a profit or paid any dividends. Stocks like these expose you to a serious risk of total loss.
The opposite of investing in concept stocks involves focusing on investment quality while looking for aggressive stocks with the potential for large returns. When we look for aggressive investments, we zero in on companies that have established a business and have at least some history of building revenue and cash flow. We also look for companies that stand to benefit as the economy continues to improve, and have proven management and viable long-term growth plans.
At TSI Network, we recommend using our three-part Successful Investor philosophy:
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Consolidation stocks are created to bring a share price back up to more respectable levels. If the value of a stock collapses to pennies a share, investors may think it is headed for zero. The company may declare a reverse split where five, 10 or more “old” shares will then turn into one “new” share.
This “reverse split” is also called a “share consolidation”, and that results in consolidation stocks. Reverse splits usually happen to penny mining companies that have spent all their money without finding any valuable mineral deposits.
After a reverse split, share prices often fall back down again. Some investors sell because the stock seems more expensive than it was, even though a given holding represents the same percentage ownership of the company. Others sell because they fear the company will raise money by selling new shares, and this will drive down its stock price.
Stock splits and consolidation stocks are a minor stock market trading detail. Don’t let them distract you from more important matters, such as a company’s fundamental value and how well it suits your investment objectives.
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There are four key stock dividend dates that are involved with dividend payments:
Dividend stocks are an essential part of a good conservative investing philosophy. Typically, dividends are paid quarterly, although they may be paid annually as well as monthly. Most important, dividends can produce up to a third of your total return over long periods.
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In the event of company bankruptcy, preferred shareholders have a higher priority claim on company assets than common shareholders.
BMO S&P/TSX Laddered Preferred Share Index ETF (symbol ZPR on Toronto) is an example of an ETF with preferred shares. This ETF preferred shares holds Canadian preferred shares. Issuers include Bank of Montreal, Enbridge, BCE, TransCanada and Canadian Utilities. Note that the dividends you receive from this fund are eligible for the Canadian dividend tax credit.
Dividends on preferred shares must be paid out before dividends to common shareholders. Sometimes preferred dividend payments are cumulative—all preferred dividends in arrears must be paid out before common dividends are resumed in a troubled company. But sometimes preferreds are non-cumulative.
A split-share company issues two classes of shares. Usually, the capital shares get all or most of the capital gains and losses, and the preferred shares get most of the dividend income.
High-quality ETF preferred shares are okay to hold in your portfolio, although we think that the best common shares can offer both high yields and growth prospects.
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A fintech stock may involve an array of services in the financial industry, always working towards efficiency through the use of technology.
Fintech has been an area of significant investment from 2008 to 2014 globally. In 2008, $930 million was invested towards developing new financial technology. This amount grew to $12 billion in 2014.
One industry that grew a lot with fintech is the peer-to-peer (P2P) lending segment—online marketplaces that match borrowers with potential lenders. This segment has grown with the help of the growing online lending business. P2P loans are primarily used for real estate or small businesses, but may also involve car loans and personal loans. P2P lending is also expanding into the areas of insurance, crowdfunding, and mortgage financing.
Recently, investors have begun to worry about the banks once again. They fear the banks will lose out to fintech stocks. However, our view is that in fact, they will probably wind up prospering in fintech, if not dominating it, as they did in stock brokerage, insurance and other financial areas that they have entered in the past few decades.
At TSI Network, we recommend looking for well-financed companies with no immediate need to sell shares at low prices and strong balance sheets. At TSI Network, we also recommend using our three-part Successful Investor philosophy:
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Desalination is the process of removing excess salt and other minerals from seawater. It’s also used where saltwater has entered underground freshwater aquifers.
There are more than 18,500 desalination plants operating worldwide. Many of these plants are in the Middle East. That’s because desalination plants are very expensive to build, so they’re only really cost-effective where there is no fresh water. When fresh water is available, it can be pumped up to 1,600 kilometres and still cost less per litre than water from a desalination plant.
The most common method of desalination associated with fresh water stocks is flash distillation. In this process, saltwater flows through a series of low-pressure chambers, where it is flash boiled into steam. The steam then condenses on rows of heat exchangers and forms water. Cogeneration plants sometimes use the excess heat from this process to generate electricity. That can cut the overall cost of desalination by up to two-thirds. Another method used is reverse osmosis.
The water business in developed countries is subject to a lot of regulatory hurdles and has limited growth prospects. There may be opportunities in developing nations, many of which desperately need clean water. But investing in fresh water stocks in these markets can expose you to political risk.
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General obligation bonds may include using general tax revenues to repay bond holders. The purpose of general obligation bonds is to serve the public interest through funding government projects like the creation of roads, bridges and parks.
A general obligation bond is a form of debt instrument. Also known as a GO bond or a general obligation pledge, these may include limited-tax or unlimited-tax pledges. The main difference between the two is that unlimited-tax pledges may involve a property tax increase by the local government issuing the bond. This tax increase allows for a maximum of 100% for covering taxpayer delinquencies.
Revenue bonds are different than general obligation bonds. Revenue bonds are used to fund specific projects that are designated for a certain population, opposed to being for an entire community. Taxes and user fees are used to repay the debt.
For individual investors, low interest rates make bonds unattractive for income. However, if you need stable income you may consider holding certain bond funds. (Or even better, dividend stocks).
Bond prices and interest rates are inversely linked. When interest rates go up, bond prices go down, when interest rates go down, bond prices go up.
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International Road Dynamics, symbol IRD on Toronto, is an example of global penny stocks you can buy. International Road Dynamics is a highway traffic management technology company that specializes in supplying products and systems to the global intelligent transportation systems industry. These include automated toll-road systems, automated truck weigh station systems, WIM (Weigh-in-Motion) systems, advanced traffic control, driver-management systems and data-collection systems.
International Road is based in Saskatchewan, but has sales and service offices throughout the United States and overseas. Private corporations, transportation agencies and highway authorities around the world use International Road’s products and systems to manage and protect their highway infrastructures.
International Road has systems in operation around the world. It has major installations throughout Canada, the United States, Saudi Arabia, Pakistan, India, China, Hong Kong, Indonesia, Korea, Malaysia, Brazil, Mexico and many other countries.
International Road Dynamics is okay to hold.
Global penny stocks are targets for aggressive investors.
However, buying low-quality global penny stocks is something that can appear to be successful before it goes badly wrong. Low-quality stocks can be highly profitable over short periods, but in the long run, you are likely to lose money. That’s because they are generally more volatile than high-quality stocks.
Ultimately, penny stocks should only be a small part of any diversified portfolio.
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They have special appeal for companies that are using takeovers of other firms to grow. They can be found in real estate and in research and elsewhere.
A hidden asset can come out of existing brand names that can help launch new products. They can also grow out of government obstacles to the entry of new competitors into a market.
If you buy a stock for its hidden assets, those assets stay hidden or ignored by investors— or turn out to be less valuable than you thought—but it can’t hurt you much. By definition, a stock’s hidden assets have not had much impact on its price so far. If you paid little if anything for the assets, you have little to lose. But the best hidden assets will eventually expand a company’s profits, grab investor attention, and push up its stock price.
Hidden assets should always be looked for while evaluating a stock. Stocks with them are not rare, but they’re hard to find. Once you find a stock with hidden assets, use these three financial measures to evaluate the shares: price-earnings ratios, price-to-book-value ratios, and price-cash flow ratios.
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Resource exploration companies, as well as start-up biotechs or software companies make high-risk capital investments.
For example, grassroots mineral exploration firms require a lot of capital but have only a very small chance of finding a mineable deposit. Drug makers—even those well past the start-up phase—in particular have to invest vast sums in every new drug they try to bring to market. Despite huge investments in time and money, a new drug can fail to win regulatory approval.
That’s why we stayed out of drug stocks in the late 1990s, when these stocks were broker/media darlings. We only bought drug stocks for our clients after the 2008 stock market plunge. By then, drug stock prices had come back down to much more attractive levels.
You get a much better return on time spent if you devote less of it worrying about high risk investments, and more of it on an investing strategy. Create a strategy that is built upon analyzing the quality and diversification of your investments, and the structure and balance of your portfolio.
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At the same time, high-risk investments also have the potential for greater gains.
High-risk mutual funds can be considered a form of aggressive investing, which involves attempting to maximize returns through investment in higher-risk aggressive stocks and investment products. While higher risk investments can offer above-average growth, they can also be considerably riskier, so you should limit your portfolio exposure to such investments.
Some of the most dangerous high-risk mutual funds are those run by managers who honestly believe they can increase their performance by frequent in-and-out trading, or by overweighing their holdings with high-risk investments such as penny resource stocks.
Buying mutual funds—or low-fee ETFs for that matter—for the most part should be done with the long term in mind. Find a sound fund that holds good stocks and stick with it.
All in all, you will get a much better return on time spent if you devote less of it to worrying about high risk investments, and more of it to a sound investing strategy. Use a strategy that is built upon analyzing the quality and diversification of your investments, and overall balance of your portfolio.
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Blue chip stocks are an example of high-yielding investments. Blue chip stocks are generally well-established, dividend-paying corporations with strong business prospects. These are companies that also have strong management capable of making the right moves to compete in a changing marketplace.
The best Canadian dividend stocks are high-yield investments that offer both capital-gain growth potential and regular income. In fact, dividends are likely to still be paid regardless of how quickly the price of the underlying stock rises.
Dividends from Canadian companies come with a tax credit, to reflect corporate income taxes. This cuts your tax rate.
When looking for stocks with high dividend yields, you should resist the temptation of seeking out stocks with the highest yield—simply because they have above-average yields. That’s because a high yield may signal danger rather than a bargain if it reflects widespread investor skepticism that a company can keep paying its current dividend. High-yield investments can be a danger sign.
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The highest-return mutual funds let small investors access professionally managed, diversified portfolios that would be difficult for them to create on their own.
In order to find the highest-return mutual funds, you must follow some specific details. It’s important to stay out of buying “theme” mutual funds and bond mutual funds.
Furthermore, get rid of mutual funds that show wide disparities between the mutual fund’s portfolio and the investments that the sales literature describes. Many mutual fund operators describe their investing style in vague terms.
It’s also important to avoid buying mutual funds that trade in derivatives and mutual fund managers who trade heavily.
Finally, to find the highest-return mutual funds, you must also avoid buying mutual funds with a lot of dead weight, and avoid buying mutual funds with anonymous managers.
Mutual funds charge an MER or Management Expense Ratio fee. MERs let you know the mutual fund management fee the mutual fund management team is charging. These management fees come directly from the assets of the funds, so the investor gets a lower return.
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They trade securities in quantities big enough to qualify for lower commission and added services.
Some institutional investors, particularly hedge funds, carry out a lot of their trading in leveraged and inverse-leveraged investments. They generally use them as part of complicated multi-investment trading gambits. They also trade frequently, and in large quantities. This reduces the percentage costs of this kind of trading. However, the trading costs still tend to eat up the invested capital.
Many institutional investors are always on the lookout for so-called “quantitative” measures like beta that can be calculated automatically by a computer program. Beta makes a broad statement about a stock’s history of volatility, but it doesn’t say much if anything about its prospects or its appeal as an investment.
Institutional investors were the first allowed to trade before and after regular exchange hours. Even though access to after-hours trading has improved for individual retail investors, this area of investing is still dominated by large institutional investors who have access to plenty of resources, so you’ll be up against some powerful competition.
Canadian stocks sometimes combine their voting and non-voting dual-class shares into a single share class to make themselves more attractive to institutional investors who dislike non-voters.
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The name “liquid alternative mutual funds” may suggest something safe, like T-bills or other liquid investments, but that’s not the case in risky hedge-fund strategies.
Hedge funds buy good stocks and sell bad stocks “short”, in hopes of making money regardless of market direction. If the market goes up, the good stocks should rise more than bad, so gains on the good stocks should exceed losses on the short sales. If the market falls, the bad stocks should fall more than the good, so gains on the short sales should exceed losses.
The term “hedge” suggests a balanced approach, as in “hedging against inflation”. But hedge-fund strategy includes short-selling, derivatives trading, margin trading and other highly speculative financial maneuvers. Profitable short selling requires superhuman timing, and the inevitable mistakes can be super expensive.
When the strategies behind liquid alternative mutual funds begin to backfire, the losses can be costly.
Liquid alternative mutual funds are an example of a broadened product line offered by investment marketers as basic hedge-fund performance faded. However, they have an added risk: the drag on returns from providing investors with the ability and liquidity to withdraw funds on demand.
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Microcap stocks have a higher market capitalization than nanocaps, but a lower capitalization than small-, mid-, large- and mega-cap stocks.
Microcap stocks generally exhibit more volatility and are considered to be higher-risk investments. However, sometimes microcaps perform better than other times, and this includes during bullish markets. Becoming more bullish, or optimistic, typically happens when stock prices have gone up. Some investors only feel safe buying more speculative stocks after prices have risen.
The best microcap stocks have some potential for large gains, but they are generally more volatile than small-cap stocks or large-cap stocks. Temporary setbacks, such as a poor quarterly earnings report, or the loss of a major contract, can quickly cut their share prices. That’s why we view even the best small cap stocks as aggressive.
To find the best microcap stocks for lower-risk gains, we recommend looking for sound companies that stand to benefit from a strong economy. It’s also important for these stocks to be well established, with strong management and prominent positions in their markets.
We recommend staying out of so-called concept stocks, which mainly include start ups or companies that look to profit from current investor fads. These companies can put on a great performance while investor interest is hot—but in the long run, they’re likely to cost you money.
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Nanotech stocks may be incredibly diverse, and can range from companies working in the health industry, to companies in the automotive industry.
Nanotech stocks are a form of theme investing. Theme investing has a natural appeal. It simplifies things. Investors like it because they feel it can put their investment returns into overdrive. Some also feel it adds fringe benefits to their investing, by letting them support social or environmental objectives. Additional examples of theme investing include water stocks and solar power stocks.
An example of a company involved in nanotechnology is Alphabet Inc. Alphabet Inc. is the parent company for Google’s Internet search business (still called Google) and other operations, such as self-driving cars and home thermostats.
Among other products, Alphabet has higher-risk “Moonshots,” such as self-driving cars and devices that use nanotechnology to detect diseases.
MTS Systems Corp. is another example of a company working in nanotechnology. MTS Systems Corp. makes equipment that manufacturers use to test the mechanical behavior of materials, machines and structures.
Current interest in nanotechnology stocks is not as strong as it was a few years ago.
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The long-term outlook for nuclear stocks is positive. That’s because global electricity demand is growing in the face of heightened concern about power generated using conventional fossil fuels. Oil, for example, is a non-renewable resource. Coal is also non-renewable, and releases pollutants when it is burned.
There are currently 440 nuclear reactors operating around the world, and roughly 150 new plants are planned for the next 15 years. Forty of these facilities will be built in China.
Technological advances in both uranium mining and nuclear-reactor construction have improved nuclear power’s safety record. This has addressed a number of environmental concerns and improved efficiency. As a result, there is growing acceptance that nuclear energy is a necessary part of a “green” energy solution.
However, the industry faces a number of short-term problems, including low uranium prices, the inevitable delays that will accompany the building of costly new nuclear plants and the slow recovery of the global economy.
Examples of nuclear stocks investing in uranium or nuclear power include:
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Oil and gas trusts may also be referred to as royalty trusts. Royalty trusts are a form of income trust. They profit from royalties associated with the sale of oil, natural gas or minerals.
On January 1, 2011, Ottawa imposed a tax on distributions of income trusts and royalty trusts. Virtually all oil royalty trusts then converted into conventional corporations.
Oil royalty trusts were a form of income trust. Income trusts were a type of investment trust that held income-producing assets. Canada offered special tax treatment for income trusts for many years. They flowed their income through to their unitholders, without paying much if any corporate tax. Investors paid tax on most of the distributions as ordinary income (although some distributions qualified as a tax-free return of capital).
Oil and gas trusts often involved far more risk than most investors realize.
An example of an oil and gas trust was Pengrowth Energy Trust, which produced oil and gas and traded on Toronto under the symbol PGF.UN. The stock converted and is now called Pengrowth Energy Corp., symbol PGF on Toronto.
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The buyer pays the seller a fee, or premium, in exchange for certain rights to the stock. In exchange for the premium, the seller assumes certain obligations.
Option stocks trade through stock exchanges, with prices quoted each day in the financial section of newspapers. Each options contract is for 100 shares of stock.
There are two types of option stocks: call options and put options.
Call options give the holder or buyer the right to buy the underlying security at a specified strike price until the expiration date. The seller of the call has the obligation to sell or deliver the underlying security at the strike price until the expiry date.
Put options grant the holder or buyer the right to sell the underlying security at the strike price until the expiry date. In turn, the seller or writer of the put has the obligation to buy or take delivery of the underlying security until expiration.
Trading Canadian option stocks can generate a lot of brokerage commissions, which is why some young, aggressive brokers recommend them for their clients. The truth is that it’s impossible to build a lasting clientele by trading options, since they place their clients in investments that will almost certainly cause them to lose money.
If you do choose to write options, pick high quality, heavily traded stocks. The premiums are higher on poor quality and thinly traded stocks, but that adds a lot of risk.
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We continue to recommend Plain vanilla investments.
One of the cardinal rules of successful investing is to invest mainly in simple, plain vanilla investments. By confining yourself to these two investment categories, you still have all the investment choice you need. With a plain vanilla investment you can also avoid the hidden risks and conflicts of interest that you’ll find in more complex products.
We stick almost exclusively to simple, plain vanilla stocks and bonds, and advise against investing in complex investment products.
There are two major reasons to avoid complex investment products and stick to plain vanilla investments. First, they tie you to an investment strategy that could have hidden flaws and big fees. The strategy could work for a while, then suddenly quit working, and generate losses instead of gains. Second, the design of a complex investment product almost always ensures that it will expose you to conflicts of interests. The operators are bound to settle some conflicts in ways that work against your interests. You might even say these products are designed to create conflicts of interest that the operators can exploit.
We also recommend plain vanilla investments over new stock issues until they’ve survived at least one recession. By then, hidden risk is easier to spot.
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With prepaid funeral plans you pay in advance, and get a fixed return at an indeterminate point in the future—the few days or weeks after your death.
The one advantage you get with prepaid funeral plans is that you fix the cost. However, it’s easy to spot a number of disadvantages of prepaid funeral plans.
For instance, you don’t get any return on the money you’ve paid, though the funeral home (or the insurer) may hold your money for decades. Depending on the plan, you may be stuck with your initial choice of funeral home, even if its service has deteriorated. You may also be stuck with your initial funeral plan, even if it’s hopelessly out of date in relation to community standards or the personal circumstances of you or your survivors.
Knowing that you are largely a captive customer, the funeral home may drive a harder bargain on related services than it would if it had to win your business as a new customer.
Before you prepay for a funeral, ask yourself if you’d buy other sorts of fixed-return investments from the same company, such as a long-term bond. If you can’t depend on the company to do something as simple as repay a loan, then why trust it to carry out your last wishes?
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RRSP types of investments to hold in your account include interest-bearing investments. This is because of the three main RRSP types of investments (interest, dividends and capital gains), interest is the highest taxed. Dividend-paying investments, and those expected to yield capital gains, are best held outside of your RRSP (unless you only hold stocks, and then you could hold some inside your RRSP). Some investors only invest RRSP funds in interest-paying securities, because they hate to see tax advantages go to waste.
Stocks come with two key tax advantages. The dividend tax credit applies to dividends from Canadian companies, so they are worth around one-third more, after tax, than the same amount of pre-tax income from interest or employment. This advantage goes to waste in an RRSP.
If you hold dividend-paying stocks in your RRSP tax shelters, you defer taxes, but lose the dividend tax credit. When you withdraw money from your RRSP, you’ll pay taxes at the same rate as regular income, regardless of how you earned the money. So it’s best to hold dividend-paying stocks outside your RRSP.
RRSP types of investments to hold outside of the account include mutual funds and speculative stocks.
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Investments in senior mining stocks— also known as majors—typically involve companies that have proven methods for exploration and mining, and have consistent output year over year.
Junior mining companies are the opposite of senior mining companies. For the most part, juniors are new or have been in business for a decade or less. They are usually smaller companies and take on risky mining exploration. If a junior mining stock is successful at finding a deposit that leads to building a mine, it can mean huge returns for investors.
A major mining company will be willing to spend a total of $5 million, and lose every penny of it, if this means it will get a chance to develop the one rare project that’s ultimately worth an investment of, say, $500 million. If it waits until the property, technology or program has proven itself, development rights will be more costly. So it gets in early by investing what are just small amounts of money for a major firm.
When investing in senior mining stocks, we look for well-financed companies with no immediate need to sell shares at low prices. They typically have strong balance sheets with low debt. In general, we’ll only consider junior mines if they have a major partner who can finance a mine to production.
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Silver penny stocks worthy of speculative investment should ideally have reasonable balance sheets with low debt. Junior silvers that have found a mineable deposit should have a major partner who can finance a mine to production.
Silver penny stocks are not always the best way to invest in silver. If you want to invest in silver, one of the best ways is through ETFs that hold a portfolio of silver stocks. That can cut your risk. At the same time, we recommend staying away from silver bullion, certificates representing an interest in bullion, and other silver bullion alternatives, such as so-called “junk silver” coins.
When you buy penny stocks you could have a big payday if you make the right choice. But the odds against success are high. Penny stocks are almost always involved in riskier ventures, such as finding mineral deposits that can be mined at a profit, commercializing unproven technologies or launching new software.
In general, penny stocks have lower trading volumes or liquidity, and this lack of liquidity means it may be more difficult to sell a stock when you want to. They also suffer from large price fluctuations, so any bit of news will cause a penny stock’s price to rise or fall.
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Many investors choose stock investing websites to make purchases online because they are fast and convenient. Stock investing websites can also be accessed anywhere with smartphone and tablet technology.
Using stock investing websites for online trading may look like a fairly quick and convenient way to build wealth, but there are hidden dangers that may not be evident at first.
The main risk comes from the fact that it all may seem deceptively easy. The lower costs and higher speeds of online trading can lead otherwise conservative investors to trade too frequently. That can lead you to sell your best picks when they are just getting started.
The apparent ease with which investors can buy stocks online may prompt even the most conservative investors to take up short-term trading or day trading. And there’s another danger with trading stocks online—there’s a large random element in short-term stock-price fluctuations that you just can’t get away from.
If you choose to use stock investing websites, be sure to avoid becoming overconfident after success with practice accounts; stay away from automated stock-picking systems; don’t indulge in frequent trading.
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Tangible assets are also known as real assets. The opposite of a tangible asset is an intangible asset—this includes copyrights, patents, trademarks or intellectual property.
One of the most important things to look for when evaluating a stock is hidden assets. By definition, a stock’s hidden assets have not had much impact on its price. If you paid little if anything for the assets, you have little to lose.
But the best hidden assets will eventually expand a company’s profit, grab investor attention, and push up its stock price. If you buy a stock for its hidden assets, but those assets stay hidden or ignored by investors— or turn out to be less valuable than you thought—it can’t hurt you much.
One of the most tangible of hidden assets is found in real estate. These assets include long-time real estate holdings that are worth much more than the balance-sheet value (usually original cost minus depreciation).
The best time to find hidden assets is when they’re still hidden, long before the company begins taking steps to profit from them.
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One key part of our three-part investing program is to diversify by spreading your money out across most, if not all, of the five economic sectors.
As part of their portfolio diversification strategy, most investors should have investments in most, if not all, of these five economic sectors. The proper proportions for you depend on your temperament and circumstances.
For example, conservative or income-seeking investors may want to emphasize utilities and Canadian banks in their portfolio diversification, because of these stocks’ high and generally secure dividends.
More aggressive investors might want to increase their portfolio weightings in Resources or Manufacturing stocks. For example, more aggressive investors could consider holding as much as, say, 25% to 30% of their portfolios in Resources.
At the same time, we recommend spreading your Resource holdings out among oil and gas, metals and other Resources stocks for diversification and exposure to a number of areas.
Instead of portfolio diversification approaches like ours, some investors practice “sector rotation.” That’s where you try to predict which sectors will outperform other sectors. But trying to pick winning sectors seldom works over long periods.
You have to pick the top sectors, then pick the stocks that will rise within those sectors, then sell before the sector stumbles. It’s virtually impossible to consistently succeed at all three over long periods.
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The same sluggishness appears in other businesses. In both cases, this has something to do with the timing of customer vacations.
Other investors think of the summer stock market doldrums as the source of the market’s seasonally weak performance between May and October. Since 1926, stock market returns from May through October have been around half of what they were in the rest of the year.
This 90-year period includes the 1929/1932 market collapse that occurred at the start of the 1930s Depression. It’s the source of the old-time market saying, “Sell in May and go away.”
However, the 90-year record merely shows that the stock market generates a majority of its profits in the October-to-May part of the year, and a minority in the May-to-October part. (The overlap here is intentional. There’s no clear dividing line between the times of minority-of-profits and majority-of-profits.)
Even when seasonal tendencies seem clear in historical records, they can still disappear without warning, or reverse themselves. That’s why few investors have ever managed to make money with seasonal trading programs.
Either way, defensive stocks in the Consumer sector can provide the most effective protection against economic downturns or summer market doldrums. That’s a key difference between Consumer stocks and companies in the Manufacturing & Industry or Resource sectors, which are far more sensitive to the ups and downs of the economic cycle.
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The TSX is the largest stock exchange in Canada and the third largest in North America. The Toronto Exchange started on October 25, 1861. The TMX Group operates a number of stock and commodity exchanges, including the TSX.
Canadian dividend stocks that trade on the TSX offer a lot to investors. First off, dividends are far more reliable than capital gains. Additionally, top dividend-paying stocks like to ratchet payments upward—hold them steady in a bad year, and raise them in a good one. That also gives you a hedge against inflation.
For a true measure of stability, we focus on those companies that have maintained or raised their dividends during economic downturns. That’s because these firms leave themselves enough room to handle periods of earnings volatility. By continually rewarding investors, and retaining enough cash to finance their businesses, they provide an attractive mix of safety, income and growth.
Interestingly, the Toronto Stock Exchange has more oil and gas companies listed on it than any other stock exchange in the world.
Examples of TSX dividend stocks include Bank of Nova Scotia, Canadian Pacific Railway Ltd., Imperial Oil Ltd., Loblaw Companies Ltd., and Telus Corp.
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Growth investing focuses on trying to identify and buy rising stocks when they have further growth ahead. Although these stocks can be volatile, and some investors may see them as vehicles only for short-term wins and losses, they often make good long-term investments, too.
These up-and-coming stocks are investments in firms whose earnings growth has been above the market average, and is likely to remain above average. It is also often the case that they pay small dividends or none at all. Instead, they re-invest their cash flow in the business, to promote their growth.
New tech stocks are also often considered up-and-coming stocks. The best tech stocks are on a rapid growth path and will continue growing. Some of the best technology companies become so successful that they start paying dividends. Investors should also scour a technology stock’s balance sheet to glean any hints of hidden value like real estate, research and development or other valuable long-term assets. However, technology stocks are also susceptible to lots of market volatility—and negative news can throw tech stocks into steep declines.
Examples of up-and-coming stocks in the tech industry include cybersecurity firms or virtual reality developers.
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Other popular 3M brands include Post-it notes, Scotch tape, Scotch-Brite cleaning products, Scotchguard protection and Thinsulate insulation.
3M’s sales rose 26.3%, from $20.0 billion in 2004 to $25.3 billion in 2008. Acquisitions were part of the reason for the gain. 3M stock earnings rose from $3.75 a share (or a total of $2.8 billion) in 2004 to $5.60 a share (or $4.1 billion) in 2007. In 2008, the company’s earnings fell to $4.89 a share (or $3.5 billion).
3M’s sales rose 7.5%, from $29.6 billion in 2011 to $31.8 billion in 2014. However, unfavourable currency exchange rates cut its sales in 2015 by 4.9% to $30.3 billion.
The company’s earnings gained 15.7%, from $4.3 billion in 2011 to $5.0 billion in 2014. 3M is an aggressive buyer of its own shares. As a result, its per-share earnings rose at a faster rate of 25.7%, from $5.96 to $7.49.
With its September 2016 quarterly dividend payment of $1.11 a share, 3M has paid dividends continuously for the past century. It has also increased the payout each year dating back to 1958.
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Different share classes are associated with front-end and back-end load funds. For instance, Class A shares take an investor’s initial investment and charge a front-end load fee. Class B shares may carry a back-end load fund fee, which is payable when the investor redeems the mutual fund shares.
Closed-end mutual funds are a lot like conventional, open-ended mutual funds. They hold a diversified portfolio of stocks, chosen by a fund manager who gets a fee for his or her services. Closed-end funds also invest in a portfolio of securities but work with a fixed asset base. The value of their assets rises and falls, depending on how they invest. Their units trade like stocks, and mostly on a stock exchange.
Closed-end mutual funds may trade above their net asset value, or “at a premium,” as brokers say. But they mostly trade at a discount. If you buy them at a 10% discount, for example, and sell at the same discount many years later, you haven’t lost anything. But discounts on closed-ends sometimes shrink or disappear altogether. That happens when the funds liquidate, for instance, or convert to open-ended funds. But when that happens, you can earn a profit of 10%, 20% or more, virtually risk-free.
Back-end load fund fees are formally called contingent deferred sales charges, or CDSCs.
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The bailout bond was issued by the government-sponsored Resolution Funding Corporation to bail out savings and loan associations that were failing at the time.
The bailout bonds issued were important during the savings and loan crisis. They were instrumental in financing, reorganizing, or paying for the closure of savings and loans that went bankrupt during this crisis.
The full faith and credit of the United States government backed the issuing of the zero-coupon Treasury bonds. Those instruments were used to support the bailout bonds
Bailout bonds stopped being issued once the savings and loan crisis ended in the mid 1990s. While being issued, the bailout bonds were backed by Treasury securities—so the yields were only slightly better than Treasury bills. A bailout bond was considered to be a safe investment when they were being issued.
The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) was created in response to this financial crisis during the mid 1980s. This act was significant in changing how the savings and loan industry operates and its federal regulation.
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We often remind investors of the importance of a balanced portfolio and as a strategy for long-term success. A key part of our approach to investing for a balanced portfolio is spreading your money out among the five economic sectors: Finance; Utilities; Consumer Goods & Services; Resources & Commodities; and Manufacturing & Industry.
That way, you avoid overloading yourself with stocks that are about to slump simply because of industry conditions or changes in investor fashion.
Generally speaking, stocks in the Resources & Commodities sector and the Manufacturing & Industry sectors are apt to expose you to above-average volatility, while those in the Canadian Finance and Utilities sectors involve below-average volatility. Consumer stocks are in the middle.
If you take account of your own financial and personal circumstances and temperament, and if you invest as we advise, you will automatically buy some growth stocks and some value stocks, some small-company stocks and some big-company stocks. However, the economic-sector diversification and overall investment quality of your portfolio are far more important than the relative amounts you invest in value, growth and small stocks.
A balanced portfolio for you depends on your investment objectives and financial circumstances. It also depends on the market outlook, and on where the best deals are available.
Focus on the quality and diversification of your investments, and the balance of your portfolio.
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The basket credit default swap has a value based on the distribution of probable default from its underlying assets. The underlying assets involved in a basket credit default swap impact the price of a derivative and include a variety of financial instruments, including commodities, stocks, futures, currency, and indexes.
The value of basket credit default swaps is typically determined through the use of simulation software like the Monte Carlo. Monte Carlo methods use computer algorithms to make samples of numerical results. It’s important to realize that these are randomized and that they ultimately make an assumption that markets are perfectly efficient. This is, of course, not generally the case with investing.
There are various types of basket default swaps, including Nth-to-default swaps, senior basket default swaps, and subordinate basket default swaps.
Basket credit default swaps are not the same as basket trading. This is a type of trading that simultaneously trades a group of different securities. Basket trading specifically defines the trading of at least 15 securities at once. However, there may be much larger basket trades that involve dozens of securities. There are no additional fees involved with basket trading.
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Penny stock promoters love to make “deals”—however small or indirect—with major, household-name companies. They’re convinced that the public is more interested in penny stocks that have some connection with names they recognize. However, major company involvement is frequently exaggerated and big companies have far more bargaining power than individual investors. This is why big-company involvement marketing tactics need to be watched carefully.
It pays to remember that a big company doesn’t go into a penny stock situation like this the same way you do, as an individual investor. If the big company agrees to spend a lot of money, it will also insist on a series of options that let it invest ever-larger sums on favourable terms. But the big company will always reserve the right to drop out and cut its losses. In most cases, it will exercise that right to drop out.
Remember, promoters go to great lengths to use a big-company involvement marketing tactic. That’s why big-company involvement by itself is never a good reason for buying penny stocks. When a penny stock shoots up on the news of big-company involvement, and the property/program/gizmo is still in the early stages of development, it’s often a good time to sell.
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A blue chip corporation can be one of the most secure shares on the stock market. Companies that have stood the test of time, and pose less risk to an investor even in the worst of financial times, are blue chip companies.
When assessing a blue chip corporation, you need to ask: What are they doing to remain vital? These companies hold strong positions in healthy industries. They also have strong management that will make the right moves to remain competitive in a changing marketplace.
Stocks like these give investors an additional measure of safety in today’s volatile markets. And the best ones offer an attractive combination of low p/e’s (the ratio of a stock’s price to its per- share earnings), steady or rising dividend yields (annual dividend divided by the share price) and promising growth prospects.
Many corporations acquire a blue chip reputation by displaying the qualities that the definition suggests. As a caution, though, note that others get it through a strong public relations effort or by being in the right industry or business situation at the right time and place. Regardless of how it got there, this blue chip label can stick with companies long after they quit living up to it.
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New investors should take the time to understand a simple break-even analysis as it applies to investing. A break-even analysis doesn’t need to be complicated. It just needs to be realistic.
A break-even point can be as simple as the following example: If you lose X% in the stock market, you will need X% to break even. An understanding of this relationship can help you stay out of poor-quality stocks where the risk of a big decline is high.
We feel it’s important for new investors to learn about break-even analysis because often rather than avoiding high-risk areas, many beginning investors feel drawn to them. When they are just starting out, many investors believe they can afford to take big risks with their money. The truth is that new investors overlook the way that a simple break-even analysis affects your investment goals. The arithmetic works against you when you take on too much risk.
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A bullish market is often called a bull market, which is a term used to define a long period of rising stock prices that usually lasts one to three years or more. Of course, rising stock prices are desirable, marking a bullish market outlook as positive. So-called "intermediate-term corrections," or market setbacks, come along unpredictably in every bull market cycle. They often last from three to six months.
During a secular bull market, stock prices still go through bear markets (downturns of 20% or more, say). The difference with a secular bull market is that the rising phases within it generally last longer and go higher than people expect.
The best stocks in the next bull or rising market will begin rising before the next bull market gets started.
The opposite of a bullish market is a bearish market, which is when there’s a pessimistic outlook associated with a market. A bear market is a long-term period of falling prices that typically lasts a year or two.
In any bull market, conservative investors often wind up selling their best stocks way too early. Often they do so because their stocks seem to have gone up “too far, too fast”, or because “I can buy it back on a dip”. These are bad reasons to sell.
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An example of a Canadian oil ETF is Horizons BetaPro NYMEX Crude Oil Bull Plus ETF. This Canadian oil ETF trades on Toronto under symbol HOU.
This ETF aims to provide daily investment performance that is double that of the NYMEX crude oil index. It uses options in a way that aims for it to go up twice as much in a day as the underlying index. If the index falls, the ETF will drop by around twice as much.
This investment works best if you only hold it for a single day when the price of the underlying index is going up. Otherwise, the costs of using options eat into the long-term value of the ETF. As well, it’s difficult to forecast price movements of oil—and you could lose a lot of money if you guess wrong.
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The trend continues towards a cashless society because companies in the financial sector are rolling out cashless systems inspired by the digital wallet concept. Google has released the Google Wallet, which is an example of this.
Part of the trend towards cashless societies could involve the use of biometrics. Biometrics requires physiological characteristics for identification. Examples of biometrics include fingerprints or facial recognition software.
Those in favour of a cashless society site the concept as a way to save time, and a way to make financial transactions more secure. Security is enhanced with biometrics because biometric IDs are unique to each person. Digital wallets can be shut down remotely if they are stolen. As for convenience, no one would have to carry money around anymore, and digital payments could be made easily with the tap of a smartphone.
Some also speculate that having a society without cash would stop black market or underground economies.
Those against a cashless society cite problems like hackers and the failure risk of biometric systems. The aspect of losing one’s phone could create a problematic situation with digital wallets, as many smartphones don’t have totally reliable encryption capabilities.
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Corporate actions are agreed upon by a company’s board of directors and then authorized by the shareholders.
Baxter International and eBay are two major companies that have undertaken a corporate action spin-off with great success.
In the case of Baxter International (symbol BAX on New York), it spun off Baxalta (symbol BXLT on New York) as a separate division in July 2015. The remaining company, Baxter, is now focused on medical devices, such as intravenous pumps and kidney dialysis equipment.
eBay (symbol EBAY on Nasdaq) also spun off its PayPal online-payment division as a separate firm in July 2015. eBay investors received one PayPal share (symbol PYPL on Nasdaq) for each share they held. PayPal processes online, mobile, and in-store transactions, including purchases made through eBay’s auction websites.
You can contrast a corporate action spin-off with a new stock issue, which is when a company first sells shares to the public.
The two situations are like two sides of a coin—one favourable to investors, the other unfavourable. The motivations of the companies are nearly opposite.
Companies sell new issues to the public when they feel it’s a good time to sell. That may not be, and often isn’t, a good time for you to buy.
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When investors buy or sell a futures contract, they commit to buy or sell a quantity of a commodity (or currency or financial instrument) in the future. The date and quantity are standard; the price is fixed when the investor buys or sells the contract.
For individual investors, investing in futures is not the same as investing in stocks or funds. Futures contracts have a fixed life, usually under one year. You can hold stocks or mutual or exchange-traded funds indefinitely. Futures contracts do not give you any income. Stocks, and some funds, do provide dividend payments. Unless you are, say, a manufacturer locking in the price of a commodity, futures are a speculation—a bet on price movements. To make money, you have to outguess other players by a wide enough margin to pay commissions. Stocks and funds are an investment because they let you profit from economic growth.
Investors who engage in arbitrage (also called an arbitrageurs or “arbs”) often put their focus on cost-of-carry markets, and aim to profit from inefficient spreads between prices of commodities on the futures market and the current spot price.
Cost-of-carry markets primarily deal in derivatives such as futures contracts.
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Typically those agents are commercial banks or other financial institutions.
A dividend disbursing agent is also known as a pay agent. Typically a company’s transfer agent is also its dividend disbursing agent. Transfer agents provide lists of shareholders and other services related to annual general meetings. Those agents also act as the official keeper of corporate shareholder records during these events.
Banks act as a third party so the issuer doesn’t have to directly pay dividends, principal payments, or coupons to security holders.
Dividend disbursing agents charge fees, but they can provide an invaluable service to companies with a large number of shareholders, many of who have only a few shares. As well as cash dividends, they can also take care of stock dividends. Note that smaller companies may in some cases act as their own transfer agents.
Dividend payments are typically cash payouts that serve as a way for companies to share the wealth they’ve accumulated through operating their businesses. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly.
Dividends can produce as much as a quarter of your total return over long periods.
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This model theoretically states that a stock is worth the total of its future dividend payments, discounted to the present-day value. If the value of the discounted dividends is higher than the stock price, then the model says that the stock is undervalued.
The discount dividend model is often abbreviated as (DDM) and is also known as the Gordon growth model, named for Myron J. Gordon from the University of Toronto, who coined the phrase in a 1956 publication.
The formula of this model can be written as: stock value = dividend per share / discount rate - dividend growth rate.
The main problem with it involves a large amount of speculation in predicting future dividends. Many assumptions about the future need to be made in order to use the model. This is true even if the stocks you are looking at are reliable companies that have consistently paid dividends.
A major assumption made by a discounted dividend model is that the dividends from a stock will consistently and steadily grow indefinitely.
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Boosters of dual-voting share structures maintain that when voting rights are closely held by company management and insiders, it lets a company pursue a longer-term strategy. They feel companies with a single class of shares are at risk of lurching from one fiscal quarter to the next, struggling to stay in tune with changing investor sentiments and shifting market trends.
Things have worked that way in the past in some companies, and will undoubtedly do so in the future. But dual-voting stock structures can also allow gross abuse by controlling interests who own a majority of the company’s voting stock, even when those holdings represent a small minority of total shares outstanding. Dual voting structures also let well-meaning but stubborn controlling interests stick indefinitely with money-losing corporate strategies, long after a company with a single share class would have voted them out.
Most Canadian stocks with dual-class shares, have a “coattail provision” in place. This provision aims to ensure that both share classes have equal rights in the event of a takeover. So, if you hold non-voting or subordinate-voting shares, you won’t miss out on a takeover bid.
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The settlor of a fixed trust distributes amounts during the year—and the trustee has little or no say in the distribution of the trust’s property.
The opposite of a fixed trust is a discretionary trust, which provides no guarantees of income or ownership of the trust. In this case, the trustee has the power to decide which beneficiaries will benefit from the trust.
A fixed trust often invests in fixed income insstruments, which is an investment strategy designed to provide a fixed stream of current interest income. Fixed income instruments can include T-bills, GICs and bonds, as well as bond ETFs and mutual funds.
A fixed trust is not the same as an income trust. Income trusts are a type of investment trust that holds income-producing assets. Their units trade on stock exchanges, but they flow much of their income through to unitholders as “distributions.” Canada offers special tax treatment for Canadian income trusts. When they flow their income through to their unitholders, they don’t pay much if any corporate tax. Investors pay tax on most of the distributions as ordinary income (although some distributions qualify as a tax-free return of capital).
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A flexible mutual fund is often a pooled investment, and will change its investment strategy with the aim of maximizing unitholder returns.
A flexible mutual fund’s ability to change will be stated in marketing materials related to it. That lets the fund’s investors know this is part of its mandate before investing in the fund.
There are, of course, thousands of mutual fund choices available at any time. But remember that most funds are set up because a fund sponsor has a saleable idea. It may or may not be a good investment idea, and these days it often isn’t. That’s because the marketing department is in charge at many mutual fund organizations. This leads to management decisions that are mainly aimed at selling new units of mutual funds, rather than safeguarding the interests of the investors who are buying mutual funds.
Flexible mutual funds may seem like a good idea—but we think the moving between asset groups is vastly over-rated as an investment tool. Asset allocation rose to prominence because the investment industry seized upon some academic research on the subject and turned it into a sales pitch for investment products that carry much higher fees than so-called “plain vanilla” stocks and bonds.
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Foreign currency futures contracts are bought and sold on regulated exchanges including the Chicago Mercantile Exchange. They are transferable and allow investors to insure against foreign exchange risk. They may also be referred to as forex contracts or forex investments.
Trading in futures is a long-established and perfectly legal way to bet on price changes in commodity, currency and financial markets. This attracts futures traders.
When you buy or sell a futures contract, you commit yourself to buy or sell a quantity of a commodity (or currency or financial instrument) in the future. The date and quantity are standard; you fix the price when you buy or sell the contract.
Futures started out as a convenience for commercial interests. Farmers sell wheat futures to fix their income from this year’s harvest. Bakers buy wheat futures to fix their flour costs. But most futures transactions take place between speculators who are simply betting that prices will rise or fall. Most contracts get closed out prior to delivery.
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In the past, some investors bought mutual funds within a fund family promoted by fund sellers for a couple of reasons.
Mutual funds within a particular fund family often shared some key investment characteristics, such as a conservative or aggressive investment approach, or a stress on value as opposed to growth.
As well, many fund families let investors switch between funds within the family at little or no charge. This way, they could rebalance their portfolios and still maintain a common investment philosophy—and incur no fees. But it also encouraged frequent trading. Frequent trading could cause investors to miss out on some of their biggest gains.
Some investors use fund families because it allows them “one-stop” shopping for mutual fund investments.
However, as a result of corporate mergers and takeovers in the mutual-fund industry, a fund’s membership in a fund family now has little bearing on its approach or its appeal as an investment.
Examples of major fund families include Fidelity, Mackenzie, Vanguard and Mawer.
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Global Depositary Receipts allow issuers to access capital market investors outside of their home country.
A Global Depositary Receipt may be issued to investors inside and outside the U.S.
A Global Depositary Receipt (GDR) can also be referred to as an International Depository Receipt (IDR).
GDRs are similar to American Depositary Receipts (ADRs). However, an ADR is a certificate that represents a foreign stock that trades in the United States. Banks and brokerage firms in the U.S. issue or sponsor ADRs, and investors buy and sell them on U.S. stock markets, just like regular stocks.
If you own an ADR, you have the right to obtain the foreign stock it represents. However, investors usually find it more convenient to continue holding ADRs.
One ADR may represent one or more shares of the foreign stock. But if the stock is expensive, the ADR may represent a fraction of a share. That way, the ADR will start trading at a moderate price, or be in range of similar stocks on the exchange where it trades. The price of an ADR usually stays close to the price of the foreign stock in its home market.
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These types of stocks are called growth stocks.
Chosen wisely, high-quality growth-oriented stocks can be worthwhile additions to most well-diversified portfolios.
Although these stocks can be highly volatile, they often make good long-term investments. They may be well-known stars or quiet gems, but they do share one common attribute—they have grown at higher-than-average rates within their industries, or within the market as a whole, for years or decades.
A growth stock manager may be connected with a brokerage firm. Note that if you use a stock broker, aim to find one who understands investing and who has the integrity to settle conflicts of interest in the client's favour. Good stock brokers can provide an effective and economical way to manage your investments. But if you are going to use a full-service broker, take the time to find a broker you can trust. At the same time, it’s important to read between the lines of all stock broker advice.
Good growth stock managers will put your interests first. A good growth stock manager will be skeptical of new issues and structured products. They will say no to frequent trading, and keep price “targets” in perspective.
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A hybrid annuity has the benefits of a variable annuity and a fixed annuity. A hybrid annuity is offered as an investment with an insurance company. In an annuity agreement, an insurance company requires the insurer to make payments to you.
A variable annuity allows investors the chance to make higher rate returns by investing in subaccounts of bonds. It is a tax-deferred retirement vehicle. A fixed annuity guarantees a minimum payment amount and a guaranteed interest rate.
An annuity, like a hybrid annuity, may be worth considering for part of your assets, depending on your age, investment experience, the time you want to devote to your investments, your desire to leave an estate to your heirs and other aspects of your retirement investing.
You buy an annuity by making either a single payment or a series of payments. Annuities pay out in either one lump-sum or a deferred series of payments over time.
But a key drawback to annuities is that annuity rates are closely linked to interest rates. In addition, annuities have no liquidity. If interest rates and inflation move up, your annuity payments would remain fixed and you would lose purchasing power. Plus, you would have no way to rearrange your portfolio. This is why we generally advise against investing in Canadian annuities.
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We recommend staying away from junk silver investments. In addition to staying away from a junk silver investment, we also recommend avoiding silver bullion, certificates representing an interest in bullion, and other silver bullion alternatives.
Silver is sometimes known as “poor man’s gold,” because it attracts a lot of interest as gold prices reach levels that seem too expensive for the average investor. But prices of silver mining stocks tend to rise along with gold prices. That’s because when gold prices soar, investors see silver as less of an industrial commodity and more as a precious metal. Silver mining stocks tend to also follow a price surge in silver.
To profit in silver mining stocks, you should look for well-financed companies with no immediate need to sell shares at low prices, since that would dilute existing investors’ interests. Also look for high-quality silver mining stocks with strong balance sheets and low debt.
You can hold silver stocks directly, through mutual funds, or through exchange traded funds like Global X Silver Miners ETF (symbol SIL on New York). If you want to invest in silver, we think the best way to do it is through silver mining stocks or ETFs.
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There are two types of knock-out options: up-and-out and down-and-out options. Both limit the profit potential for the option holder by “knocking out” or cancelling an option once the underlying stock reaches a predetermined level. In an up-and-out knock-out option, the price of the asset has to move up through the targeted price in order to be knocked out. In a down-and-out knock-out option, the price of the asset has to move down through the targeted price in order to be knocked out. The opposite of a knock-out option is a knock-in option, which only gains value once the price of an option reaches its predetermined price.
A knock-out option isn’t traded on option exchanges. Instead, it’s an over-the-counter (OTC) instrument.
Over-the-counter stocks are shares of companies that are traded on the over-the-counter market by “market makers” or traders who maintain an orderly market in a particular stock by standing ready to buy or sell shares. Most companies who trade over-the-counter don’t meet the minimum criteria for capitalization and number of shareholders that are required by major stock exchanges. In the end, over-the counter trading is typically for investors who are not afraid of losing the money they invest.
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A market correction is typically a temporary downturn—a downturn that interrupts a long-term upward trend.
When a market correction comes, it’s likely to be particularly hard on low-quality or speculative investments. That’s because during those times many well-established stocks are downright cheap in relation to their earnings and the dividends, compared to bonds and other fixed return investments. In contrast, many speculative stocks may appear expensive at current prices, in view of the financial performance you can reasonably expect for them.
In a stock market correction, investors tend to sell low-quality stuff and move their money into higher-quality investments. Either way, it is always a good time to reduce or eliminate your most speculative exposure. We don’t advise that you to sell anything out of a portfolio of well-established companies because we believe a balanced portfolio of high-quality stocks will produce substantial gains.
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If you sell control of a company but retain 49% or less, you become the minority investor. If you disagree with the controlling interest about what you are entitled to as a minority investor, you have little if any of the legal protection that investors have in public companies.
If you sell anything less than control of your company, you will likely get a lower price. This reflects the higher risk of holding a minority interest in a private company. It’s far harder and costlier to sell a private business than a publicly traded stock.
Minority investors may also be referred to as a minority interest or a noncontrolling interest (NCI), or a minority shareholder. A minority interest could be an individual investor or another company.
Holding companies may own all, or a majority or a minority, of companies in which they invest. A holding company is a company that owns all or a substantial part of a variety of different businesses. These businesses may be private companies, or publicly traded. The one thing most holding companies have in common is that they trade for less than the combined value of their holdings.
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A money manager may also be known as an investment manager or a portfolio manager. Money managers are different from stock brokers, as a money manager does not receive commissions on transactions. Instead, money managers typically receive their payments based on a percentage of the assets under management they’re controlling.
Money managers have a fiduciary relationship with their clients. This means there’s a level of trust and good faith required in the actions taken by the money manager.
As a portfolio manager or money manager select investments for a portfolio, they are expected to choose based on investment objectives, risk tolerance, age and personal circumstances. Most investment research is aimed at portfolio managers. However, an analyst’s buy-sell-hold recommendation can be the least valuable part of the report. Instead, money managers generally read brokerage research for the data, rather than the conclusions.
Financial planning can complement portfolio management by helping you estimate how much you need to save, or the investment return you’ll need, to achieve a particular level of income at some future point and adjust your portfolio accordingly to meet this goal.
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In a monopoly situation, the one firm is ultimately the industry itself. A market that is a monopoly cannot be entered because the costs are too high. Additionally, other qualities can be involved in a monopoly beyond high, restricting ongoing costs. These qualities may be economic, social or political.
Exclusive rights to a natural resource is another possible example of a monopoly, as is the ownership of patents or copyrights.
An example of a monopoly was Teranet Income Fund, before it was taken over in 2008. Teranet managed Ontario’s electronic land registration system. Teranet was granted an exclusive license from the Ontario government to operate the land registry system. Teranet’s guaranteed monopoly cut its risk and provided steady cash flow. The fund’s growing customer base would also eventually help protect it from new competitors when its license expired. As well, customers used to Teranet’s products were reluctant to switch to an unfamiliar information provider.
Monopolies are an example of the extreme side of capitalism. The opposite of a monopoly is considered perfect competition.
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A positive earning surprise may point to a lasting rise in earnings and a company’s stock price—one that can go on for weeks, months, even years. Of course, the rise may instead be very short term—if it happens at all.
The funny thing is that earnings estimates are based on info supplied by the company. Some companies routinely try to manage brokerage-analyst expectations “downward.” That way, analysts routinely underestimate their earnings. This can lead to a string of positive earnings surprises.
A positive earning surprise may give some investors the idea that the company is forging ahead much faster than expected.
The market may then reward the company with a higher per-share price-to-earnings (P/E) ratio. It may trade for 22.0 times earnings instead of, say, 19.0 times. This can cut the company’s cost of financing. It can also make it cheaper to provide stock options to executives. But the surprise can end abruptly.
This may lead to a negative earnings surprise if the company runs into unforeseeable earnings problems. A negative earnings surprise is when a company’s earnings come in below the consensus
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A proxy is a written authorization or ballot provided by a shareholder that permits another individual to exercise the voting rights of the shareholder at company meetings. Proxy ballots sent to shareholders typically list the issues that will be raised at the shareholders meeting, as well as the directors up for election. Submitting a proxy lets them vote without having to physically be at the shareholder meeting.
A proxy fight is often handled by proxy advisors or proxy firms in order to come to a final determination. Broadridge Financial Solutions Inc. (New York symbol BR) is a firm that handles proxies—including those involved in proxy fights.
Broadridge serves the investment industry in three main areas: investor communications, securities processing and transaction clearing. It processes 90% of all proxy votes in the U.S. and Canada. The company is also helping businesses switch from paper-based investor communication products to digital versions. This helps speed up proxy votes, increase shareholder participation rates and cut mailing and printing costs.
A proxy fight may develop because one or more groups wants to replace a company’s management, or put new members on its board of directors.
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After using the Real Estate Investment Conduit, the pooled mortgages are then sold to investors. The ownership interests in these mortgage-backed securities can be in the form of bonds, certificates, or other securities.
Real Estate Mortgage Investment Conduits can be involved with commercial or residential mortgages. The securities involved in Real Estate Mortgage Investment Conduits are traded on the secondary mortgage market.
One example of a company that would take advantage of Real Estate Mortgage Investment Conduits is Home Capital Group Inc., a mortgage lender that serves borrowers who don’t meet the stricter standards of larger, traditional lenders, like banks. The company offers most of its loans through 4,000 independent mortgage brokers. Clients include self-employed people and recent immigrants with limited credit histories. Home Capital keeps its credit losses down by identifying problem loans early. It then uses this information to restructure a borrower’s repayment terms and adjust its lending policies.
Bonus tip: Investing in real estate often involves special types of loans to purchase property called mortgages. At the same time, reverse mortgages in Canada let homeowners who are 55 years of age or older borrow on their home equity—the minimum age was 60 until a year ago. (If it is a married couple, both spouses must be above age 55).
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Beyond the owner’s holding decisions, a self-directed RRSP is otherwise similar to a basic RRSP.
Generally speaking, it’s best to hold interest-bearing investments inside an RRSP. That’s because, of the three forms of income (interest, dividends and capital gains), interest is the highest taxed. Dividend-paying investments, and those expected to yield capital gains, are best held outside. Some investors only invest RRSP funds in interest-paying securities, because they hate to see tax advantages go to waste.
The owner of a self-directed RRSP must abide by all legal requirements for the holdings in the RRSP. There are still holdings that are not permitted in a self-directed RRSP just like we see in a normal RRSP.
Before developing a self-directed RRSP, we recommend you base your retirement planning on a sound financial plan. Here are the four key variables that your plan should address to ensure you have sufficient retirement income:
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A stock margin account lets investors borrow up to double an account’s cash balance.
Overall, stock margin accounts can be considered as loans from a brokerage.
Buying stocks on margin can be a sound investing strategy, but it carries more than the usual amount of risk.
The main cost involved with buying on margin is the interest on the money you borrow—although when interest rates are low it adds to the appeal of buying stocks on margin. Plus, when you sell a security that you’ve bought on margin, you must first pay back the loan from your broker.
The main risk of buying stocks on margin is that it increases your leverage. Leverage works two ways: It magnifies your profits when the market moves in your favour, but it magnifies your losses just as surely when the market moves against you.
When you buy on margin, you’ll be able to write off your margin interest in full against ordinary income in the current year. However, you’ll pay less than ordinary income tax rates on dividends.
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A stock portfolio review can take time, but should be undertaken from time to time.
Investors often look at a stock portfolio review for performance discrepancies among shares they hold. But all too many take little more than an occasional glance at the relative weight of the various securities they own. They have little if any idea of how much impact each holding has on the portfolio as a whole.
A thorough stock portfolio review goes a lot deeper, of course. But the balance between stocks and bonds—call it equity and debt if you prefer—is a key indicator. That’s because bonds give you higher stability than stocks in the long term, but at a cost of lower returns than stocks.
We apply our stock portfolio review techniques much more deeply for our portfolio management clients, of course. But if you apply just this much of it to your portfolio, it will put you far out ahead of most investors in understanding how much risk your portfolio exposes you to, and how close it comes to matching your goals.
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Takeover bids are presented to companies who are attractive candidates for takeover, which primarily means the company is profitable. The chance of a takeover often adds to a stock’s appeal, although this appeal alone doesn’t provide reason enough to buy a stock on its own.
An example of a takeover bid: In April 2010, Alimentation Couche-Tard (symbol ATD.B on Toronto) launched a hostile, $2.0-billion takeover bid for Casey’s General Stores (symbol CASY on Nasdaq). However, competitor 7-Eleven outbid it.
Couche-Tard was more successful in two other bids: its $2.7-billion acquisition of Norway’s Statoil Fuel & Retail gas station chain in June 2012 and The Pantry, which Couche-Tard bought for $1.7 billion in March 2015. The Pantry operates more than 1,500 convenience stores in 13 southern U.S. states.
A hostile takeover bid targets shareholders in an attempt to replace the management of the target company, typically when the management doesn’t agree with the merger or acquisition.
The opposite of a hostile takeover is a friendly takeover, which is when the management of a company approves of a takeover or merger.
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A voting trust certificate is typically used in backing the process of reorganizing a corporation. The voting trustees who are in control and make the decisions for the corporation are usually few in number.
A voting trust certificate is exchanged for a common stock and provides all the usual rights except the right to vote in corporate matters. Voting trust certificates typically last for a specific amount of time, usually five years, and then the certificate expires. Once the certificate expires the complete original rights are returned to the shareholder, often returning the right to vote.
Votes are conducted at annual shareholders meetings. These votes are on current issues impacting the company, including appointments to the board of directors, how much compensation executive members should receive and stock splits, among other issues. Future strategies are also typically discussed at shareholder meetings.
Holders of voting trust certificates cannot vote in person at annual shareholders meetings, or by proxy. A vote by proxy is written authorization, or a ballot, permitting shareholders to exercise their voting rights. Voting can be conducted online or by mail or by transferring your voting authority to another shareholder, or the company’s management.
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A whisper stock may develop based on the rumours from any variety of people, from investment bankers to people closely associated with executives of a company.
Investors need to approach whisper stocks carefully, as the rumours surrounding those stocks may never develop into reality.
Whisper stocks are often of interest to speculative stock buyers, as they approach whisper stocks with the hopes of making a significant profit after the takeover happens.
Some takeovers work out well for the acquirers, of course. This doesn’t diminish the inherent risk. More important, risk multiplies as takeovers become a habit.
Takeovers are more likely to succeed when the acquirer is already a successful company and is under no pressure to buy anything. That way, the buyer has likely taken its time and waited for a truly attractive, low-risk opportunity to come along.
If a takeover starts to falter, well-managed companies are likely to cut their losses while there is still some value to salvage. The best companies cut the risk by only making takeovers that help expand their core business. They are willing to get out, even at a loss, when they see an exit as the smart thing to do.
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A wind bond is a form of catastrophic bond. Catastrophic bonds were created in the 1990s for mitigating the risks of natural disasters for the insurance industry. Hurricanes and earthquakes were the catastrophic events that led to the creation of these bonds.
Catastrophe bonds are also known as “cat bonds”.
A wind bond, or any other type of catastrophe bond, is a high-risk, high-yield security. The goal of these bonds are to shift the risk caused by catastrophic events to capital markets instead of insurance companies.
There are four types of catastrophe bond trigger types. These include indemnity, modeled loss, indexed to industry loss, and parametric index.
Sponsors of catastrophic bonds, like wind bonds, include government agencies, corporations, insurers and reinsurers.
Wind bonds, like other catastrophe bonds are different than stocks in the way they are not impacted by market trends.
Overall, wind bonds and all other catastrophic bonds are not recommended as investments for individuals, because they come with a high level of risk. In fact, most rating agencies rank these investments in the same category as junk bonds.
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A written-down value is also known as book value or net book value. The book value per share of a company is the total value that the company places on its assets, less all liabilities, divided by the number of shares outstanding.
Book value per share gives you a rough idea of the stock's asset value. However, this ratio represents a “snapshot” of an instant in time, and changes over time. That's because asset values on a company's books are the historical value of the assets when they were originally purchased, minus depreciation. Certain types of assets on a balance sheet might have actual market values well above historical values, as sometimes happens with real estate or patents.
When we find a stock with a low price-to-book value, we look to see if the price is too low, or if its book value per share is inflated. Often, we find that the stock price is too low. But, sometimes, the company’s assets are overpriced on the balance sheet, which means they may be in danger of being written down with a big one-time charge.
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The acquisition cost includes closing costs and brokerage commissions.
Acquisitions, particularly big ones, can also push up a firm’s debt, which leaves the buyer vulnerable to failure if it can’t meet the payments. They can also load the buyer’s balance sheet with goodwill, an intangible asset whose value can drop overnight if it turns out that the company made a bad acquisition. In that case the company has to write off all or part of the acquisition’s cost against current earnings. This can wipe out a year’s earnings for the growth stock and devastate its share price.
It pays to be skeptical of stocks that rely too heavily on making acquisitions. That’s because the buyer of something rarely knows as much about it as the seller. So it follows that if a company makes enough acquisitions, it might eventually buy something that has hidden problems. At some point, those problems will come out into the open and hurt the buyer’s earnings.
Acquisitions can be favourable, of course. Acquisitions can boost cash flow and earnings, and ultimately lead to expansion for companies. A sound balance sheet is a sign that a company is able to keep making acquisitions.
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Active portfolio management for individual investment accounts also bases stock selections on the client’s investment objectives, age and personal circumstances.
Active portfolio management should not be confused with financial planning. Financial planning include arranging affairs to cut taxes, which can be done through income splitting and various other means. Financial planning and portfolio management complement one another by helping you estimate how much you need to save, or the investment return you’ll need, to achieve a particular level of income at some future point, and then to adjust your portfolio accordingly to meet this goal.
Conventional mutual funds and some new ETFs are examples of investments that use active portfolio management. Active management comes at higher costs than investments like passive ETFs.
Traditional ETFs stick with passive management as they follow the lead of the sponsor of the index (for example, Standard & Poors). Sponsors of stock indexes do from time to time change the stocks that make up the index, but generally only when the market weighting of stocks change. They don’t attempt to pick and choose which stocks they think have the best prospects.
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After hours trading can take place before 9:30 a.m. and after 4:00 p.m.
The popularity of online investing during the 1990s bull market led to a demand by individuals for access to similar after hours market trading.
In 2000, Canadian brokerage firms began making after-hours market trades on U.S. exchanges available to individual retail investors in Canada.
To trade on the after-hours market, a retail investor must participate in online stock investing, and must become a customer of an Internet brokerage firm that has its own electronic-trading platform, called an electronic communications network, or ECN. Alternatively, the brokerage firm must have access to an ECN.
Some ECNs are regulated exchanges. Others are side businesses of broker-dealers. Still others are unregulated.
After hours trading differs from trading during regular hours in many ways. For one, there are far fewer buyers and sellers after hours, so there may be less trading volume on the stock you’re interested in. This may result in wide spreads between bid and ask prices, which makes it harder for you to buy at a favourable price.
This area of investing is still dominated by large institutional investors who have access to plenty of resources, so you’ll be up against some powerful competition.
Generally speaking, we think you are better off doing your trading during normal hours.
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Asset allocation aims to shift a portfolio’s allocations between stocks, bonds and cash in order to capitalize on perceived investment opportunities in any one of those classes.
Portfolios involving aggressive allocation typically have a majority of their investments in stocks—especially aggressive stocks. If they do hold a portion of their holdings in fixed-income investments, or bonds, then they would focus on high-yield, or “junk” bonds.
When looking for the best long-term mutual funds or ETFs, we first eliminate anything with “asset allocation” in the name. If the fund’s name includes the term, it means the fund’s managers or sponsors feel they can enhance returns and/or reduce the risks of their mutual funds, often using a so-called “black box,”—a computer program that makes trading decisions based on a pre-selected set of rules for interpreting financial statistics.
It can be considered aggressive allocation when the portfolio is 70&% to 85% in equities. Aggressive allocation seeks maximum return for high levels of risk.
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Portfolios with aggressive investment allocation in place typically have a majority of their investments in aggressive stocks. If the portfolio has a portion of its holdings in fixed-income investments, or bonds, then they would focus on high-yield, or “junk” bonds.
A portfolio can be considered to have aggressive investment allocation when the portfolio is 70% to 85% in equities. Aggressive allocation seeks maximum return for high levels of risk.
Aggressive allocation is a form of aggressive investing. Aggressive investing involves attempting to maximize returns through investment in higher-risk aggressive stocks and investment products. While higher risk investments can be a strong component of growth, they can also be considerably riskier, so you should limit your portfolio exposure to such investments.
Asset allocation programs are like hindsight; they work great when they are applied to the past, since their creators can tweak the rules to match what actually happened. They are far less effective at extracting profit in real time. However, they always work great at jacking up a fund’s expenses, because of the commission their trading generates.
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Alibaba Group Holding raised a total of $25 billion in its initial public offering (IPO). It opened for public trading at $92, and moved up to $93.89.
By December 31, 2014, Alibaba’s revenue rose 39.7%, to $4.22 billion from $3.02 billion. However, that was below the consensus estimate of $4.44 billion. It’s also slower than the company’s 54% sales growth in the 2014 third quarter.
In 2015, The company reported that its earnings per share, excluding one-time items, rose 13.5% to $0.81. That beat the consensus estimate of $0.74. However, the company’s earnings figures include a number of difficult-to-evaluate one-time items such as pre-IPO stock awards to employees and executives, and the amortization of intangible assets on newly acquired companies.
Alibaba Group Holding has experienced disputes with China’s State Administration of Industry and Commerce for failing to protect consumers against counterfeit goods. The company has also been accused of taking bribes from vendors, and faking transactions to make sales volumes look higher.
Alibaba’s Chinese location adds to its risk. Foreign stock market regulation is far more lax than in North America. Self-dealing by insiders is more common, and close personal connections can go a long way toward offsetting inconvenient investor-protection laws. We don’t recommend Alibaba.
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The components of earnings reports include earnings per share, net income and sales, and earnings from continued and discontinued operations.
Earnings reports are often followed by an earnings call. An earnings call reviews financial results of a public company four times each year along with the earnings reports. Earnings calls have traditionally been conducted by a company’s management via teleconference, although the use of webcasts has grown for many earnings calls.
When examining an earnings statement, it’s important to put special attention on research spending, and write-offs.
The investment world often responds to earnings reports with stock price movements. Shares can rise and fall almost instantaneously on a good or bad report.
Earnings reports share updates on the three primary financial statements of income, balance sheet, and cash flow. For U.S. stocks a 10-Q is the SEC form that must be filled out and submitted to the Securities and Exchange Commission (SEC) quarterly. This report is published after an earnings report and helps add credibility to it. A 10-Q form is more comprehensive than an earnings report. A 10-K form must be completed after the fourth quarter, as it’s the annual report that must be submitted to the SEC.
To profit from earnings analysis, look at them in context, and consider the historical pattern.
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The theory in essence says that stock market pricing already includes all relevant data.
Three forms of efficient market hypothesis exist, including the strong form, semi-strong form, and weak form. The weak form of EMH says that the future prices of assets like stocks or bonds can’t be predicted by looking at past prices. This includes technical and chart analysis. The semi-strong form of EMH says that the prices of assets quickly and efficiently adjust to all publicly available new information. The strong form of EMH says the prices of assets quickly and efficiently adjust not only to all publicly available new information—but all private information as well.
When you try to pick a handful of stocks that will all beat the market, you are asking a lot of yourself. No one, not even people that devote their entire lives to it, has ever been able to consistently pick stock-market winners over long periods.
On the other hand, it’s relatively easy to acquire a balanced, diversified portfolio of mainly high-quality dividend paying stocks, spread out across most if not all of the five main economic sectors: Resources & Commodities, Finance, Manufacturing & Industry, Utilities and Consumer.
If you diversify, you improve your chances of making money over long periods, no matter what happens in the market.
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We experienced an energy crisis with ballooning oil prices in the early 1970s. It grew out of the fact that too much world oil production was concentrated in the volatile Mideast. The supply of oil was precarious due to Mideast politics and the constant risk of armed conflict. However, modern fracking and other technology gains now make it possible to produce oil and natural gas in vast quantities all around the globe. Energy prices may stay high, but energy security is greatly improved.
The markets for fungible goods like oil are especially unpredictable.
Markets like these are so enormous that there is no practical limit to how much you can trade in them. It follows that if you could predict them, you could wind up acquiring a measurable proportion of all the money in the world, and nobody ever does that. That’s why it’s a mistake to build your portfolio in such a way that you have to accurately predict the future direction of fungible goods like oil, interest rates or gold.
Some markets are inherently unpredictable, especially energy and mines. That’s why we recommend that investors diversify their portfolio across most if not all of the five major sectors, including Resources.
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Retirement investing should begin well before you approach retirement age. And there is a plan you can adopt during your working years that is particularly effective in smoothing the path to retirement.
The best individual retirement plan you can have is to start saving as early in your working career as possible. You then invest a steady or rising amount of that money in the stock market every year. When you follow this plan, you automatically profit from dollar-cost averaging. You will automatically buy more shares when prices are low, and fewer shares when prices are high.
In retirement, you reverse the process. You live off your dividends, and sell stocks only when you need more money. When you do that, you sell your lower-quality holdings first. That way, your sales have the added advantage of upgrading the quality of your portfolio.
If you want to pay less tax on dividends while you’re still working, investing in an RRSP (Registered Retirement Savings Plan) is the way to go. RRSPs are a great way for investors to cut their tax bills and make more money from their individual retirement plan.
RRSPs are a form of tax-deferred savings plan. RRSP contributions are tax deductible, and the investments grow tax-free. When you later begin withdrawing the funds from your RRSP, they are taxed as ordinary income.
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An investment broker can sell his or her clients a wide variety of products and services that will bring the broker a wide range of fees and commissions, from high to low. Oftentimes though, the more income a broker can earn from selling an investment, the poorer the match between the investment and the interests of the client.
There’s nothing inherently wrong with this arrangement, of course. But it can introduce conflicts of interest that can influence your investment brokers’ recommendations, and you should be aware that this might not always work in your favour.
A stock broker’s income is proportional to his or her trading frequency. However, increased trading is likely to cost the client money. Commission rates vary among investments, which gives brokers an incentive to sell the investments that pay the highest commissions. But a general rule is that the riskier an investment, the more commission a broker earns for selling it.
Brokers are human—some are people of high integrity, others less so. But we do have a low opinion of many of today’s investment products and services. The core of the problem is that in many cases the financial industry offers its salespeople incentives to give clients bad advice.
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Stock investment clubs can offer social and educational benefits. They can be a good place to learn about trading stocks if you think that you would feel more comfortable learning about investments with others.
But stock investment clubs can also have hidden risks that can hurt your profits. That’s because an investment club makes decisions by committee. As with all collective initiatives, responsibility for mistakes is diffused. And when committees make mistakes, they sometimes make big ones.
In addition, investment clubs can produce unexpected personality clashes and unfortunate peer pressures. What’s more, decisions formed by group consensus sometimes take on an air of legitimacy and urgency that can ultimately cost members a great deal of money.
We strongly advise that you look for an investment club that follows a reduced-risk, conservative strategy like ours.
In addition, if you do join or form an investment club, make sure that in the initial planning the group carefully creates and follows a partnership agreement and organizational by-laws. The better organized the investment club is, the more advantages you are likely to realize as a member.
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You can put money in RRSP trust tax shelters each year (up to a limit based on your income) and deduct it from your taxable income. You only pay income tax on your contribution, and the income it earns, when you make withdrawals from your RRSP.
The tax treatment of RRSPs is what sets them apart from other investment accounts. Ottawa created RRSP tax shelters to let Canadians invest money on a tax-deferred basis, presumably for retirement.
It’s best to hold speculative and aggressive stocks outside your RRSP trust. Losses are common with speculative investments, and very possible with aggressive stocks. If you hold them outside your RRSP, the losses provide you with tax-deductible capital losses that can reduce your payable capital gains tax. Inside your RRSP, losses simply reduce the capital you have available to take advantage of an RRSP’s tax-deferral power.
A loss in your RRSP also deprives you of the opportunity for tax-free compounding that the money would have enjoyed within your RRSP tax shelters. That’s particularly costly. After as little as seven years in an RRSP, the ability of an RRSP contribution to grow and compound free of tax may be worth as much as your initial contribution itself. That’s why RRSPs are a bad place for aggressive investments of any kind.
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The maturity period of an ultra-short-term bond fund is usually one year or less.
Bond funds are ETFs or mutual funds that invest most of their assets in government or corporate bonds. As a general rule, the safest bonds are issued by or guaranteed by the federal government. After that comes provincial issues or bonds with provincial guarantees.
Corporate bonds are far riskier than government bonds, and the risk on corporate bonds, varies widely. Some corporates are almost as safe as government bonds and offer only slightly higher yields. Some corporates are far riskier and offer far higher yields.
As interest rates fall, the value of bond holdings rise. This adds capital gains to the interest the bond funds produce. The reverse is true as well: bonds drop when interest rates rise—and long-term bonds drop significantly more than short-term bonds.
Ultra-short-term bond funds provide increased protection against interest rate risk than longer-term bonds. Although there’s heightened protection against that interest rate risk, ultra-short-term bonds generally carry more risk than investors realize—short-term bonds can still drop and still have default risk.
Ultra-short-term bond funds invest only in fixed-income instruments. Fixed income instruments can include T-bills, GICs and bonds. We feel that investing in fixed income investments should only make up a very small part of your portfolio.
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An uncovered call is also referred to as a naked call or a short call. Uncovered calls involve more risk than covered calls.
The opposite of an uncovered call is a covered call, where the owner of the stock is the person offering the options contract.
Covered call writing is where you sell a call option against a stock you own. You receive cash for selling the call but are obligated to sell the stock at a fixed price (the “strike price”) if the holder of the call exercises the option.
An option is a contract between a buyer and a seller, based on an underlying security, usually a stock. The buyer pays the seller a fee, or premium, in exchange for certain rights to the stock. In exchange for the premium, the seller assumes certain obligations.
Options trade through stock exchanges, with prices quoted each day in the financial section of newspapers or online. Each contract has a limited lifespan, or time to expiry—usually less than nine months. The expiry date is the date on which the contract expires. The strike, or exercise price, is the price at which the rights granted to the buyer can be exercised.
Commissions are paid each time you buy or sell options.
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Bitcoin was created by Satoshi Nakamoto (possibly a real person, possibly a pseudonym for one or more hackers).
Bitcoin wasn’t the first digital currency, but Nakamoto’s innovation was to use math-heavy coding techniques that allow bitcoins to be exchanged without the need for a central authority or a physical standard, like gold, to deter counterfeiters and regulate the supply.
An example of a bitcoin penny stock is Vogogo Inc. (symbol VGO on Toronto). Vogogo Inc. makes software that lets merchants and financial firms conduct financial transactions in bitcoin or other digital currencies.
Vogogo first sold bitcoin penny stock shares to the public and began trading on Toronto in September 2014 at $0.75. Around that time the stock shot up to more than $4.50 in response to the bitcoin craze underway at that time.
Bitcoin and other cryptocurrencies remain in a regulatory grey area. For example, cryptocurrency transactions are hard to track, making it easier for criminals to launder funds and evade taxes. This likely to attract government attention and is unlikely to be good for business.
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Bond indexing is also known as a bond market index.
Bond indexing is determined through the weighted average prices of selected bonds. This bond market index serves as a way to describe a market as well as compare returns on investments.
The major factor in changing prices in the bond market is changing interest rates, which influence the value of existing bonds inversely. When interest rates fall, bond prices rise, and vice versa.
The best bond funds hold short-term bonds and have low fees. If you want to hold the best bond funds, we advise you focus on holding bonds with short-term maturity dates because bonds with shorter terms face a lower risk from interest-rate increases.
The bond market is highly efficient and few bond fund managers can add enough value to offset their management fees.
Bond indexes vary broadly. Examples of bond indexes include government bonds, high-yield bonds, and corporate bonds.
As a general rule, the safest bonds are issued by or guaranteed by the federal government. Next are provincial issues or bonds with provincial guarantees. Corporate bonds are riskier than government bonds, although the risk on corporate bonds, varies widely.
iShares Canadian Short-Term Bond Index ETF (symbol XSB on Toronto) is an example of an index fund that mirrors the performance of the DEX Short-Term Bond Index.
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The company last raised its quarterly dividend by 10.2% with the March 2016 payment, to $0.325 from $0.295. The shares now yield 3.6%.
Before that, it raised its quarterly dividend by 10.3% with the March 2015 payment, to $0.295 from $0.2675.
Canadian Utilities distributes electricity and natural gas in Alberta and Australia. It also operates 15 power plants, in Canada (13) and Australia (2). ATCO Ltd. Owns 53.1% of the company.
Earnings in the latest quarter rose to $108 million, or $0.34 a share, from $43 million, or $0.12 a year earlier. If you exclude unusual items, earnings gained 29.7%, to $131 million from $101 million. That’s due to new investments in its power plants and pipeline operations, and cost cuts.
Revenue in the quarter declined 3.1%, to $756 million from $780 million, mainly due to lower power prices in Alberta.
The wildfires in Fort McMurray also disrupted operations. However, the company estimates the damages at just $10 million after insurance.
Canadian Utilities generates about 32% of its power from two coal-fired electric generating plants in Alberta. Most of the rest of its power comes from natural gas-fired plants.
Alberta Premier Rachel Notley has mandated that coal power be phased out in the province by 2030. However, coal-power producers, including Canadian Utilities, will get compensation from the Alberta government.
Canadian Utilities is a long-term favourite of ours, mainly due to its stable cash flows and annual dividend increases.
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The bank’s wholly owned subsidiaries include National Leasing Group, Canadian Western Trust Company, Valiant Trust Company, Canadian Direct Insurance and Canadian Western Financial.
In February 2015, Canadian Western announced a new plan to focus on its main banking businesses. As a result, it agreed to sell Canadian Direct Insurance to Intact Financial, symbol IFC on Toronto. The bank also sold its Valiant Trust subsidiary’s stock-transfer and corporate-trust businesses to Australia’s Computershare Ltd. for $33 million.
By January 31, 2015, Canadian Western Bank stock’s earnings rose 6.8%, to $52.4 million, or $0.65 a share. A year earlier, it earned $49.1 million, or $0.61. Revenue improved 6.1%, to $150.9 million from $142.2 million.
In its most recent quarter, the bank made $0.55 a share, down from $0.64 a share. Canadian Western Bank’s 3.1% dividend yield is lower than the yields of Canada’s five big banks.
Canadian Western Bank stock is not one of our recommendations. We prefer the big five Canadian banks -- Bank of Nova Scotia, Bank of Montreal, CIBC, TD Bank and Royal Bank.
Canadian Western Bank stock can be found on Toronto under symbol CWB.
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Capital preservation can be done through smart investments. For instance, bonds provide investors with steady income, and preservation of capital. While there’s not as much room for interest rates to fall, higher rates could lead to major losses on fixed-income investments.
Another example of investments focused on capital preservation involves safety-conscious stocks. Safety-conscious stocks are investments in well-established companies with attractive business prospects—but with a particular emphasis on preservation of capital.
The safest investments come with a high degree of stability and lower risk. Safety-conscious investors utilize these four tips:
There are also a host of key indicators to determine if a security is a safe investment, like management integrity, its growth prospects and its stock price in relation to its sales, earnings, cash flow and so on.
For a true measure of stability, focus on those companies that have maintained or raised their dividends during an economic or stock-market downturn. We think investors will profit most—and with the least risk—by buying shares of well-established, dividend-paying stocks with strong growth prospects.
The preservation of capital is the utmost importance to smart investors.
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Here in Canada, regulators are using CRM2 to nudge the industry toward the fiduciary rule for investing. This obliges brokers to only sell securities to their clients that are in the clients’ best interest. The fiduciary rule is effective April 10, 2017 in the U.S., but only for retirement savings accounts.
CRM2 is an acronym for Client Relationship Model - Phase 2. It came into effect July 15, 2013, and was introduced through a multi-phase period lasting three years. The completion of the new requirements of CRM2 began on July 15, 2016.
Dealers and advisers were the first entities required to meet regulations. These requirements included the disclosure of pre-trade charges, and the reporting of compensation from debt securities transactions.
Requirements on expanded account statements were enacted next. These requirements involved a disclosure of position cost information and market values.
Finally, registered firms were required to provide an annual report with compensation amounts from the adviser. An annual investment report was another requirement.
ETFs got a boost from the last wave of CRM2 changes that came into effect in July 2016. Those rules forced brokers to fully disclose all the fees and trailers attached to mutual funds which drove some investors to switch to ETFs.
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When analyzing a stock, you need to form an idea of how likely is it to survive a business slump and go on to prosper all the more when economic growth resumes. To do that, you need to look at a variety of factors. These include how sensitive it is to the economic cycle, its advantages and disadvantages in relation to competitors and so on. And very importantly—how much debt it has.
Experienced investors start by looking at ratios—including undertaking a debt to equity ratio analysis, or a debt to capital ratio analysis. This ratio comes in several variations, but the basic idea is that you measure a company’s financial leverage by comparing its debt with its shareholders’ equity. In essence, you assume an attractive company can earn a higher return on its total capital than the interest rate it pays on the debt portion of its capital.
In that case, excess profits accrue to shareholders, and that in turn raises shareholders’ equity on the balance sheet. But leverage works both ways. If the total return falls short of interest payments, the difference comes out of shareholders’ equity.
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Dividend harvesting is also known as dividend capture or dividend rotation.
If you are using dividend harvesting and you can sell the stock for as much as you paid for it, then you would capture the dividend at no cost, other than the transaction costs.
To undertake dividend harvesting, you would buy a stock just before the ex-dividend date, so that you would be a shareholder of record on the record date, and would receive the dividend. Because the stock falls by the amount of the dividend on the ex-dividend date, the strategy then calls for you to wait for the stock to move back to the price where you bought it before the ex-dividend date. At this point, you sell the stock for a break-even trade.
In the end, a dividend harvesting strategy may only really have appeal for securities dealers or brokers who are executing huge trades with very low transaction costs. They may also have tax benefits, particularly for corporations. But the average investor has little chance of making a significant profit.
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The EBITDA associated with a company aims to capture the performance of its core operations. The idea is that by ignoring expenses such as taxes, interest, depreciation and amortization, it takes away all the costs not directly related to running the business.
EBITDAs can be helpful when comparing two companies—in a sense, it compares the ability of a company’s managers to make money when debt structure and so on are identical.
EBITDA is often used as a valuation measure in mergers and acquisitions, especially when small businesses or middle market companies are involved. Mergers are when two or more companies combine to form one entity. An acquisition is when a company buys another one.
Of course, though, it’s not possible to isolate out factors like debt. Excess debt and interest costs can be very negative to a company’s earnings and cash flow, and investors need to be aware of that—and factor it into their investment decisions.
Because its limitations, EBITDA is not compatible with the rules of generally accepted accounting principles.
In terms of financial performance, we recommend looking beyond EBITDA for stocks with a long-term record of dividends, a long-term record of profit, an attractive balance sheet, industry prominence or dominance, and the ability to serve all shareholders.
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The concept of economic efficiency is theoretical, as it can be approached but ever actually reached.
Special deals like government-encouraged activities, write-offs or special tax grants reduce economic efficiency. For example, when businesses pursue tax advantages, it disrupts their most efficient business plans. They may quit focusing on what they do best. This diverts them from the path of long-term growth. Meanwhile, a high nominal tax rate discourages the formation of new businesses that don’t benefit from special considerations.
This situation may also encourage U.S. companies to leave foreign profits out of the country, rather than bring them to the U.S. where they will be subject to the higher U.S. tax rate. High U.S. corporate rates also encourage so-called “tax inversions”. This cuts U.S. employment and U.S. tax revenue.
In many developed countries, tax rates have gone too high, and tax rules have become too complicated, for economic efficiency. If countries simplify their tax systems, businesses will be able to focus more on producing goods and services, and pay less attention to avoiding taxes. That would likely bring on a sudden jump in productivity.
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Estate planning is done in large part to minimize a variety of taxes, and is often a part of retirement planning.
When you’re doing this kind of retirement planning, it’s always good to have clear arrangements in place and keep them up to date as your circumstances inevitably change.
It’s important to have a financial contingency plan in place as part of your estate planning. This will let someone you trust take charge of your finances and investments if you can’t handle them yourself. However, it’s best to focus on finding someone you trust thoroughly, and giving that person as much latitude as possible.
As part of your retirement planning, you should periodically check the form that names or changes the beneficiaries of your life-insurance policies. Often, you’ll name a primary beneficiary (generally your spouse), and a secondary beneficiary (often your children) if the primary is incapacitated or dies at the same time as you.
The estate planning function of wealth management generally involves tax planning around an investment portfolio as well as estate planning. Estate planning tips only help if you have assets to leave to your heirs. Of course your initial goal should be saving for retirement.
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Fastenal (symbol FAST on Nasdaq) sells: threaded fasteners; tools and equipment; abrasives and cutting tools; components and accessories for hydraulics, pneumatics, plumbing and HVAC (heating, ventilation and air conditioning); material-handling products; and janitorial, welding, safety and electrical supplies.
The company serves clients in the construction and manufacturing markets. Its construction customers include general, electrical, plumbing, sheet-metal and road contractors. In manufacturing, Fastenal sells its products to original equipment manufacturers and maintenance/repair operations. It also serves farmers, truckers, railroads, mining companies, governments, schools and certain retail trades.
Fastenal also sells its industrial products through vending machines that operate 24 hours a day, 7 days a week.
Revenue rose 39.8%, from $2.8 billion in 2011 to $3.9 billion in 2015. Part of the company’s growth is due to its purchase of related businesses. For example, in 2015 it paid $23.5 million for certain assets of Fasteners Inc. This firm distributes industrial and construction equipment in Washington, Idaho, Oregon and Montana.
Fastenal stock’s earnings jumped 43.4%, from $357.9 million in 2011 to $513.3 million in 2015. Due to fewer shares outstanding, earnings per share gained 46.3%, from $1.21 to $1.77.
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Some mutual funds are “class” funds, which means that they are “tax-advantaged.”
These mutual funds allow fund switching within a family of tax-advantaged funds without realizing capital gains.
However, tax-advantaged funds generally have higher costs and lower returns. One reason for this is that these funds must hold larger cash balances in order to fund more frequent redemptions. In addition, these funds may need to buy and sell more often, to accommodate holders who want a tax-deferred switch. This extra trading increases brokerage commissions and other costs.
We think investors should avoid the appeal of fund switching and stay out of tax-advantaged mutual funds. When choosing mutual funds, the main criteria should be the quality of each fund’s holdings, rather than the ability to switch funds without incurring capital gains. Frequent trading can also cause you to miss out on some of your biggest gains.
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GDP is often referred to as the economic report card of a country. The level of GDP reveals information about the size of an economy, while the change in GDP from one period to another period indicates whether the economy is expanding or contracting.
The monetary value associated with gross domestic product can also be used as a measure of the importance of a country’s stock markets. It’s used to show the cumulative economic performance of a country and is used for global comparisons.
For example, the Market Vectors Africa Index ETF, symbol AFK on New York, aims to match the performance of the Market Vectors GDP Africa Index. This index tracks the performance of the largest and most liquid companies in Africa. A country’s weighting in the index is determined by the size of its gross domestic product.
Gross domestic product was coined as a term in mid to late 1600s when William Petty created the basic concept of GDP for defending landlords from unfair taxation during wartime.
Overall, gross domestic product can be determined in three ways and each method should provide the same result. These approaches are the production approach (including value added or output), the expenditure approach, and the income approach.
In some countries, a significant portion of their gross domestic product is concentrated in one sector—for example, resources in Canada, including mining.
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An official recession requires more than two quarters of negative gross domestic product growth. A growth recession does not require two quarters; it can receive that classification while the economy is still effectively expanding.
More jobs are lost during a growth recession than the number of jobs that are added. This leads to a rise in unemployment.
During growth recessions, economic growth is slow, but not quite low enough to reach the state of a technical recession. If it stays slow however, it could eventually turn into a true recession.
We like high-quality blue chip consumer product companies because they can provide stability during a growth recession or even a real recession. Typically, consumer products companies sell staples, like soap, soup and beverages that consumers must buy no matter what the economy is doing.
Strong consumer product companies survive recessions—and growth recessions—because they have geographic diversity to protect them from regional economic difficulties, a record of rising cash flow and strong balance sheets.
Stocks that pay dividends are another good option for protecting yourself in growth recessions. We believe that a record of increasing dividend payments is a good indication of a strong company, especially in a slow economy.
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This aims to put their fund in a “market-neutral” position. By buying good stocks and shorting bad ones, you have aimed to hedge your stock market exposure. Theoretically, this means you make money regardless of which way the market moves.
Hedge fund management looks like this: If the market goes up, the good stocks should rise more than the weak ones, so the gains on the good stocks should exceed losses on the short sales. If the market falls, the bad stocks should fall more than the good, so gains on the short sales should exceed losses.
But profitable short selling requires superhuman timing, and the inevitable mistakes can be expensive.
Many hedge fund managers make things worse for themselves by trading too heavily, or using borrowed money, or using leverage from options, futures and other derivatives. No one can consistently time the market. When short sellers make timing mistakes, they can lose everything.
Hedge fund enthusiasts overlook one simple fact. Short selling is an extraordinarily hard way to make money. You don’t make it any easier by hedging your shorts with some stock purchases.
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One type of high frequency trading involves looking for small trading opportunities in the market. For example, a regular trader might place a large order for shares that can only be fulfilled by splitting it into smaller orders at multiple exchanges.
Since exchanges are in geographically different locations, those smaller orders will be executed at different times—perhaps even milliseconds apart.
The disparity between when the smaller orders are executed at different exchanges lets high frequency traders detect the shifts in demand for stock. The high frequency trader can then “front run” the trade by snapping up blocks of those shares before they are bought by the regular traders looking to buy at one of the slower exchanges. The high frequency traders then sell their shares to those regular traders, and at a higher price than they paid.
The form of online trading known as high frequency trading accounts for over half of stock trading in the U.S.
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Innergex owns hydroelectric plants, wind farms, and a solar power field. These facilities are located in Quebec, Ontario, B.C. and Idaho. The majority of the company’s power comes from the hydroelectric plants.
Innergex makes sure it has firm long-term power-purchase contracts in place before it starts to build, or buy, new plants.
Innergex’s latest plant is its new 40.6-megawatt Big Silver Creek hydroelectric facility in B.C.
Construction began in June 2014 and was completed in July 2016. That was earlier than expected and was within budget.
All of the electricity produced at Big Silver Creek is covered by a 40-year fixed-price agreement with BC Hydro. Innergex obtained that contract under the province’s 2008 Clean Power Call Request for Proposals. The deal also allows for an annual adjustment to Innergex’s selling price based on a portion of the Consumer Price index.
Innergex stock yields a high 4.6%. Innergex stock trades on Toronto under symbol INE.
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Investment properties can make money for the investor by renting or leasing it to others, or through resale of the property.
Before you commit yourself to buying an investment property, you need to face the risk that you could run into a combination of negative factors. For example, suppose the house is sitting vacant; suppose it’s vacant because your last tenant caused extensive damages, and left you with one or more months of unpaid rent; suppose too that mortgage rates have gone up, and you’ve lost your job. To top it off, perhaps local employment opportunities have shrunk, so potential tenants are leaving town, or offering lower rents than you expected. If you have to renew your mortgage at a time like this, your lender may insist on an extra-high interest rate, because of these risk factors.
Remember, the profit on the sale of an investment property is taxable as a capital gain.
Real estate investment trusts are good alternatives for owning investment property. Real estate investment trusts invest in income-producing real estate, such as office buildings and hotels. That’s a segment of the market that is difficult for most investors to access through direct ownership of property. Real estate investment trusts save you the cost, work and risk of owning investment property yourself.
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Johnson & Johnson stock can be followed on the New York Stock Exchange under the symbol JNJ.
Johnson & Johnson stock is connected to three major businesses that the company operates in: pharmaceutical, medical devices and diagnostics, and consumer.
Pharmaceutical (47% of revenue) makes anti-infective, anti-psychotic, contraceptive, dermatological and gastrointestinal drugs.
Medical devices and diagnostics (35%) sells equipment for joint reconstruction and managing circulatory diseases.
Consumer (18%) makes over-the-counter products such as Johnson’s baby care items, Band-Aid bandages, Tylenol and Motrin painkillers, Listerine mouthwash and Neutrogena skin cream.
In June 2016, Johnson & Johnson agreed to acquire beauty-products firm Vogue International for $3.3 billion; it represented the company’s biggest acquisition in four years. Vogue’s annual revenue—from hair and personal-care brands such as OGX, Proganix and Maui Moisture—is about $300 million.
The company has also acquired NeuWave Medical Inc. and NeoStrata. NeuWave Medical Inc. makes and sells minimally invasive soft-tissue microwave ablation systems. NeoStrata is a maker of skin care products created by dermatologists.
Johnson & Johnson’s balance sheet is strong. That puts it in a strong position to acquire smaller pharmaceutical firms with promising drug therapies or medical-device makers with products that complement its existing lines.
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The buyer has to send a letter to the U.S. securities commission (SEC), promising not to sell the stock right away. The buyers may include corporate insiders such as executives or members of the board of directors, or early “seed investors”.
Buyers may get letter stock after mergers or takeover activity, and agree not to sell for a period of time to avoid hurting the value of the stock on the open market. Sometimes letter stock is issued for junior companies or more speculative stocks.
When buyers want to sell their letter stock, they must meet the conditions set out in the SEC’s Rule 144. This rule allows for the public resale of restricted securities if a number of conditions are met.
There are five conditions that must be met to sell letter stock:
First, the prescribed holding period for the letter stock must be met. Second, there must be adequate current public information available to investors about a company. Third, if a selling party is an insider of a company, he cannot resell more than 1% of the total outstanding shares during any three-month period. Fourth, all of the normal trading conditions that apply to any trade must be met. Finally, the SEC requires a seller to file a proposed sale notice, if the sale value exceeds $50,000 during any three-month period, or if there are more than 5,000 shares proposed for sale.
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Margin investing is a respectable investing strategy, but it carries more than the usual amount of risk.
The main cost involved with buying on margin is the interest on the money you borrow. Plus, when you sell a security that you’ve bought on margin, you must first pay back the loan from your broker.
Interest rates remain low in margin investing. That does add to the appeal of buying stocks on margin.
The main risk of buying stocks on margin is that it increases your leverage. Leverage works two ways: It magnifies your profits when the market moves in your favour, but it magnifies your losses just as surely when the market moves against you. That’s because the amount you owe on your investment loan stays the same, so every dollar lost in your portfolio comes straight out of your equity.
When you buy on margin, you’ll be able to write off your margin interest in full against ordinary income in the current year. However, you’ll pay less than ordinary income tax rates on dividends from Canadian stocks, thanks to the dividend tax credit.
Due to its increased risk, buying stocks on margin is certainly not for everyone. We continue to recommend that if you are going to use margin to invest, it’s all the more important to stick with our three-part investing strategy.
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Market noise, which can also include economic noise and is sometimes simply referred to as “noise”, is often responsible for speculative trading.
You’ll often hear successful investors explain that you need to “tune out the noise” to make profitable investment decisions.
There’s a lot of market noise in the penny stock industry, particularly because of penny stock promoters. Penny stock promoters love to make deals with major, household name companies. The link with a major aims to give them instant credibility, especially with investors who are willing to buy penny stocks.
For example, penny stock promoters find it far, far easier to sell stock to the public if Goldcorp, BHP Billiton or some other major mining company has agreed to partly finance exploration of their mining claims, or if Apple or Intel or some other household-name multinational has agreed to evaluate their revolutionary software or “cloud” application.
However, major company involvement is frequently exaggerated, and can be seen as market noise.
Furthermore, big companies have far more bargaining power than individual investors. A big company doesn’t go into a situation like this the same way you do. It will always reserve the right to drop out and cut its losses, and in most cases, it will exercise that right.
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McDonald’s serves a wide variety of food, but it is best known for its hamburgers and French fries.
McDonald’s stock earnings rose from $4.4 billion in 2009 to $5.5 billion in 2011. They then dropped to $4.7 billion in 2015. McDonald’s is an aggressive buyer of its own shares, so per-share earnings rose from $3.98 in 2009 to $4.97 in 2015. Earnings per share will likely rise to $5.60 in 2016, and $6.10 in 2017.
From 2009 to 2013 McDonald’s stock increased as its revenue by 23.6%, from $22.7 billion to $28.1 billion. This increase was due to business improvements, including new menu items like premium coffee. The company also appealed to cost-conscious consumers through its popular Dollar Menu. However, revenue fell to $25.4 billion in 2015.
Since then the company has aimed to spur sales by eliminating slow-selling menu items and letting diners customize their burgers. As well the company is working out certain workflow problems, because cooking different types of food at the same time could slow down service.
In the U.S. (which supplies 33% of McDonald’s revenue), the company’s operations face challenges, such as higher minimum wages and legally mandated overtime costs. New restrictions on drink sizes and demands that fast-food sellers post calorie counts could also hurt sales.
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An example of monetizing the debt can be seen in U.S. federal budget deficits. The government issues government debt (bonds). Then the U.S. Federal Reserve buys the bonds. That leaves an increased money supply.
Excess debt monetization could eventually bring on some kind of crisis. Nobody knows when the crisis will come, but inflation is one significant possibility.
Still, when Japan’s great post-war boom ended in the early 1990s, it turned to deficit spending to buoy its economy. Japan has had a budget deficit ever since, and has not had a problem with inflation. In fact, it has had periods of mild deflation.
The fact is that monetizing the debt (also known as expansion of the monetary base) only provides the raw material of inflation. This raw material needs a speedup in monetary velocity to translate it into inflation. To spur inflation, the money has to change hands faster.
Monetary velocity stays low for the same reason that consumer confidence, economic growth and bank lending stays low; Consumers are afraid to borrow, despite low interest rates.
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Money management may also be known as financial management, portfolio management, or investment management.
Stock brokers, who may also be known as investment advisors, are one option for providing a resource to manage your investments.
However, finding good stock brokers has always been difficult. As any good stock broker or experienced investor can tell you, bad brokers are all too common. By “bad brokers,” we mean those who put their own interests above their clients’.
Many bad brokers use model portfolios to build their money management business. These models have some of the most misleading ads.
For instance, an ad claims that its model portfolio turned $100,000 into more than $1.7 million in ten years. It says the model outperformed the S&P/TSX 60 market index in every one of those 10 years. It says the model returned 124.6% one year, compared to a 22.9% return for the market. In another year, it claims the model returned 90.0%, compared to 27.9% for the market.
However, as the ad explains in the fine print, these calculations don’t reflect trading that actually happened. Nobody turned $100,000 into $1.7 million. Instead, the fine print explains that the results show “hypothetical or simulated performance” and are “not meant to represent actual performance results.”
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ETFs are highly efficient mutual funds with low fees because investors don’t pay for active management. Traditional ETFs passively follow the lead of whoever sponsors the index.
Sponsors of passive stock indexes do from time to time change the stocks that make up the index, and they do tinker with the rules for calculating the index. However, these changes are kept to a minimum. ETFs then adjust their portfolio holdings to reflect these changes, without considering any impact the changes may have on the performance of the ETF portfolio.
This traditional, passive style also keeps turnover very low, and that in turn keeps trading costs for your ETF investments down. We think you should stick with “traditional” ETFs.
Passive fund management stands in contrast to the “active” management that conventional mutual funds provide at much higher cost. Active management is when a fund manager picks stocks on an ongoing basis, rather than aiming to match benchmark indexes. To do this, they use research, forecasts, experience and judgments to make investing decisions aimed at outperforming the investment benchmarks.
Passive fund management is also known as indexing.
There is more work associated with active management than there is with passive management.
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You can enhance the long-term portfolio expected returns of your portfolio through the following tips:
Compound interest can have an enormous ballooning effect on the value of an investment and your portfolio expected return over the long term.
No investor and no investment can earn an outsized return indefinitely. Regression to the mean is inevitable. Pay attention to your portfolio and don’t be afraid to get out of a failing stock.
Insider actions dictate integrity. No investment can ever be so undervalued or desirable that it overcomes a lack of integrity on the part of company insiders.
Investment long shots will always cost you money. If you have nothing but long shots in your portfolio, you are likely to make meager returns or lose money over long periods, rather than making the high returns you seek.
Financial incentives have an enormous impact on the beliefs of otherwise honest people, particularly when it comes to what they are willing to say in order to spur you to buy something. Financial incentives can influence people negatively.
Some markets are inherently unpredictable, like the markets for fungible goods such as oil, interest rates and gold.
In any reasonably healthy economy, equities will always give you a higher return than bonds.
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For example, we’ve long advised investors to invest 20% to 25% or more of their portfolios in U.S. stocks. If you followed that advice, U.S. stocks could now make up 40% to 50% or even more of your portfolio, depending on which stocks (Canadian and U.S.) you bought, and when you bought them. This may spur you to re-balance your portfolio by selling some of your U.S. stocks, and investing what’s left of the proceeds (after taxes if any, plus brokerage commissions) in Canadian stocks.
We have always advised against practicing a top-down sector rotation style as a method of portfolio rebalancing; under-weighting or over-weighting sectors of the stock market depending on a forecast of the stage of the economic cycle or other factors.
For instance, if the finance sector was hot and receiving lots of investor attention, investors using a sector rotation strategy might rebalance their portfolios to overweight that sector and hold more finance stocks.
However, few sector rotators succeed over long periods, because they need to guess right twice. They have to pick the top sectors, and they need to pick the stocks to rise within those economic sectors. Consistently succeeding at both is extremely difficult.
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Royal Dutch Shell Corporation also has interests in chemical companies and other energy-related businesses. Shell has interests in deepwater oil and gas production in the Gulf of Mexico, but that’s just part of its wide range of worldwide production operations. The company produces oil and gas in countries as diverse as Iraq, Nigeria and China.
The company was created through a merger of U.K.-based Shell Transport & Trading and Royal Dutch Petroleum. It is now headquartered in the Netherlands.
Royal Dutch Shell Corporation has an integrated approach to its business—its operations range from the exploration and development of new oil and gas reserves, as well as production and refining, petrochemical creation, distribution and marketing, power generation, and energy trading. Some of its power generation involves alternative energies like wind and biofuel.
Shell has four main business groupings: Upstream International, Upstream Americas, Downstream, and Projects and technology.
Royal Dutch Shell is listed on the London Stock Exchange but also has secondary listings on Euronext Amsterdam and the New York Stock Exchange.
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When you take money out of your RRIF, you have to pay tax on your withdrawal at the same rate as ordinary income in the year you make the withdrawal. However, under an RRIF meltdown strategy, you would offset the additional tax by taking out an investment loan and making the interest payments from funds you withdraw from your RRIF (the withdrawals must be equal to the interest payment).
Since the interest on the loan is tax deductible, the tax on the RRIF withdrawal is cancelled out. This, in theory, results in zero tax owing on your withdrawal.
You can then use the investment loan to buy dividend-paying stocks, which you would use to provide income during retirement. Dividend-paying stocks also have the advantage of being very tax efficient.
However, the fees and commissions that the investor generates when he or she invests the money are an obvious benefit to the investor’s broker. The investor, meanwhile, significantly increases his or her leverage. Moreover, many investors attempt the RRIF meltdown strategy when they’re at or near retirement. In other words, at the worst time to take on additional debt.
Of course, borrowing to invest can go wrong if you buy at the top of the market and sell at a low. However, taking out an investment loan can be a good investment strategy for certain investors.
For example, you may consider borrowing to invest if you are in the top income tax bracket and expect to stay there for a number of years, you have 10 or more years until retirement, and you have the kind of temperament to sit through the inevitable market setbacks without losing confidence at a market bottom and selling out to repay your loan.
Either way, we see no benefit in complicating matters by tying your investment loans to RRSP withdrawals.
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In September 2007, General Minerals Corp. (a gold exploration company) hired Sprott Consulting, a wholly-owned subsidiary of Sprott Asset Management (symbol SII on Toronto), to make all future investments on General’s behalf. General Minerals then changed its name to Sprott Resource Corp. and began selling shares to the public at $1.50 each in September 2007.
Soon after, Sprott Resource started financing joint ventures in the resource sector, investing in natural-resource companies and directly buying commodities, like gold and silver bullion.
Investments held by Sprott Resource now include 49.98% of privately held One Earth Farms Corp., which is focused on natural and organic meats and other value-added branded products. One Earth Farms's food products are currently sold under the Beretta Farms, Beretta Kitchen, Heritage Angus, Black Apron, Diamond Willow Organics, Chinook Organics and Sweetpea Baby Food brands in five Canadian provinces along with select EU markets, China and the Middle East.
Sprott Resource Corporation stock trades under the symbol SCP on Toronto.
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The company supplies clients with a square-shaped card reader that plugs into their smartphones or tablets. To make a sale, they swipe the customer’s credit or debit card through the reader. The device then wirelessly transmits the information to a payment terminal. Square also provides the software that handles all aspects of the transaction, in addition to marketing help through spending patterns, analysis, and sales data.
Square offers other services: Square Capital, which provides cash advances to pre-qualified merchants; Square Customer Engagement, a marketing service product; and Caviar, a food delivery service.
Class A Square Inc. stock (one vote per share) was first sold to the public on November 19, 2015, at $9.00 a share. Through class B Square Inc. stock, insiders get 10 votes per share.
Square’s revenue jumped 522.8%, from $203.4 million in 2012 to $1.3 billion in 2015. Due to heavy investment in its operations, losses worsened from $0.71 a share (or a total of $85.2 million) in 2012 to $1.24 per share of Square Inc. stock (or $212.0 million) in 2015.
In the latest quarter, the company’s revenue rose 32.2%, to $439.0 million from $332.2 million a year earlier. Payment volume jumped 39%, to $13.2 billion.
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The reduction of tax liability is a main reason that tax selling is employed as an investing strategy. Tax selling is used by many during the year-end tax planning and results in a lot of sell-offs in December.
With stocks, you only incur a capital gains tax liability when you sell or “realize” the increase in the value of the stock over and above what you paid for it. (Although mutual funds generally pass on their realized capital gains each year.)
Tax selling is similar to tax-loss selling, or tax-loss harvesting, which occurs when you sell a security at a loss in order to use that loss to offset capital gains in Canada. By using these losses to offset your taxable capital gain, you can save on income tax.
If you are considering making use of a tax-loss sale to minimize capital gains in Canada, you should also be aware of the “superficial loss rule.” This rule states that if an investor, their spouse or a company they control, buys back a stock or mutual fund within 30 days of selling it, they are not permitted to claim the capital loss for tax purposes. Failing to obey the 30-day rule will result in the capital loss being disallowed.
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Over-the-counter trading is a term used to refer to the buying and selling of stocks via a dealer network instead of one the major exchanges such as the TSX, NYSE or Nasdaq.
Most companies that trade via these dealer networks are small, have a bad credit history or do not meet other listing requirement the major exchanges have. Most stocks that trade over-the-counter are considered penny stocks.
In the end, most over-the counter trading is for investors who are not afraid of losing the money they invest. We think you should avoid stocks that trade over-the-counter where such things as regulatory reporting are lax. You can be wrong on any of your stock picks, of course. But when you’re wrong on a over-the-counter trade, your losses are likely to be bigger than they would be with a well-established company.
The Canadian Dealer Network has been a subsidiary of the Toronto Stock Exchange since 1991. The Canadian Dealer Network is the formally organized and recognized OTC system in Canada, and it is known under the acronym CDN.
Prior to being called the Canadian Dealing Network, the system was known as the Canadian Over-the-Counter Automated Trading System (COATS).
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In general, it tracks stocks in developing countries with a great deal of foreign direct investment.
The Emerging Markets Free Index includes stock indexes from nearly two dozen emerging economies, including Brazil, China, Egypt, India, Korea, Malaysia, Mexico, Philippines, Poland, Russia, Thailand, and the United Arab Emirates, among others.
Emerging markets are countries or geographic regions with economies that are for the most part are growing rapidly—but they are also riskier.
This index is published by Morgan Stanley Capital International (MSCI). The index is a market capitalization weighted index. The market cap of a stock is the total number of shares outstanding multiplied by the current price per share.
Buying stocks of companies based in emerging markets is riskier because many are still in the early stages of establishing the rule of law in which property rights are respected. Corporate governance is often in its infancy and control of corruption can be sporadic. The legal and political climate can change quickly in countries that do not have a tradition of the rule of law. When changes occur, you can bet that foreign investors will suffer more than well-connected locals.
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This fragmented-portfolio situation is more common than you’d guess. Many investors deal with it by adding up the total value of their accounts from time to time, to calculate their net worth. Most also look for performance discrepancies among accounts. But all too many take little more than an occasional glance at the relative weight of the various securities they own. They have little if any idea of how much impact each holding has on the portfolio as a whole.
If you want to avoid fragmented-portfolio syndrome, you should start by listing all your holdings on a single file, and converting their value to Canadian funds. Then you’d separate them by kind, grouping your stocks (plus equity-type holdings) in one section, and your bonds and other fixed-return investments in the other.
Next, you’d determine the economic sector of each of your stock holdings, and add up the value of each of your stocks, and the total value of all your stocks.
Once you’ve taken these steps to prevent fragmented-portfolio syndrome, you should then go on to check your individual stock selections against our TSINetwork Ratings system. You want to make sure that your stocks are made up predominantly of “Average” or higher-quality stocks that we currently recommend as buys.
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The International Monetary Fund, also known an IMF or simply the Fund, was created in July 1944 during a UN conference in Bretton Woods, New Hampshire.
The goals of the IMF include facilitation of international trade, the reduction of global poverty, the development of a multilateral system of payments for transactions, and to create high employment and sustainable economic growth.
Fixed exchange rates were created by the IMF. This system is also known as the Bretton Woods system. These were used to strengthen the global economy after the Great Depression and World War II. Fixed exchange rates were done away with after in 1971, and the use of floating exchange rates was implemented.
The IMF was created at the same time as the World Bank. Both entities have similar interests and focuses, but they are separate. The World Bank focuses on long-term economic strategies while the IMF is more concerned with short-term loans.
In 2012 the International Monetary Fund was updated to include macroeconomics and financial sector issues on a global scale.
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The secular stagnation hypothesis refers specifically to non-cyclical situations, where a return to growth will not necessarily follow on its own accord.
We’d say that the secular stagnation hypothesis is a political opinion. Since the end of the recession, the U.S. government has been raising taxes, expanding regulatory activity, and changing laws by presidential edict. This makes business planning much less reliable. Understandably, businesses react by holding off on investment and expansion. They hesitate to make major investments when the rules of the game can change against them at any time. Even if interest rates stay low, you still have to re-pay the principal.
If the U.S. government decides to cut and/or simplify taxes, and let up on regulatory activity and executive edicts, businesses would feel more confident about the future. They’ll respond with more aggressive expansion. This would tend to create jobs, push up wages, raise stock prices—in other words, provide all the usual benefits of an economic expansion.
In a roundabout way, however, belief in secular stagnation is a good thing. It helps investors maintain a healthy sense of skepticism.
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The Tokyo Stock Exchange is also known as Tōshō, or abbreviated as TSE. It was created on May 15, 1878 as the Tokyo Kabushiki Torihikijo. June 1, 1878 marked the first day of trading on the exchange.
The market merged with ten other major Japanese exchanges in 1943, but was shuttered and reorganized after the Nagasaki bombing that same year.
The Tokyo Stock Exchange reopened from closure after the bombing of Nagasaki on May 16, 1949.
In 1990, the TSE was responsible for over 60% of stock market capitalization globally. Since then the TSE has been one of the largest exchanges in the world.
In July 2012 the Tokyo Stock Exchange merged with Osaka Securities Exchange, resulting in the Japan Exchange Group (JPX), which launched on January 1, 2013.
The Japan Equity Fund, New York symbol JEQ, is an example of a closed-end fund that invests mostly in large capitalization stocks on the Tokyo Stock Exchange. The fund’s top holdings include: Toyota Motor, Mitsubishi UFJ Financial Group, Honda Motor, Sony Corp., Sumitomo Corp. and Panasonic Corp.
The Tokyo Stock Exchange remains one of the most actively-trading stock markets in the world.
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An option is a contract between a buyer and a seller that is based on an underlying security, usually a stock. In exchange for the premium, the seller assumes certain obligations.
Each options investing contract has an expiration date, which gives it a limited life span (usually less than nine months). The strike price (or exercise price), is the price at which buyers can exercise their rights under the contract. There are two ways to participate in trading options: call options and put options.
Call options give the holder or buyer the right to buy the underlying security at a specified strike price until the expiration date. The seller of the call has the obligation to sell or deliver the underlying security at the strike price until the expiry date.
Put options grant the holder or buyer the right to sell the underlying security at the strike price until the expiry date. The seller or writer of the put has the obligation to buy or take delivery of the underlying security until expiration, if the option holder exercises the option.
Trading options is a major profit source for many brokers, since you pay commissions each time you buy or sell stock options. That’s one of the main reasons that most options traders wind up losing money.
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Common forms of unsecured debt include credit card debt, medical debt, utility bill debt, or debt on personal loans. There assets do not have collateral requirements and hence they are unsecured debts.
Unsecured debt is typically less stressful than secured debt because people with unsecured debt do not stand to lose any assets if the debt is not repaid. There are no claims on property that can be made by lenders if payments of an unsecured debt fall behind. However, there is a high degree of risk for the lenders of unsecured debts because the lender would need to sue the borrower in court if they are unable to collect the full amount owed.
Unsecured debts are favourable for borrowers in the fact that they allow for debt reduction options to be considered with more ease. However, unsecured debt does still hold a lot of risk. If a person fails to pay unsecured debts appropriately, the person’s credit rating score can be drastically damaged. It’s very hard to obtain credit for larger amounts of money if a credit rating is damaged.
There are benefits for people who are able to pay off unsecured debt on schedule. Some of these benefits may include lower interest rates and bigger lines of credit.
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Walmart stores opened in 1962 and since then, has experienced significant growth, with over 11,500 stores worldwide.
In 1991, the company opened its first store outside of the U.S. through a joint venture with a Mexican retailer.
Walmart stock earnings in 2014 slipped to $16.7 billion in 2014, as it spent more on store upgrades. But earnings per share rose to $5.11 due to fewer shares outstanding.
In fiscal 2015, higher healthcare costs cut Walmart’s earnings to $16.2 billion, or $4.99 a share. If you exclude unusual items, such as costs to close some stores in Japan, it earned $5.07 a share.
In August 2016, Walmart agreed to acquire online e-commerce website Jet.com. This business, which began operating in July 2015, sells a variety of products from over 2,400 retailers.
This is part of Walmart’s growing e-commerce strategy. Another part of Walmart’s e-commerce strategy involves China. The company has formed an alliance with Chinese online retailer JD.com. Under the terms of the deal, JD.com acquired Yihaodian—Walmart’s shopping website in China. In exchange, Walmart received a 5% stake in JD.com. It later increased this stake to 10.8%.
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This exchange deals in agricultural commodities such as barley, milling wheat, durum wheat, and canola. The Winnipeg Commodity Exchange, or ICE Futures Canada, deals in futures and options and is now a subsidiary of Intercontinental Exchange (ICE) Futures Canada.
WCE began in 1887 in Manitoba as the Winnipeg Grain & Produce Exchange.
The Winnipeg Commodity Exchange became the first commodity futures exchange to trade completely electronically in North America in 2004.
Commodities futures are legal contracts to buy commodities at a specific price at a specific date in the future. Futures differ from options because they are a binding commitment to purchase rather than the opportunity to do so. When you trade futures, you are betting on the direction and speed of coming price changes. However, no speculators consistently win these bets. Sometimes you guess right and sometimes you guess wrong, but you pay commissions and fees with every trade.
The ICE platform is where the former Winnipeg Commodity Exchange now trades its quotes. The products that trade on ICE are considered commodities. A commodity investment is a basic good or raw material, ranging from copper, tin, and oil, to agricultural products like corn, coffee, cocoa, and sugar. We believe the best way to invest in, and profit from, commodities is by purchasing commodity stocks.
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Wind farm stocks are companies that build and operate wind turbines, and then sell the electricity from them into the power grid. Wind farm stocks can be poor investments because generating power from wind faces a number of key obstacles. For example, wind farms are most often located in remote areas. That's in part because if wind turbines are located in populated areas, noise from turning blades can spark public opposition that makes it difficult to win regulatory approval. The obvious solution is to locate the turbines in remote locations with steady winds. But that requires a bigger investment in long-distance transmission lines. A lack of transmission capacity has been one of many major problems with wind energy and wind projects. Additionally, although the space between the wind turbines can be used for agriculture, a wind farm dominates the visual landscape and is often considered unacceptable in tourist areas or nature preserves. Wind farm stocks rely on government subsidies-otherwise they would not be commercially viable. However, many governments around the world are cutting subsidies for alternative energy investments as they look for ways to deal with their ballooning budget deficits. Whether you decide to buy wind power stocks or not, you should build your portfolio by following TSI Network and using our three-part Successful Investor strategy: 1. Invest mainly in well-established companies; 2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities); 3. Downplay or avoid stocks in the broker/media limelight. Discover how the secrets of successful investors can help you to a more profitable investment future in this special report, The 10 Best Practices of Successful Investors.
Historically, windmills are most associated with Holland, where they have been used extensively for centuries. Today, wind power plants use large blades to catch the wind, turning rotors in turbines that produce electricity. Just as oil, coal or natural gas-fueled plants use steam or combustion gases to turn electricity-producing rotors, wind plants use wind turbines, often assembled on a large single wind site called a wind farm. Most of the installed wind generating capacity today is in Germany, Spain and Denmark, although it is making inroads in North America, especially in Texas. Despite its perception as a clean and renewable source of power, wind power does draw objections from environmental groups. As well, it has encountered a number of technical problems. Until wind power is as cheap and problem-free as conventional power, the possibility of losing its heavy government subsidies remains a big risk factor. At TSI Network we a recommend our three-part Successful Investor strategy:
Discover how to make the most of your commodity investing in this free special report, Commodity Investments: Fertilizer Stocks and Potash Stocks That Will Profit from Rising Food Demand, from TSI Network.
Wind power stocks are the stocks of companies that operate (or build and make parts for) wind farms. Those projects aim to offer a source of clean, endlessly renewable energy that could conceivably replace fossil fuels such as oil, coal and natural gas.
Wind power technology has been used for centuries around the world in the form of windmills for pumping water and milling grain. Historically, windmills are most associated with the Netherlands (Holland) where they have been used extensively for centuries. Today, wind power plants use large blades to catch the wind, turning rotors in turbines that produce electricity.
Just as oil, coal or natural gas-fueled plants use steam or combustion gases to turn electricity-producing rotors, wind plants use wind turbines, often assembled on a large scale, on a site called a wind farm.
Most of the installed wind generating capacity today is in Germany, Spain and Denmark, although it is making inroads in North America, especially in Texas. However, like other alternative-energy firms, wind power stocks face significant costs and risks. These include a reliance on government subsidies.
Wind power shares may be suitable for your portfolio, but the technology behind them isn’t efficient enough to yet phase out fossil fuels. To invest more wisely, buy wind-power stocks that also have a sound base of traditional power generation. And for the best overall portfolio returns, follow TSI Network’s three-part Successful Investor strategy:
Discover how to profit from coming changes in the natural resource industry in this free special report, Canadian Natural Resources Stock Guide: What to look for in Canadian Energy Stocks, from TSI Network.
New York symbol WIN, provides local and long distance telephone service to customers in 16 states. Most of its customers are in rural areas.
There is of course no one "world stock market", but rather a great many stock exchanges in countries around the world. However, investing in international markets can be complicated and risky. A simpler strategy is to invest the bulk of your portfolio in U.S. and Canadian companies that have operations in many countries. This lets you profit from positive changes in the global economy.
Another way to invest around the world is with ETFs that hold international stocks. You can also invest in foreign stocks that trade on U.S. stock markets as American depositary receipts (ADRs). From the investor's point of view, when you buy and sell ADRs you are trading in the U.S. market. This makes it easier to invest in foreign companies without worrying about currency exchange rates, foreign stock exchange rules, and foreign languages.
Price information is more readily available and transaction costs are lower. Trades will clear and settle in U.S. dollars. As well, the depositary bank or broker will convert any dividends or other cash payments into U.S. dollars before sending them to you.
ABB LTD. ADRs, New York symbol ABB, is an example of one of the world stock market investments we analyze in our Wall Street Stock Forecaster newsletter. It manufactures transformers, transmission switches and other equipment for distributing electricity. It also makes automation systems and robotics that increase the productivity of manufacturing plants. Switzerland-based ABB has clients in a variety of industries.
Whether you are investing on the world stock market-or in U.S. and Canadian stock-we recommend using our three-part Successful Investor approach:
Discover how most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
What is a wrap account? A wrap account is an investment account in which the investor receives brokerage and possibly other investment services for a single, predetermined price-usually a percentage of assets ranging from 1% to 3%. For the one fee, wrap accounts may provide investment counseling, portfolio management, brokerage commissions, and administration. In general, we feel it's unwise to give a broker trading authority over your account, directly or indirectly. The conflict of interest is simply too great. It gives brokers an incentive to make transactions that favour their interests more than yours. This risk also applies to non-broker managers who manage funds in broker-affiliated wrap account. These managers have an incentive to please the broker who hired them, rather than the client who provides the funds. To do that, managers may invest in ways that favor the brokers' interests over the clients', such as trading more actively than necessary, or buying stocks that brokers want to get rid of, perhaps to accommodate the broker's major clients. Many individual brokers rise above the industry's conflicts of interest and always put their clients first, even when this puts them at odds with their employers. However, brokers like these are in the minority. They are also at a disadvantage when it comes to rising to positions of authority in a brokerage firm. You won't find many of them running their firm's wrap account program. At TSI Network, we recommend using our three-part Successful Investor philosophy:
Discover how to make the most of your stock investments in this free special report, Stock Market Investing Strategy: Pat McKeough's Conservative Investing Guide for Making Money & Cutting Risk, from TSI Network.
What Does it Mean to Write Down in Investing?
What does write down mean? To write down an asset is to reduce its value. For example, the economic recession a few years ago led to many banks writing down the value of their loans. This led to a fall in the prices of many bank stocks, at least temporarily. Write downs can also happen with intangible items like goodwill. Goodwill is an accounting entry that reflects the price that the company paid for its acquisitions, minus the value of assets, like buildings and equipment, as well as trademarks, that it received as part of the acquisition. The resulting value is the company's "value as a going concern, or goodwill. Goodwill acquired in an unwise acquisition can lose value overnight. When that happens, the company has to write it off against earnings. At worst, the company might have to write off most, if not all, of its goodwill. If that writeoff wipes out most of the company's shareholders' equity, and/or most of a year's earnings, it can devastate its share price. Write downs occur frequently in business mergers and acquisitions. That's why we keep a keen eye out for any potential write downs and stay out of stocks with a high risk of writing down their assets. At TSI Network we also recommend using our three-part Successful Investor strategy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
New York symbol WYN, is one of the world's largest hospitality companies. It owns 6,560 franchised hotels plus various other vacation resorts, rental properties, luxury clubs and timeshares.
New York symbol XRX, makes copiers, printers, scanners and fax machines. The company also supplies consulting and maintenance services.
Toronto symbol YRI, owns and operates seven operating mines in five countries in North and South America, along with interests in two others plus five development stage properties. It also holds extensive exploration properties.
New York symbol YUM, operates 35,000 restaurants in over 100 countries. It has five main banners: KFC (fried chicken), Pizza Hut, Taco Bell (Mexican food), A&W (hamburgers) and Long John Silver (seafood).
Toronto symbol ZAR.UN, has oil and gas production assets in Alberta, Manitoba, Saskatchewan and North Dakota.
Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' FREE Special Report from The Successful Investor.
How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.
The Successful Investor Inc. and its affiliate Successful Investor Wealth Management (referred to hereafter as TSI Network) know that you care how information about you is used and shared, and we appreciate your trust that we will do so carefully and sensibly. This notice describes our privacy policy. By visiting websites owned by or associated with TSI Network, you are accepting the practices described in this Privacy Policy.
This privacy policy is applicable to all TSI Network Visitors, Clients, Employees, Suppliers, Web sites, Management, and all other interested parties. Any links to or from our site are not covered by this policy. We encourage you to read the privacy policies of every site that you visit.
The privacy of the site/store visitor is very important to TSI Network, and is respected at all times. The information we receive from customers helps us to personalize and continually improve your online experience at TSI Network.
We do not collect or disclose personal information, except when it is provided to us voluntarily by the site/store visitor with their consent.
We store subscriber and password files containing personal information securely. These files are stored in secure areas that are not accessible to the general public. We are always working to ensure the security of your personal information.
We are continuously in the process of improving our sites and services. If any new features or policies require a change to this current policy, we will post a clear notice of this change on pages of our site where the privacy policy appears. The principle behind this privacy policy is to collect information with your knowledge and consent.
What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
Information You Give Us: We receive and store any information you enter on our website or give us in any other way through sign-up forms or ordering forms for publications and services. You can choose not to provide certain information, but then you might not be able to take advantage of many of our services and features. We use the information that you provide for such purposes as responding to your requests, customizing your web browsing experience for you, improving our website, and communicating with you.
Automatic Information: We receive and store certain types of information whenever you interact with us. For example, like many websites, we use "cookies," and we obtain certain types of information when your web browser accesses TSI Network.
Information from Other Sources: For reasons such as improving personalization of our service (for example, providing better product recommendations or special offers that we think will interest you), we might receive information about you from other sources and add it to our account information. We also sometimes receive updated delivery and address information from our shippers or other sources so that we can correct our records and deliver your next purchase or communication more easily.
We do reserve the right, however, to collect and perform statistical analyses of the internet traffic to our website for our internal use. However, information collected does not allow us to identify any individual, and will not collect any personal information of the visitor. Furthermore, we do not sell, rent or loan to any outside parties the information collected and analyzed.
Although you may be able to access some of our websites without being required to register or provide personal information, certain websites and sections of our websites may require registration. In addition, if you choose to contact us to ask a question, we will collect your personal information so that we can respond to your question.
To make the visitor’s experience on our website easier, we may use per-session “cookies” (session identifiers) to track the state of the visitor session. This “cookie” is destroyed when your session with our website is over.
Cookies are alphanumeric identifiers that we transfer to your computer's hard drive through your web browser to enable our systems to recognize your browser and to provide features like "Remember Me" for our paying subscribers. Cookies are also used during the ordering process to help ensure your order is handled correctly. We do not extract any information about individual users or their computers as a part of this process.
The "Help" portion of the toolbar on most browsers will tell you how to prevent your browser from accepting new cookies, how to have the browser notify you when you receive a new cookie, or how to disable cookies altogether. However, cookies allow you to take full advantage of some of TSI Network's most useful features, and may be required to access certain areas of our website.
Internet Protocol (or IP) addresses are collected for all visitors to this site. This information is used for the purposes of traffic analysis.
Does TSI Network Use the Information It Receives?
"Contact Us" and Comment Features: TSI Network encourages visitors to its websites to contact us with questions and comments. Email addresses and other information of persons using these features may be collected in order to facilitate our responses to those inquiries.
Purchases of Merchandise: TSI Network websites may offer individuals the opportunity to purchase branded or other merchandise online. In connection with those purchases, customers may be asked to submit personal information, such as shipping addresses and credit card information, which is required to complete the transaction. TSI Network may also offer a Membership program, through which purchasers of its products may receive discounts on their online purchases. Membership registration may involve the submission of personal information to TSI Network and assignment of a user ID and password.
Agents: We employ other companies and individuals to perform functions on our behalf. Examples include fulfilling orders, delivering packages, sending postal mail and email, removing repetitive information from customer lists, analyzing data, providing marketing assistance, processing credit card payments and providing customer service. They have access to personal information needed to perform their functions, but may not use it for other purposes.
Promotional Offers: We may make our postal mailing list available to organizations offering products or services that might interest you. If you prefer NOT to receive these offers, please send an email with your name and address to service@tsinetwork.ca with "Do Not Rent Name" in the subject line. We do NOT make our email list available outside our organization.
Protection of TSI Network and Others: We release account and other personal information when we believe release is appropriate to comply with law; enforce the terms of the Legal notices that accompany this policy; or protect the rights, property or safety of TSI Network, our users or others. This includes exchanging information with other companies and organizations for fraud protection and credit risk reduction.
In addition to these limited disclosures of personal information, TSI Network may provide its affiliates or unaffiliated third parties with aggregate information about visitors to our sites. For example, we might disclose the median ages of visitors to our websites, or the numbers of visitors to our websites that come from different geographic areas. Such aggregate information will not include information of any individual visitors to our websites.
TSI Network may provide personal and other information to a purchaser or successor entity in connection with the sale of TSI Network, a subsidiary or line of business associated with TSI Network, or substantially all of the assets of TSI Network or one of its subsidiaries, affiliates or lines of business.
With Your Consent: Other than as set out above, you will receive notice when information about you might go to third parties, and you will have an opportunity to choose not to share the information.
Except as provided herein, TSI Network will not sell or rent personal information about you to unaffiliated third parties.
We may disclose personal information you have provided through our websites, for the above purposes, to persons or companies that we retain to carry out and other activities for which you have registered or in which you have otherwise asked to participate. In particular, we may for these purposes transfer information to any country (including the USA and other countries which may not offer the same level of data protection as Canada). We also will disclose personal information if required by law, including compliance with warrants, subpoenas or other legal processes.
TSI Network requires persons and companies to which it discloses personal information to restrict their use of such information to the purposes for which it has been provided by TSI Network, to adequately protect the information, and not to disclose that information to others. TSI Network cannot be responsible, however, for any damages caused by the failure of unaffiliated third parties to honour their privacy obligations to TSI Network. Similarly, TSI Network is not responsible for the privacy policies and practices of other websites that are linked to our websites.
COMMENTS: TERMS OF USE
We’re always happy to receive feedback, comments and ideas from TSI Network visitors, and we encourage you to add your perspective to any issue by leaving your comments on the site.
To make sure users get the most out of the site’s comments function, we’ve provided a few guidelines:
Please note that we reserve the right to delete or edit all comments. As well, we may close posts to further comments at our discretion. If a user repeatedly abuses our comment policy, we may also revoke that user’s access to our comments section.
By commenting on TSI Network, you agree that you retain all ownership rights in what you post on the site, and that you will relieve us from any and all liability that may result from those postings.
Special Note for Parents
TSI Network does not sell products for purchase by children. If you are under 18, you may use TSI Network's site only with involvement of a parent or guardian
How do we protect your personal information?
TSI Network does everything possible to prevent unauthorized intrusion to its websites and the alteration, acquisition or misuse of personal information by unauthorized persons. Notably passwords submitted by users of our websites are encrypted using encryption mechanisms. However, TSI Network cautions visitors to its websites that no network, including the Internet, is entirely secure. Accordingly, we cannot be responsible for loss, corruption or unauthorized acquisition of personal information provided to our websites, or for any damages resulting from such loss, corruption or unauthorized acquisition.
How do we maintain the integrity of your personal information?
TSI Network has procedures in place to keep your personal information accurate, complete and current for the purposes for which it is collected and used. You may review the information that you have provided to us and where appropriate you may request that it be corrected. If you wish to review your personal information please send a request to: service@tsinetwork.ca.
How do I withdraw my consent to use Personal Information? Access, Correction, Inquiries and Complaints
If you wish to request access to, or correction of, your personal information in our custody or control, or find out how we've used or disclosed that information, please make your request in writing to us. We may need to verify your identity before searching for or providing you with personal information. In some circumstances, we may not be able to provide access to your personal information, for example if it contains the personal information of other persons, if it constitutes confidential commercial information, or if it is protected by solicitor-client privilege. If we deny your request for access to, or refuse a request to correct, your personal information, we will advise you of the reasons for this refusal.
If you do not want to receive promotional offers, please notify TSI Network by sending an email to service@tsinetwork.ca.
How can you ask questions about our Privacy Policy and access your personal information?
The provision of information by you is entirely voluntary and you have the right not to provide information. Subject to applicable law, you may have the right to receive certain information as to whether or not personal information relating to you is held by TSI Network and to obtain a copy of such information that is sought. You may also have the right to require information, where appropriate, to be erased, blocked or made anonymous or to have data updated or corrected. If you do not wish TSI Network to hold information about you or if you wish to have access to information, modify information, or object to any processing of information or if you have questions please contact us.
What Choices Do I Have?
Changes to this Policy
This Policy is the sole authorized statement of TSI Network's practices with respect to the collection of personal information through TSI Network's websites and the subsequent use and disclosure of such information. Any summaries of this Policy generated by third party software or otherwise (for example, in connection with the "Platform for Privacy Preferences" or "P3P") shall have no legal effect, are in no way binding upon TSI Network, shall not be relied upon in substitute for this Policy, and neither supersede nor modify this Policy.
TSI Network may revise this Policy from time to time.
Legal Notices and Disclaimers
The contents of this web site and our publications are based upon sources of information believed to be reliable, but no warranty or representation, expressed or implied, is given as to their accuracy or completeness. Any opinion reflects the Successful Investor’s judgment at the date of publication and neither the Successful Investor, nor any of its affiliated companies, nor any of their officers, directors or employees, accepts any responsibility in respect of the information or recommendations contained in the publications or on this web site. Moreover, the information or recommendations are subject to change without notice.
Information presented on this web site or contained in our publications is not an offer, nor a solicitation, to buy or sell any securities referred to on the web site or in the publications. The material is general information intended for recipients who understand the risks associated with an investment in any securities referred to in the publications or on this web site. The Successful Investor has made no determination regarding whether an investment, course of action, or associated risks are suitable for the recipient.
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