Keeping informed

Money Digest, Jan, 2003

Many investors lose money in the stock market. Even seasoned professionals often underperform the market. If you analyze mutual fund performance, you will find that a majority of funds perform worse than the market index.

Why so? There are at least two explanations for investor underperformance. One is the unrealistic expectation that one can become rich very quickly in the stock market. When we have unrealistic expectations, we tend to become impatient and make unwise and costly investment decisions. It is possible to become rich investing in the stock market, but it takes time and discipline.

The second reason investors lose money in the stock market is the tendency to act blindly on 'hot tips.' Following 'hot tips' usually means that we do not know why we are investing in a given stock, but simply trust whoever gave us the tip. If the tip does not work out (and most don't), the recipient of the 'hot tip' loses the money, not the person who offered the tip.

An effective way to avoid these traps is by keeping informed. If we can do that, and avoid greed and impatience, our investing efforts can be successful.

All you need to do is read the business section of a good newspaper regularly, read some good books and read a well-balanced financial periodical. We try to present a wide range of investing possibilities and offer good investment books at a discount. We hope you find them useful.

Web sites

With the multitude of information available on the Web, here is a shortlist of sites that you may find useful.

Stocks/equities: Globeinvestor.com, adviceforinvestors.com, investcom.com and stockhouse.ca.

DRIPs: www.stingyinvestor.com, canadianmoneysaver.ca;

Mutual funds: globefund.com, morningstar.ca, fundlibrary.com.

U.S. sites: smartmoney.com, moneycentral.msn.com, motleyfool.com, cnnfn.com.

General sites: investingcanada.com, money.msn.ca, moneysense.ca, rrsp.org, webfin.com, canadianfinance.com, cdnnews.com/ccnnewswire/investors-investorsinfo.html.

Periodicals

Here are some periodicals that deal with investments.

* Money Digest (www.iac.ca) contains tightly edited and well-balanced articles (available online-only as of March, 2003). The articles are timely, short, to the point and are written by a small group of contributing editors. The publication also contains articles written by brokerage firms.

* IE: Money (www.iemoney.com, 400-90 Richmond St. E., Toronto, Ont. M5C 1P1) is published eight times a year and contains excellent in-depth articles on investing and personal finance. $20.00/year or $3.95/copy.

* Canadian MoneySaver (www.canadianmoneysaver.ca, Box 370, Bath, Ont. KOH 1GO) is published 11 times a year. The magazine includes a variety of articles on personal finance and investing. The articles generally represent the views of the individual writers. $3.25/copy at newsstands. $21.35/year.

* Investor's Digest of Canada (www.adviceforinvestors.com, MPL Communications, 133 Richmond St. W., Toronto, Ont. M5H 3M8) covers areas covered by Money Digest, but in greater detail and more frequently. $137.00/year or $6/copy.

* All Canadian Mutual Fund Guide (Pursuit Publishing, 118 Eglinton Ave. W, Suite 200, Toronto, Ont. M4R 2G4) is published four times a year. Contains articles on mutual funds. $16.20/year or $4.50/copy.

* The Boomer (www.wealthyboomer.com) published six times a year by The Wealthy Boomer Inc. and is only available online. Contains articles, as the title goes, on Wealth, Wisdom and Well-Being.

* Money Sense is published eight times a year by Rogers Media (www.moneysense.ca, 777 Bay St., Toronto, Ont. M5W 1A7). One-year subscription is $19.95; single issue available on newsstands for $3.95.

Special purpose newsletters

The following newsletters present a conservative, value-based approach to investing:

* Successful Investor (Ste. 977, 6021 Yonge St., Toronto, Ont. M2M 3W2) is edited by Money Digest's contributing editor Patrick McKeough and contains more detailed analysis and recommendations of Canadian (and U.S) stocks. Monthly. $139/year.

* Canadian Wealth Advisor ($99/year, contains information on the safer side of investing) and Stock Pickers Digest ($169/year, contains information on specific stocks) are also published by Patrick McKeough.

* Investment Reporter (MPL Communications) carries analysis and recommendations of Canadian and U.S. stocks. Carries lists of stocks to buy and stocks to avoid. $279/year.

* Money Reporter (MPL Communications) is geared more towards fixed income investors. Bi-weekly. Subscription $197.00/year.