All posts by Pat McKeough

Tips for picking Stocks from the TSX index

Posted By Pat McKeough | March 16, 2026

Financial, safety, and survival factors are important to consider when looking for stocks on the TSX

The TSX is the abbreviated name for the Toronto Stock Exchange. You will often see our stock recommendations on TSINetwork accompanied by a TSX index symbol. When we’re looking for the best investments to recommend in 2025 (ones you might consider as buy and hold), we start, as we traditionally do, by putting all the important information we know about a company into perspective. This is the case for making investments from the TSX index.

What is the TSX index?

The TSX is the largest stock exchange in Canada and the third largest in North America, representing approximately 95% of the Canadian equity market with roughly 3,417 listed issuers across various sectors of the Canadian economy.

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. That’s also reflected in the S&P/TSX Composite Index, commonly called the TSX index. 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 index is highly regulated. The Toronto Stock Exchange lists common shares of companies, but also index securities like ETFs.

What are the different sectors of the TSX index?

The main sectors of the TSX (Toronto Stock Exchange) index include:

Financial Services – banks, insurance companies, and investment firms
Energy – oil, gas, and renewable energy companies
Materials – mining, forestry, and chemical companies
Industrials – manufacturing, transportation, and construction
Information Technology – software and hardware companies
Utilities – electricity, water, and gas providers
Consumer Discretionary – retail, entertainment, and automotive companies
Consumer Staples – food, beverage, and household products
Communication Services – telecommunications and media companies
Healthcare – pharmaceutical companies, healthcare providers
Real Estate – property management and development companies

How does the TSX index compare to the S&P 500?

While the S&P 500 has historically outperformed the TSX due to its heavy technology weighting, the Canadian index could reverse this trend in 2025 due to more attractive valuations, higher dividend yields, and potentially investors moving away from tech stocks.

Factors for finding the best stocks to invest in on the TSX index

a) Financial factors:

Start your search for “buy and hold stocks” by looking for companies that have a 5- to 10-year history of profits. Companies that make money regularly are safer than chronic or even occasional money losers. You’ll also want to look mostly for companies that have been paying dividends for at least 5 years. Ten years is even better. Companies can fake earnings, but dividends are cash outlays. If you only buy dividend-paying value stock picks, you’ll avoid most frauds. The last financial measure we like to see in a company is manageable debt. When bad times hit, debt-heavy companies often go broke first.

b) Safety factors:

At TSINetwork we continue to look for companies that have industry prominence if not dominance when we consider stock to buy and hold (and watch carefully). That’s the same in 2025 as it was in 2005. Major companies can influence legislation, industry trends and other business factors to suit themselves. Smaller firms, on the other hand, don’t have that ability.

The next safety factor we look at is geographical diversification. We tend to buy and hold strong companies that operate Canada-wide, but we think multinational corporations are even better. There’s extra risk in firms confined to one small geographical area. The last safety factor we consider is that the best stocks must be free of excess regulation, free of dependence on a single customer, and free from self-dealing insiders or parent companies.

c) Survival/growth factors:

We feel that the best stocks to buy and hold are the ones that are free from business cycles. Demand periodically dries up in “cyclical” businesses, such as resources and manufacturing. You can hold some of these stocks in your portfolio, but keep them to a reasonable part of a well-balanced portfolio.

We are also particularly keen on companies that have ownership of strong brand names and an impeccable reputation. Customers keep coming back to these businesses, and will in turn try their new products.

Factors we look at when picking stocks from the TSX index

We insist on political stability. For example, mineral exploration is risky enough without the threat of expropriation or onerous taxes.
We look for well-financed stocks with no immediate need to sell shares at low prices, since that would dilute the interests of existing investors.
We like to see a strong balance sheet with low debt. For junior stocks, we like to see a major partner who can finance a mine, software and so on to production.
We want to see experienced management with proven ability to develop and finance a new business.
We avoid stocks trading over-the-counter where regulatory reporting and so on is lax.
We avoid stocks trading at unsustainably high prices due to broker hype or investor mania.
We compare the market cap of the stock with the estimated value of its reserves, future product sales and so on.

Our stock research is always focused on investment quality

Even if a stock looks like it might thrive, we may still refrain from recommending it for a number of reasons. Our stock research may lead us to conclude that it presents too much risk of heavy losses if it fails to thrive. Or we may feel that stocks we already recommend offer better alternatives for investors seeking quality stocks to buy and hold. Or we may simply prefer to hold off on a promising stock because we feel it has limited near-term potential. This can happen because it has been overhyped in the broker/media limelight, for instance.

In many cases, we watch the progress of these stocks-we-like-a-little. We may recommend buying them months or even years later, but only after seeing favourable developments and signs of progress.

How have your TSX-listed stocks performed compared to your U.S. investments?

Pat McKeough has been one of Canada’s most respected investment advisors for over three decades. He is the founder and senior editor of TSI Network and the founder of Successful Investor Wealth Management. He is also the author of several acclaimed investment books. This post was originally published in 2014 and is updated regularly, mostly recently on Oct. 23, 2025. It is republished on Findependence Hub with permission.

What is Market Timing Theory?

Posted By Pat McKeough | March 4, 2026

Market timing theory attempts to interpret and detect buy and sell signals in trading patterns and history

Market timing theory is an investment strategy based on the belief that investors can identify optimal times to enter or exit financial markets by predicting future market movements using technical analysis, economic indicators, or other forecasting methods.

The practice of market timing consists of coming up with and acting on a series of guesses (or estimates, or probability assessments) to use in your buying and selling decisions. The aim is the same in 2026 as it was in 1997 when the strategy gained prominence: to buy near a low and sell near a high. Market timing theory attempts to interpret and detect buy and sell signals in trading patterns and history. Some of the decisions you make with the help of market timing will bring you profits, and others will cost you money.

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 come in spurts. The worst thing that can happen to you near the start of an investing career is that you make a series of successful timing decisions. This may lead you to believe that you have a natural talent for market timing, or that you’ve stumbled on a timing process that’s a guaranteed money-maker. Either of these conclusions can spur you to back your future timing decisions with growing amounts of money.

Good timing-based decisions often produce modest profits. They tend to be smaller than the losses you get from bad timing decisions. Needless to say, one of your future decisions is bound to turn out bad. If you’ve invested enough money in it, you could wind up losing much more than your accumulated winnings from prior timing-based decisions.

What are the key principles of market timing?

The key principles of market timing theory include:

Market Predictability: The foundational belief that financial markets follow discernible patterns that can be identified and exploited through various analytical methods.
Risk Management: The goal of reducing exposure during market downturns by moving to cash or defensive assets, potentially preserving capital that would otherwise be lost.
Enhanced Returns: The aim to outperform buy-and-hold strategies by capturing market upswings while avoiding significant downswings.
Signal Identification: Using technical indicators (like moving averages, MACD, RSI), fundamental data (economic indicators, interest rates), or sentiment measures to generate buy/sell signals.
Pattern Recognition: Identifying recurring market behaviors such as support/resistance levels, trend formations, or historical cycles that might predict future price movements. Continue Reading…

What are ETFs? A guide to investing in exchange traded funds

Posted By Pat McKeough | February 9, 2026

Continue reading to find out answers to these questions: What are ETFs? Are ETFs good investments? Should I make ETFs part of my diversified portfolio?

Have you ever wondered, “what are ETFs?” and how can they impact my investment returns?

Exchange traded funds (ETFs) are set up to mirror the performance of a stock-market index or sub-index. They hold a more-or-less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index.

Exchange traded funds trade on stock exchanges, just like stocks. Investors can buy them on margin or sell them short. These funds have gained popularity among investors, mainly because many ETFs offer very low management fees.

What are ETFs: Reasons why investors like ETFs

The MERs (Management Expense Ratios) are generally much lower on ETFs than on conventional mutual funds. That’s because most ETFs take a much simpler approach to investing. Instead of actively managing clients’ investments, ETF providers invest so as to mirror the holdings and performance of a particular stock-market index.

ETFs practice this “passive” fund management, in contrast to the “active” management that conventional mutual funds provide at much higher costs. 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.

This traditional, passive style also keeps turnover very low, and that in turn keeps trading costs for your ETF investment down.

What are ETFs: When to buy

Some investors decide when to buy an ETF with the help of technical analysis.

Technical analysis is a useful tool, but only if you recognize it as one of many tools. Before making any recommendations or transactions in client accounts, we always look at a chart. However, we don’t look at the chart 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.

We find it encouraging if the two seem congruent, and they usually do. But sometimes one contradicts the other, and that’s when we know we have to dig deeper, and perhaps wait until the situation clarifies itself. Continue Reading…

Consider all your Retirement Investment Management Options for a Financially Sound Future

Posted By Pat McKeough | January 28, 2026

Here’s a look at some of your best retirement investment management options and choices. These include pensions, RRSPs, RRIFs and more.

Your retirement investment management 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.

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. 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.

Learn how your retirement investment management works in a Canada Pension Plan (CPP)

The Canada Pension Plan, or CPP, is the name for the Canadian national social insurance program. The program pays out based on contributions, and it provides income protection for individuals 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.

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 rate.

Here’s a look at some of the pensions or benefits provided by the Canada Pension Plan:

Retirement pension
Post-retirement pension
Death benefit
Child rearing provision
Credit splitting for divorced or separated couples
Survivor benefits
Pension sharing
Disability benefits

Use a Registered Retirement Savings Plan (RRSP) as a starting place when you look into retirement investment management

An RRSP is a great way for investors to cut their tax bills and make more money from their retirement investing.

RRSPs were introduced by the federal government in 1957 to encourage Canadians to save for retirement. Before RRSPs, only individuals who belonged to employer-sponsored registered pension plans could deduct pension contributions from their taxable income.

RRSPs are a form of tax-deferred savings plan. They are a little like other investment accounts, except for their tax treatment. RRSP contributions are tax deductible, and the investments grow tax-free.

You might think of investment gains in an RRSP as a double profit. Instead of paying up to, say, 50% of your profit to the government in taxes and keeping 50% to work for you, you keep 100% of your profit working for you, until you take it out.

Convert an RRSP to a RRIF to create one of the best investments for retirement

A Registered Retirement Income Fund (RRIF) is another good long-term investing strategy for retirement.

Converting your RRSP to a RRIF is clearly one of the best of three alternatives at age 71. That’s because RRIFs offer more flexibility and tax savings than annuities or a lump-sum withdrawal (which in most cases is a poor retirement investing option, since you’ll be taxed on the entire amount in that year as ordinary income). Continue Reading…

How to stay calm and Invest confidently amid Stock Market Fluctuations

Posted By Pat McKeough | January 12, 2026

Letting unnecessary stock market worries take hold of your investment decisions can lead to much bigger problems than just finding stocks to buy

Our early ancestors had to be on guard against threats in their environment. They were under constant threat. At night, if you woke to every sound from the bushes, you lost some sleep, but you cut your risk of being eaten by a lion or killed by an enemy. Today we face much less risk from animal predators and human marauders. But many people still carry this hair-trigger fear response. We spend more time than we should worrying about things that will never happen. This includes stock market worries.

That’s especially true of investors, who generally think more about the future than other people. It’s true all the more of subscribers to our newsletters and members of my Inner Circle service.

Understand stock market worries and risk so you can put everything in perspective

That’s because many of you are the kind of people who seek out investment information from a variety of written sources, where it’s much more extensive and detailed than what you get from a glance at the headlines, the evening news or cable TV. However, some of that information is biased, overblown or incorrect.

This doesn’t mean you should ignore potential threats. You just need to put them in perspective.

Learn what experienced investors do about common stock market worries

There is never a shortage of ways to ease your stock market worries. “You never go broke taking a profit,” is a favourite of brokers I’ve met over the years. They used them to spur their clients to do more trades, to boost their own commission income.

Our view now is that stocks are still a good place for your money, if you can afford to stay invested for several years. If you expect you will need to take money out of your portfolio, you should think about selling sooner than you need to.

Look beyond immediate stock market movements to help reduce your anxiety and stock market worries

Stock market trends are the general direction in which the stock market is heading. These market trends are dictated by a number of factors: what sector investors favour at the moment, economic and world news, interest rates and other trends from industries such as technology or resources, and so on. These trends could be positive or negative, and they could lead to a huge boom for a stock market. They could also 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.

Anxiety recedes with investment quality, diversification and portfolio balance

You’ll find that many of your worries concern things that are unlikely to happen; that are already largely discounted in current stock prices; and that probably won’t matter as much as you feared they would. Continue Reading…