All posts by Pat McKeough

How to stay calm and Invest confidently amid Stock Market Fluctuations

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

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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…

How to Decide which Canadian Bank Stocks are Best for You

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Canadian bank stocks are true blue chip stocks and have long been a top choice for growth and income. Today’s economic uncertainty doesn’t change that

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We’ve long recommended that all Canadian investors 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 the importance of these institutions, and their blue chip stocks, to Canada’s economy. That hasn’t changed despite lingering economic uncertainty about high inflation. Investing in bank stocks remains a popular strategy for many Canadians.

Canadian bank stocks – unlike Canadian penny stocks – remain key lower-risk investments. As well, the Big Five Canadian bank stocks all have long histories of annual dividend increases. That makes the Big Five the best bank stocks that the country has to offer. It also makes them top blue chip stocks for income investors.

Picking the best bank stock between two of Canada’s big banks is a lot harder choice than choosing between a bank stock and a Canadian penny stock. Still, if you’ve decided to start by investing in bank stocks with just one Canadian bank, one key question remains: which Canadian bank is the best bank stock for you? How can you tell which bank will give you the best long-term performance? There are a few performance clues you can look out for.

Performance clues to look for

When deciding on the best bank stock to buy, you want to start with the same criteria you would use for any investment in blue chip stocks (as well as with a Canadian penny stock):

We believe Canadian bank stocks are still well-positioned to weather downturns in the Canadian economy, despite their significant increases in loan-loss provisions over the last couple years because of COVID, the inflation that followed, and its impact on the economy. All five stocks trade at attractive multiples to earnings and are well positioned for any economic fallout from continuing high interest rates. Investing in bank stocks remains a popular strategy for many Canadians.

Canadian bank stocks have always been some of the best bank stocks globally. They’re also among the best income-producing securities: true blue chip stocks. Below are 3 tips for using dividends as barometer for picking Canadian bank stocks when investing in bank stocks.

1.) Dividends are a sign of investment quality. It’s why so few Canadian penny stocks offer them. While some good banks reinvest a major part of their profits instead of paying dividends, failing banks hardly ever pay dividends. So if you only buy stocks that pay dividends, you’ll automatically stay out of almost all the market’s worst banks.

2.) Dividends can grow. Stock prices rise and fall, so capital losses often follow capital gains, at least temporarily. Interest on a bond or GIC holds steady, at best. But the best banks like to ratchet their dividends upward: hold them steady in a bad year, raise them in a good one. That also gives you a hedge against inflation.

For a true measure of stability when hunting for the best bank stocks, focus on banks that have maintained or raised their dividends during economic and stock market downturns. These banks 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. Canadian banks stocks are well known for their financial stability in the face of economic downturns.

3.) Look for Canadian bank stocks with consistent dividends. One of the best ways of picking a quality stock is to look for banks that have been paying dividends for at least 5 to 10 years. Dividends are cash outlays that an unsuccessful bank could never produce. A history of dividend payments is one trait that all the best dividend stocks have.

Don’t limit your investing to bank stocks

Simply put, a well-constructed stock portfolio will make your life easier and maximize your gains.

Early in their investing careers, many investors have only a vague idea of the value of a planned portfolio when investing in the stock market. Continue Reading…

Real Estate Investing in Canada can be Profitable but It’s no sure thing

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Here’s what we think about real estate investing in Canada — and it may surprise you

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We’re constantly asked about real estate investment in Canada (or investment in Florida real estate, for that matter), and we understand the appeal. Even though today’s house prices still remain high in most markets (i.e., Toronto and Vancouver) mortgage interest costs are expected to fall as inflation comes back down. And owning your own home has a number of advantages.

In terms of real estate investment, owning your house is a great tax shelter. That’s because gains on your principal residence are exempt from capital-gains taxes. Note, though, that this benefit only applies to your principal residence, and not investment in Florida real estate as a second home or income property. You must still pay tax on gains on the sale of a recreational property, such as a cottage or a ski chalet. But these properties generally appreciate at a much slower rate than, say, a home in a major urban centre. That’s a key consideration with any real estate investment.

What are the best real estate investment strategies in the current market?

Given Canada’s diverse real estate landscape in 2025, the most effective strategy is to focus on suburban multi-family properties in growing secondary markets like Hamilton, Halifax, or Kelowna, where prices remain relatively affordable while offering strong rental demand and potential for appreciation.

What are the potential risks of investing in real estate right now?

The primary risks include rising interest rates affecting mortgage payments, potential market corrections in overvalued areas, and stricter regulations on foreign buyers and short-term rentals in major Canadian markets.

Capital-gains taxes are also applicable to gains on real estate investment, such as rental properties you buy for investment purposes.  Moreover, this type of real estate investing in Canada (or investment in Florida real estate) involves a number of other commitments that can make it feel more like running a small business than, say, investing in stocks. With stocks, you only have to tell your broker to buy: everything else is done for you.

By contrast, when you own rental property, you have to spend time finding and dealing with tenants, arranging for maintenance, doing the accounting and so on. You can hire others to do these tasks for you, but that can get very expensive.

Moreover, real estate investing in Canada can entail higher levels of risk than stocks. That applies to investment in Florida real estate and other U.S. sunshine destinations. Simply put, all real estate investment must contend with the fact that real estate is less liquid, more expensive to manage and to buy or sell, and highly geographically concentrated. Rising crime, unpleasant neighbours and other 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, or limit what you can do with your real estate investment property.

Many real estate investing enthusiasts say that if you buy a property with a 20% down payment (which is the Canadian government’s proposed new minimum to qualify for government-backed mortgage insurance on a property that is not your principal residence), then a 20% rise in the property’s 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 costs). It also overlooks any negative cash flow you may have experienced while you owned the property, because rents failed to cover expenses. When you’re less familiar with the market, such as with Canadian investment in Florida real estate, that kind of unfavourable outcome is more likely.

How can I prepare my real estate investments for potential economic downturns or unexpected events?

Maintaining substantial cash reserves (ideally 6-12 months of expenses per property), keeping conservative loan-to-value ratios, and diversifying across different property types and locations provides the strongest protection against market volatility.

What is the best long-term investment strategy for building wealth through real estate?

The most reliable strategy is buying and holding cash-flowing multi-family properties in growing metropolitan areas while systematically paying down the mortgages to build equity over time.

We continue to believe that ownership of a primary residence is all the real estate exposure most investors need. Still, we get many questions about real estate investment beyond that. If you want to add to your real estate holdings, one good way to do it is through real estate investment trusts, or REITs.

Real estate investment trusts invest in income-producing real estate, such as office buildings and hotels. Some may even focus on investment in Florida real estate or other key U.S. markets for vacationers. Generally, that’s a segment of the market that is difficult for most investors to access through direct ownership of property. Moreover, real estate investment trusts save you the cost, work and risk of owning investment property yourself.

If you’re interested in real estate investing in Canada through a REIT, we still recommend RioCan Real Estate Investment Trust (symbol REI.UN on Toronto). It, like all REITs, continues to suffer fallout from the COVID-19 pandemic. Still, RioCan continues to benefit from an increasingly solid portfolio of properties now focused on Canada’s biggest markets. It is also working to diversify its portfolio beyond malls (these malls feature large stores that are usually part of a chain). We cover RioCan in our Successful Investor newsletter. Continue Reading…

5 Key Wealth Management Factors that Influence Investment Decisions — Every Investor Should Know

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Understand the factors that affect investment decisions so you maximize your portfolio returns

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It’s generally a waste of time to obsess about a short-term downward movement in the economy, stock market or both. These downward movements can occur for a wide variety of reasons, at any time: even outside the kind of significant downturn caused by COVID-19 or, more recently, higher inflation and the Russian invasion of Ukraine.

Still, for every “real” short-term downturn, you can spot a dozen fake-outs: situations where the market or economy looked like it was going into a tailspin but pulled out of the drop and began rising at the last minute.

On the other hand, it does pay to obsess about factors that affect investment decisions like portfolio diversification, investment quality, and the extent to which your portfolio suits your personal goals and temperament.

1. What is the appropriate asset allocation for my portfolio?

A diversified investment portfolio should be spread across multiple asset classes for risk management and potential growth. The main components typically include:

Stocks provide growth potential and can help protect against inflation over the long term. They tend to be more volatile but historically offer higher returns.

Bonds offer steady income and help reduce overall portfolio risk. They generally provide more stability than stocks but lower potential returns.

Cash equivalents, like money market funds or GICs, offer safety and liquidity but usually provide the lowest returns.

The specific percentage allocated to each depends on your personal circumstances, but maintaining this basic diversification helps balance risk and return potential.

Remember that regular rebalancing helps maintain your target allocation as market values change over time.

Spread your money out across most if not all of the five main economic sectors (Finance, Utilities, Manufacturing, Resources, and the Consumer sector). 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.

As well, balance aggressive and conservative investments in your portfolio, in line with your investment objective  and the market outlook. Above all, avoid the urge to become more aggressive as prices rise and more conservative as prices fall.

Discover more about properly diversifying your portfolio.

2. How do I find quality investments?

Quality investments can be identified by examining key financial metrics such as consistent revenue growth, stable profit margins, low debt levels, strong cash flows, and competitive advantages within their industry.

The best blue-chip stocks offer strong investment quality. When the market suffers a significant downturn like that prompted by the emergence of the coronavirus pandemic, these stocks generally keep paying their dividends, and they are among the first to recover when conditions improve.

In keeping with the Successful Investor philosophy, we feel stocks that have been paying dividends for five years or more are some of the safest investments you can have. Dividends are a sign of quality and a company’s financial health. Canadian banks and utilities are among the income-paying stocks that we consider to be safer investments.

Learn more about developing a long-term strategy focused on stocks with high investment quality.

3. Why is it important to have a disciplined savings plan?

A disciplined savings plan creates financial stability by building wealth consistently, protecting against emergencies, and helping achieve long-term goals through the power of compound growth.

If there is one piece of personal wealth management advice you should immediately implement, it’s to have a disciplined plan for saving during your working years. This, above all things, can set you up for optimal investment gains. We talk more about this in 9 Secrets of Successful Wealth Management, which is free for you to download. Continue Reading…

10 Secrets of investing in Junior Mining Stocks

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Junior mining stocks are highly speculative, but here are 10 secrets that will help you find the best of them

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In mining exploration, an “anomaly” is a geological formation or find that might attract a prospector’s interest. However, one rule of thumb for mining stocks is that you have to look at 1,000 “anomalies” to find one “prospect,” and that fewer than one “prospect” in a thousand turns into a mine. In other words, finding a mine is a million-to-one shot.

What are the challenges facing junior mining stocks in Canada?

Junior mining companies in Canada face significant challenges of securing adequate financing for exploration and development, navigating complex environmental regulations and permitting processes, managing high operational costs in remote locations, and dealing with commodity price volatility.

What is the government doing to support the junior mining stocks in Canada?

The Canadian government supports junior mining through flow-through shares tax incentives, the Mineral Exploration Tax Credit (METC), favorable exploration policies in territories like Yukon and Northwest Territories, and programs supporting critical minerals exploration.

That’s one reason why junior mining stocks — unlike many of the best mining stocks — are highly speculative, and are apt to cost you money. Another reason why junior mines are risky is that it’s relatively cheap and easy to launch a penny mine and sell stock to the public. So the junior mines promotion business attracts more than its share of unscrupulous operators and stock promoters. That’s increasingly the case in 2023 when unmined, easily reached deposit sites are harder to come by. It’s also why finding the best mining stocks takes some research.

How do I diversify my portfolio with junior mining stocks?

To diversify with junior mining stocks, limit them to a small percentage (typically 5-10%) of your total portfolio and spread investments across different commodities, development stages, and geographic regions to manage the high risk inherent in this sector.

However, junior mining stocks can play a role in a portion of your portfolio, specifically the part you devote to aggressive resource investments.

Here are 10 things we look for when we analyze junior mining stocks in a search for the best mining stocks to buy:

  1. 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, like Russia or Mongolia. Mining is inherently a politically vulnerable business; you can’t move the mine to another country, and local citizens sometimes believe that a foreign mining company is robbing them of their birthright, even though they need the foreign company’s capital and expertise to get any value out of the ground.
  2. When we recommend pure-exploration junior mines, we prefer those that operate in an area with geology that is similar to that of nearby producing mines.
  3. We look for well-financed junior mines with no immediate need to sell shares at low prices, since that would dilute existing investors’ interests. The best junior mines have a major partner who has agreed to pay for the drilling or other exploration or development, in exchange for an interest in the property.
  4. We find that the best mining stocks are those with a strong balance sheet and low debt.
  5. When we recommend mining stocks, we want to see positive cash flow, preferably even when commodity prices are low. Continue Reading…