Pass on Investing Today to a friend

---

  First, let me extend a warm welcome to those of you who are receiving Investing Today for the first time. Since our last newsletter went out on May 8, we have added more than 500 new subscribers to our list, bringing our current total to over 3,700. If you are among the newcomers, we hope you find this newsletter to be interesting and worthwhile, and we always welcome your comments and suggestions.

Please note that you are welcome to forward Investing Today to friends and relatives you think may be interested in receiving it. If you have received this issue from a friend and would like to subscribe yourself (no cost), you can do so at http://www.gordonpape.com/InvestingToday/Newsletter.cfm

Investing Today is free - there are no hidden charges of any kind. Our hope is that this newsletter will encourage some readers to investigate our two fine paid subscription letters, Mutual Funds Update and the Internet Wealth Builder and the other high-quality products and services we offer.

With that, on to this month's financial news of special interest.

Be cautious in this sectoral market

---

  Like most other people in this business, I frequently refer to "bull" and "bear" markets. It's a convenient shorthand for expressing the general direction in which stocks are moving.

It's also simplistic and often misleading. Saying a market is in a bull phase conveys the impression that a rising tide is lifting all boats. Conversely, when we talk about a bear we imply that everything is under water.

Those concepts may have been broadly true in the past. But they do not apply to the market conditions we have experienced in recent years.

What we are seeing today can best be described as a sectoral market. Certain groups may be in deep decline - a bear phase - while at the same time others are showing tremendous strength.

Technology stocks have been in a bear market for over a year, and may still be so. The TSE Industrial Products sub-index, which includes high-tech companies like Nortel, had plunged 54.3% in the past 12 months as of last Friday's close. That was enough to drag the broad index down, but it doesn't tell the whole story or anything like it.

While tech stocks were crashing, the Metals and Minerals sub-index was rising 39.1%. The Oil & Gas index was up 24.9%. The Conglomerates index rose an astonishing 51.9%. Pipelines were ahead 36.5%. Financial Services advanced 25.6%. And recently, the Gold & Precious Minerals index has been on the move, up 12.3% year to date.

In short, amidst all the gloomy news you could still have made profits - handsome ones - if you were in the right place.

That will be the challenge to investors going forward. I don't see the situation fundamentally changing. The market will continue to be sectoral in nature. The key to success will be to focus on quality stocks in areas that are in the ascendancy and to dump those in sectors that are depressed - or likely to become that way.

This is not a buy-and-hold market. This is a market for traders. You need to keep a close watch on what's happening, take profits as appropriate, and get rid of losers before they cause serious damage.

If you're not comfortable with that, put your money into some good mutual funds and let the pros make the calls for you.

(Excerpted from the June 4 edition of the Internet Wealth Builder, a weekly e-mail financial newsletter.)

One month free of the IWB - No Risk offer

---

  We believe the Internet Wealth Builder is the best electronic financial newsletter in Canada, by a wide margin. Our track record of winners, even in these tough markets, is exceptional. In the past week we've taken a 74% profit on our Gulf Canada recommendation and sold part of our position in Petro-Canada for a 91% gain!

As a special incentive to try the IWB, we have a special offer for the month of June only. Subscribe to the IWB for the regular rate and get a bonus month free - 13 months for the price of 12.

Plus, we provide a money-back guarantee. If you don't agree after one month that this is the best financial newsletter you've ever read, just send us an e-mail canceling your membership and we'll refund every cent, no questions asked. You'll have paid nothing and had the opportunity to read four advice-packed issues on us.

The IWB is published weekly (44 times a year) and delivery is only by e-mail. So you get the news fast, not a week or two after the recommendations were prepared and the stock has already moved.

For full details on this special offer, and to read a recent edition of the IWB in full, visit our home page: http://www.gordonpape.com

Taxable vs. non-taxable benefits and other questions

---

  If you're in negotiations for a new job, or know anyone who is, this is a must-read item. I received a question from a gentleman in that position who wanted to know what benefits he could ask for that would not increase his tax bill. For my detailed response, go to: http://www.gordonpape.com/qa.cfm and click on the appropriate heading.

Other questions answered this week deal with holding a child's mortgage in your RRSP, the status of an RRSP when someone moves to the U.S., designating a cottage as a principal residence, and investing for retirement.

Top choices among the Spectrum funds

---

  I recently had an opportunity to sit down over a working lunch with Karen Bleasby, the vice-president, investments at Spectrum Mutual Funds. Much of the conversation was about her new Spectrum Tactonics Fund, which conceptually is very impressive. Over coffee, we moved on to discuss other funds in the Spectrum line-up and her comments were refreshingly candid. If you own any Spectrum funds, or are thinking of buying units, here's what she likes and dislikes right now.

Spectrum Global Telecommunications. This fund had a hot run in the late '90s but collapsed in the past year, with a loss of 49.3% in the 12 months to April 30. Despite that plunge, Bleasby doesn't see it as a buy at this time. The industry has suffered from too much overbuilding and the financial position of some companies is precarious. There is likely a great deal of volatility still to come. Avoid for now.

Spectrum Canadian Investment Fund. This is the most conservatively managed of Spectrum's domestic equity funds and it did very well in the rough markets with a one-year gain of 16.7%. Manager Kim Shannon's value style is working well. Buy.

Spectrum Canadian Equity Fund. McLean Budden are great managers and the value/growth mix is working well. This fund will be a consistent performer. Buy.

Spectrum American Equity Fund. It had a difficult year (-15%) but it has come back recently. Bleasby describes it as a "best ideas" fund and likes it better than the companion American Growth Fund in the current market.

Optimax USA Fund. This U.S. entry has undergone a strategy change in the past couple of years. It now has a value bias with a much tighter focus on outperforming the S&P 500 Index. Bleasby likes its prospects.

Spectrum Short-Term Bond Fund. Spectrum offers three bond funds. This is the one Bleasby would pick right now. Reason: although short-term rates are still falling, longer rates are moving higher, which has a negative impact on the price of mid and long-term bonds. That means steer clear of the Mid-Term Bond Fund and the Long-Term Bond Fund at this time.

Spectrum Emerging Markets Fund. The whole category has been bad for some time. This one shows an average annual compound loss of more than 10% over the past three years. Current prospects aren't much better. Bleasby's advice: if you want emerging markets exposure, get it through a broadly-based global fund.

Spectrum European Growth Fund. This is her favorite non-North American fund. It focuses on European small-cap companies, where there are better opportunities at this time than can be found in large firms.

This article was adapted from the June 2001 issue of Mutual Funds Update, a monthly newsletter. If you'd like subscription information and to read the entire May issue without charge, go to: http://www.gordonpape.com/mfudemo.cfm

Read an excerpt from 6 Steps to $1 Million

---

  My new book, 6 Steps to $1 Million, has just been published by Prentice Hall Canada and is available in stores across the country. It is a practical guide to creating wealth that I believe will benefit just about anyone. But this is more than just another "Get Rich" book. It describes in detail how to adjust your lifestyle and mental approach so that you will not only be in a better position to become wealthy but to enjoy your success to the fullest. I think you'll find that this book will enhance all aspects of your life.

If you'd like to read an excerpt, go to: http://www.gordonpape.com/BookEX.cfm?bkex=bookex3

To order a copy at 15% off the suggested retail price: http://www.gordonpape.com/bookstore/productdetail.cfm?product_id=277

Choosing the right balanced fund

---

  Balanced funds are a middle-of-the-road option. They're designed for conservative investors who want broad diversification in one fund. You can read about the various types of balanced funds, their good points and their pitfalls in this article I prepared for the official Web site of the Canadian Association of Retired Persons: http://www.50plus.com/money/

Read the latest CBC transcripts

---

  If you'd like to download a transcript from any of my CBC broadcasts, or just skim through them to see what I've had to say, they're all available at: http://www.gordonpape.com/cbcradio.html

That's our report for now. If you have any comments about Investing Today or any suggestions for articles or information you would like us to include, send them along to me at the e-mail address below.

We'll be back with another edition in early July.

Best regards,

Gordon Pape