Popular Answers to Member Questions 

Question 1: What percentage of an RRIF account would you recommend having exposed to a covered call strategy using BMO Canadian High Dividend Covered Call ETF (ZWC), the said account has Enbridge, Superior plus, XTR and FIE, with the two latter having the largest percentage 

Answer 1: Much depends on your goals, but we would suggest a 10% cap on covered call strategies, mainly due to the fact that they can underperform a straight equity strategy over time, giving up total returns for higher short term income. 

Question 2: Just back from a trip and noticed Peter was on Market Call last week. Tried to access his top picks from that show but the link was taken down. Could you tell me what they were?

Answer 2: Boyd Group BYD.UN; ECN Capital ECN; WSP Global WSP

Question 3: What are your thoughts on Spotify as a long term hold? Would there be other names in the same field with better growth potential?

Answer 3: We have gone somewhat neutral on the name, largely due to very high competition within the sector and no clear resolution to see higher margins. Artists' royalties make it very hard for the company to make money. It is one of the clear leaders in the space but both Youtube and Apple pose serious competition to SPOT. 

Question 4: Oil and gas stocks in Canada have been a poor investment in the last few years. Is the timing better for a good long-term investment today? If yes, what stock would you suggest for a five-year hold for dividend and capital appreciation?

Answer 4: This, of course, requires a prediction; the sector has recovered a bit following the Saudi attacks, and the sector, of course, is very cheap after such big declines. But we think it may still see redemptions (from energy funds) and (perhaps a lot) tax-loss selling. The fundamental issue (transportation) in Canada has yet to be resolved. So, we would consider the sector OK for a small weighting but might not go too big in it yet. We would like to see more stock buybacks and mergers. We have suggested a 5% position in the past, we would be OK at 6% to 7% but would not see the need to go beyond that. Names to consider: ARX, PXT, BIR, WCP, SU 

Question 5: I have a relatively large cash infusion (an additional 20% of my overall portfolio value) to invest. Over what timeframe would you recommend that I gradually add to/start positions with this cash? Do you have any other general advice regarding how best to invest the cash as part of my portfolio?

Answer 5: Studies have shown that the best course of action is investing in a lump sum, as time in the market beats out timing the market. There are psychological considerations though, that make this approach difficult. The below link is an interesting one, however, outlining how even starting out conservatively in say bonds, and then 'averaging in' to equities can still outperform. https://ofdollarsanddata.com/the-cost-of-waiting/

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Disclosure: The author does not hold positions in any stocks or funds mentioned.