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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I have owned National Bank for a number of years. I have read the posts and your preference for TD and BNS. I presently feel that this may be an ideal time to make a switch. The P/E of National Bank (according to Google) is presently quite high, especially for a bank, in my opinion. It is presently a few points higher than both TD and BNS (and also has a slightly higher dividend as well). Is there something going on at the National bank that justifies this higher P/E, is it simply investor sentiment, the higher dividend...? If the P/E is unjustified, in time the stock will retreat and I would rather switch over when the price is higher. Your thoughts on switching over (dollar for dollar). Normally I do not like doing this because, it is not a dollar for dollar switch, after I pay taxes (but I am sure I can sell some losers as well). If you recommend the switch, why do you like TD and BNS more. Looking at the 5 year charts, I see that TD has performed well in comparison. BNS and NA are at about par (assuming NA can sustain the PE or increase its EPS at a higher rate than the other banks). I assume that if the switch is recommend, I do it 50/50? Thanks.
Read Answer Asked by Walter on January 31, 2017
Q: Peter & Co., I am planning to add to my small positions in one or two of these American banks. I have compared P/E, P/B, ROE and payout ratios and I am in a quandary. Would you please list them in order of your priority for possible purchases.
With great appreciation for your excellent service.
Read Answer Asked by Ed on January 30, 2017
Q: Hi,

I have held fairfax for several years, primarily as a hedge against negative market events. With the trump election win, and the unwinding of many of fairfax's bearish hedges, it now seems to trade much more in lock step with my other financials (bfs, slf, ry). Do you still feel fairfax offers a good hedge against negative market events? If not, what you would generally recommend in it's place?

Regards,

Robert
Read Answer Asked by Robert on January 27, 2017
Q: Hi Peter and Team:
I am interested in some comments about both FFN (North American Financial 15 Split) and PIC.a Both trade on the TSX but act like a mutual fund with a small 'mer'.
FFN pays a monthly dividend of 0.10 and its yield is about 13.07% at a trading price of $9.18
PIC.a pays a quarterly dividend of 0.20319 and its yield is about 11.30% at a trading price of $7.20.
I really like high paying dividends, as we all should but,,,,
I have been invested in PIC.a since April 2004. This has consistently paid quarterly since that time. It was a DRIP until a few years ago. Now it strictly pays Cash. This cash is 'Return of Capital' and as such has no tax implications in my regular investment account???, I think. Is this a good or bad thing???
I own about 17% of my overall portfolio in PIC.a Some of this PIC.a Div cash is paying out into a RIF withdrawal, with minimal effects on the Capital in the RIF.
Now I am looking for your thoughts on FFN as I diversify a bit more and of course feedback on PIC.a
Thanks. Ken .....
Read Answer Asked by Ken on January 26, 2017
Q: From what I understand insurance companies should do well if long term interest rates rise. If these companies hold longer term bonds in a rising interest rate environment would any increase in income from higher rates be offset by capital losses on the bonds as long as interest rates increase? How does this affect the stock price?
Read Answer Asked by Jerry on January 24, 2017
Q: In December, you suggested that, with its investment profile now dominated by insurance holdings, Fairfax might lose its premium multiple. But many insurance co's offer a better dividend and at least as good a growth profile; what's actually to like about today's Fairfax - or is it, essentially, still coasting on its outstanding performance during the Great Recession?
Read Answer Asked by John on January 19, 2017
Q: My portfolio consists of 14% Financial stocks that include; 6.5% BNS,3% TNC, 3% ECN, and a new purchase this week of 2.5% RY. TNC and ECN are in my TFSA, the RRSP has the other two. Two questions, overall should I have more financials, if so a suggestion please? I have a high tolerance for risk and a long time frame in mind if required, of course quick gains are always appreciated. haha
Read Answer Asked by Charles on January 16, 2017
Q: I recently purchased 50 shares at $650, with a multi-year horizon, following a thorough article about FFH being a top-ranked stock when it comes to long-term value AND growth. It has recently been on a steady decline, down by about 5%. Where could I find a relevant explanation for why this is happening and what is your outlook for FFH moving forward ?
Read Answer Asked by Paul on January 13, 2017
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