Investment Q&A

Q: Stocks will sometimes issue more shares to raise capital. Does this ever happen with ETF’s ?
When an ETF is born I presume the promoter will take a percentage and institutional investors the rest , is this so ?
I ask because I notice some ETF’s are very small, does this mean they will remain illiquid ?

Q: Peter; This may sound a bit jaded but in the last 1-2 weeks DIR.UN has been trading upwards - closing at $14.15 today- now a new issue at $13.65- is there any way to see if the firms doing the issue are also short the stock? Thanks. Rod.

Q: I took on a flyer bet with USMJ. Evolve has announced the will be closing it down. If I can sell now I have to pay sell fees. What do you recommend on the best approach to wind down this investment?

Q: Hello 5i,

I sold my holding in MX on January 16 for a tax loss to help offset my gains in BYD. I also sold NFI for the same reason. I’ll need to find one more by the end of the year to even it all out.

I intend on buying them both back after the 30 day waiting period.

My question, as it pertains to both, if the SP has fallen substantially, does one invest the same dollar amount and buy more shares, or would one buy the same number of shares and keep the cash left over for other purchases? I’m leaning to reinvesting the whole amount back in to each Company. I respect that that is a personal decision on weighting’s, but I would prefer your personal opinion based on experience.

PS, I picked up TRI yesterday after selling TOY. Trying to be prescient.

Thx for providing the service, to date, based on the Balanced Portfolio, my holdings are about to eclipse my wife’s, who uses a service that clocks in at 700/month, For her LIRA, RRSP, and TFSA’s. PSA, that!

Best regards,

Kelly

Q: Hi,
Just a quick comment on after hours trading from the question from Barry on AMZN. Publish if you think it night be helpful. TD allows this for all. There is no club. Day orders only. On the order entry screen, you just tick a box for a day order and after hours. I tried it once with a small order just out of curiosity really. It is essential you place a limit order to protect yourself. Never enter a market order. There are wide swings with thin trading. My bid was off the normal range. It did get filled and I felt pretty good. Then the CEO said something negative on the conference call. The next morning the stock opened lower than my fill and I did not feel as good then. I never did it again. You want a market with full liquidity and all the public information disclosed.
Dave

Q: I have cash to employ/deploy soon, perhaps. I don't want to sell any stocks(they are all good) but use the funds to add to the ones that have recently retreated. Should I use Book Value or Market Value? Should I base the toppings up on Sector/category percentages? What would 5i do? Thanks

Q: I have found that for some ADRs, the home country (eg., the Netherlands, Spain) withholds a portion of dividends, even when the shares are in registered accounts, and of course such tax can't be written off against Canadian taxes. Company websites don't seem to make this information available. Is there some way of identifying in advance when such withholding will occur, or can you offer more general advice regarding how best to invest in individual, non-US companies, while receiving the full value of dividends paid?

Q: I was in my car yesterday listening to CNBC when a chain of events occurred.
3.59PM - We look forward to to the results from Amazon's quarterly report after the bell.
4.01 PM - Interesting but AMZN is up 5% after the close. We await the results.
4.03 PM - We now have the results
4.05 PM - AMZN beats top and bottom line. The stock now up 10% "after hours"
Next morning the G & M reports the results. Stock is up 13% "after hours".
My questions are these . Who are these people that trade "after hours" and how do I get into this club?
Say I placed a $2000 US sale order at the beginning of the week on AMZN, is that only good during "normal" hours. What if I wanted to take that down after seeing the results? Or was it able to be sold at 4.01 PM yesterday?
How were people able to discern they wanted to buy the company at 4.01 PM? My guess, insiders who knew the financials prior to release?
Why does the SEC allow this? It only propagates the notion that the whole system is rigged.

Q: Hi, I have been doing some analysis around building portfolios with different volatility characteristics. I chose 'beta' to measure volatility, as it is available from several sources. However, I am finding large inconsistencies from different sources ( I am looking at BMO Investorline, BNS and Interactive Brokers ). The inconsistencies are material enough that the results are individually unreliable. Are you aware of a source for reliable 'beta' calculations or source of some other form of volatility statistics. Thanks

Q: With many markets currently expensive by historical measures, I wonder whether you could suggest either some regional or country markets that may offer good value at this time. One area that may qualify is emerging markets but I wonder if you may also have other suggestions. I realize this goes outside of your normal field, but I would appreciate any insights that you may have.

Q: I received a nice payment yesterday from the Amaya litigation. In a non-registered account, would this be regarded as a capital gain?

Q: In finance or investing media there is often reference to portfolio insurance. I did not know such a thing even existed. The discussion often makes a passing reference to “... buy the VIX.... “ If this is correct, how would one do that? If insurance--- I assume that means mitigating risk--- is unrelated to VIX , is portfolio insurance even buy-able (OTHER than by use of options)? If options are the only way to mitigate risk, do you know some reliable sources one can go to? If I am going to pull my hair out worrying about “toppy markets” (a favorite phrase of some market commentators) I would like to be able honestly to claim I did make best efforts before the said hair-pulling.

Q: What is YOUR definition of a momentum stock?
Please name companies in your portfolios that you Currently consider to be momentum stocks.
Thank you

Q: A few years ago, I had some losses on several semiconductor companies, foundries and equipment suppliers to the industry. Since then I have more than made up. I VAGUELY recall a financial analyst saying one should not buy chip companies when they have low P/E.... that one should only buy when they look expensive. Does this heuristic make sense to you ? If yes , does the suggestion apply to all cyclicals or just some sectors?
BUT how does one actually apply the ‘rule’ , in other words:
What specific ratios should one use, including inter alia :
Trailing P/E
Forward P/E
PEG
It seems counter-intuitive and migraine-provoking to *intentionally* buy expensive and later intentionally to sell cheap.
I am interested in YOUR thoughts.

Q: I look at the company profiles you provide (among other things) before purchasing a stock. I sort of like a stock with a low PB ratio. It worries me when I look further and see a low price to tangible book value. I'm not totally sure what it means to have a negative price to tangible book. No real underlying value compared to the value of a bunch of good will or patents? I'm ok paying for patents (I think) but I am less happy paying for good will as I think that is just management paying too much for an acquisition. Is there anyway to distinguish the provenance of the intangible assets? How do you view the intangible value stats? Does this even come into your review of a company? Or do you just consider intangibles "good" if the company performance by other metrics is "good". Could you please recap when price to tangible book value is a stat that is worth considering. It causes me worry sometimes and I hesitate on purchases to my detriment.
Thank you for your excellent service.

Q: Is there a way to hold the S&P index in an ADR or some other instrument that would turn the investment into a Canadian capital gain. (maybe I am just wishing) Could you explain how an ADR works. Thank you for your valuable assistance.
mike

Q: Comment on Kevin's question about the minimum withdrawal from a USD RIF. I don't know the answer but I believe they would use the FX on Dec. 31/Jan. 1 and not on the date of withdrawal. That would set the amount for the year and most brokerages will have a spot on your account page where they tell you that amount for the year. My withdrawal amounts show up automatically on Jan. 2.

Q: I am concerned about the concentration of FAANG stocks in the S&P 500 index. My understanding is that the concentration of the top 10 holdings in the S&P is near historic highs.

Do you feel this is a real risk? Would you recommend switching from a market capitalization ETF (e.g. VFV) to an equal weight ETF (e.g. EQL)?

Your advice is most appreciated. Thank-you

Q: Just a general comment on why there is no accountability(CEO,Board) for companies who fail miserably on managing the company never mind trying to add value for shareholders. Bombardier(Govt. handouts,mismanagment, etc). Thyssen Krupp same as above, Generel Electric??? - and most recently Boeing. Sure the CEO might get"Fired" with a multimillion dollar payout but why does the board always just get away with no repercussions as they ultimately allow the CEO to make the mistakes?

Q: What are the implications of holding Canadian companies, e.g. banks, on US exchanges in registered & non-registered accounts?