Investment Q&A

Q: Pleased that I have a "double" now with Canopy Growth! What is your particular investing philosophy when you reach a substantial gain in a stock? If trim, what percentage? Or let the momentum continue?
Many thanks, Lorraine

Q: Im looking at the Dalio/Robbins "All-weather Portfolio". Do you have any comments about it fundamentally? They both say its about diversifying the risk rather than the sector or products in order to increase the chances of making money in almost any market and decrease losses.

Can you make recommendations for each category please? They also recommend low cost etfs to get further diversification within each category. I would still keep a small amount of cash aside for higher growth names to "play with", so any profit taking would potentially go into the All Weather Account.

What they lay out is:

30% Long term bond (20-25 year)

15% Intermediate Bonds (7-10 years)

30% Stocks

7.5% Gold (possibly a bouillon etf, or possibly just gold with no etf)

7.5% Commodities


Please deduct what you feel for credits since this is a multi part question.
Thanks

Q: Hello Peter
I have question regarding "dead cross" on daily frame of $SPX S&P500 (EMA50/200).
If one would sell all portfolio at dead cross time in the middle of October 2000 or beginning of January 2008 that person would save about 50% of losses and about
4,5 years of recovery . What is your or your technical analyst opinion about "dead cross" and current situation compared to 2000 & 2008 corrections.
Thanks.

Q: I run my own portfolio using Scotia I Trade. The portfolio is of size and I feel I need a more sophisticated platform.
Please refer me to one or two options to consider.

Q: I trade with td Waterhouse and get their Technical alerts via e mail. Dec. 7th. Alert has downgrades on the above noted stocks. ipl- Close 20.92 down to 18.00 range. mre close 10.28 down to 4.75 range. sis close 13.01 down to 8.00 range. Your view on these technical downgrades, and are they fact. Sis was a recent top pick of Ryan Modesto. Should I be selling on Monday?

Q: I am a long time subscriber to 5i and long time follower of BNN and one of BNN's best, David Driscoll, mentioned that he could see another 16% down-side on the S & P. Also, awhile back John Zechner mentioned that there are stocks that are like melting ice cubes. Sell them before they are gone. Your opinion? I was always under the understanding that it is one credit per question. Please clarify this. Thank you. Dennis

Q: Re: Growth vs Value in market downturn

How do growth stocks tend to perform during market downturns vs value stocks? Does one need to hold a bit of both? If one holds stocks of good companies but have premium valuations..what does one do in a downturn..wait for markets to pick up and do nothing? This is essentially what I am doing. Thank you.

Regards,

Shyam

Q: I am planning to realize losses on the above companies to offset capital gains with a plan to repurchase after 30 days. In order to maintain sector exposure in the intervening period I would like identify proxies for each holding. My thinking is as follows:

TECK.B == XMA
BNS == TD
TFII == ZIN
NFI == ZIN
WEF == CFP
VET == XEG
WCP == XEG

Please review my suggested proxies and add / amend as needed. Alternatively, if you think I would simply be better off holding cash until repurchasing please say so. Thank-you very much for your help.

Q: In one of today's questions, you note "The inverted yield curve has worried some, as it does tend to predict recessions." This statement has an air of certainty that seems to be at odds with the table of data that you published the day before showing that recessions on average came 20 months after the yield curve inversion. What value is there in a prediction that takes on average 20 months to materialize. I would bet a correlation between not having a recession for ten years and having one in the next 2 to 3 years is even better and just as useless. Do you really want to propagate this myth?

Q: Timely article.
https://ritholtz.com/2018/12/how-to-use-behavioral-finance-in-asset-management-part-iii/

Q: david rosenberg just publishes an article in the globe ignore the yield curve at your own peril, the crew at 5i seems to me far more optimistic than this article indicates, furthermore the market action seems to indicate rosenberg is right on,so my question is who is right andshouldn,t we all be raising much more cash including 5i portfolios. dave

Q: I would like to add a comment in response to the question on Manulife's Income for Life offer from Dave. I am a financial advisor who recently dealt with this issue with an inherited client who had both a registered and non-registered Income for Life product. Some considerations to keep in mind is that the "top up" offer for non-registered plans is fully taxable. In my client's case, we determined that the non-registered offer didn't make sense but that the one for the registered plan did, as there was no taxation and it does not affect the client's RRSP contribution room. In my experience, when an insurance company wants to get out of a product, take a hard look at it because it usually means it is favouring the client too much (but not always, of course). Income for Life is meant to provide not only income for life but guranteed growth in the base amount as well. In Dave's case, the low growth in his capital to date is because of the investments he chose to be in - there is a wide range of investment choices so if the time frame is long enough, he may be able to grow that value. These products are not for everyone but the offer should be examined carefully with the taxation issue in mind. Hope this helps.

Paul F.

Q: Hello, I would like to start a Share Purchase Plan with one of the main banks in Canada. I am not an employee, and would like to do this in an RRSP/TFSA/RESP. I contacted Computershare to do this and they told me it cannot be in done in a registered account. Does anyone know if this can be done any other way or with another company?


Thanks

Q: Given the current volatility in the market there are a lot of analysts heads making bold predictions. Recently I heard one analyst say that "historically double peaks in a period of heightened volatility signals the end of a bull market". You've taught me there is always an opposing view-so is this statement simply that or is there some credence to it. Thanks for all you do.

Glen

Q: Hello Peter,
There have been many short sellers in the last few years in health care and now in Cannabis stocks. At this point, time will tell on Aphria, but for others like Valeant etc the short sellers were correct. I find it interesting that the brokerage firms, and analyst that covered these companies gave high marks and all of a sudden with a short report, they either revised their price targets or put out a release that the stock is under review rather than defend their own analysis. I am starting to question the analysis that is done by Canadian firms and their ratings. How is it that the short sellers are able to find things that the analysts covering these companies have not managed to even come across? Can you please comment as this is getting ridiculous when analysts and BNN Guests talk highly of companies and than we find out the shortfalls in these companies. Where is the accountability on these analysts and brokerage firms that put out good reports? Thanks very much

Q: With the 10/2 year treasuries spread now at 0.11 for December 4, 2018. Would it be prudent eye up good quality stocks, in preparation of a recession coming?
And is this something you are watching?

Q: We recently received a letter from Manulife with an offer to buy out our Annuity contract with Income Plus. Rob Carrick had an article on the offer in the Sept. 22 issue of the Globe and Mail. I would like to ask your opinion. My original investment was 175,000, purchased in May 2008. Recent market value was about 217,000, for a some what dismal return of less than 2 percent. These types of fixed annuities have some guarantees, but are complex and very hard to understand. The buyout offer is 37,000 and Manulife would add that to our present market value and roll over our contract into a newer segregated annuity product with lesser benefits. It looks like we have 3 options: 1)leave our contract as is with Income Plus 2) accept the bonus and move our market value into their new and watered down annuity version 3) Take the bonus and cash out of Income Plus at market value.
In recent weeks, I have done an internet search on this type of annuity and now see some limitations that were not fully understood when we originally purchased: the very high fees, now about 4%; a lack of inflation protection; a declining insurance coverage as well as a declining principle, which will both go to zero if I live to a ripe old age. The guaranteed income for life, which is 13,400.00 per year for me, no longer looks so appealing, as I wish to leave something in my estate for the family.
The intent of the original purchase was to act as a pension as I am self employed ( rancher) and have not paid much into CPP.
Do you think that a basket of conservative blue chip dividend stocks and reits, might be a better choice, if we take the option to cash out and reinvest? We are not fans of USA companies, but realize that many of them are international in scope.
Thanks, Dave Bober

Q: Just read David's question about the yield inversion. Over the years I have found these two sites to be very useful when considering the question of impending recession. Both are data driven. Worth a look.
http://scottgrannis.blogspot.com/
https://www.dashofinsight.com/
Mike

Q: Hi team,
I saw an interesting question last week on the metrics for evaluating stocks in different sectors. You did not mention the tech sector. I am curious on those metrics where there are many companies, trends, growth prospects, competitors, among others. Many companies show no earnings at all as they are investing for earnings down the road. So how do you compare these companies?

With the market unrest the past couple of months, I have looked more closely at your Companies section where there is a wealth of information. Take 3 cloud stocks that regularly show up on your favourites list: BOX, RPD and TEAM. None have earnings today. There are non-earnings metrics shown, such as price to sales and price to cash flow. On a price to sales basis, BOX is 4.5, RPD is 6.3 and TEAM is 22.3. Box is the winner with RPD a reasonably close 2nd. On a price to cash flow basis, BOX is 32, RPD is 620 and TEAM is 60. BOX again is the winner but RPD is a poor 3rd. I know numbers don’t tell the whole story, but I am not sure how to make any reasonable evaluations based on the metrics.

Thanks for the insight.
Dave

Q: Hi 5i,

I read on Bloomberg that the 3 and 5 year bond yields have inverted in the states. I know generally it's a good indicator of a recession. How worrying is this sign to you? Would it lead you to making any investment changes?

Thanks!
Dave