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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: Hi,
Since your comments are often extremely intuitive and helpful, I am keen to hear your thoughts on the new Communication Services sector in the US. As it will reclassify a few stocks I currently own, I am wondering about the potential effects, if any, of ETF managers rebalancing sector specific funds on some of the stocks involved. It has crossed my mind there might be a significant number of changes required on multiple ETFs, but am not sure whether this may affect stock prices, or would it just see increases in volume for a period of time? Is there an opportunity here for picking a few stocks, possibly growth ones, that may gain from the reclassification?
As always, we appreciate your insight.
Dawn
Read Answer Asked by Dawn on August 28, 2018
Q: I’m 40 years old and I have a portion of my investments in fixed income ETFs. In a rising rate environment, should I reduce my fixed income exposure? Each fund is down about 4%, while my preferred ETF fund is up 10%.

Jason
Read Answer Asked by Jason on August 28, 2018
Q: Not sure if this is in your area of expertise. If I expect to have capital gains taxes on death, should I consider permanent insurance? If so, should the cash value portion of the policy replace my fixed income exposure?

Jason
Read Answer Asked by Jason on August 28, 2018
Q: I have MACD on my Vector Vest charts but really dont understand it and how to read it and use it----Can you explain this to me?
Thanks
Peter
Read Answer Asked by peter on August 27, 2018
Q: Dear 5i Research,
I enjoy reading your watchlist questions. I am 67 years old, semi retired and enjoy doing my own investing through a discount brokerage over many years. I do have a high risk tolerance. My retirement income is CPP, OAS and my stock portfolio in 7 figures divided amongst 6 stocks. I am a very “concentrated” investor having gone from 30 plus stocks and ETF’s to only 6 stocks – Constellation Software (CSU), Alphabet (GOOG), Berkshire Hathaway (BRK-B), Amazon (AMZN), Alibaba (BABA), and Tencent (TCEHY). I follow them all closely. Should I be concerned about my high tech component and rather concentrated portfolio? What type of diversification if any would you recommend?
Read Answer Asked by Chris on August 27, 2018
Q: Preferred Shares: How to evaluate risk? How have blue chip preferred shares behaved during previous massive downturns such as 1987 and 2008? Have they gone down as much as regular shares? Thank you for your fine service.
Read Answer Asked by Genevieve on August 27, 2018
Q: In the past, when asked what the optimal geographic allocation is for the 'typical' Canadian investor with a long time horizon, 5i has variably replied 50/30/20 Cdn/US/Intl and 50/40/10 Cdn/US/Intl. Does this answer change if one considers the Canadian 'dividend-focused' investor, where the dividend tax credit would be a significant consideration? For this type of investor, would a higher allocation to Canadian equities be acceptable/preferable? If so, what would you consider to be a prudent 'upper limit' (percentage-wise) for the Canadian portion of one's total equity exposure? How would you allocate the balance between US and Intl. equities? Thank you.
Read Answer Asked by Walter on August 27, 2018
Q: The cash positions of each 5i portfolio are currently:
6.67% - Income Portfolio
8.17% - Balanced Portfolio
10.59% - Growth Portfolio
As an individual investor, one of the factors affecting cash allocation might be cash requirements for living expenses. Could you outline other market factors that an investor should consider when deciding on the cash allocation in a portfolio? Thanks!
Read Answer Asked by Linda on August 27, 2018
Q: I have an RESP for my two year old granddaughter that is diversified into 6 TSX stocks and one US ETF. Each TSX stock is currently a small holding because of the limited RESP donations to date. My question is - when the RESP is liquidated many years from now, is there a minimum number of shares I should have in each stock to facilitate selling the position?
Read Answer Asked by Linda on August 27, 2018
Q: You have repeatedly recommended PBH, TSGI and PHO in your portfolios, so I am interested at starting positions in PBH and TSGI, and adding to my existing position in PHO.
While I like that they have all come down in price, I am hesitant to buy because you recommend buying into positive momentum not negative.
I use stockcharts for my evaluations before I buy so my question is: How would you determine when to enter a stock showing negative momentum using technicals? Do you wait until it crosses the xx day ema, MACD crosses positive, RSI above 50, etc.?
Read Answer Asked by Curtis on August 24, 2018
Q: I much appreciate the US market maps that finviz.com provides, with its various options and details. Finviz does provide a small market map of the Canadian market, but it lacks relevant detail. Is there a site that provides more fine-grained maps of the Canadian markets? There is a Canadian one at https://stockcharts.com/freecharts/carpet.html?[TSX], but it lacks much detail. Thank you.
Read Answer Asked by Kurt W on August 24, 2018
Q: Are there Canadian companies whose dividends are paid in USD and qualify for the dividend tax credit? If so please provide a list of a dozen or so or alternatively how can I locate them?
Thank you.
Read Answer Asked by Stanley on August 23, 2018
Q: Peter,
In your opinion, what is a better predictor of future cash flows, Earnings vs Cash Flows? The FASB indicated operating earnings are a better predictor but just wondering your general thoughts on this topic? Also, which earnings do you prefer: EBITDA, EBIT, EBT or Net Income?

Thanks.
Read Answer Asked by Rod on August 23, 2018
Q: Press release from last week:
American Hotel Income Properties REIT LP ("AHIP", the "Company") (TSX: HOT.UN, HOT.U, and HOT.DB.U) discloses that Rob O'Neill, CEO, purchased 5,000 additional units today, through open market purchases.
Since January 1, 2018, Mr. O'Neill has acquired 163,398 additional units of AHIP, including 15,498 units provided as part of his agreement with the Company to take 100% of his 2018 compensation in the form of equity.

Seems to me a CEO taking 100% of his 2018 compensation in equity is a great sign and bullish for the stock. Do you agree? Also, how common is this for a CEO to be 100% compensated in equity?
Read Answer Asked by Robert on August 23, 2018
Q: Thank you very much for your answers and service. You has been helping me in my investment decisions quite a lot.
I have noticed that responses to questions seems to be variable at times. It seems that some answers have a different approach than others. I am not saying that responses have been wrong of conflicting, just different. Different perspectives are indeed helpful, but can also be confusing.

My question is: How many people do you have answering questions? Would it be possible to sign the answers so that we know who is answering? I am sure each person has a slightly different view. All views are valuable, but knowing where the answer is coming from would also be valuable.

Thanks,

Fed
Read Answer Asked by Federico on August 22, 2018
Q: Hi 5I
You have answered previously that you prefer and have done well by adding to a position experiencing upwards momentum. My question is to what degree that applies , would you overweight a full position (by a little/a lot) ?
I'm guessing you're reply will be along the lines of each situation is different but hey I've loads of credits so appreciate your experience.

Thanks
Read Answer Asked by mike on August 20, 2018
Q: hello
I could swear you used to have an excel list of all the companies you cover, but I cannot find it.
Do you still have one or could you provide such a list?
thanks
Francois
Read Answer Asked by Francois on August 20, 2018
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