Investment Q&A

Q: I had to respond to comments respond to comments regarding 5i's reluctance to issue early sell signals.
It's OK to want this, but the onus is on the individual investor to make those decisions him or herself. I'm shocked every time I see someone say I'm down 50% on this stock, is it time to sell?
If it's down 50% you need a double to break even.
I would suggest a stock rolling down a hill is unlikely to double in anything resembling a short time frame.
There are plenty of ideas on how to mitigate losses. Stops (I prefer mental because it gives me more freedom) to charting to just plain, common sense.
If people are willing to let their investments ride the roller coaster down, blaming the messenger won't fix the problem.
Sorry for the rant, but I pay attention every day. And make corrections as needed,
If a person doesn't have the time to invest it seems unlikely, to me, the money they invest will perform up to their expectations..

Q: Can you give me your definition of small and mid cap? I am trying to set up my portfolio to a certain percentage of small caps. Based on your definition could you categorize the following for me: ECN, SPE, SPX, SGY, GPS, ITC, ABT, SYZ, GUD, PLI, PTE. Thank you for your service

Q: Hi, My question is about NR stocks held in the model portfolios. I have created a custom stock universe using all stocks from your coverage list with a rating of B- and higher, plus all NR stocks from the Balance and growth model portfolios. I built a balanced 25 stock portfolio from the universe(all full positions). I have full positions in CLS and TECK.B, You have 1/2 positions in the Balanced port. You also had 1/2 position in RHT. I know RHT was risky for several reasons and AEM, CLS, TECK.b is for diversification? or is there high cyclical risk? For NR stocks i'm not sure how to decide full, half or exclude them. All stocks have different levels and types of risk. Is there a way to mention or grade the risk level and type of risk when adding NR stocks to a port? For example the new additions to the growth port. I assume GDI is lower risk then LGO? Can I consider full positions? I'm just trying to avoid accidentally having a full position in a very high risk NR stock.
Thank you so much!

Q: Hej
Whenever I look up a stock, I love to study the one year chart
Would it be too labor intensive to show the one year chart on any stock?
A very small chart would be fabulous!!!
Think about it
Thanks
Juri

Q: My question has to do with the timing of portfolio rebalancing. I tend to rebalance at least semi-annually (summer, year-end) but don't have a hard and fast date at which I do so. I also do not tend to keep any cash in the portfolio and I tend to trim winners fairly quickly once they exceed 5% of my portfolio.

When we go through periods of sudden volatility, like the past week or two or when an official correction/recession hits, though, is the best time to re-balance? There are some stocks I consider to be good buys currently - KXS for example, that I do own already but, of course, my percentage weighting is now lower than it was a week or so ago. I fully expect it to go back up, at which time it would once again hold its "proper" weighting. But other stocks, PKI for example, has increased to the point where I might want to trim it. So do I sell some PKI to buy some KXS now, should I wait until I do my next official rebalancing around December, or rebalance now to take advantage of what I think are some good buys?

Appreciate your insight.

Paul F.

Q: As a follow up to your reply "AD has had some earnings struggles recently. We prefer to look at forward (estimated) earnings, and on that basis, the P/E is just 11.8X."

Can we derive the forward PE of a company with the Company profiles available on your site? If so, how would I calculate it?

Thanks.

Q: here is my personal mea-culpa

over 35 years i have lost an embarrassing amount of money in the market

i am an aggressive investor and have lost money in every single way imaginable - you name it, i have done it

mercifully i am getting 'better' and lose less, less often; yet being in the market means you will have losses

my biggest mistakes show up in these 2 areas:

1) impatience
2) buying hope

so regarding today's massacre of RHT I offer this:

peter's team provides an excellent framework on how to allocate assets; how to keep portfolio positions small (5% max) and 'second to none' fundamental analysis (P/E's, cashflow, balance sheet info etc)

most importantly - this information simply tells you WHAT to buy

to know WHEN to buy you must have a brief look at the chart (technical analysis)

for example; he can tell you all day that 'fundementally' BNS is a good solid company and should be owned; yet looking at the chart, a three year old with a crayon can tell you that it has not finished going down yet

why is it going down? who knows, and really who cares?

so i learned long ago to be patient.....and buy only when the stock has stopped going down --- therefore i no longer try to catch the knife; call the bottom etc etc - and therefore I lose less

and this brings on #2

as you have all heard before - hope is not a strategy

as humans, we are hardwired to believe we 'know' better and nowhere is this more dangerous than investing

when our stock (of a 'good' company) starts going down we buy more because "it's a daily mis-pricing"; then it goes down more and we 'double up' because "it's a great business and i can't believe how stupid some people are".......and then the poor news comes out and we sell (because we never did actually understand the company and we bought on hope (or greed) based on someone's recommendation...........or buy we more to "trade ourselves back on side"

a look at the RHT chart shows it has been going down in a perfect line since february - why was that? who knew? more importantly who cares? the chart has been telling you 'something ain't right"

to summarize

always look at the chart and most importantly....

IF YOU ARE IN A HOLE, STOP DIGGING!!!

i have made every stupid investing mistake; most of them many, many times....

i am probably not finished making stupid mistakes

but i hope I am.......

bob

Q: Please comment on my perspective below. Am I wrong?

A bond matures and you get a known amount of principal back (on top of the distributions paid out along the way). As such it provides a safety component in your portfolio. The safety comes from NOT being at the mercy of the market (all you have to do is wait till it matures).

A bond ETF does not do this. The principal you put into it is eternally at the mercy of the current market price of that ETF. Even when any bond matures, the ETF just goes out and buys more bonds at current market prices. Therefore it does not return a known amount of principal as a bond would. The whole concept of "maturity" or "yield to maturity" disappears. So these ETFs are a lot more like equities than bonds. If people are following advice about the percentage to allocate between bonds and equities, in my opinion it is a mistake to treat the bond ETFs as in the bond category.

(The exception to the above being "target date bond etfs which do mature and return your principal").

Q: Hi Peter,
Jim Keohane from Hoop was on BNN Friday and was explaining his absolute return strategies he uses to run the HOOP Pension plan. He was explaining the approach for lower risk vs return vs a equity only approach. Is it better ? Are there any strong funds like this available to the average guy ?
Thanks, Paul

Q: I have read that the spread between US treasury 10 year and 2 year bond yields has been narrowing, and is currently sitting at 30 basis points. Assuming that the US spread continues to narrow and possibly invert, can you comment on the effect that would have on the Canadian financial and housing markets? And in your experience what would be time frame once the US yield curve inverts for those markets to be influenced? Many thanks!

Q: About 25% of my non-registered portfolio is in US dollars. Other than currency risk, is there any disadvantage to buying Canadian dividend stocks listed on US exchanges, such as the banks, utilities, etc. As an income oriented investor that seems preferable to US dividend stocks which have less favourable tax treatment for Canadians.

Q: Hi Team,

Is it a good idea to have a stop loss order for some of the high volatility stocks such as PHO, RHT, COV, TSGI and tech stocks and what should it be set at.

Thanks

Q: I've got a small investment in this company. They are listed on the CSE as SPR and now on the OTCBB as SRUTF.
What kind of security do I have on these types of listings?

Q: Peter,

To get copies of financial statements on Canadian companies I use SEDAR. What one can I use for American companies such as Pepsico?

Thank you,

Paul

Q: Hi
I have a question regarding stock options.

When a company declares stock options to management or board members, etc., does the person receiving the stock option have to pay the exercise price to the company's treasury before purchasing these shares? Is that true for all types of stock options?

Q: Looking at the sell offs/drops on both sides of the border the last week, can you offer any advice? I have a long term outlook, and am ok with some risk. Do you see any stocks (on either side) the present a good buy at current levels that are likely to make a good rebound?

Thanks

Q: With the recent sell off, have any of the above stocks (contained in either the Income or Balanced Portfolios) reached the stage where you would call them "table-pounding buys"? In other words, has the market overreacted and the pendulum has swung too far?

Obviously, there is always the chance of a continued downdraft, but at some point you just step in top up your holdings.

The Income Portfolio is sitting on 10% cash...any thought to deploying some of it soon? Thanks...Steve

Q: In the current investment environment with the prospect of rising interest rates would you use stop loss orders or just hang in? Thanks, Bill

Q: It's getting ugly out there. Any general comments about what to do (esp. if you like the gains you've had and don't want to see them just relentlessly evaporate?). I realize I've answered my own question but am still interested in any comments that come to your mind.

Q: Good morning...moving forward what impact will the increasing bond yields and interest rates over the next 6 months....by order what industry categories are considered on a downward trend? Also, for the next 6 months what would you say are the 8 stocks in 5i portfolio's that you think will be (temporarily)harmed by the rising rates and yields over the next few months..
Thanks