Investment Q&A

Q: For an investor with a higher risk tolerance who is always fully invested, do you think it is possible to profit on a risk adjusted basis from buying into a market dip on margin (assuming a "reasonable" margin rate of <6%)?

Given your experience, what would be reasonable parameters of a system to do this? I am thinking something along the lines of: If the market (e.g. index tracking ETF(s)) drops 10%, deploy 10% margin, drops another 10% deploy another 10% margin, ... subsequently deleveraging by a similar scheme on the way back up. Are there other schemes in the same vein you are aware of which are profitable?

Would it instead make more sense to wait for the market trend to reverse before deploying margin? For example, say you sit idly while the market drops 30%. Then you wait for the trend to reverse (e.g. Spot price > 200 SMA) and deploy margin, perhaps in 20% increments monthly as the trend continues eventually delevaraging at a new market peak.

Thanks as always.

Q: Hello team,

Is there any site that gives you the short% and its change on Canadian stocks?
The shortsqueez.com only gives the short interest on US stocks.
Thank you!

Q: How does this class action lawsuit work for investors who bought or owned this stock between Nov 15/14 and July 10/15. If i owned and bought this stock during this period, am i entitled to be involved in this settlement, and what do i have to do? These dates were on the Siskins law firm website.

Q: I am very interested in the question and answer on free cash flow. I have no doubt it is an excellent indicator but like most others, not fool proof. In looking over the list of top 10 FCF companies, I was gobsmacked by Yellow Media in the list. It is and has been a disaster for it's investors over the years.

Q: Hello 5i, My financial advisor for my RRSP is with Scotia Wealth Management and I'm not happy with him. If I want to take control of my account do you know what the procedure is? Also are there certain types of investments that can't be in a self directed account?

Q: With so many potential valuation and growth metrics available, it's hard to know which ones are REALLY important. I would love to use a handful (3 to 6?) of metrics that I could use to screen companies in order to create a "to buy" list.
Do you have any recommendations for a group of "must-use" metrics?

(Some that I am considering are: EV/EBITDA, PEG, Price/Cash flow, P/B, Price to Sales, P/AFFO for REITs, Debt/Equity, Dividend yield, Dividend Payout ratio, and a company's history of raising the dividend)

Would I want to use different metrics for growth vs. value companies?

Also, is there some place that I can look up a company's metrics (i.e. EV/EBITDA, P/B, etc)?

Thanks!

Q: Greetings Peter and team,

Again, thank you for your logical answers to my previous questions.

In the 60s, a self-made, wealthy graduate of the Benjamin Graham, Columbia University program which warren Buffett praises, recommended that investors keep half of their portfolio in cash. When the market drops 10%, he recommended that they use a third of that cash to buy stock bargains. Today, that would be a US market index ETF. If the market drops another 10%, he recommended that they use all their cash to buy bargains, again, say a US market index ET. And if the market drops another 10%, he recommended the investors margin their portfolio fully.

I would appreciate your views on this seemingly risky approach to investing money not needed for near-term use.

Thank you,

Milan

Q: Hi,
ORT stopped trading a few months back. I have a small holding left in this. Is there any possibility of this stock trading again and if not what is the procedure to have this removed from your account?

Q: I recently saw a feature on BNN that indicated a study by CITI that said the most reliable metric to use is free cash flow per share when evaluating a stocks performance and future growth potential. Is this something that you can use when you screen and include in a company report

Q: Just a comment, I’ve been a member since you launched your site. I read a load of investment things daily, and your offering is unparalleled. While I don’t ask many questions, I truly benefit from the Q&A every day, and of course the insight gleamed from your portfolios.

Since your company has grown a lot, obviously the demands - the sheer volume of questions alone - has clearly grown with it, because over the last while I’ve noticed a very big difference in your answers. They’ve lost the choppiness: the quick, short, get-to-the-point way in which they were always written. Now, they’re very smooth, all corners are rounded, very well-written quite frankly, so I assume that answers are now being dictated, and a ‘writer’ is putting them together for publication. Very nice, easy to read in a mellifluous kind of way. But I have to say, I miss the choppiness!

Had to comment on it, it’s just that marked a difference. Thank you for the excellent service, I look forward to staying with you until you hang up your hat!

Q: The recent hand wringing (and rightly) over CRH (haven't owned for years) has made me question what rationale retail investors use to buy and sell. I understand why advisors suggest a buy and hold strategy. But can't understand why retail investors need to be tied to that philosophy. I'm making a leap and will assume most members of this site use a discount brokerage. Given the almost insignificant cost to buy and sell (assuming buys and sells of more than $10,000), isn't a more active approach to trading a reasonable proposition? I use technicals to take the emotion out of the equation and would love to know what buy and sell discipline you would suggest. Having personal buy/sell rules might help investors feel better about making these decisions.
Thanks for all your support and advice over the years.

Q: Peter
From Morgan Stanley, i think, a well written little dose of common sense...
print or keep for you

NEW YORK – The S&P 500 closed at a new high on Wednesday in what analysts hailed as the accumulated result of several hundred million people waking up every morning hoping to solve problems and improve their lives.

The index finished up 4 points. Goldman Sachs strategist Bill Blake said the move was the result of unidentified marginal buyers being a little bit more motivated than unidentified marginal sellers. “We’ve now had 241 years of people in daily competitive pursuits to do things a little better, and those benefits add up over time. Mix that with some good luck and where we happen to be in the business cycle, and here we are,” he said. “My job is to sound smart, but you can explain this stuff to a five year old,” he laughed.

Corporations earned $5.89 billion in after-tax profits. Financial advisors and middlemen took in $710 million in fees. The difference, Blake said, would accrue to investors over time.

Analysts warned of several metric tons of dopamine and cortisol careening through the global economy, which they said created a near certainty of poor financial decisions. At some point, Blake said, these bad decisions create social proof and feed on each other, leading to recessions. “When is the next recession?” he asked. “I don’t know. Whenever the second mortgage you took out to buy a boat to appease your insecurity convinces your brother in-law to do the same, and his boat gives the boat salesman enough misguided confidence to become a day trader, and then all three of you crack under a collective bout of geopolitical bad luck or something. But we’ll move on.”

About 9,000 new businesses formed on Wednesday. Another 8,200 dissolved. Analysts expect the trend to continue, calling it an “unmistakable example of basic capitalism.”

Fifty-five million American children went to school Wednesday morning, leveraging the compounded knowledge of all previous generations. Analysts expect this to lead to a new generation of doctors, engineers, and problem solvers more advanced than any other in history. “This just keeps happening over and over again,” one analyst said. “Progress for one group becomes a new baseline for the next, and it grows from there.”

Three dozen political pundits yelled at each other on TV in front of an audience of 75 million. Meanwhile, a couple hundred million people were reasonable and productive in front of an audience of zero.

Just over 1,700 patents were filed at the U.S. Patent and Trade Office, with a few expected to change the world over the coming decades. “Pretty damn cool” said Sarah Donald, a PTO spokeswoman. “I wish more people paid attention to this kind of stuff.”

Facebook stock fell $0.23 to close at $169.16. Four-hundred seventy one news outlets covered the move. No one knows why.

Analysts expect more of the same tomorrow, with the trend continuing into next week.

* Nothing, and yet everything, about this post is accura

Q: I bought a half position of KWH.UN July 10 and after only 3 weeks, it's down 7%. Do you recommend I add to my position and average down or wait for an certain event?

How do you determine when to add to partial positions?

Q: Marylin question.
I use this web site for dividende growth http://www.dividendgrowthinvestingandretirement.com/canadian-dividend-all-star-list/
Publish as you which

Q: can you refer to a few hedge funds or managers that generally produce excellent results year over year?
i like dkam but they are closed for new investments.

Q: Hello: I am trying to find the list of those companies (Canadian, US, global) who have increased dividends year over year +for ever+. I know I have seen it but am not able to find it right now. Can you please point me to this, I am going to try to use it more in my portfolio planning. Many thanks to you, Marilyn

Q: In response to John on Aug 1st, here is a link to the Bank of Canada CAD index against a basket of 6 currencies: http://www.bankofcanada.ca/rates/exchange/ceri/

Q: Please advise what is the effect of strong Can.$ on the aforementioned stocks.Thanks for u usual great services & views

Q: Hi the great 5I team, following Harry's question on ask and bid price, how unbiased is the market maker? Your answer seems to suggest never put in a market order ? Thanks always.

Q: I am considering realizing some capital gains now at the 50% tax rate in case there is an increase to say 75% in the fall federal budget. How and when will I get more info on the fall budget? Will there be an announcement at some point?