Investment Q&A

Q: Good morning Peter, Ryan, and Team,

In today's answer to Adam about DRIPs (SIS in particular), you told him that "on a portfolio basis, we would just never get into a situation where you need to sell something to generate cash". Is it appropriate to sell part of a stock or ETF to raise cash if you're doing it for portfolio balancing? Or is this a dangerous strategy that could backfire if the market takes a nose-dive? I'm presently in a situation like this in my RRIF, which is well-balanced using mostly 5i recommendations, plus some fixed-income ETFs.

Thanks as always for your timely advice.

Q: Could you recommend a source of accurate and up to date statistics of mutual fund flows? Also interested in ETF fund flows, especially leveraged ETFs.

Thank you.

Q: Hi 5i,
I'm 58 years old and recently transferred over my Mutual Fund RRSP's to a self directed RRSP. I now have a diversified portfolio except for fixed income - still have 50% in cash. I know I should have around 30% in bonds (fixed income) but having a difficult time justifying investing in bonds with such low interest rates. Can you explain to me if rates start going up won't the value of bonds go down? What bonds would you recommend CBO or CDV or.... Are there bond like equities that would be better at this time.
Question 2: If rates go up in the US will that effect Canadian Utilities, Telco's and interest sensitive stocks.

Thanks,
Luca

Q: I wonder about letting your winners run vs diversification. I recently donated half of my PBH(up 300%) to charity, and it still is 5% of my portfolio. Is this an appropriate way to balance those competing ideas? I read that you can't get a "10 bagger" if you keep selling your winners, and at least some pundits think it's 10 baggers that make a portfolio a success, but surely that unbalances the portfolio? confused.

Q: Hi Gang,

What are the best strategies or tactics to follow ahead of earning announcements to safeguard against potential precipitous price drops given that stop orders will not necessarily work? As example the significant drops in AVO and CXR after the recent earnings announcements.

Thank you
Anthony

Q: How do you decide whether to use a DRIP or not for companies in your portfolio? Do you base it on whether you need dividend income or not or is it more company specific? We can use SIS as an example since I own some shares and wondering if I should drip the 2% dividends or take the cash.
Thanks

Q: What is the best way to invest in GICS? $200,000 proceeds to be withdrawn over four years at $50,000 annually. So $50,000 in one, two, and three year terms. It looks like Oaken Financial offers the best rates in Alberta. Or is there a better alternative that provides the safety of a GIC?

Thanks,
Hal

Q: (MISC)Covered Call ? of Aug 29/16 Asked by Linda:

Go to Google advanced search, Youtube.com, www.torontopubliclibrary.ca, Amazon.com, or Chapters.com etc and search on 'covered calls'. Also, Richard Croft and Lawrence McMillan have written books and articles on options.

Q: Would you have some suggestions for reading material on covered calls? I wasn't looking for something too complicated. But I am interested in information that would cover (a) stocks and stock markets best suited for covered calls (b) logistics of how to choose the best case of option cost and duration for a particular stock ( c) option timing in dividend paying stocks and (d) what is a realistic rate of return. Thanks!

Q: There was an article from the Globe describing an investment stratigy to look for areas where capital is scarce. I havn't seen this before, at least described like this, I guess basically the opposite of momentum investing. Or maybe this is what value investors look for. In any case they did not back the article up with any evidence that the strategy has been successful over the long term.

So: are you familiar with this conceptype and do you think there is merit to it? I guess it could help being early to a sector that will soon turn around, but it seems to me that investor capital (aside from a lot of retail) is pretty smart money and may be avoiding areas for a good fundamental reason that could last many years.

"Returns are best where capital is scarce” is one of my favourite bits of investing advice. The idea was popularized by Richard Bernstein, former chief quantitative strategist at Merrill Lynch and founder of RB Advisors."

Q: Good Morning
WealthBar is a Robo Adviser based out of Vancouver.
We will appreciate any information you may have about this company. Is it safe to invest through them?
Thank you

Q: You may have answered this in the past, but: does the 5i team believe that individuals can beat the market? I'm assuming you must think so given your team is essentially in the stock picking business, but how does this align with most studies that suggest the ETF or couch potato approach?

Q: Hi guys,

When analyzing companies with a high debt load model like infrastructure companies or utilities, what is the best metric to analyze the valuation? Should we use a multiple of EBITDA, rather than net income since net income will be heavily influenced be depreciation and interest expense?

Thanks,
Jason

Q: I read with interest Jason's Aug. 24 comment on being allocated some subscription receipts with IPL's recent deal. How does one go about receiving such offers?

Q: Hi 5i team, I would like to get refereed to good websites in order to access market by price ( bid and ask depth) information on TSX listed stocks. I noticed they charge a fee for that service, but could you recommend one or two in particular?

Thanks

Q: I have a lump sum that I received from the sale of a rental property and I'm looking at deploying the capital in the stock market. My question is around portfolio construction or how to deploy a lump sum of money. Do you build half positions in the companies you like and look at adding to the positions on pullbacks or do you initiate full positions if the valuation is reasonable?

Finally, once the portfolio is largely complete, do you recommend only trimming and adding at month-end or once a month? It seems like this would avoid unnecessary trading fees and limit too much trading activity.

Thanks,
Jason

Q: I am in my early 60s. I have 46% of my portfolioin fixed income. All in CBO average cost $19.15. With interest rates in US likely going up a little in Dec. Should I reduce CBO and re-enter TD followig BMO better than expected results.

Q: Monitoring Dividend Stocks: I would appreciate your advice as to how investors can monitor and stay on top of bad news, particularly for smaller, riskier dividend stocks.

Example: I have a small position in GRC/Genville Strategic Royalty Corp. I missed the news of the poor results in May. The stock price dived down, and has stayed down. (As of today, the capital loss 49%.) The dividend was cut 27%. How can one avoid or limit losses in similar situations. Also, do you advocate selling a stock as soon as a dividend cut is announced, or anticipated?

Q: We keep reading about the incessant search for yield but I can't figure out who it is that is searching. The average investor couldn't live on yield alone even at some of the highest levels. Not to say that yield is not an important metric; it is, as 5i points out. But who then is doing all the "searching"?

Q: Hi Peter and Associates!

I recently received a notice from my discount Broker about a class action potential claim for anyone holding shares in Barrick Gold. The class action originates out of the US. Do you have any suggestions for how to handle this piece of information as I have no broker to receive advice from?

Ian