Investment Q&A

Q: Hello,
After reading your recent recommended link on bear markets in Canada by Raymond James, I have a question involving his recommendations at the end. I've been following your Balanced Portfolio as I find it suited to my risk tolerance. I was planning to just weather the storm with it, maybe purchasing more during this down time. However, is it recommended to also diversify into bonds and gold, as the article recommends?

A second question, in the same vein, is regarding porfolio management more broadly. What are (and where can I learn more about) particular asset combinations that historically have had higher returns in the long term for any particular risk tolerance?

Q: Hope everyone enjoyed the cruise and that it wasn't as choppy as markets!
My question is on Covered Calls in the CDN market and I wonder if you would have 5 stocks to suggest for this strategy. I note that using this strategy in the US market … AAPL, CSCO, DIS have way more activity and choices, but I like this idea for CDN stocks that I already own, per the suggestions from 5i.
Your thoughts please, and welcome back to reality.
Peter

Q: Good Morning All, I have a general question regarding banks, cash and the economy. I have noticed a lot of talk about negative interest rates, bank bail ins and a cashless society with limits on withdrawls. Do you see any of this as a realistic threat and if so, how does someone protect themselves?

Q: I have about 10% of my RRSP portfolio currently in cash earning 0.75%. I plan to invest it in a fixed income vehicle sometime in 2016. I noticed today that Rona is trading at $23.40 about 3% less than the takeover price. Would investing some of this money in Rona at its current price be a smart alternative to a fixed income vehicle?

Q: Capitulating :( (me) .... so expect the market to turn up very soon!

Nonetheless, I am now firmly in the "income camp" and have reviewed the 5i Income portfolio where I already hold all but ADW and IGM of your stocks but none of the ETFS (VCH, XHY, CVD,CPD, ZRE). With the exception of VCH they have all taken it on the chin in the last year - like so much else.

I am building a "sleep at night portfolio" and have set aside an appropriate cash reserve portion. The rest will stay in the market. With "sleep" well and make a few bucks top of mind, would you recommend any of the 4 ETF's or something else like ZWB, ZDV? Thanks for help with this project.

Q: Good morning Peter and team! My 21 daughter has $20,000 to invest in a TFSA for the first time. For someone of this age, with the potential to withdraw some money within a 1-2 year horizon, would you recommend ETFs or individual stocks (or both), and what would be your top 3-5 picks at this time? Thanks! Lois

Q: What do you think would be the impact on equity prices if the US and or Canada implemented a negative interest rate policy? Thank you.

Q: Good morning,

I do not understand how the bond market works and do not have any in my portfolio. In your income portfolio you have xhy. Is it necessary to have a fixed income stocks in a portfolio? Please explain me how the bond market works or do have sites in the internet that would explain it? Is the decrease in price in xhy all due to decrease of the Canadian dollar?

Thank you

Paul

Q: I was interested in Paul's question about allocation changes based on exchange and it raised a question in my mind about what has become my biggest holding.
This is an RSP account with 20 equities so the allocation should be in the 5% region.
This stock has grown to the 10% region.
Now according to normal allocations I believe that I should take the profits and bring it back to the 5% area.
This particular stock has been sold down to the point that it is, for argument's sake, free. It has appreciated 300% since it was added to the portfolio and allocations were reduced.
The other point is that divided wise it is paying a 7% dividend at current pricing but at my cost the yield is much greater.
So solid stock that has grown does the allocation become less important or should still be followed and a solid performer sold to bring allocations back in line?
I have experienced where extraordinary events have cost me money due to allocation, DH's short issue comes to mind.
Some additional information is that I am 65 and sort of retired.
Thanks,
Ken

Q: Dear 5i,
For a Feb 1 question about WN vs L you mentioned that you typically prefer operating companies to holding companies. Could you clarify a bit more, please? Is it because the operating company would reap more benefits from its growth than the holding company? If so, would the opposite be true of the opposite, when the operating company does not perform well?
Thank you for your service.
Francesco

Q: I'm looking for monthly retirement income. Please suggest a few of your favorite ETF'S that I could invest in that would provide me with a monthly income stream. I am hoping you can suggest investments that would yield 4% or better. I realize that to provide this kind of return I will have to accept some level of risk and I'm prepared to do this. However, I hope you can suggest some investments that are relatively safe. If you know of any other possibilities I would appreciate any guidance you can give to me.
As always, I appreciate any advice you can give to me.


I thank you for your guidance.

Q: Good Morning Gentlemen,

I am writing to you to get your counsel in developing a long term diversified portfolio in US$.

My Canadian portfolio is based on the 5i 3 platforms.

My objective is to outperform the SPY if possible.
I have chosen 5 ETF’s that when analyzing them seemed to show good performance, good Morningstar rating, and non duplicated holdings.

I have researched their MER’s, objectives etc.

My question to you, (I obviously am not a PM, but Peter is) is by purchasing these etfs:
1)am I duplicating effort?
2)Am I diversifying sufficiently or too much?
3)Would you recommend I add or delete any suggested holding?
5)I have no specific sector ETF, as I can’t predict which one will outperform, is that ok?

Here they are:
Dividend: SDOG (unique approach)
Large Cap: PRF
Small Cap :IJK
Low Volatility: SPLV
Growth: IWY.
Thanks so much in advance for your advice/suggestions.

Sheldon

Q: My question is about selling puts on bns as an example. Any advice on how to start out as I am new with options. Have done quite a bit of reading on the subject. I have my account with TD set up for options 2y ago. What would you recommend as a strike price and how far out would you go. I was thinking about 3 to 6 weeks. What sectors would you currently recommend for selling puts. Any reading you might suggest. What are the taxes paid on the premium received. Thanks for the great service and the more elaborate the answer the better. This is a large question please charge 5 credits. Thank you. Chris

Q: I am trying to determine how/if to incorporate foreign exchange gains or losses when doing my portfolio weightings. Assume I started with $100k Cdn and I buy 9 Cdn stocks and 1 US equally. If none of the stocks changed in value, except the one US stock was now worth $14,000 due to foreign exchange gains, that one stock would now represent 12.3% of my portfolio when valued in Cdn dollars. If I wanted to keep my original 10% per share holding Would I then sell 2.3% to get back to my original 10% holding or do I ignore the conversion for now and say it is still just 10% of my portfolio.

Thanks for your help.

Paul F.

Q: I would like your suggestions for replacing the three interest income positions and the preferred shares position with dividend like equity positions. Thanks.......Tom

Q: I am reviewing your Macroeconomic Report Card. Thanks for that, I find it interesting.
Two questions:1) How are the TSX and S%P 500 average P/E ratios calculated? Are these a straight average of all stocks in the exchange or are the weighted in some way? 2) For the TSX and S&P yields, are all stocks included or just those with dividends or something else? and is it a straight average or weighted by capitalization or something else?
Thanks, you provide a great service.

Q: While I am not yet 89 , I understand the older gentleman's desire to still have a hand in the market. Would keeping 50 per cent for emergency and putting the remaining in laddered GICs work for him? He could still get at the GICs even if he had to pay a price. What do you think? (not wiser than you, but older!)

Q: Hi Folks,

I read this note this a.m. from Bill Dickey at RBC in his 'technical corner' I thought it was very appropriate to the interests of the readership here and with the numbers included from Bloomberg really brings what you've been saying to those that worry to light.

"Much is made of the stock markets daily direction, but watching the movement too closely likely makes it more difficult to tell what the trend may be, but the allure and excitement of the process makes it an irresistible thing to watch for some investors. Often it seems that the market changes direction on a daily basis, with the reason for the move sometimes being a pretty weak excuse. This is because the daily market moves are driven more by the emotion that gets tied to the daily news rather than the trend of the fundamentals that determine the long- term success in investing. If the markets moved only in relation to the facts, they would be easier to understand, but once you throw opinion and emotion into the mix, it gets very confusing and uncertain. The table below illustrates how the daily market movement is close to a coin-toss in which direction that it may be as the emotion of investors is a lot harder to predict than the market itself, while the longer-term view generally supports the theories and benefits of a long-term investment plan."


Percentage of time S&P has been up over the past 65 years

Daily : 53%
Weekly : 64%
Monthly: 59.3%
Quarterly: 64.3%
Yearly: 73%

Source: Bloomberg news

Best

Sheldon



Best

Sheldon


Q: Hello, can we get your opinion on the market return GIC offered by many banks (maximum return capped with the principal guaranteed - few years commitment). Does not seem to appealing but would it be ok to replace some fixed income assets with this given the low rate environment (some upside vs 2-3% for bonds) . Is there a lot of fees in these products ? Thank you

Q: My father (89 years old) has sold his home and moving into an "over 55" facility near me. He lives on social security, plus some distributions from some prior investments (currently worth about $70,000). That covered all his expenses (his home was mortgage free).



He has just sold his home, and will have about $100,000 in proceeds at closing from the sale. When I asked own investment adviser what my dad should do with the 100,000, he was reluctant to offer more than "put it in the bank". My dad will need to withdraw from these funds monthly, probably a few hundred $ per month to meet anticipated expenses.

At the age of 89, seems the SEC takes a critical look at advisers investing money for people of that age. I should add my father is in very good health, given he is 89.



So, keeping my dad's money in an interest bearing account is unappealing to him, (and me, tho I understand that may be the wise choice). He is keen to invest it somehow, but is less than a novice in that area.





My main questions are these:



Should his money be invested at all? Should it sit in a savings account in a bank?



Or, in spite of his age, would the risk of owning a solid dividend paying stock(s) be worth the extra income?