Investment Q&A

Q: What are your thoughts on RRSP loans and borrowing to invest in general?
Right now I can borrow at 5.3% for an RRSP loan and can otherwise borrow at 7.4%. I think the tax and investment benefits would outweigh the borrowing costs in the case of putting it into an RRSP. In the case of a non registered account, the 7.4% hurdle rate makes it tougher. Do you have any general advice for borrowing to invest in a non registered account? And if one chooses to do so what suggestions would you make regarding allocation or options to consider? I understand this would be general advice and not personal recommendations.

Thanks very much

Q: In a recent response to another member you mentioned "IBKR is almost twice the size of HOOD ($99B vs. $56B market cap, respectively)".

I ended up looking into IBKR and HOOD a bit more and discovered this about IBKR:

Depending on the data platform, some list the IBKR market cap as ~$25B and others list it as ~$99B. This has to do with whether you consider both public and private shareholders counts when calculating market cap.

I learned that GAAP handles this where the non controlling interests are removed from the income statement ("less net income attributable to non-controlling interests" which was $2.652B for 2024 leaving $765B Net Income) to leave only the net income attributable to IBKR public share holders. The bigger chunk goes to IBG Holdings controlled solely by Thomas Peterffy.

Based on this I believe IBKR is half the size of HOOD, at least the portion that common shareholders attribute earnings too.

How do you think about companies structured like this?

Q: Good Morning 5i Team,

Retired income investor. Current funds generated keep my wife and I comfortable.
Will be inheriting a large sum in very near future. With ongoing Trump issues should I hold monies in reserve; dollar cost average or go all in.. Are we going to see a major downturn which would provide buying opportunities Your thoughts and insights on how to proceed would be most appreciated.

Q: Hello,

I've heard that stock traders are using AI-automated trading platforms for day trading. Is this practice becoming popular? Does AI truly help improve trading performance? Based on your knowledge, what are the success rates of these trades? Can these AI platforms effectively do the job? I would appreciate your insights. Thanks

Q: Is it possible for you to accumulate all the past tariff questions into a separate question category? Thank you

Q: They say bond people are smarter than the stock market. Where would "shorts" get rated. Better, worse, leading, lagging etc. How much is too much, if any. e.g. Pembina Pipeline (PPL)
Tx in adance. Ken

Q: A grandson age 22 saw ad from canadian personality ontv. He says that this company has investors making money with small amount deposited. I told him to hold off and was going to check with 5i. The company is Anvil Capita LB SL. based out of Madrid. Maybe people with 51 have dealt with them or is this scam.Appreciate your help 5i Use has many points for questions that I have. Thank you

Q: You recently answered a question on selling covered call options. Most of the options you sell, I believe you said went out about a month. I imagine these are on volatile stocks. But you said options can be sold on longer time frames. Just wondering which stocks would go with which timeframe. More stable stocks with longer time frames? Just to get an idea, how would stocks such as Google or General Motors fit into an options selling strategy?
Thanks

Q: Regarding my question yesterday, I am not interested in taking advantage of dollar swings, I already have significant US funds. I will attempt to clarify my question. I have funds that I would like to invest further in US companies. If I buy stock on a US market I will be buying with a very weak Canadian dollar. So my question is, if instead I buy a product that is hedged (CDR, ETF), which would not have been affected by past dollar swings, would I then be purchasing US stocks without suffering the disadvantage of a weak Canadian dollar?

Q: Just an FYI for you and your members, Questrade is now offering free trading on stocks and ETF's on all of it's accounts.
I missed this announcement on Feb.09th, so I thought it was worth mentioning.

Q: With the weak Canadian dollar I do not intend to buy stocks on a US exchange. However, it occurs to me that if I buy hedged products on a Canadian exchange (eg. CDRs, XQQ) I will be buying US stocks without suffering the shortcomings of the weak Canadian dollar. Is this correct reasoning?

Q: Do US politicians have to declare any and all securities that they buy/sell? Or is it only required if they buy/sell over a certain dollar value (or % of a company)?

What about the rules for Canadian politicians?

Q: Everyone, what is the downside of buying partial shares? Clayton

Q: Where can I find a repeat of the Feb 4 webinar by Ryan

Q: Rob's question regarding Constellation not issuing new shares and any other companies, I thought maybe BRK fit that or because of BRK.B guess not.

Also not to nitpick but CSU and GOOG can't be compared in the non issuing equity even though not a direct comparison as you did say "To our knowledge, GOOG has not issued shares other than for acquisitions, which is not quite the same" as GOOGLE has issued insane amounts of shares via SBC and of course they buyback to keep share count BUT Is there not a better way? BEN HUNT says it well I think:

"When stock buybacks are used to sterilize stock-based comp (i.e., a company gives managers stock with one hand and buys it back from them with the other hand), no money is “returned to shareholders”. This is true whether or not management actually sells its shares into the buyback program.
Stock buybacks only “return cash to shareholders” to the degree that the buyback program reduces the share count. To the degree the buyback program does not reduce the share count, but simply sterilizes new issuance to management, it is purely a transfer of wealth from shareholders to management."

Thoughts or rebuttal to that?

For readers on Constellation:
Mark Leonard was funded with 25 million from OMERS in 1995 to start, they had one private placement in 2000 that Leonard regrets for 60 million (TD Capital – Birch Hill and OMERS), then going public in 2006 no shares were issued just provided exit for OMERS/Birch Hill.

The best things about them among never issuing new shares for acquisitions etc is they have no Stock Based Compensation or RSU/ESO and that combo is not replicated anywhere (plus executives and employees having to buy stock with parts of their bonus and hold for 4 years is great alignment).

This along with numerous other factors are why its my highest holding and you never worry about it, ever, 10 years reading your answers and your views have never changed on this company, you have always been a big bull and wish I didn’t wait until 2022 to buy or really understand the company!

Q: I was unfortunately unable to participate in the webinar yesterday. Is there a recording that I am able to access?

Q: Hi 5i Team - Constellation Software is a company that has never issued shares beyond their initial IPO. I'm pretty sure this applies to LMN and TOI as well but could you confirm. In all three, is there any possibility of them issuing more shares in the future.
Also could you name a few other companies that have never issued shares, Canadian, U.S., any size market cap, any sector.
Thanks.

Q: I don't really want to spend C$1.45+ for each USD cash. So to gain US market exposure, does it make sense to buy CDRs of US companies (Cdn $ version of their large cap stocks) ? for example JPM, MSFT, GOOGL, BRK.B etc.

Q: In the event that the USD reverses course and starts to become even moderately devalued (e.g. BRICS decides to actually develop an alternative trading currency system that by-passes the USD), how should Canadian investors strategize and position themselves within the various asset classes?

Q: My son inadvertently, a while back, bought Canadian companies (eg. SLF) in his US Margin account. Is there a way to get them back to the Canadian margin account? Is that called "Journaling"? Would you end up with more shares on the Canadian side, given that you are converting from the US $? Any gain/loss/currency tax issues? Thanks very much.