Investment Q&A

Q: My question is about portfolio diversification. Is there a dollar value of a portfolio in which you might invest more than one company per sector to reduce company risk while maintaining diversification? Thanks!

Q: Hi 5i team, your answer is very very helpful to lead us to become an investor. In the past, you have trimmed AYA as it gained quite a bit. Is there any rule , when and how much, behind such trimming process?

Q: Hi Team,
Can you give me 3 to 5 names (or more) to watch that you would consider buying after tax loss selling in December? Or is it too early to narrow down at this time?

Thanks, Shane

Q: Good Morning, Peter,

How will the planned changes in June 2015 by the TSX affect a typical Canadian investor with a portfolio of less than $1 million who trades equities about 10 to 20 times a month?

Reuters reported that the TMX "...wants to introduce a "long life" order type on both its main Toronto Stock Exchange and its sister venture exchange which will be executed ahead of other orders at the same price..."

Thank you in advance for helping clarify the impact, if any, that these changes will have on the average 5i member.

Gail

Q: General Trading question. I have been investing in stocks for only a couple of years and recently wanted to try out Trading however I have found that I am way too slow to make a decision. Some of my hesitation centers on how to read and understand the implications of a companies reports. For example a report saying revenue is up while profit is down to me should be a positive thing for a company. Also, the "street estimate" is only an estimate, while the company reported figures are factual. Would not a company who has improved revenue be worth more whether it was short of the "street" expectations or not. I realize you guys/gals are not traders but do the very quick traders trade on "any bad remark"

Q: I have been invited to attend a presentation by Raintree Financial Solutions ((Exempt Market Dealer) where Private Capital Markets Investing will be the main topic. Three companies will be profiled specifically, Enercapita Energy Trust,Equicapita and Solar Income Fund Inc.
I am interested in hearing what you think of this new category "Exempt Market Dealer".
Private capital investing seems to have been the domain of high net worth individuals therefore not available to small retail investors. Raintree claims that private investing adds diversification to a portfolio and is not as susceptible to downturns as we have experienced in the past few weeks. What would be your opinion?
Your view of the companies being profiled, if any, would also be much appreciated.

Q: Thanks to 5i & Russ who provided an excellent source of closing Block trades. Demonstrates the power of informed forums.

I asked the question in respect of AVO trading. The data has raised the question of what do they mean.

I assume that if the buyer is different from the seller, they are interested in disbursing the Block to retail according to their views on what is likely to happen to the price. But what is the reason for the same Brokerage firm selling to it's self?

Perhaps there are other motivations? For me it is interesting that buyers & sellers are interested in making Block trades, but can the transactions be interpreted to mean anything?

Your personal experience with this please.

Ernie

Q: I have a general question as to how, and if, analysts' reviews affect stocks.

On Wednesday, TD Securities downgraded Canaccord Genuity Group to "hold" from "buy" with a price target of $12.50 (Canadian). The stock was around $11.00 at the time. It subsequently plummeted about 10% and continues to drop today.

Today, Raymond James upgraded Mullen Group to "market perform" from "underperform" but cut its price target to $25 (Canadian) from $27.50. The stock has dropped about 5% so far.

In both cases, the stocks were about 10% below the analysts target. Once was considered a downgrade, although it was still a hold. The other was considered an upgrade but its target was not going to yield any greater returns.

My question is threefold. Is "market perform" considered different than "hold" (since they seem pretty similar to me); secondly, why was one stock hammered so much and the other wasn't when they are both expected to perform about the same, at least as it pertains to their target prices; finally, should TD be considered impartial since they are downgrading a competitor.

I am hoping that with your insight, I will move closer to understanding how things work!

Thanks so much.

Paul F.

Q: On Oct 20th you answered Robert regarding 5I following US stocks. You mentioned that if 5I "closes membership" in Canada you might consider it,
Question ; Is 5I only a temporary service in Canada? I sure hope not!

Q: One of the key items I have learned since subscribing to 5i is the importance of diversification. With that, I have a couple questions related to this:
1) I have approximately 25 stocks in my portfolio. I know it's difficult question without the names, but is this generally too many for the average investor?
2) Being in Canada, I constantly hear that most portfolios simply cannot be diversified without going abroad. Do you think this is true? If so, are there some recommended ETFs (in Canadian dollars preferably) that contain sectors we cannot get in Canada and provide a more balanced portfolio? (ie. not energy, financials, materials)

Q: Ok, I know you do not really like trades, but what do you think about picking up some shares of Air Transat now and holding them until May/June and taking advantage of the winter busy season. It has worked in the past, a few times really well, others not as well but always made money. This is pretty speculative, and would be for the mad money part of my investments.
Thanks for your opinion.

Q: Hello, with regards to your answer below what does "close membership in Canada" mean? You may have answered this elsewhere, but I haven't seen it are you going to limit the number of subscriptions? If so at how many memberships and are you close to doing so? Thank you.

5i Research Answer:
Thank you. We know there is a lot of demand for US coverage, but we would not change our no-conflict stance in order to achieve that. Lots of things are under consideration, but we certainly do not want to give the impression we will follow US companies any time soon. When we close Membership in Canada we will likely look at this more closely.

- See more at: http://www.5iresearch.ca/questions?st=1&page=2#sthash.wcFjrPnz.dpuf

Q: Do you know of any tool or website that helps determine whether a company is a Passive Foreign Investment Company (PFIC) under the U.S. tax code? In particular I am wondering about Brookfield Asset Management (BAM.A). I have emailed their investor relations department, but have not yet gotten a response.

Q: Peter,

With the new credit system for questions, where can I find out how many I have left to use?

Thanks
John

Q: Hi team
When you say you would be comfortable with a 15 to 20 percent weighing in energy in a portfolio is that a percentage of total portfolio? For example with $700,000 portfolio $100,000 allocated to oil and gas stocks is adequately diversifying the portfolio with the rest in all different sectors. Thanks.

Q: Following up on your comment to Gord today: "It is very unlikely that 5i will report on US stocks. One problem is simply finding staff with experience in the US markets that are willing to commit to no trading", would you be open to the idea of creating a US stock research section where the analysts allowed to hold U.S. securities but must fully disclose them?
I'm pretty sure most 5i Research members are astute enough to discern the difference between objective commentary and biased, self-serving opinion. Moreover, you could institute very strict guidelines for making stock recommendations that would address possible biases.
I have made a lot of effort in the past few years to diversify worldwide (U.S. 40%, Europe 20%) but it's awfully hard to find good, objective information on foreign companies.
Robert

Q: Peter,

As a follow up to Stephan's question on Oct 19, BMO's report on REITS shows only 8 of 34 Reits have return of capital of less than 50%. 16 of the 34 have a return of capital of more than 70%. As a general rule, would this not indicate that REITs are better invested outside of the RRSP.

Regards
John

Q: How do you feel about buying call options in good blue chip dividend paying companies over a longer term? As I understand that options still payout dividends while holding the contract. I have noticed that some contracts have dropped 40-50% while the underlying stock has dropped only 20-30%. This would present a good case for substantial rise and possibly exercising the option down the road. Your thoughts.

Q: Hi 5i Team. Perhaps one thing to remember in these times is that, if you are lucky enough to hold cash and is waiting to get in, you could do it in steps. Take for example, Whitecap. It got to over $18 before the drop. When it got down to 13.95, I went in with half a position. It bounced up violently the following day (2 days later? whatever), I went in with the other half at 14.90. Of course, there could still be another drop in oil prices. For the long run though, we are addicted to the stuff. So it is a hold. I am able to stay calm during all this turmoil because I was unlucky enough to have been invested through Black Monday. 20% drop in one day! This one we are experiencing is a picnic. You don't need to remind me that anniversary will be in a couple of days. Cheers. Henry

Q: Not a question Peter, but another word of thanks to you and your team. My wife and I enjoyed your presentation at the money show on Thurs. We especially were pleased to meet you and Ryan in person and have a few words with you.
Again many thanks for all the help you have given us and many others. Hal