Investment Q&A

Q: Hi folks:
I can only find 9 stocks on your site with ROE greater than 20 percent. Most of these are quite expensive. Would an A+ stock with ROE around 15 % offset the need for a 20 % return?
Charles

Q: A couple of my holdings have been punished for reporting weak quarterly numbers, namely Parkland (PKI) and Newalta (NAL). Here's my question: I hear some people say that one weak quarter is often followed by another, while others say that one quarter is too soon to decide on a stock. Could I have your comments on PKI and NAL, as well as on how to decide whether a bad quarter is a harbinger or a blip. Thanks very much.

Q: Just a comment supporting your article about increasing dividends. I bought Canadian Energy Services (CEU) in 2007. Since then the dividends have grown to the point where I am currently earning at an annual rate of 48% of my original purchase price! Keep up the great work.

Q: Hi - can you please let me know of any website where I can enter a share symbol and the date I purchased it and the overall gain or loss will be calculated? Some of my shares go back 15 years or so and I would like to see the overall return with dividends.
Thanks!

Q: Hello: Further to the August 06, 2014 question asked by Paul about the recent market declines... If someone has cash to invest, what would you recommend? Wait till close to the end of Sep.? Wait x weeks to see if the markets "settle down"? And, please tell us where and how to look for the volumes you mentioned? (Total market or individual stocks or etf's?)

Just a few days ago, I invested about $100K in some US etf's. They are, of course, now down about 1.5% to 2.5%. I have a further $275K to invest. Is it best to wait?

Q: I want to find the short position of a particular stock trading on Toronto. I think this info is available somewhere on the TMX website but all I've come up with is the top 20 biggest positions for the Exchange. Help? Thanks, J.

Q: Some discount brokers (e.g. IB) do not make currency conversion at the time of purchase of US$ denominated stocks or funds, and return money when you sell in any denomination (USD or C$)you choose. Since there has to be conversion some where. My question is; Is there possibility of being ripped off? Where is the best place to convert currency; Bank or brokerage? My TD banker advised me that I will get better rate at TD Brokerage.

Q: I want to have more of my portfolio in US $. Some Canadian stocks trade on both the NY and Toronto exchanges (e.g. Magna). Can I avoid all the hassle of US holdbacks and other tax issues that apply to a non registered US$ account by simply buying a good quality Cdn stock on a US exchange? If so what stocks would fall into this category that you would recommend with a bent towards growth?

Q: Hi Peter & Team,
What is the way to calculate an estimate to a target price based on: forward P/E or Price/Cash Flow or Price/Sales or any of "per share data".
Is there any other data I need? or where can I get this info?
Thanks,
Morris

Q: Hello Peter & 5i Team
As a Canadian expat living in Europe, my current equity portfolio includes (in order of magnitude) European, Canadian, US and Australian equities. Given your experience in the industry, I would be interested in your views of international markets. More specifically, would North American markets provide better/worse growth/income etc than European markets or vice versa. I appreciate this is a very broad question that includes currency risk among others but I was wondering whether there is a "common knowledge" within the investment industry of the pros/cons of investing in the various markets with respect to quality of company reporting, dividend issuance, growth potential etc.

Your insight is always appreciated and I am constantly learning from your replies and reports. Thank you.

Q: Hello Peter,

Regarding the question I ask (August 01) concerning portfolio diversification, allocation and types of accounts for tax efficiency. Thank you for your answer and also for Lance’s comments (August 04) may I say I find this most informative and educational in helping me in my investment decisions. Ronald

Q: Question about what to do when buying or selling shares in less than 'board lots'.
I nearly always try and buy/sell shares in multiples of 100, but this doesn't always work if one wants to exit a position entirely, or if one wants to allocate a specific portfolio percentage to a stock and the numbers don't add up.
If it has to be less than 'board lots', should we aim for further multiples of 10 or doesn't it matter?
I was wondering that if one wanted to sell an obscure number of shares as quickly as possibly, would they take longer to sell if they were in random numbers?

Just as everybody else says, I really appreciate your advice. I finally feel that I am gaining control of my own destiny (belatedly, and not without your assistance.) Thank you.

Q: Thanks for the July 30 answer to Darcy on AYA. One additional question for Clarity on your answer. You indicated that a 20 to 30% positions becomes a portfolio bet on one company. I understand this concept, but doesn't a double down strategy by definition mean you will have positions greater than 30%, or do you always limit portfolio positions to a certain maximum even in you double down approach? Great Service, you have greatly changed my investing success.

Darcy

Q: Hi Peter & company. Great job! We have recently sold all of our U.S. stocks because we were scared off due to the recent tax laws changes with respect to people with dual citizenship (US and other country). We don't have dual citizenship but this new tax is quite significant for those affected and the U.S. government seems to need to increase tax revenue. Do you think we were over cautious?

Q: For life insurers such as SLF, I have heard many times that higher interest rates will help them because of higher earnings in their bond portfolios. But, higher interest rates should also result in capital losses on bond portfolios. Can you explain this apparent conflict?

Thanks,

Q: re: Boeing

what symbol do we use please?

Gord

Q: Balanced Portfolio?
You currently have a model Equity Portfolio and a model Income Portfolio. From subscriber's questions, it appears that at some point you will be adding a Growth Portfolio.
Would it be in the realm of possibility to add a "Balanced Portfolio" as well. This would not necessarily need to be a brand new researched portfolio started from scratch but rather a portfolio constructed from stocks selected by you from your existing Equity/Income/Growth Portfolios and just maintained in a separate listing.
With 20 stocks in your Equity Portfolio and another 19 in your Income Portfolio and potentially another approximately 20 more in a future Growth Portfolio, I would find it difficult to manage a portfolio with this many holdings. I would find it extremely helpful as I'm sure other subscribers would who seek diversification not only in different sectors but also between equity, income & growth, and be able to maintain them in one all-encompassed portfolio.
Thank you.

Q: Hi Peter, you articulate well your reasons why 5I does not issue target prices, and I agree with same and it makes perfect sense. I note brokers are normally "behind the curve" when setting or revising target prices. Usually it occurs right after earnings. If there is a big earnings beat, miraculously the target price is revised down, and conversely if it is an earnings miss then they revise down often. When target prices are set without reference to recent quarterly earnings, aren't they set using some valuations method, ie. price/forward earnings, price/book, price/affo etc. I don't buy or sell based on target prices, however is there not some limited value in them in that at least it allows one to examine the price based on a valuation method, and at least pay attention to the stock. And as to a potential purchase, if a stock is at its target price(s) should I not at least confirm there is no obvious reason why the stock cannot go up from there? I do keep in mind your advice that generally if nothing has changed fundamentally there is usually no reason to sell. Thanks for the great advice 5i provides. Bill Y.

Q: a comment

You can post this in the forum if you like Peter and team...

First off, enjoyed your session on Market Call. Very well done.

More importantly, what I really took from it was the consistent 5i message which has now repeatedly (we must drive you nuts) mentioned the philosophy of not using any kind of "target pricing" expectation/strategy. Ironic for me personally, considering just yesterday I asked where you thought Amaya might end up. I will be doing my very best moving forward to not ask about target prices although I admit, it will be tough.

I appreciate more than you will know the lessons you consistently emphasize - faith in metrics, long term investing, and not trying to invest/divest based on target pricing and/or timing the market. All things every once in a while I am guilty of not observing.

Have patience with me 5i team. I will try and do better.

Thanks for all you do

Gord

Q: Peter,
I know it is repetitive on my side and repetitive on your side..
but, tell me even this type of information is not even make you blink?
''Corporations are now the single largest buying source for U.S. stocks – authorizing buybacks of their own stocks to the tune of $754.8 billion in 2013 alone.

And it’s a long-term trend. According to Birinyi Associates, for calendar years 2006 through 2013, corporations authorized $4.14 trillion in buybacks of their own publicly traded stock in the U.S. — raising the question, just what kind of a bull market is this?

JPMorgan Chase, the largest U.S. bank by assets, has turned share buybacks into an art form, buying back a whopping $17,945,000,000 of shares from 2010 through 2013. In just the calendar year of 2011, JPMorgan spent a stunning $8,827,000,000 on stock buybacks''.

There is debt attached to that, it is not gone! 4 trillions buyback!!
To me this is madness in proportion of the 2000 and 2009 madness.. So ''they'' think they can get away with it this time.. Of course attached to that is the explosion of derivative (http://www.advisorperspectives.com/dshort/updates/NYSE-Margin-Debt-and-the-SPX.php?utm_source=Triggermail&utm_medium=email&utm_term=Markets%20Chart%20Of%20The%20Day&utm_campaign=Moneygame_COTD_072914) leverage but everybody is on the same side of the trades as usual. Give me a serious black swan and you still do not worry?

Thank you for having again the patience to explain the reasons why you are so little worried.
CDJ