Investment Q&A

Q: Hello Team 5i,
I have a diverse portfolio consisting of many companies, some of the companies are located in faraway places, hence my question about tax treaties with other countries. In my RRSP account I am consistently being deducted funds when I receive dividends, I assume for taxes, below are a few of the companies doing this. I have contacted my brokerage company and am basically told this is the way it is. One of the companies below “Williams Partners” deducted the most money. I thought we had a tax treaty in place (USA) or is there something I need to sign.
Williams Partners LP NYSE:WPZ, China Mobile Ltd NYSE:CHL, Royal Dutch Shell PLCNYSE:RDS.A
Your help is always appreciated,

Q: Hi Peter and team
I am wondering if you are considering making a model portfolio for retired investors who need a higher percentage of regular income than the model portfolio allows.
Looking forward to the webcast on Saturday.
Thanks
Kathy
Kathy

Q: My portfolio is up just over 20% YTD and I am concerned about market risk going forward. I remain long in equities (US & CDN) however, I am wondering what are ways you recommend to protect against a pullback in the market without cashing out? Thanks for your valued input.

Q: We own several Reits, pipelines and telecoms and have heard that if the interest rates go up these sectors will go down in value. Is this correct?

If so, what would it take to bring them back to current levels?

If we wanted to invest more in these sectors, when do you think a good time would be?

Thank you

Q: When trying to evaluate the earnings per share and growth rate for a high tech co., do you look at the EPS, the Net Income/sh, the EBITDA/sh or perhaps something else? Would this apply to most other sectors as well? I'm under the impression that for O&G producers Funds From Operations is more important and perhaps for other sectors Free Cash Flow?
Thank you.

Q: Hi,
I have a double-weighting in Goldcorp (G) and notice it is relatively volatile in price. Does it make sense to try to hold something to counter-balance this in my portfolio? Or should I just accept a bit of volatility in 10% of my stock portfolio? If it makes sense to counter-balance what would you recommend? The rest of my portfolio consists of 5i model portfolio stocks (except the B or lower rated ones). Thanks! Michael

Q: Hello Peter and team,

After reading Lowell Murray's "The Single Best Investment - Creating Wealth with Dividend Growth", my wife prefers dividend payers in her RRSP, but would like to emulate the model portfolio as much as possible.

As an example, if she is uncomfortable with TOU, what would be a suitable dividend paying O/G substitute? WCP or VET or ? What about substitutes for the other non-dividend payers in the portfolio?

Thanks so much for your advice.

Q: Just a comment to Edward re: CDN/US citizenship - the US treats a TFSA as just another account, and all income is taxable by the IRS, even though exempt by the CRA. Not sure there is any reason for a US citizen to hold a TFSA. If there is any advantage to a TFSA under these circumstances, I would appreciate hearing it.

Q: I was disturbed by Bruce's question re US citizens owning 'foreign' stocks. My wife and I are both dual Candian/US citizens and we live in Canada. We own 100% Canadian dividend stocks in a joint portfolio, two TFSAs and a RIF. We will not buy US stocks as the IRS takes 20% of the dividend right off the top while the Canadian tax man gives us a break on dividends. Do you know of any problems we might face, other than paying our accountant about $1700 a year to fill out our ridiculously complicated income tax returns?

Q: Do you have any market intelligence on a potential market pull back?
Are there any known upcoming events that would escalate a pull back?
If and when a pull back occurs, what percentage will the markets drop? I know you don't have a crystal ball, just looking for your gut feel/market instincts.
Thanks!

Q: Because of recent tax rules, US citizens are restricted in the amount of money they can keep in other countries unless they have $$$ to pay international tax accountants.

Neither can they cost effectively own ETFs, REITS, trusts, mutual funds, etc.--again due to arcane rules and draconian penalties for non-compliance.

Therefore, I can buy only a small number of stocks in Canada, and I would hope to hold them for long periods for fewer tax reporting complications from buying and selling.

Would you see enough potential, without overdoing risk, for a portfolio of such stocks, totaling no more than 120k to purchase? Could a yield of 3 to 5% be achievable?

On top of all this, there is no telling when new rules may be composed that make owning ANY stocks in Canada prohibitive, so I have to be prepared to sell whenever they make such a change. For example, we had to sell our TFSAs and ETFs swiftly upon being alerted to the current restrictions.

Thank you for any response.

Q: What are your criteria when you consider a stock is expensive versus cheap?

- Or do you compare the company P/E to its industry peers (i.e.: Financials, Tech, Consumer Staples, Oil/Gas, etc.)?
- Or do you compare the company P/E ratio to the company growth rate (Revenue, Earnings/share, Cash flow) from the previous year's quarter?
- Or something else?

Thank you.

Q: Hello 5i,
Would a LIRA account have the same general tax rules as a RRSP (especially with regard to the dividend tax credit and withholding tax on US dividend) ? Based on my research it appears to be the case but I was looking for confirmation. Any advice or comments would be appreciated. Thank you.

Q: Is BITCOIN the new gold ? What is the best way to invest in it ?

Q: Since 2007 my wife and I have contributed our best appreciated securities in our cash account to a Private Giving Foundation (PGF) at TDWaterhouse which has helped us minimize income tax by escaping the capital gains tax thus maximizing charitable donations. For the earlier contributions, once in the PGF the money from stock sales has been invested in the TD Balanced Income Fund which has had stodgy performance and steep MER, and TD Monthly Income Fund lately which is sort of ok for both. We have no choice in the allocation of investments once our securities have been committed to the PGF.

For our future contributions to a PGF are you aware of any other carriers that might provide more choice in the investments made on behalf of our chosen charities and/or lower fees to run it? (I am in no hurry for an answer here as I recognize it is a question that may be outside your scope, or if it is more apt for CMS, I'll post it there.)

Thanks to 5i for pointing out Badger +205% which will be the next to go to the PGF before repurchase, and others I would not have acted on without 5i. Thanks again, J.

Q: How long do you carry a losing stock in this case 4 in my portfolio,(CCO,POT,G,TCK). What makes you at 5i decide to sell or hold on a stock that has lost considerable value

Q: I am thinking of making adjustments to my portfolio keeping in mind the period from Dec to March is generally good for stocks and I have a one year time horizon in mind.
I have 10% exposure to emerging markets, specifically in India, and Korea where I am overweight (70%) and only in one stock –KB. I also have a position in Artis –Ax-Un that I am thinking of getting out of, with a loss. And the reasoning is thus.
With short term rates likely to rise and the tapering, there should be significant outflows from the emerging markets and the likelihood of Indian and Korean markets doing well is small. Also, the Reits here will probably underperform and the overall return could be negative despite high yields. Would you then suggest I lighten / get out of the stocks mentioned above or continue to hold and maintain diversity of my investment? I am just a little hesitant to pull the trigger specially since I am under water.
If you think I should adjust, I am considering adding on something from your model portfolio or replace with something international such as Lloyd bank, Toyota Motors or IWM –ishares Russell ETF. If you would suggest something else, that is welcome too.

Q: This is a comment not a question about Bryon's comment.

Personally I find the question and answer portion of the service to be of huge value. Although I only post a small number of questions I do find that I benefit by reading the questions and answers posed by others. Although it may be a small number of people asking questions I think they are still adding value and I appreciate it very much. It has brought companies to my attention which I otherwise would not have discovered.

I raise this point merely to highlight that there is value beyond just getting answers to ones own questions, just something to consider when thinking about the idea of limiting the number of questions a user can pose.

Thanks for the great service, keep up the good work.

Rob

Q: I have questions about earnings estimates, triggered most recently by your answer to an earlier-today question about Bird Construction. Your answer stated "The earnings estimate for Bird was $0.22 . . ."

WHO comes up with these earnings estimates and, more importantly, HOW do they come up with them? What credentials does anyone (outside the company) have to come up with such statements?

Even more importantly, why do "investors" (??) believe such estimates, to the extent that an "earnings miss" like BDT's drops the share price? Or, more correctly I guess, why does the belief in what would seem to be flimsy evidence like an estimate drive up the share price?

But I'm willing to be educated (that is why I'm here<g>).

Q: I support comment by Bryon. Further more most of the questions asked by members already have a recent or prior satisfactory answers in the Q & A section of the website. I suggest members should search first before asking.