Investment Q&A

Q: Public Feature Request: Could you add a filter to focus on Favourites for a given ticker?

This would allow a quick view (and reminder) of the answers I find most useful for a given stock.

Cheers / Thanks!

Q: Hello Peter & Team,

As per Bob Dylan... "The times they are a changin"

I have some new money to deploy and I am a little confused right now regarding where I should put it and how much cash I should leave out!

With what's going on in China, supply chain issues combined with pent up demand and lots of cash on hand, increasing energy costs, and the shortage of labor, I think everyone can agree we are about to/are in and inflationary period which could last for a few years.

I don't think it's a bad thing. And I don't think the markets are going to be (long term) adversely effected. But I do think there are companies/sectors which will do better than others in an inflationary environment. As an example... financials should do well. Inevitable rate hikes plus their ability to pass along added costs to the customer makes sense for them to be able to continue generating good cash flow.

My questions
1. We have all done very well in tech thanks to your guidance. How do you see this sector performing over the coming 1 - 3 years? It would be a shame for the 5i family to see all the capital gains we've recently enjoyed be depleted.
2. Which sectors and specifically which companies do you think will do well in this environment moving forward?
3. With respect to the 5i portfolios which many of us follow closely, what plans/changes are you considering keeping in mind the increasing cost-of-business landscape?

Thanks for all you do.

gm

Q: For my kids RESP's I buy low cost TD index funds "e-series" to keep things simple. However I notice they added a disclaimer which didn't used to be there when buying this last time, it says "A short-term trading fee of up to 2%, payable to the fund, may apply to all units of TD Mutual Funds (except money market funds". What does this mean? Short term makes it sound like I get the money back? But if not, f they are adding 2% to the purchase of low cost index funds, those are no longer low cost. Thoughts?

Q: Hi Peter and Team, I am hoping you or perhaps other members can help me here.
I have a rather large pension entitlement which, upon my recent retirement, I can move to a LIRA. While attempting to open a LIRA account with Qtrade, I was told that its LIRA accounts are available only in Cdn dollar - but no USD - this despite the fact that its RRSP accounts are available in combined CAD and USD and despite the fact that a LIRA, as you know, is simply an RRSP with an overlay of pension-law restrictions which 'lock in' the funds. The Qtrade rep had no explanation for this, except "maybe it's a regulatory issue or CRA needs to approve". That makes no sense to me.
My concern is that a CAD-only account will either limit me to Canadian investments or I will constantly be paying currency conversion fees to Qtrade every time I want to buy or sell USD securities or receive USD dividends.
As best I recall, most brokers moved to providing combined CAD-USD accounts over a decade ago. Am I missing something that might be preventing Qtrade from providing the service I need or is it just a decade behind its competitors?
Thank you!

Q: Hello 5i,

Can you please explain to me the difference between the following selling techniques:

Stop market, stop limit, trailing stop market and trailing stop limit. I am a new investor and would appreciate some concrete examples. Also feel free to supplement your explanations with links to any good videos. I find this tricky...I hate being stuck holding a stock for years before it bounces back.

Q: I think Will Rogers advise was "Buy a stock and if it goes up sell it. If it doesn"t go up don't buy it."

Q: Hi 5i,
Regarding Robert’s inquiry on journaling ENB or MG and the BMO Investorline answer, I journal stocks all the time when I want to increase my U.S. exposure. This is an option in lieu of Norbert’s gambit. With TD, the stocks are moved to the U.S. side. I sell them and have more U.S. currency for new purchases. There is no point in holding the stocks on the CDN side in U.S. dollars as when one sells them, you are hit with FX conversion charges, and end up with CDN cash not U.S. cash. Perhaps there was just some confusion by the Investorline service rep.
Dave

Q: Using ARX as an example of a company with a 10% share buyback approval, through to Sept 2022.
As an owner, I would rather see them leverage and do it sooner, while the stock is still cheap.
Does this ever happen, or it considered as bad form by the TSX ?

Q: Hi
I use BMOInvestorline as my brokerage account. I have a CDN and a US dollar side.

I'm overweight Canada and wanted to increase my US holdings. I thought that one easy way to do that was to journal my Enbridge and Magna positions from the CDN to the US side of my account.

I think I misunderstood what this meant. I had thought that it meant that my existing shares in ENB and MG on the TSE would be exchanged for ENB and MG shares traded on the NYSE. But the fellow at BMOInvestorline said that it's just changing the currency and the shares will continue to trade on the TSE.

Is there a way to take an existing position on the TSE and exchange it for the same shares being traded on the NYSE?

I'm not sure I really diversified my holdings. I just changed the currency.

Thanks,
Robert

Q: RE: Profit Taking -- Asked by Rob on October 15, 2021

Perfect question. Perfect answer. Investors: Keep & read this gem often!

Q: Is "Profit taking" just investment speak for "the price is falling and I don't have a clue why, but because I'm supposed to know I need a term that is very vague and makes sense to the masses"?

It's a term you hear all the time but what does it mean?

It seems strait forward enough. Investors bought lower and are now selling and taking their profits. Good for them; Isn't that what you are supposed to do? According to Will Rogers; "Don't gamble with your money, just buy some good stocks and when they go up, sell them" Take Profit!!!

Who is taking profits?

Is this the so called smart money?

What do these guys know that we don't?

If we are holding a stock that has started to go down because of profit taking, should we be concerned?

At what point does a decline stop being profit taking?

Q: Hi Guys
When using the rule of 40 to determine the performance of software companies. Would using 3 yr Rev Growth be acceptable , as some newer companies aren't profitable yet. ? and regarding margins, what are you looking for, Gross Margins, Net Margins, or EBT Margin.
Thanks Gord

Q: Is there different ways of calculating price to sales figures re this stock. I see morningstar has a price to sale number of 32.17 for this company, while others show numbers around 18.0 - 19.0. Wander what is the right number and why not standardize the calculation. Many tnx for the great work.

Q: In my portfolio 10 top equities (stocks or ETFs) comprise 30.8 % of the total. In your opinion is this an appropriate weighting? Or there is some rule to it? None of the stocks is over 5% in its weighting and one global EFT is slightly over 5 %.
Thank you as always for your advice and recommendations
Miroslaw

Q: How do you confirm positive momentum has been re-established in a stock, to the point of making it buyable?

Q: I have $10K to invest. Is it better to buy Apple shares directly or should I buy Canadian Depositary Receipts (CDRs). If the stock moves up 10% will CDR also move up by the same %. Apple pays dividends will I also get dividends if holding CDR. Is it safe to buy CDR what happens if it gets delisted?

Thanks for the great service

Q: Hello, in your disclaimers at the end of your responses it states whether any staff have a financial interest in the security in question. Could this mean a short position as well? Also could it mean the security is a merely held in an etf?

Thank you

Q: Hi There,

Can you please explain the emergence of the Canadian Depositary Receipts (CDRs), how they work, under what circumstances one should buy them ie. what kind of investor how they trade, and your overall opinion on them?

Thank you!

Q: Don’s question of October 7 asked about Canadian vs. US dollars and whether to buy a stock on the TSX or NASDAQ. While many investors are confused on this point, Don should understand that once he buys the stock (on either the TSX or any US exchange) the future performances of the Canadian and US dollars have no effect on the actual value of his gains or losses. In other words (and for doubters), if you were to decide to split your purchase and buy half the shares in Cdn on the TSX and half in USD on a US exchange, each half of your shareholding will worth exactly the same thing regardless of any future movements in the value of the respective currencies.)

Q: Voluntary lock-ups - Why would early stage investors or VCs, voluntarily extend lock-ups periods in pre-ipo or early ipo-ed companies?

Would they typically receive warrants in exchange for this restriction in liquidity?

Is the motivation by the company to prevent sales of large blocks since they are anticipating a rapid rise or fall in share price?

I know this is hypothetical, but trying to understand the concept/reasoning.

Thanks!