Investment Q&A

Q: Hello
My & my husband's accounts each hold about 60% stocks and 40% bonds. I am considering putting all our bonds into our RRSP/LIRA accounts and increasing the equity portion of our TFSAs and non-registered accounts. This would allow us to hold higher growth stocks in our TFSAs.

We bought most of our holdings last spring/ summer so we would be taking a loss on the price on the long bonds and buying equities at a higher price.

Here are my questions.
1. Does our thinking about where to hold bonds make sense?
2. Is there any advantage to distributing the bonds across the various accounts?
3. Would it be better to hold off on the reallocation until equities come down a bit and bonds go up in price? I know you can’t time the market, but we are at all time highs in equities.

Thanks

Q: Many questions relate to a stock that has run into difficulties with a downward stock price. Your customers are looking for an indication of what to do. Quite often they ask 'is it a buy, hold or sell'? In all my years as a customer of 5i, and skimming through the hundreds of thousands of questions, I don't recall more than a few 'sell' responses. Mostly 'hold' is the way to go. I, and probably most of your customers, would appreciate a bit more of a definitive answer. I realize giving a sell response is a big decision that could backfire if the stock recovers. You might end up with unhappy customers. What about qualifying the hold response. How about rating the 'hold' with a number scale from 1 to 10 where one is a weak hold and 10 is a strong hold. A '1' might apply to a company that has missed guidance a quarter or two but has a chance to recover in their market (there is still potential). A '10' might relate to a solid dividend paying company that missed guidance due to a large sale being delayed, currency issues or a temporary drop in margins.

I'm sure others would appreciate this clarity. Keep up the good work.

Q: Benzinga reports unusual options activity today for Digital Turbine. I purchased recently and am down. Can you explain what this means and what effect it will likely have on stock price.

Sentiment: BULLISH
Option Type: SWEEP
Trade Type: PUT
Expiration Date: 2022-03-18
Strike Price: $45.00
Volume: 820
Open Interest: 14

Q: I'm confused: Your "Shares out" for Verano is stated as 122.23M and that # is the same when I check VRNO's TMX listing but MarketWatch lists the shares out at 131.08M.

VRNO started trading on the CSE on Feb 17/21 after its reverse takeover of Majesta Minerals. It also trades OTC stateside under the ticker VRNOF.

Portions of VRNO's total float are "locked up" in escrow, to be release on the 90th, 180th, 240th, 310th and 400th days following the initial offering on Feb 17/21.

According to a fellow who passes himself off as "MJ Stock Trader" on Twitter, the unlock schedule for Verano is as follows:
1. 17-Feb-21: 60M shares
2. 12-May-21: 42M shares
3. 10-Aug-21: 42M shares
4. 08-Nov-21: 42M shares
5. 06-Feb-22: 42M shares
6. 18-Mar-22: 56M shares

For a total of of 290M shares.

The questions:

(i) Do these numbers represent VRNO's CSE listing or the stateside OTC operation?

(ii) When large chunks of escrowed shares unlock, bidders can make hay of askers, which is what appears to be happening to VRNO this week; how likely is it that the tables will turn in November when another chunk of locked shares unlock and the US fed govt presumably inches closer to legalization?

Thank you!

Q: I have a non-registered stock portfolio of about $150k that I am managing. I have 10 US Stocks and 10 Cdn. How many stocks would you say would be desirable for a portfolio of this $ size. If purchasing a new stock - what would you say is a good $ range when buying into a new stock given the size of the portfolio?

Q: People who are very close to the market having connections that I don't have. Here are examples: PINS - in May it was $50 and up until recently it was up as high as $82, then it started selling off and eventually quickly plummeted below $60. AMAZON - this was not doing much most of the year by July it was at $3760, a short time latter it was $3300. PINS started selling off fairly rapidly once it hit the low $80's. I think some people knew that the writing was on the wall for this stock. In the case of Amazon, since it wasn't doing much anyway - it sold off rapidly over a short period of time down to $3300 - again I have the same feeling as I have with PINS. PAY PAL had a massive sell-off and ROKU in July at one time in July was $490 plus and now it is down over $100 and seems to continue to fall I wish I had got out when it reached the $500 value. Would you say these lucky people who got out at the high price are well sophisticated traders or have a lot of connections? Your opinion. Thank you.

Q: Everyone,
A BIG thanks for recommending: SHOP, LSPD and NVEI. I am up 40x times on my original SHOP investment - only recently sold a small piece to by CSU. LSPD is now 4x my original investment after two years and I will not sell. And only up 70% for NVEI investment since I bought it this spring.
Thank you!
Clayton

Q: Hi 5i,

I enjoyed your article on Ron in the FP and his financial practices. My practice as well is to hold only equities and no bonds. Like Ron, I have an indexed DB pension plan, which serves as my fixed income. Are you comfortable with an all equity portfolio for an investor in these circumstances?

Thanks again
Dave

Q: Dear 5i,

If one were to use these two ratios; P/E and P/OpCashFlow to get a rough idea of valuation. Based on historical ratios. As a rough guide how many years averages would you recommend. I think 1 Year is too short. I was thinking perhaps at least 3 to 5 year averages. Where could one find this data and where could I find the corresponding Earnings Growth and Operating Cash Flow growth figure?

thanks

Q: Are there any sites you would recommend where you can see which companies are buying back shares? Or what is the best avenue to obtain this information for multiple stocks? Thanks, Marc

Q: As I enter my 60's I have discovered the benefits of not having more than 5% in any one company. I sleep much better, my returns are superior ( up 25% this year) and the 5% cap allows me to invest in as many as 20 or more companies. I do tend to have more cash on the sidelines but it is ready to be deployed whenever I find a bargain.

Q: I am considering buying Amazon by buying CDR's via the Neo exchange. What is your opinion on buying shares in Amazon this way?

Q: You stated in a previous question:
"Cash, long term, acts as a portfolio drag. Generally, we like to keep cash fairly low. Personally, we are in a small (7%) margin position right now in our portfolio. "

My questions are 1. Is a margin position just a negative cash amount in a portfolio or do you have to request an amount based on the margin amounts determined by your stock positions?
2. What interest rate is charged when you borrow on margin?
3. What happens when a margin is called?
I realize these may be naïve questions. Thanks, Len

Q: Peter, my dad a died one week ago at 97 years. He did not have a pension but he and my mom always lived within their means. He began saving $5./month in 1947 and increased that every time he could afford to. It was not always easy. He ran his own business for 65 years. which he started in 1948. My parents went on 26 ocean cruises and many other trips around the world. They travelled using investment income, never touching their principle. Your article is bang on. Mike

Q: In July, 2022, when my mortgage is due for renewal (with $90,00 left), say if I refinance for 80% of the value of the condo (about $240,000), would the new mortgage money be tax deductible while still not deducting the carry over amount (about $90,000). In this case $240,000 minus $90,000 would be deductible, with an ongoing ratio of $240,000/$90,000 or 266.67% of every future payment of interest, until the mortgage is paid off.

I realise this is a question for an accountant, but was wondering if you would know?

Q: Got to say...it takes me from one to two hours daily to read over your answers to questions.....WOW, the time to do the answers must be awesome.....And the insights and learnings is more than awesome by 110%.......Many thanks, eh?! ........Tom

Q: In the current environment how much of a cash position would you recommend? I have 15%.

Q: Hi Guys
I have initiated a short position for my portfolio. I know timing the Market is impossible, but at todays lofty valuations i just felt it was warranted.
I have started very small, 1.5% of my Portfolio. My aim is to continue to slowly add to the position over time, maybe every 3 months or so. My thinking is the longer I'm wrong, say over 3 months I'm down 10 % i can lower my average cost base going forward, by adding another 1.5% to the position. Can i have your opinion please, and at what percent would you top out at on this hedge.

Q: I had been thinking about but Tencent for a long time. With the recent bargain basement price, I'm still willing to take a small punt despite the current risk. It's a long term play.

But perhaps I'm too incautious, even for a 'play'. When I tried to buy on Questrade, I got the following message: "You're attempting to buy enter a position in an OTC/PINK sheet listed security. The following risks may limit your ability to sell your position in the future...".

Can you explain what 'OTC/PINK sheet listed security' means. I take this as a serious warning sign but am still tempted to buy under the belief that China would be shooting itself in the foot to undermine the company long-term.

Q: Since the beginning of this year, I can think of 3 companies that were able to list on the TSX with a very limited float of shares available. Examples: DRDR, FDGE, MAGT. Even a few shares can move the share prices quite a bit, both up and down. How is it that the TSX has allowed these limited shares to be accepted and listed there. What are the listing rules generally for these type of cos. Thanks