Investment Q&A

Q: I have these prefs in my rrsp,they are down a lot,paying between 5.5 and 6.4%,would I be better off holding them and hope they recover or selling them and buying etfs such as cdp,zdv or cdz.Any suggestion you guys have would be greatly appreciated.

Q: Hi,

I read the IMF has warned about the system risk posed to the financial system, including insurance companies, by Deutsche Bank. I own shares in GWO. Should I sell the shares and allocate the money into a safer company. If yes, which company would you recommend?

Thank you!

Q: My friends who invest in the housing I.e rental apartments/townhouses seem to be making outsize returns...I personally feel this is because their purchases are highly leveraged. They require only a 20 to 25% down payment to buy a rental property. I personally think it is much safer and easier using a diversified groups of stocks.. especially with the great advise from 5i.but to make outsized returns one needs to borrow money..Banks give preferential rates for home purchases.whereas equity purchases are treated as riskier investments.What are your thoughts on this? I would also like it if your members weigh in on this subject.

Q: As.noted in the A and A today some of the more speculative growth names Savaria Shopify New Flyer dropped today. Is it sector rotation into oil and gas after the OPEC announcement?
David

Q: I appreciate your comment about the PowerShare s&p 500 low volatile ,one in US dollar and in can. Dollar.Your comment about this ETF,and the pro and cons of having them.Thank you ebrahim

Q: In view of the effect on the market of the unknowns coming up in the next few months - with US election and its aftermath, and good possibility of US bankrate going up in Dec. I am thinking of going defensive. I have quite a few of the stocks listed in both your Balanced and Income portfolios, could you please list for me which of these stocks you would designate as best 'defensive' - (whatever that means). Thanks again, always look forward to hearing your comments.

Q: I have just recieved some new money to invest and woukd like to increase my expsosure outside Canada. Im thinking of a US index fund. Can you please tell me the difference between VUN/VUS, HXS and SPY? Which one is better? Do you think this is a good time to invest in the S&P with it at all time highs?
As always your advice is greatly appreciated.
Nancy

Q: Hi !! It is me again. Would you consider it be time to invest in preferred shares again? If you would you recommend straight preferreds or floating rate? Could you also recommend some? Cheers, Tamara

Q: Any comments on if this ETF as a safe place to park money in an income investment that won't get hammered by interest rate hikes in future, and is not locked in like a GIC (i.e. so it can be turned back into cash readily ... e.g. in case a major sell off in markets presented a buying opportunity).

- pays about 2%
- looking at all historical prices, it seems to preserve the capital nicely -- worst dips were only down 2% and came back up shortly thereafter.
- based on floating rate securities so to me, a rise in interest rates would not be negative for this ETF

Q: OK the Trump effect ... would it be prudent to turn all investments into cash lets say a week ahead of the US election (50 stocks X $10/transaction =$500) and if Trump wins ride out the wave of volatility and then buy back into the portfolios for another $500 hit possibly avoiding the chaos that would follow the Donald into his presidency? If Hillary wins would you expect a positive response from the markets?

Q: I have been a bit worried about the US market, as measured by cyclic PE it seems quite expensive. I have used the recent strength to sell some of my low conviction stocks and take half positions in what I consider to be better companies. My cash is now up to 10%.

My first question is do you think this cash level is appropriate for the market now? My second question is, given a pullback how would you deploy the cash. Immediately on the day of a big drop, say over 200 points on the Dow?. Or try to time the bottom using technical analysis? Or gradually ease into a position starting the day after a big drop in the market? Any other suggestions gratefully received.

Q: I have rate reset preferred shares (bought at $25 / share) which are presently 25% in value underwater because of the Banks of Canada’s unexpected prime interest rate decrease. At the time of purchase their interest rate was 4 to 4.5% & they will be subject to a rate increase in 2019 & 2020. I your opinion what is the chance of their value returning to near $25 in the next 3 years? I am wondering if I should sell the preferred now or hope that their value will appreciate sometime before their rate reset date . Thanks … Cal

Q: I submitted this question last Thursday. But I think there maybe system glitches that some questions get lost. This is a resubmitt:

Your balance portfolio has an impressive returns. Mine is way behind. So I searched your QA database, without success, to see if previous questions were submitted regarding a general strategy on how to migrate my stock/mutual funds/etfs holdings to duplicate your balanced portfolio for getting less hands on investing. I hold perhaps 80 stocks and I share perhaps 15 securities with your balanced portfolio and these are obviously to keep within the constraints of asset allocation. I have about 25% holdings in US companies. Your answer, I am sure, would be of great benefit to those members who are like me, are tired of chasing ellusive returns and wish a steady hands-off approach to investing.

So my questions are:

- Is it possible to give a guide line on how to migrate a portfolio to duplicate one of your portfolios? Do you think by adding few of your covered stocks with A/B ratings be a positive or a drage on performance?

-In searching your data base for questions like this one, using a key word like strategy, would I be able to find answer to such a question?
- Allocating assets between Canada and US in general terms, to enhance returns, without consideration to personal circumstances, what percentage allocation should one invest outside Canada?

Your program has helped me tremendously in focusing my portfolio after many years of haphazard approach to investing. So your help is much appreciated by the many members of this community,

Thanks a lot.

Q: what is your outlook on the market for the next three months and also the next year tsx dow jones and nasdaq?

Q: Can you please explain something to me? Why, at least based on what I read in the newspaper, when the economy shows signs of deteriorating putting off risk of an interest rate rise the market goes up. When things look better for the economy and there is talk of raising rates the market goes down. Wouldn’t most legitimate business do better in a better economy? So shouldn’t it really be the other way around? Why are stocks thought to do better in low interest rate environment? And is it true that they do?

Q: In my RRSP, 28% of my portfolio is in U.S. stocks. I am getting concerned about the US election, and what it might do to the markets, in the short term, as well as the overall U.S. economy in 2017/18. With the Cdn dollar being down around $.76, would it be advisable to take that down closer to 15%, instead of the 28%, for a while?
Also, I presently have 25% in cash, and want to put half of that into something low risk,but better return than cash, for up to 2 years. Would ETFs with a stable history, be a good place to put the cash,and if so, can you recommend a couple? Or another idea, instead of ETFs...
The remaining 47% of the portfolio is in the Cdn market, and some Emerging Market ETFs.
Thank you
Grant

Q: I am holding TIP in the US as inflation protection, however I am having doubts regarding this strategy. For real return type bond ETFs, an increase in the relevant CPI increases income, yet rising inflation will be met with rising interest rates on nominal bonds that will drive the price of inflation-protected bonds down as well, negating the benefit of the increased income on a total return basis. It would seem to me that real return bonds are only protection from a central bank that has lost control over inflation; orderly inflation not so much. Is this an accurate assessment?

Q: Good Morning: A two part question about CBO. First, what is the difference between CBO and CBO.A, and is one preferable to the other for retail investors? Second, and more importantly, I notice that the stated yield (on my BMO Investorline fact sheet) for CBO is currently 3.3%. In your opinion, would an increase in interest rates in the US be likely to affect this rate in a significantly negative fashion?

Q: given the present state of the markets, on a percentage basis how would you invest by sectors 1M including a % in cash . thanks in advance

Q: I am putting together a portfolio called "Big Dogs"
I broke out the 10 largest stocks by market cap in each of the 10 sectors
I will invest in 3 of those stocks in each sector for a total of 30 stocks.Determining which 3 has been a challenge,looking at the usual--
dividends--eps--p/e-- market cap etc.Also have a bias toward your favourites.
Since I am only looking at the top 10 do you think I will be overlooking some better opportunities?I think perhaps, but I would go
crazy trying to look at the whole sector or even the top 20.I feel my odds of success are better sticking with the "Big Dogs"
Over all I will put 10k in each stock but not until I see a market
pull back which I feel is imminent.Perhaps I could have your thoughts on that as well.
This is not something new---What do you think of my idea and approach?