Investment Q&A

Q: Hi Peter!

What broad market and sector specific ETF's that are currency hedged would you recommend for the US market for a 2 year hold?

Ian

Q: dear team 5i: took a tax loss on pgf. could buy back at same price or less sold at 1.08. do you concer with opinion of canaccord on page 33 of dec. jan. moneysaver as for pgf could benefit in market recovery How so? Ifso? thanks Larry

Q: Capitulating :( (me) .... so expect the market to turn up very soon!

Nonetheless, I am now firmly in the "income camp" and have reviewed the 5i Income portfolio where I already hold all but ADW and IGM of your stocks but none of the ETFS (VCH, XHY, CVD,CPD, ZRE). With the exception of VCH they have all taken it on the chin in the last year - like so much else.

I am building a "sleep at night portfolio" and have set aside an appropriate cash reserve portion. The rest will stay in the market. With "sleep" well and make a few bucks top of mind, would you recommend any of the 4 ETF's or something else like ZWB, ZDV? Thanks for help with this project.

Q: Hi Team,

Could you please provide your thoughts on Whirlpool as a three year hold? Is appliance growth expected in India and other developing nations?
Thanks,
Richard

Q: I am 44 years old and I have $100k, thinking of an even split $50k for CPD and $50k for Zdv. I have also considered putting the whole $100k into XIC, and writing the occasional calls. Your thoughts on this. What would give me best returns over 10years with the least amount of work or worry?

Q: I already own several hundred shares of ZWB. My average purchase price is well above the current unit price. I am thinking of adding more ZWB primarily for income but also to bring my average unit purchase price down. I do not have any other exposure to my Cdn banks.

What do you think is the forecast for Cdn banks for 2016?

Please be forthright in your answer - add more or not.

Thanks

Q: Good Morning Gentlemen,

I am writing to you to get your counsel in developing a long term diversified portfolio in US$.

My Canadian portfolio is based on the 5i 3 platforms.

My objective is to outperform the SPY if possible.
I have chosen 5 ETF’s that when analyzing them seemed to show good performance, good Morningstar rating, and non duplicated holdings.

I have researched their MER’s, objectives etc.

My question to you, (I obviously am not a PM, but Peter is) is by purchasing these etfs:
1)am I duplicating effort?
2)Am I diversifying sufficiently or too much?
3)Would you recommend I add or delete any suggested holding?
5)I have no specific sector ETF, as I can’t predict which one will outperform, is that ok?

Here they are:
Dividend: SDOG (unique approach)
Large Cap: PRF
Small Cap :IJK
Low Volatility: SPLV
Growth: IWY.
Thanks so much in advance for your advice/suggestions.

Sheldon

Q: I have this hedged ETF, VXC, for foreign exposure. If I expect the Canadian dollar to trend up over the next few years which ETF should I buy instead? I'm aiming for 15% of my portfolio to be foreign. Sound like a good idea?

Thanks.

Q: I am looking to buy about $100k of Fixed Income for my asset allocation and I have a 12 year horizon. Do you think I should buy actual bonds in some sort of Bond Ladder? or Bond Mutual funds? I am quite sure interest rates will rise at least 2-3% in the next 12 years. Is there a better fixed income product.

Q: Peter and Team:

Even as oil turns and heads lower again and the Saudis confirm they are not going to blink, there is a general consensus that oil will eventually find a "stable" level i.e price higher than it is now.(2016/17?)

I am looking for your opinion on parking 50k in either XEG or ZEO. They are paying a respectable approx. 4%, and I would think would realize a pretty decent capital gain if held over a two or three year term. Would you have a preference, if one considers cheap oil may be around for a while and some companies might fold?

Thanks as always

Phil

Q: Hello 5i team,
There is a lot of talk about deep discounts inflating auto sales in North America, thus suggesting a peak in activity.
What is your take on this ? I hold a little LNR and a little MG (3% of portfolio) and was thinking of adding a little XTC (another 1%)
Thanks,
Antoine

Q: Don't see much Q/A on Airline companies. Would have thought they would be getting a boost to the bottom line in 2016 due to the low (and going lower) cost of oil. WJA share price looks pretty beat up right now. Can you come up with any negatives on this stock?

Q: For a young couple just starting TFSA with $5,500.00 each
I was thinking for the total $11,000
20% xbb
30% xic
40% xsp
10% vee
Please advise if there is a possible better alternate
For a smaller portfolio should one consider individual stocks

Q: 3rd submission:

I forwarded an question yesterday regarding this rant and I guess it was missed so I will resubmit. I have reviewed many of the concerns today on your blog, and wish to obtain your views further.
A bear market condition in which the prices of securities, and widespread pessimism causes the negative sentiment to be self-sustaining. As an investor anticipate losses in a bear market and selling continues, pessimisms only grows. Although figures can vary for many, a downturn of 20% or more in a multiple broad market indexes over a month period is considered a bear market. This has occurred since Jan 1-2016
A bear Market should not be confused with a correction, which is short-term trend that has a duration of less than usually two months. While corrections are often a great place for a value investor to find an entry point, bear markets rarely provide great entry points, as timing the bottom is very difficult to do. Fighting back can be extremely dangerous because it is quite difficult for an investor to make stellar gains during a bear market unless he or she is prepared to short the seller.
My gut feeling that is not a simple correction as well I have been kicking around markets for over 60 years, I cannot remember an incident as severe as what we are presently experiencing. I felt in the first few days of this year it was going to be a usual correction, however within the past week I made the decision (right or wrong) and have liquidated over 70% of my portfolio to capital gains on the ones I was above water on.
Coupled with this our government is arranging a major restructuring for Alberta and Saskatchewan as well as major funding to kick start "infra structure" which is going to take some time in put in place. In addition, Canadians have now been labeled as have the highest personal debt levels of all G7 Nations and if we get an much as 1/2 to 3/4 interest rate increase, we have a bubble in real estate and the consumer cannot service debt. We all know what happened in the US when this occurred. Real Estate will be the next thing on sale.
So My Rant is, as we work through this, and we will, what can 5i offer in suggestions and recommendation for us an investors to get through this delima. If this stays with us, will we have to change our investment style to shorting and putting. :)
I would appreciate your usual and frank suggestion and comments as well as Peters take on the present day situation.

Q: Like most people I have a bit of cash to spare but am nervous about catching the proverbial falling knife in this market. Would you recommend easing into a stock I liked slowly by buying part positions? Or better trying to buy based on a technical signal. Such as waiting for the ten day moving average to turn up or a golden cross to develop etc.? In the past I have found technical signals to be pretty useless and I think academic research shows their accuracy to be at best slightly better than a dartboard.

Q: Recently and in very short order, the TSX blew through a correction (10% down), then quickly passed through bear market territory (20% down) and is right now on this very bad day about 26 % off its high. At what point do we start calling this a market crash? At what point would you consider there to be blood in the streets? It certainly feels like the blood is being sucked out of my portfolio!

Q: Most analysts seem to agree to CDN dollar is going further down compared to the U.S. Some think to 50%? What do you think and is there an ETF or investment that you think would be a good way to play that belief?

Q: Hello, do you think the reasoning 15 or 16 times earnings of 90-100$ which implies the spx benchmark adjusting to around 1500 has some merit in the current environment ? Also, with the US economy doing ok and the $can below 0.70, is it a strong stimulus for Canada or are we not exporting to them as much anymore ? Thank you

Q: Regarding certain analysts recent advice to sell everything I would like to refer to a chart in Stock Charts that was published today on the Juggling Dynamite blog. The chart follows the value of the TSX and the $Cdn. The $Cdn leads and the TSX eventually catches down. 2002 TSX bottom 6000 & $Cdn at 62.5. 2009 TSX bottom 7500 & $Cdn at 77.5. If the TSX follows the $Cdn down to the current 68 cents, the TSX level will be 7000.

You keep telling us that nothing has changed. Maybe all assets are reverting to the mean from their elevated levels caused by all the QE. Almost every 10 year stock chart that I look at shows super charged growth starting about 2012.

The chart that I referenced is quite shocking and suggests that this correction could test the 2009 levels. Would you please comment.

Q: I am 68 years old, retired, and rely on dividends for income. I went 100% into cash on December 31st, thereby avoiding the 7.2% drop in the TSX over the past two weeks. Once the dust settles, I plan on re-establishing my previous positions in individual high paying, low beta, small to mid-cap Canadian dividend paying stocks, diversified across most sectors. I prefer Canada over the U.S. for the dividend tax credit, and I prefer small to mid-cap stocks for their monthly payouts. Given the current macro and micro economic conditions influencing the Markets, in your view, is this a reasonable strategy going forward? As always, thank you for your valued response!