Investment Q&A

Q: Peter I notice in your model portfolio you 100%equities .
I have 26% fixed I classify callable preferred 2015-16 fixed along with my bonds and 7% cash.77% is equities and perpetual preferred.Any comments
Stan

Q: Hello Peter,
I am looking for income generating ideas. What are the best Canadian & US sectors (for dividends) that are currently undervalued or fairly valued? Are the Canadian and US markets overvalued at this time? Should I wait for the next six to eight months to see the direction of these markets? Should I look at ADRs (Europe and Latin America)? What are your takes on individual and ETF preferred shares and corporate bonds?
I know I am asking a lot of questions. These are questions I think most of us here are thinking of as we look forward to 2014 and beyond.
Thank you and have a great day.

Q: Hello all:
My US and EAFE ETFs are way up on the year some as much as 30%.

Is now a good time to take profits on these or do you feel the US and Europe still have a ways to go?

Do you have a rule of thumb for when you take the profit from a stock or ETF?

Thanks for the great service

Q: Aside from gold, what other sectors/companies do you believe have been oversold or present an opportunity on a value basis?

Q: Hi Team,
Thanks for suggesting IWO (US small cap ETF) and IBB (US biotech ETF).
I'm up handsomely since buying in. I read your view about IBB a couple of days ago, but I'm wondering what your current view is about IWO.
I keep hearing mixed views about the space, but I only trust yours.
Keep up the good work.

Q: As a followup to the deflation scenario, you would think that if the US wants inflation at all costs that this would be good for Gold-eventually??

Q: Hi Peter & team,
I'm hearing more about DEFLATION lately and wondering what effect it would have on the markets. THANKS!

Q: Peter and Team,

I bought a 5% position in Stantec a couple months ago around $48 and sold a covered call on it with a strike of $50 for the next month. I got called away and proceded to sell a Put at $52 for the next month. Stantec then reported their incredible quarter and the stock is now $68.50 or so. With the big run up, does this stock still make sense to buy new or should we be waiting for it to come back down a bit?

Q: Hi Peter and Team: Do you think it is an appropriate time to buy a materials ETF, or should I wait?
On the subject of the number of questions: I think each question should pose essentially one focussed issue for your analysis. To ask for details on more than one stock is being greedy, but asking for a comparison of two similar stocks would be OK (in my opinion). Infrequent questioners who have multiple queries should pose multiple but separate questions.

Q: Peter,
As not much seems to matter anymore (LARRY SUMMERS THINKS THAT BUBBLES ARE "THE"PANACEA FOR BOOSTING ECONOMiES... Well.. we knew that all along, but neither Greenspan nor Bernake dared to say it openly before him but he obviously had the excuse of being rejected from the job lately and we understand his frustration..) I would be happy to share a little trivia on the market:

What was the lowest in 2002, 2009 for the S/P?
2002: 777
2009: 666

What was the Dow closing price on the first day it passed 16000
11/21/ 2013: 16009.99

The nagging question that remains is: will the Nasdaq close its highest at 5222, 5333 5444 5555 or 5888(5666 and 5777 have already been taken)?
who dared say blondes had more fun when we have Wall Street??

Cheers, and publish at your own discretion, of course!

Q: 5i recently responded to a question on sector classification / weighting by stating that your ideal sector setup would have 'around 15 sectors' opposed to the TSX's 11. I'm curious to know what your ideal sector classification setup would be, and what your ideal sector weighting would be today given a blank slate for a risk on investor? IThis will allow me to vet my existing portfolio with your sectors to see how it stacks up and if its too overweight / underweight anywhere. Thank you.

Q: Market strategy
With big name investors like Carl Icahn predicting big drops in the market, I am getting a bit nervous.
What is your perspective on the current state of the markets? Would you be inclined to go to a higher cash position. If yes, would you sell specific sectors or more generally across the board.
My investor profile is more income oriented vs needing to selll stocks.

Thanks.

Q: I assume there was nothing in google search data before the last crash that could be used to predict the next one? Perhaps something less obvious than increasing paranoia or volatility?

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: 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 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: Would you consider that the US MARKET has topped temporarily and is about to make a correction?
Ditto for Canada?

If so what might some money making opportunities in contra ETFs?

Q: which companies that you guys have covered could be the most negatively affected by a surprise interest rate increase, thanks?

Q: Hello Peter.
This may be more of a portfolio management and Investor behaviour question but as everyone wants to own a portfolio that grows and/or grows income, from your experience how does an individual investor balance all the inputs?
Inputs like, Media noting markets appear to have run their distance, Others saying we are in a long-term Bull at least into March next year, technical managers indicating sell when the uptrend is broken.(good investments don't always stay in an uptrend)
I understand most of this is noise and some is out there to generate market activity, but in the mix has to be some truth to be distilled.
As a small investor, I am interested in seeing my portfolio grow over time and would like to not pay 2.5% or more to the banks for keeping my capital in a mutual fund.
I guess the question is, how does a small investor navigate through the noise and what are the important structural inputs for successful investing as a retail investor? What are the important inputs that will support the right moves (portfolio management) at the right time?
Your thoughts on this and any resources or readings in this area you can recommend would be appreciated.
Thanks for this ongoing excellent service
Dave

Q: I have been advised to safeguard my recent portfolio increases, which have been substantial, by selling shares equal to my profits, leaving only my original investment amounts. While an attractive idea, I am a dividend drip investor and removing the profits will reduce the "multiplier" effect they should have in a bull market. What would you advise?
David
PS: And of course keep up the good work!