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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Hello 5i team,
I’m 74 years old; with due diligence and with the contribution of people like you, my RRIF portfolio is behaving very well. My plan is to deplete the RRIF portfolio at age 90. The revenue from this portfolio will continue at the same level if I get a 7% compound annual total return in the next 16 years.
Unfortunately, we expect a recession sometime during those years. If I were to ride the recession, the value of the portfolio would stand still for (let’s say) 5 years and if the portfolio were to grow by 7% in each of the remaining years, my revenue would drop by a whopping one third. In order to maintain the expected level of revenue, my excel projection model indicates that I should obtain a 20% growth per annum instead. That is unrealistic.
Alternatively, I could do what I did in 2008. I sold my holdings after incurring a 15% decline and re-entered the market a few months after it bottomed and started on its recovery path. If I did that and planned for a 7% growth per annum, the revenue would drop by 13% only. That is quite acceptable because there is a 10-15% safety margin in my revenue forecast…a cushion of sorts.
If, however, I knew when the recession will occur, I would exit the market ahead of time and re-enter after the bottom…”but that is another story”.
I would greatly appreciate your collective opinion.
Best regards,
Antoine

Read Answer Asked by Antoine on July 10, 2017
Q: Good morning Peter,

When looking at reversion to the mean, the near-term chart can be different from the long-term chart. For instance, the one-month chart for QQQ at closing on Friday, July 7, shows it to be below the mean suggesting a good buying time. However, the 10-year chart shows it to be significantly above its mean suggesting a good time to take profits.

Which is the more important indicator?

Thank you.

Milan
Read Answer Asked by Milan on July 10, 2017
Q: I see a couple of concepts repeated in your answers: 1) if you have a short term need for cash (buying a house within 1-2 years eg) you should hold cash or cash-like investments (i.e., not equities), and (2) in general, some equity investments may be ok, but only for a 3-5 year hold.

Can you walk through the mechanics of how to deal with the situation of investing when you know you'll need cash after, say, 4 years? Do you buy good diversified equities (eg BE portfolio) and hold for 4 years, committing to yourself to sell only on the day before the 4-year period is up? Or do you buy such equities, but then slowly rotate into cash (when?)? Or commit to rotating into cash at the 2-year mark or some other arbitrary date? Or do you assess the situation at the 2-year mark (e.g.) and hang on, or not, depending on whether the portfolio is high or low?

Wondering what your thoughts are on buy/sell strategy in such a scenario. Thanks.
Read Answer Asked by Chris on July 05, 2017
Q: With interest rates likely increasing this month in Canada and also the USA, would you put any extra cash into bond funds (like CBO,XHY) or preferred shares right now; or wait to see if the prices decline with the new higher interest rates?

Thank you.
Read Answer Asked by Donald on July 05, 2017
Q: Hi there, not really a stock specific question but more a psychological/behavioural question. Based on your experience, how often should one look at their portfolio? I, probably like many others, look at my portfolio far too frequently. I suspect this can be stress inducing and can lead to more possible losses than gain? How often do you recommend one to look at their portfolios? Thanks!
Read Answer Asked by Michael on June 30, 2017
Q: Morning folks,

Could you please comment in regards to establishing positions in good quality companies that are so called expensive. I hear money managers refer to companies as to rich and need to wait for a pullback before getting in. With some companies a pullback might not even happen. As a long term investor does it really matter when an investor buys in. Could you elaborate.

Thank you.
Read Answer Asked by Mark on June 30, 2017
Q: Hello Peter,
I'd appreciate your insight.

What do you think about the suggestions that money is moving out of technology and some of it will find its way in the biotech sector? I do not hold any US tech but do hold the biggish position in IWO and IWM combined. With no fresh money, what do you think of reducing the positions in either or both IWM/IWO combine and invest in IBB?
The second aspect where I would like your thoughts is on the Financials both side of the border. With BOC likely to raise rates atleast once, the TSX may drift down, maybe even a sharp reaction. What do you think of reducing TSX exposure, buying US dollars and investing in US financials for the second half of the year?
As always, appreciate your views.
Regards
Rajiv
Read Answer Asked by Rajiv on June 30, 2017
Q: I want to invest about $400000 new money, over what time period should I invest ? Is this a good time to get into the market or should I wait for possible pull back. or should I get into the market now by buying all the companies in the 5i income portfolio? or should I invest half now and half if the market pulls back.
Or should I just park the money in HFR until oct or nov?
Thank you
Read Answer Asked by Hari on June 30, 2017
Q: I am very impressed with your ability to limit your balanced portfolio to 25 stocks. Currently I hold the above six stocks in the financial sector whereas you hold three. The only one with large imbedded gains is REF.UN which I have held for over twenty years. one third of our total portfolio follows your balanced portfolio. The other 2/3s is managed for us and includes a large allocation to canadian banks. I am willing to sacrifice some stability for more growth. Would you consolidate any of the above stocks to simplify the portfolio? Below is my current allocations. My bias is to keeping REF, GSY and ECN.
2.23% aif
3.16% ref
2.36% ecn
1.90% fsz
2.54% gsy
1.86% slf
Read Answer Asked by Paul on June 08, 2017
Q: Hi Peter, Ryan, and Team,

I understand the rationale for different weighting of sectors among the three portfolios. You've stated in the past that we should look at our entire portfolio to "determine where we stand", and I've done this for my RRIF, my wife's RRSP, both of our TFSA's and our joint Margin Account. I use Google Sheets to track this entire portfolio. My question is this: In a 'composite" portfolio, how can one determine the appropriate sector weighting, or is it purely a personal choice? For example, Technology is 21.38% of the Balanced Equity Portfolio, 32.05% of the Growth Portfolio, and 7.26% of the Income Portfolio. In our 'composite' portfolio, Technology has a weighting of 10.83% of the portfolio's equity portion. So I suppose my question would be "How do I know that my weightings are appropriate, and once weightings are chosen, do I stick with them? Or should they vary for different points in the economic cycle?"

I have another question that I'm hoping can be answered by one of our computer-savvy members: As mentioned, I use Google Sheets to track our portfolio which can "capture" the stock price for popular indexes like the TSX. However, there's a "new kid on the block", namely the Aequitas Neo index, and I haven't been able to "capture" prices to be inserted into Google Sheets automatically. As an example, a Canadian Money Saver top-rated ETF, (CLU) is no longer listed on the TSX, but is now listed on the Aequitas Neo index. Do any 5i members know how to accomplish this "price capturing"?

Given that there are several questions in this long-winded question, please deduct as many question credits as you deem necessary. Thanks for all your help! Now I'm going to watch Peter on BNN which I PVR'd earlier!
Read Answer Asked by Jerry on June 08, 2017
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