Investment Q&A

Q: Tax loss season is upon us. Can you name 2 small caps and 2 large cap stocks that will be largely affected by tax loss selling, but have a chance for a strong rebound. Thanks

Q: Although I typically look at some ratios when purchasing stocks, I never have used the Relative Stock Index (RSI). Although I understand roughly how it is calculated and understand that an RSI above 70 is an indicator of an overbought situation, I was interested to know if you use this tool as part of any of your recommendations or when you are answering Member's question and why or why not.
Also, if I am asking a question that has already been asked in the past, how can I search the history of questions asked to find questions related to a specific issue. The only place I can find anything seems to be in "MISC" however there does not to be any means to search this specific area to determine if a specific question has already been asked.
A specific company I was looking at in regard to RSI was Manulife. In the last month the RSI of this company has risen from about 50 to the current level of about 85 as the share price has increased from about $20 to $23. Obviously, if I look at RSI, I should not buy until the RSI drops to below 70.
I appreciate very much your thoughts on RSI and what if any value you would assign to it.

Q: Hi 5i,

I am retired and have a 5-10 year investment horizon. I love your Q&A database and find it provides almost all the answers I need.

My question is a general one around interest rates, but I have provided A&W as an example.

I have heard for, it seems like more than a decade, that when interest rates rise, then the price of dividend producing equities will suffer as folks move to bonds and other more growth orientated companies or funds. I have always thought that, say A&W with a 4.4% dividend (and a visible healthier food strategy driving higher sales) would retain its value unless interest rates rise "a lot". The dividend is likely very stable and tax beneficial, so very attractive.

Now, with conditions forming out there that may lead to rising interest rates, and maybe "a lot", how concerned should I be with, say, holding my A&W.

General comment. I notice that some of us who ask questions like to define our status (retired) and time horizon (5-10 years) as we pose a question. I would be supportive in providing a general profile that is maintained at your end so you can "look me up" when answering questions. Optional for us, as some might not want to share. Just a thought.

Love your service.

Q: Team 5I
Your independent service is very much appreciated.

Previous Question: from other member on Oct 3 2016
How would your adjust position from Oct 3 2016 have in view of projected present US situation.
Re: dividend aristocrats vs dividend growth

Q: Could you please explain why Spin Master's Q3 earnings have been higher than the aggregate of the other quarters combined? Would you anticipate this to change in Q12017 with several new products coming online for the holidays? I'm not very comfortable investing in companies like TOY, PBH and PKI due to valuation so do you think that starting with small positions in each and adding to the winners makes sense?

Q: Hi Peter and Team!! I do not have any exposure to emerging markets in my portfolio. Could you suggest an ETF for me, and is it a good entry point at this time? Thank you, Tamara

Q: My question concerns asset allocation. I understand how rising interest rates can affect utilities that have a lot of debt or low oil prices affect energy companies but I am less clear why other sectors should be declining in what is being generally viewed as an improving economy. For example, why are consumer staple stocks declining in an atmosphere where economic growth is expected? Does sector rotation fully explain this?

In the same allocation vein, my one weighting anomaly is in industrials, where I have a 25% weighting. I hold EIF, MMM,ECI, HEI (a US airplane parts manufacturer), STN and SIS in fairly equal proportions. Most models suggest this sector should be at most a 20% weighting but when I look at the list I see companies in different industries and businesses and I wonder what a water heater rental company and an engineering company have in common. Am I being too slavish to an asset allocation model or is there something that ties these companies together that I am overlooking?

Appreciate your insight.

Paul F.

Q: I have Ryan's read excellent article dealing with the impact of the US election on Canada.

However, I am somewhat bewildered by recent market activity - especially on the downside here in Canada.

The opinion has been expressed that interest rate incrases are/were already baked into the market. Can you quantify that in any way? e.g. 3-5%; 1-2% .... to what degree they are "baked in".

The reason I ask is that, it seems like all the media had to this week was mention the likelihood of inflation driven interest rate increases in the USA and sectors here like utilities and REITS took it on the chin.

How much more downside can we expect given the impact of just a few words about possible Trump moves to drive the USA economy when the decision(s) are made to actually increase rates in the USA?

Could this downward pressure be magnified if, in addition, we see US corporate taxes reduced and see some companies start to shift production to the US.

How likely is it that we are facing the prospects of a signicant bear market lasting a few years here?

Or is this a knee jerk reaction right now like Brexit that will likely reverse itself over the next few weeks?

Any light you can shed on this will be greatly appreciated.

Q: Hi Peter and company
I am sitting on a load of cash with a watch list itching to go but I dont know when I should pull the trigger.Maybe now or wait till 2017?I buy only CAN stocks.Thought there might be a downturn but so far hasnt happened.
Peter N

Q: A number of the companies that grow by acquisition seem to be under greater pressure right now. I was wondering, if we are now in a context in which interest rates are likely to increase, whether companies of this kind (and thus their stock prices) will be impacted in terms of their capacity for growth and their ROEs. Decisions regarding any given company require more detailed financial assessments, so your general thoughts are what I am wondering about.

Thanks for the wonderful guidance that you provide.

Q: portfolio- with recent scenario (new us president) looks like people moving to more growth oriented names. as such what would be recommended sector allocation. thanks

Q: Looking at what is going on in the USA, if Trump reduces the tax rate to 15% and encourages the money held outside the US to come back will this be USD bullish?
Also can you give me your thoughts on ZRE, REITs are going down, should I be looking to add?

Q: I hold XQQ and have a small gain. In light of the US election result would you recommend holding on to this etf? Or, would you switch to a Dow based etf? Thanks, Bill

Q: Due to Trump's election and his political/economic agenda, would you recommend taking up a position in an American Equity fund at this time? Or, would it be wiser to "Wait and See" because of the market's current unpredictability/volatility? Thank you.

Q: How would you suggest I invest $100,000 in fixed income today, or would you recommend I hold the cash position into December? My only fixed income holding at present is a $200,000 5 year GIC ladder. Thanks, Barrie

Q: Hello 5i Team,
I have a hard time understanding the recent drop of Gold and, in contrast, the sharp rise in base metals. I thought the former was a hedge against uncertainty and inflation and the latter to be a reflection of supply & demand.
Thanks,
Antoine

Q: Where is the best place to hold some short term cash that will be deployed over the next 2-3 of months? Is it worth holding in high interest account, ETF or just to leave as cash and deploy as opportunities come up.
Thanks

Q: I have losses between 55% and 33% on the following list of stocks. DH 55%, PIH 48%, TPK 46%, CAM 33%. My regret is not so much in the losses but rather not having the good sense of using stop loss orders. Would you appreciate your opinion regarding stop loss orders and if you would continue to hold these stocks. With thanks, Bill

Q: I have 4000 SIS stocks,has made money so far is pullback in price also gold and oil pull back a good opportunity to buy?.

Q: Hello 5i
Thought I would ask Investor portfolio management and psychology/behaviour question.

As I watch my profits in companies like Emera drain away 2% per day ( down $5/share since August), I wonder what the statement to investors should be when the question comes up, why did we not get out seeing clearly this stock is in a down trend and with rates moving up, is going to be out of favour and see price declines?

Waiting for an annual dividend of $2 when in four months $5 of capital disappears, just does not make good math sense or a profitable stance.

In September this was a good investment. What are your thoughts on this today with debt high, rates moving and short sellers pointing at companies like this?

Should we not have been selling at $50 instead of holding at $45.....and watch the price tick lower?

As you can imagine, it is tough watching long term paper profits in REITs, Telcos and utilities drain away.

Would you please offer your thoughts on the emotions that arise in this situation and with the stated company and sectors?

Thanks
Dave