Investment Q&A

Q: Do you see a sector rotation taking place into 2016 where enb - bns - cgx- t - slf- and mg could outperform and thus should be brought up to same allocation as esl - dsg - ccl - csu....thanks

Q: Merry Christmas and happy new years.Thanks for sharing your knowledge with all of us. I just read a book by Marin Katusa titled The Colder War about world oil market. What is your view on the future of petrodollar ?

Q: In a portfolio it is generally recommended that you avoid a weighting of more than 5% per equity. My question is as follows. Assuming your total portfolio is 1M. The split 60% equities and 40% fixed income. On the equity side this would imply 20 stocks at an average value of 30K per stock to meet the 5% guideline. On the fixed income side does the same rule apply or can you say 2 ETF's at 200K each. Say 200K of CBO and 200K of ZSU as an example . It brings the weighting to 20% each. Notwithstanding one could probably go to a product that gives you the entire bond spectrum and put 400K in one ETF. What is your opinion and recommendation.

Always appreciate your incite and all the best in the new year.

Q: I am baffled at the discrepency between forecast and actual numbers of the US weekly oil inventories. This week a plus of 4.5MM vs a forecasted reduction of 1.8MM. Can you shed some light on what could create that much variance on a weekly reported number?

Carl

Q: I am wondering what your reaction is to the proposed 4 rate increases for 2016 and 4 more for 2017. My impression was that the rate increases would come much more slowly. Was this your expectation and what the effects would be on the US and Canadian economy and equity markets.
Many thanks
Mike

Q: I WONDER IF YOU COULD PROVIDE ME WITH YOUR INSIGHT INTO WHERE YOU FEEL THE U.S. AND CANADA ARE IN THEIR INDIVIDUAL BUSINESS CYCLES.
THANKS,
RANDY

Q: Having read so many questions recently from your customers citing down 20%, 50% and worse; and feeling the pain myself ... would it make sense as part of a "flight to safety" plan (tip the risk reward in my favor/minimise downside risk) to buy a real return bond fund - or something similar? Looks like the dividend is only 1.9% but short term that beats a lot of other choices.

Thanks. Merry Christmas and the Best of Years in 2016.

Q: Good Afternoon: My question is really currency related rather than Visa specifically. I own a few US stocks including Visa which fortunately for me I purchased when there was not as much difference between the US and Canadian dollar. As a result of stock performance and the difference in currency valuation I have done well. I would like to make a few more US purchases but cant make myself do so with the almost 40% hit. In my opinion some time in the future our dollar will get stronger. Do you have any suggestions or can you recommend Canadian companies or ETF's that I can buy without being so concerned about the currency. Thank You.

Q: Hi,

I have just started investing and making my own portfolio this year. I selected a few core stocks to begin with and have been slowly adding positions in other stocks for diversity. As such my weightings range from 3 to 10%. Over the last couple of months about half of my stocks have dropped 10 to 30%. My question is, going forward is it better to continue adding new positions or adding to stocks I currently own at their lower values?

I like the names of the stocks I own. Diversification is ok but not properly weighted.

Thanks again for the advice.

Paul

Q: When the market was doing well, all the analysts were positive on the future of stocks. Now that there have been some stumbles, the bears seem to be coming out of the woods. They say that quantitative easing and a zero interest rate policy has created a stock market bubble by forcing yield investors to switch from bonds to dividend paying stocks. I even heard one analyst on BNN say that this feels like the tech bubble of the late 1990's. I don't really feel that multiples are stretched. Although some high yielding dividend stocks are trading at higher multiples than 10 years ago when interest rates were "normal" and some high growth stocks are trading at rich multiples, overall the market does not seem over valued. Of course, if we see double digit inflation and much higher interest rates, then I would expect a significant pullback. Otherwise, the market feels like it has room to grow. I would appreciate your thoughts.
Thanks,

Q: Can you explain why U.S. preferred share ETFs like PGF and PFF have considerably outperformed their Canadian counterparts such as CPD and ZPR ? Thanks, Joe

Q: Maybe this is not an easy question to answer, but when you say a particular stock is cheap or very cheap how do you determine this? Also, how would you determine if a stock is cheap AND high quality? Thanks!

Q: this question is about rebalancing for "balanced positions" and those for "small cap growth positions" within an overall portfolio.

for example, ATD.B in the balanced portion of the overall portfolio now has a market value of about $25,000 or 5% of the overall portfolio.
as it understand the i5R investment approach, when it reachs 7%, then I would sell some ATD.B share to get back to a 5% weight, right?!

now for the small cap growth positions…..with the position cost being $2,500…..or about 0.5% of the overall portfolio,
what is the rebalancing rule of thumb?……..do I hold until a small cap growth stock gets to $25,000, or to some lesser amount that is less than the 7% of the overall portfolio???

Q: Hi folks: How will gold and silver react if (when) the bond market crashes?

Q: I hold some XHY in my margin and TFSA. The Canadian dollar has come down since I purchased about 2 months ago. The prediction is for a lower dollar. How risky is this downward slide , should I sell now? I just bought for the increased yield.Thank you,Phyl

Q: Is it possible that the recent weakness in gaming stocks is partly the result of the U.S Gov. position on Fan Duel and Draft Kings . If the Gov. action is succesfull it will mean the end of these two large companies and probably the end of the Fantasy Sport business in the U.S. More than 5,000000 people play this daily in the U.S and there is billions in revenue at stake. What do you think?

Q: Is FTS at any risk as far as being coal-dependant ?
Thanks for your help.
Sam

Q: Hello Peter & 5i team,
So far so good in 2015, even though it was a tough year ; the equities (all canadian) I own have generated a 12.6% total return to Nov 20.
But these equities represent 82% of my RRIF portfolio ; this means that I’m sitting on 18% cash which I hesitate to redeploy.
You say that the US economy is pretty strong ; well, I’m not so sure about that. It is rather the best among a lousy bunch; in other words, in the kingdom of the blind, the one-eyed is king.
The S&P 500 rally is of low quality in terms of lack of breadth ; in 2015, its top 10 performing components represent over 100% of the total whereas that ratio was less than 20% in 2014 and slightly more that 10% in 2013. That’s a bad turn of situation.
The relative performance of the Russell 2000 vs the S&P 500 is in decline due to lack of liquidity in the small cap sector (which is the engine of growth). That’s no good either.
The Retail sector (consumer discretionary), which is a very important sector in the US economy, is dominated by only 3 names : Amazon, Netflix and Expedia. That’s hardly reassuring.
The US$ keeps gaining ground ; that causes enormous pressure on Emerging Markets debt and constitutes a substantial headwind on US multinationals profitability.
To top it all, the 2-year US yield is going up contributing to a flattening of the yield curve ; if (and its a big if) this situation perseveres for a few more months, we could face an economic downturn.
This is my rationale as to why I hesitate to redeploy my cash and look forward to your counter arguments,
Thanks as always,
Antoine

Q: Hi 5i: The stock market situation has changed a lot since I last did any rebalancing. Could you therefore tell me what weights you would now recommend for the 10 TSX sectors. Also, what sectors would you assign to MAL and BOS which Morningstar calls Basic Materials, and to DRT which Morningstar calls Services. Many thanks.

Q: Good morning,

I currently hold SPY, VIG and IWO for US exposure in equal amounts representing 8% of my portfolio. Would you recommend switching to/ or adding to these the specific ETFs that you outlined for tech, consumer discretionary and industrial sectors? Also, what portfolio % might you aim for in US currently.

Thanks.