Investment Q&A

Q: Some guys in my stock group think oil is a real long term dud beause of American shale. The infer it is much worse than people suspect from the supply side, indicating the US has just scratched the surface on their ability to recover this cheap oil.If I heeded this news it would discourage me from ever buying any oil stock in the future since demand will never come close to making up for this new technology which is also allegedly being exported all over the world. Do you think this idea is over blown, for the short and long term

Q: I would like to add something I have learned since I have been with 5i for a couple of years now. I have learned an awful lot and no lesson has been more important than the need to diversify. Unfortunately, at first that simply meant to me holding companies in different sectors without enough regard for exactly where those companies earn their money. So when oil and commodities collapsed, not only did my purer plays (Tck, G, Sgy) drop but "associated" companies in other sectors declined as well (Rus, Bdi, Qst) so I realized I wasn't as diversified as I thought. Lesson learned.

All in all, I have been happy with my total returns over these past few short years. But I seemed to have achieved those returns by having some 2,3, and even 4 baggers while having lots of losers. Is this a "normal" situation or just a current sign of the times and the makeup of my porfolio? Is there a percentage of winners one should expect in a portfolio (assuming moderate risk)? Or will the losers often/usually outnumber the winners?

Appreciate your insight.

Paul F.

Q: Please comment on where 5i stands as a whole in regards to the needs for pipelines and on the Fed environment department giving a green light to build an LNG plant on Lelu island (Petronas). In regards to pipelines, specifically on ‘Energy East’ and ‘Trans Mountain’. There certainly is a lot of red tape with the Fed/Prov, Environmentalists, FN’s, etc; but isn’t it time Canada “became whole” on important infrastructure (ie. pipelines/LNG) issues to move our “trapped” resource to tide water/abroad? 5i has a very savvy investor base, a moderated forum would be a good thing to “open the floor” so to speak to hear all views on a variety of issues...

Thanks and regards,
Evan

Q: Good morning...was wondering if your read the article in Financial Post "How Canada is becoming the orphan equity market nobody wants"...would appreciate your thoughts...

Thanks

Q: My biggest (>40%) on paper “losers” in a non-registered account are: SGY, TOU, PHM, SCL, and AVO. They are each between 1% and 2% of the portfolio.

My biggest (>100%) on paper “winners” are : CSU and ATD.B.

I don’t have any capital gains to offset this year since I have not sold anything. Does it make any sense to trigger a tax loss for the sake of it since it could be used in the future (and nothing to carry the loss back to either)? If I sold any of the above “losers” I probably would not be in any hurry to buy them back, if at all. I can hang onto them as I still kind of believe they are still good, but you refer to the opportunity cost of holding onto them. Not sure if I should create a loss for the sake of it, and maybe take some profits on the winners since they are up quite a bit.


Paul J.

Q: Terrorists attack on Paris is truly tragic. Sadly this may lead to market correction. In today's Globe and Mail (net edition) there is an article by Reuters' Journalists about the possible short term correction and a "short squeeze" taking place in the near term. They don't expect any long term consequences.
What is your opinion and suggestions regarding portfolio management? Buy on this dip or just leave things be and monitor the situation?

Q: I seem to be noticing a trend over the last few earning seasons (particularly this last quarter and in Canada). If a company’s earnings (and general outlook) surprise to the upside, the stock price may move up a bit but usually not by much. If earnings are in-line with consensus estimates, the stock price might just hold steady but more often drops anyway. If there is a small earnings miss the stock gets severely punished, and on a large miss the reaction is often brutal (i.e down 30%-50% in the following days ex. Amaya). The daily moves that some supposedly steady large cap names can encounter these days on a single piece of news is getting more and more exaggerated. It almost makes me believe that selling an entire portfolio before earnings season and buying back immediately after could make a lot of sense. The downside risk seems to be so much more amplified versus the upside potential when quarterly numbers are released. I would obviously never expect you to endorse such a timing strategy, so my question is simply: 1)Am I imagining this or have you noticed this trend? 2) If this is in fact the case, what are your thoughts on the reasons why and when /what might stop it? Is it just a function of current investor sentiment?

Q: Hello 5i
My portfolio is imbalanced and i have been thinking
about bringing it back into balance. The imbalance is due
at least partly because i wanted to go heavy on comsumer
products, as i don't have much in fixed income. I know, of
course, that consumer staples are not a substitute for
fixed income. But, i thought they would bring some
stability.
The breakdown is as follows:
consumer staples 25%
financials 16%
Industiral 14%
energy 5%
telecom 6%
materials 11%
information tech 11%
Utilities 7%
health 3% (Note: I am moving out of healthcare stocks for an eft)
intrntl etfs 6%

I am thinking about bringing this back into line
and also getting some more fixed income.

The real problem with this is that I will have some fairly large
capital gains to pay. A nice problem to have, I suppose. But, I
was wondering whether since many of these stocks are in what
are generally considered very safe sectors, s, it is worth taking the tax hit
to rebalance? I realise, of course,
to rebalance? I realise, of course,
that it is difficult to comment since
you don't know the individual case. But, i would none
the less, appreciate any suggestions.
thanks for the great service, cl

Q: I'm looking for percentage allocation by sector with,of course, a bias on the best growth opportunities. Could yoy provide this?
Thanks

Q: I'm looking to park some cash for 3-6 months. I'm familiar with CLF CBO and XSB and I expect products from other companies will be similar but what are Floating Rate instruments such as notes? What are they and how do they compare is safety to the 1-5 year laddered ETF's? Thanks again Henry

Q: I would like to add some global exposure to my trading account portfolio. I have short listed 3 ETFs, with XFH and ZEA excluding North America and VXC containing a significant exposure to the US market. I already have exposure to US securities but I would appreciate your perspective on which option may perform best.

Also, would you recommend a hedged or unhedged vehicle at this point.

Recommendations on alternative approaches are also appreciated.

Thank you.

Rossana

Q: Can I have your outlook on CBO for the next year or two.

Thanks

Q: For those who are considering buying Valeant, I recommend watching what a Rotman School of Business finance professor had to say about it today, on BNN. I attribute little weight to many guests that come on BNN, because of conflicts of interest, but Ramy is a professor who I have met and trust. His financial analysis methods are certainly modern and respected. What he said about EBITDA was also interesting/worrying considering how many BNN guests use it to back their ideas. dishttp://www.bnn.ca/Video/player.aspx?vid=736200

Q: Hi 5i - a general portfolio management question:

Assume that I start with 20 stocks at 5% each. I have CPG, DH, CXI and AYA that are all down from the ACB. Say that those stocks mentioned are now varying from 2-3.5% FMV - assuming that I still like those companies (and the overall weighting in the sector makes sense), should I be putting new money in those stocks to bring the FMV back up to 5%? I am averaging down, but also re-balancing the portfolio - any suggestions?

Q: Do you preceive that there will be less tax selling this year due to the volitility of the markets for the last 10 months.

Q: These questions are in regard to Peter’s comment today about maintaining a balanced (sector weighted) portfolio: 1. If one was starting fresh with a $1m equity portfolio, how many names would you choose if building a portfolio from the Summary List? Regardless of sector (next question), would they all be equal weight by name?
2. I see that you have applied 14 sectors to your summary names – 4 more than the TSX/S&P breakdowns (Services, Industrial Goods, Financial Services and Consumer Goods seem to be adjuncts to the usual 10). In determining sector weighting of the portfolio, would you choose names so that all 14 sectors were of equal weight (i.e. 7% each)? If so, how far would you let a sector run before re-balancing?
3. If one decided to follow your Balanced Portfolio, would you buy all 27 of your current names? Would they be all equal weight or at the current weights in your portfolio?
4. What would be the highest percentage for a single name to run before re-balancing?

I realize sector/stock weighting cannot be made into a science, but I’m just trying to get a toehold conceptually. Thanks a lot.

Q: Is there a symbol to track "Options Adjusted Spread".

Q: Hi there, please give me your opinion on the below allocations for Financials, Health Care, and Industrials:

Financials (18% weight)
BNS.TO, CSH.UN, EFN, FSZ.TO, MRC.TO, SLF.TO, TCN.TO

Health Care (9% weight)
CPH.TO, CXR.TO, GUD.TO, PHM.V

Industrials (11% Weight)
DRT.TO, LGT.B, NFI.TO, PUR.TO, STN.TO, WSP.TO

To me its a solid bunch of companies but I need to trim this list (or perhaps remove and add others) but am having a hard time - looking for your opinion.

Thanks!

Q: Is there a way to run a screen for stocks that are:
1) doing buybacks (perhaps using a % of shares outstanding range)
and
2) over a certain p/e (eg 30x)
Thanks Cameron

Q: Given the trade deal that was signed today would you have any sector-stock selections that could benefit. What would you recommend for a protein stock. sap, hlf, Clearwater or mapleleaf.
Thank you as always.
Chris