Investment Q&A

Q: Hi, what would you consider appropriate weightings (%) to the following sectors in an all equity portfolio in today's market?

Communications
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Technology
Utilities

Looking to create a more diversified portfolio and seem to struggle on an appropriate weight for each. Thanks!

Q: In general, how many stocks are necessary to be adequately diversified? I know that your model portfolios have 20 positions each, but if I owned fewer stocks, it would make if possible to monitor each positiion in more depth. I would appreciate your thoughts.
Thanks,

Q: Hi Peter and team the markets seems to have more worse days than better are we going back to the 2008-2009 days slowly. How bad are things is it a specific underlying problem (China, Recession, US raising rates fear) seems that nothing is making the market turn around? Thanks Nick

Q: Market is droping like crazy should we still hold?.

Q: I would appreciate your opinion on the upcoming Federal election as to how an NDP win may affect the market.Certainly if Capital gains and dividend incentives are eliminated the effect on the stock market will be profoundly negative to the point that,if an NDP win seems likely,one may be well advised to sell a good portion of stocks.If some or many investors vacate the market completely then advisory services such as yours may also be affected.Your opinion is appreciated. Thank you, Don.

Q: I have just recently tried to find value stocks to invest in and am currently watching about 40 stocks and I would be interested to know what you consider to be the main value indicators to watch such as P/E ratio, debt to cash flow ratios, state of balance sheet etc. I would also be interested to know what indices you consider important before making a decision to buy a particular stock. For example, a P/E ratio below 20.. You may well have been asked this question before and if so please refer me to your response. Thanks

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Q: feel free to post if helpful. delete if not of use.

this second decline, from down 100 points to now down 660, has been occurring after the US Press Secretary appeared to be saying the White House and Yellen will not make any knee jerk reactions regarding QE4 or interest rates based on a few bad days in the market.

This morning, many "talking heads" were calling for Yellen or the White House to "do something". My favorite, so far has been Suze Orman before market open:

"I am taking this year off but it is hard to sit silently and watch these markets. Fed Chair Yellen help us out. Commit to no rate increases".

I don't know if I should laugh or cry at her tweet.

Q: Looking way ahead - would you agree with the view that it would be very unlikely to see significantly higher interest rates in Canada in a world of low oil and gas prices. If this view is correct - would it be fair to look at O&G equities (and to a lesser extent - energy infrastructure equities) as a "hedge" against higher interest rates. Thanks

Q: Hello Peter,
Usually a month from now I start investing the built up cash balances in my non registered and registered accounts and am fully invested by November end. I am wondering if it makes good sense to hold back this year and maintain the cash balance going into 2016.
The reasoning is thus. The economy has slowed with the risk of a recession on the rise. Corporations had lower earnings expectations which have been mostly met but the revenue misses have been an excuse for market sell offs. There is the fear of a global slowdown including the US(GDP growth projections have been tempered for the 2nd half). The Fed has been painted in the corner and will necessarily raise rates once or twice this year.
What is your opinion? Should I be all in or think of retaining the cash for capital preservation?
If you think the markets are fine, where would you advise I focus my attention? Your growth portfolio or the model portfolio?
Your opinion is highly valued as always.
Rajiv

Q: Just an anecdotal comment on day trading: I know a day trader who got his professional training at one of the big 5 banks trading departments. In his mid-forties now, he claims to make his living doing this by trading off the most active list (he seems to live well); his mantra is it doesn't matter if it's going up or down, use the technicals for your trend, and ensure you're out of all positions by market close. Also Online Trading Academy offers a week-long stock trading course for about $5000 that's very technically oriented. I think the lesson many have learned is that you have to know what you're doing here as many have tried and few succeeded consistently. In addition, it's a full time job.

Publish if you think this is instructive.

Q: Hi everyone,
On last nights market call Michael Smedley stated that stocks are going nowhere and are gaining one day but giving it all back and more the next. Even the good ones don't seem to be making any ground. He went on to say he feels this is now a bear market and other fund managers know this but are not admitting to it. What is your take on this and if we are in this malaise it could go on a lot longer than we expect ?

Many thanks for a great service

Peter

Q: Hi
I am looking into getting into the stock market. I have invested in stocks in the past but currently don't hold any stocks. I'm 25 years old, have a long term horizon and a medium high risk tolerance,
I have about 10K to start investing with and am looking for the best way to diversify and also get into the stock market again. I hold GICs already.
I was thinking about starting off with the stocks in the balanced portfolio and from there (as i am able to save some more money) pick a few other key names,
What is your opinion of this idea, do you think if I start with those stocks in the balanced portfolio at the current prices is that a good start?
Thanks
Chris

Q: Hi guys.

Lets say I initially buy a 4% position in company xyz. Over the course a few months that position gets whittled down to 3% due to either share price decline or due to the rest of of the portfolio performing well while xyz does nothing.

For portfolio rebalancing purposes, would you consider that xyz position to be either now 3% of the portfolio, because that's what it represents currently, or would you consider that xyz position to be a 4% weighting because that's what it was when you initially made the purchase.

If you like the company, is there anything wrong with buying more (with existing cash in the portfolio) to bump up the weighting closer to that initial 4%, or do you say "my initial position was 4%, I'll wait till xyz's share price performance catches up to the rest of the portfolio?

I'm using "xyz" as a theoretical example because I'd like to know what the general rule is, or does it really depend upon the stock, MacDonald Dettwiler for example.

Thanks a bunch.

Q: Peter, your performance on BNN tonight was excellent. You mentioned that the US is 60% of Bin's business. Could you list a few more Can Co's where the US is a % of their business that you like. Thanks for the wonderful service!

Q: Hello Peter!
Can you please comment on my portfolio.I currently hold in my portfolio (stocks - Weightings): CSU-11.2%,CCL.B- 13%,BYD.UN-10%,DHX.b-10.8%,ATD.b-15.5%,AYA-5.6%,ESL-7.6%,SJ-9.8%,CXI-5.9%,MG7.9%
,BOS-2.7%,TDG.US-3.5%,NOC.US-1.5%,CBM.US-1.8%,AGN.US-1.8% .

I also have 18K CAD to invest. Would you please give me your 3(non energy)buys today to complement my existing portfolio.
Thanks Andrew B.

Q: Further to Paul's MISC question; What is the best way to rebalance? A simple calendar approach? If so how often? At one extreme, one could rebalance daily, but incur heavy transaction fees and possibly sell one's winners way too early.

At the other extreme, one could rebalance annually, or some longer period. Transaction fees would be minimised. But this approach might miss cycle tops (and bottoms).

If a calendar approach is not used, then how is discipline maintained?

Q: What is your opinion on using Stop-Loss orders? Should investors use them and if so, what is a good percentage to use?

Q: Hello 5i team,
I am responding to your answe to Les concerning the amount of fixed income appropriate for a 70 year old. I think it would help many of us to have your rationale for your suggestions.

For instance, you suggest 40 per cent fixed income, even though they have enough to live on from their pensions and could thus presumably ride out a down turn. In this low interest rate environment many suggest a nuch lower per centage. You have yourself, i believe from time to time.
Should not the pension be considered a form of fixed income and thus count towards the per centage?

You also recommend xbb, which goes out to seven years. I imagine we are mainly thinking about preserving the capital. And if that is the case, why not choose the shorter term, xsb instead?
Thanks for any insight you can put on this important aspect of investing for many of us
Claire

Q: What 3 sectors would you avoid in an increasing interest rate environment? Which 3 sectors would perform best in an increasing interest rate environment?

Q: Hello Peter & Co,
My RRIF portfolio in entirely denominated in Cdn$. In order to invest in US stocks, the wise thing would have been to convert a portion of the portfolio to US$ when both currencies were at par; but I did not.
To convert now would cost me some 30% in exchange rate; I would not mind that if our loonie would remain at current levels. But that would be an irresponsible assumption because, even though there could be some additional downside in the short term, our currency would eventually move up (say by 10-15%).
So, the return from the US investments would have to be reduced accordingly.
But I am generating for the past 6 years a 17% compound return per annum from my Canadian holdings (when 7% pa would have been sufficient to meet my "wants"). The math here does not seem compelling to me with a hurdle of 17+(10 to 15)%.
So, unless I'm missing something, is this all worth the hassle?
Thanks,
Antoine