Investment Q&A

Q: This question does not relate to a specific stock and may not be something you can predict, but would like your opinion on the Cdn. dollar. It has been hovering just above .81 cent mark which is above the 21 day moving average.
I would like your opinion if you think the $ will continue moving up?
Thanks . Enjoyed watching Peter on BNN today.

Q: With all the bubbles building up around us – bonds with negative yields, unbelievable levels of debt, USD artificially overvalued and its reserve status under attack from the Chinese – do you ever consider going into some sort of defensive shell to shelter from the coming storm? If so, what kind of a shell would that be? Do you think the CAD might escape some of the turmoil, due to less sovereign debt? How do you feel about gold?
I’ve been trying to play defense for some time now, by investing mostly (but not entirely) in small cap dividend paying Canadian stocks that can’t easily be shorted, or accessed by large US investors, avoiding financial services stocks, and having some gold stocks. I have thereby missed out on the huge rise in US stocks and bank stocks, but I think in the long run my strategy will probably still pay off. What do you think?
The top ten holdings (in decreasing value) that my wife and I have are KEG.UN, PPL, BPF.UN, CHE.UN, CGX, FCR, BXE, FNV, AW.UN, and GIL, out of a total of about 25 holdings.

Q: Hi Mr. Hodson and 5i,
Our equity exposure is currently 95% in Canadian large caps.
With all this talk about Canada's stagnating economy, we want to trim our can. large caps. We just trimmed Can. banks and Reits by 11% of the portfolio today.
The proceeds are to go into 5i portfolios, US, Eafe and Emerging Markets Etfs.
Please comment on following tentative Percentage Allocations for the large cap and International Sector portion of the equity:
Financials 13%. (Can.)
Telecom, Utilities, Pipelines 11% (Canadian)
Energy+Materials+Gold 12% (Can.)
REITs 4% makes it
Total Canadian large cap = 40%.
Healthcare 10% (US)
Tech+Industrials 13% (US)
Consumer Staples+Discret. 9% (US)
Small cap Etf 3% (US) makes it
Total US Sectors = 35%
Eafe Etf 17%
Emerg. Markets Etf 8% makes it
Total Global Etfs = 25%.
I would like your opinion on the above Canadian large cap 40% + US Sectors 35% + Global 25% equity allocation. Too much? Too little?
The portfolio is for growth, time horizon 5 years +.
Thank you so much.

Q: You may have seen the announcement of aluminum-ion battery technology: <http://www.theglobeandmail.com/technology/new-inexpensive-aluminum-ion-battery-set-to-outlast-competitors/article23829686/>. Understanding that this technology requires further development, doesn't it defeat the investment thesis for lithium mining (particularly as concerns automotive batteries)?

Q: I need help with strategy. I want to sell these stocks ( AC, GPS, MTSN, NLN, QST and TWD) to make room for stocks from the new growth portfolio. Is there some timing stratagem I can employ or do I “Just Do It”. GPS & QST & MSTN are at rock bottom and I think can only go up if I wait. NLN could bounce up (or down) 10% on any given day. TWD was always just a lark. AC has upward momentum currently. BUT! All the stocks on the new list I want to buy could all be going up too. What to do? Any advice on how to approach this will be welcome.

Q: I am at the point where bond maturities are reducing my interest revenue yet do not want to be overexposed to equities (currently at 50% - I am retired). Bond yields are very low. What strategy do I take? Do I reinvest in short-term Bonds hoping for the return of decent interest rates or move up the risk curve and use bond-like equities for better yield?

Q: Hello Peter
Is the shares purchase price the criteria used in order to determine the proper percentage allocation within the portfolio ? if the value of the shares decrease should you add in order to keep the the proper allocation ?
Thank You for the excellent service
Dan

Q: When starting to build the new Growth Portfolio,with $50,000.Is it better or more efficient to buy exact dollar amount ( $2500 per position for ex.) or by even lots? Also, should you start with the 5% positions first and then work you way to the 3% positions overtime?
Thank you very much for your expertise.

Q: what good cash vehicles would you recommend that are liquid and available in discount brokerage trading accounts.I currently have a large cash position as I have zero weighting in financials and oil and gas and don't expect to deploy these funds for 6 months or more.
Reading the questions there seems to be much discussion of $65.00 oil,with the reserve increases that I am monitoring,$35.00 oil seems a more realistic target.What are your thoughts?

Q: "Start shedding the deflationary plays such as utilities, consumer staples and telecommunications because that story has become as old and tired as the bond rally." So writes David Rosenberg in a basically anti-bond pro stock piece in the March 27 Financial Post where he assesses the impact on bonds and income stocks of interest rates rising even slightly. Do you think the 5%+ (growing) yield on BEP would offer a sufficient cushion over most other utilities in the face of rising rates or should profits be trimmed as Mr. R. suggests? Thanks, J.

Q: My question is not about Vivendi per se but rather about activist investors who buy large numbers of stocks in underperforming companies (such as Vivendi) and then pressure these companies to break up into smaller businesses purportedly to boost shareholder value. Does this tactic always have the effect of improving returns for shareholders? Or are there times when it's better to wait until the dust settles? When I think of CP's huge gains after Bill Ackman's involvement, buying this company is hugely tempting.
Robert

Q: Hello 5i Team, first of all I'd like to say that this is a very valuable service. I wish I'd found it much sooner.
I'm in the process of moving our RRSP Mutual funds to a self directed account at my bank. The plan is to create a balanced diversified portfolio using ets's.

30% Fixed Income - XQB
25% Canadian - XIC
25% Us- XUS
15% Europe - XEF
5% Emerging Markets - XEC

(or something similar - not sure yet if I'm going with BMO, Vanguard or Ishares)

Or would it be better to choose sector specific ETF's such as Financials, Health Care, Industrials ect.?

Also would you recommend waiting until after the summer (sell in May and go way), buying into the market all at once or buy in 1/3rd chunks over a period of months.

Thanks you very much in advance

Q: Hi Peter & 5i team: After reading many of your answers to members it seems to me more or less the holdings in your model portfolios are for "hold" if no further news from you. Am I right on this? I prefer not to take cap gains and let it grow instead, but when the market comes to a correction my "strength" gradually goes down also and I had times resulted buy high sell low. Or at the end of the year I just rushed to take tax losses. I have a number of holdings from your model portfolios and the rest that your comments to members are positive. Also, my portfolios are well diversified. Any suggestions that I can do better? Or I just sit back and watch out any new comments from you on the 5i site? I am really impressed by your answers to members. Thank you for your wonderful service.

Q: Is there a connection I may be missing between the low price of oil and the solid upward momentum of healthcare stocks? That is,are healthcare businesses the beneficiaries of a new lower cost environment due to the current price of energy? Thank you, Peter

Q: Hi Peter and Team,
Would appreciate your position on stock buybacks. Money managers that appear on BNN tout stock buy backs as a positive akin to dividends. However, the following article questions this practice and would appreciate your take :
http://www.philstockworld.com/2015/03/12/harvard-business-review-throws-up-all-over-stock-buybacks/

Appreciate all you do for us small investor types,
Steve

Q: Hi guys,

I want to limit exposure to the financial sector to 20% of my portfolio. I currently own TD and BNS and with the recent pullback in the major CDN banks, I'm thinking of adding 2 additional banks and I'm thinking about BMO and RY. I don't want to invest in an insurance company since no one can be sure when rates go up and I'm not sure about Home Capital Group since it is more concentrated in its business than the major CDN banks and the yield on the major CN banks are twice that of HCG? Your thought? It is risky to hold 4 major CDN banks in my portfolio if overall exposure is capped at 20%?

Thanks,
Jason

Q: Buy before or after Earnings Release?
I have done both and invariably seem to get it wrong on both sides. Optimistic about a prospective stock, I buy before and am disappointed by a poor result. Cautious about a prospective buy , I wait and then wonder if I should "chase" after a good result. I have no consistent strategy, but am increasingly coming to the view that's it's better to wait in order to avoid the loss with the proviso that you'll have to pay up for a good result.
What do you recommend as a general guideline in this situation?
Thanks

Q: Hello 5i,
I am considering buying my foreign holdings (outside North America) in the currencies of their respective countries, currently they are held in US dollars. When a sector is bought into, I generally will purchase approximately 10 different securities to remove the idiosyncratic risk, so I have a lot of companies. Currencies considered other than Canadian and US are British Pound, Euro, and Australian Dollar.
What do you think of this?
Thanks,

Q: Good Morning. Could you please tell me what Canadian stocks or
sectors would benefit most from a possible correction in the US
dollar? In this type of market, would corrections of this sort last days, weeks or months? Thanks Jan

Q: Regarding Linda's question on washing within RRSP. RBC Direct for a few years now, has both US and Canadian currency accounts in RRSP, TSFA and all other accounts. Thus when you trade US securities they stay in US $ and you are not hit with currency exchanges coming and going. I find this feature a huge advantage.
steve