Investment Q&A

Q: Since certain sectors (such as Energy) have fallen so much, do you recommend people rotate to keep portfolio weightings in check from before? For example, I had about a 10% weighting in energy before the sector meltdown, so it's closer to 5% now. Should I reduce some weightings in others (eg. consumer staples, tech, etc) to bump up Energy? I would plan to reshuffle after a recovery...

Thanks!

Q: Sector rotation keeps coming up in various posts. I sense you agree.

Clearly there is a rotation out of energy. Any other sectors?

And where is the smart money going? And what would be the top couple of names in each of those "rotated into" sectors?

Thank you.

Q: Good afternoon,

US discretionary spending is indicted to rise with oil dropping, wmt is hitting new highs in anticipation. I consider a moderate risk investment in light of "new money" theoretically ready to deploy. What are your thoughts, where will Canadians spend if discretionary spending increases, will they payoff debt ( bad for banks), would they spend on credit with increased sentiment on repay ability (good for banks, magna, cineplex).. where would you invest in light of the economic change?

Thanks,

Eric

Q: Hi Peter,

I'm down considerably on the above names.
Would it makes sens to sale them now for tax purposes and
buy something equivalent for the next 30 days, so if a pop up happens I won't be out in the cold.

What do you think about this strategy and do you have any equivalent replacements?

Thanks
M

Q: Hi Peter and Staff
I choose so far to hold a lot of stocks in each sector(doing my own ETF I guess) .This is so you know that the industry each of the companies are in below in relation to my overall portfolio % wise is not an issue in making your recommendation.
Would you please look at the two lists below and if you feel worthwhile to dump 2 or 3 of the ones I own in favour of 2 or 3 of the ones various people recommend in the other list, please say so in order of trades,brief explanation as to why please.You can assume no rush to realize benefits,assume 10 years
POSSIBLE DUMPS
AIM,CHE.UN,CJR.B,DII.B,MTL,NWC,PZA,XSR,TPK
POSSIBLE ADDS
ADW.A,ADN,AGT,CSW.A,KBL,KPT,LNF,RUS,TRI,WEF

You can safely assume that I do already own the stocks with reasonable dividend levels in these sectors that are in your model portfolio.
Thanks for all you do
Dennis

Q: How much value does your team place on technical analysis. A large number of energy related stocks have violated all moving averages recently. Does that mean we should not buy them until they move back up significantly

Q: What is the best strategy to protect against a major market decline ? I am concerned that the stock market as a whole may be in bubble territory and that we may see another major decline like we did after the shocks in 2000 and 2007. In response to similar questions from Heather and Charles on Oct 1 and 2 you suggested that investors should hang in there for the long haul. Are you still of the same view or is there a safety net you would recommend ?

By way of background, in the period from 1995 to 2000 the S&P 500 went from 500 to 1500. After the tech collapse, it sold off to a low of around 800 in 2002 (-45%). Over the next 5 years of recovery, the index went back up to 1500 in 2007, but then collapsed again to around 800 in 2009. We are once again in the 5th year of a bull run, with the S&P shooting past 1500 to its current all-time high of over 2000.

Q: Peter,

Would you please comment on someone in their early sixties maintaining their portfolio by investing in ETF's compared to individual companies.

Thanks

Q: Hello 5i,
I will be building out the bond part of my portfolio in time. My thinking is to structure that part of the portfolio with BB- to BB+ bonds that have a time horizon of eight years max.

What do you think of this strategy?
Thanks,

Q: Hi 5i Team
I am sitting at 14% Energy with BDI, PEY,VET and QST and 13% Basic Materials with G, SJ,and RUS.. I have approx 5 to 10K to invest and would like your advice as to whether I should take advantage of lower energy and Materials stock prices i.e. Whitecap WCP and First Quantum FM or into recent top picks Trimac TMA and EXco XTC. I do not have any Transportation nor Auto related stocks currently.
Regards
Kathy

Q: I understand and accept the importance of a properly constructed portfolio. However, I have a lot of trouble deciding on how to set up the energy portion of my holdings - mainly because there are so many different yet excellent choices.

If assuming you want a 15% portion of the portfolio to go into energy, how does one decide to split this among light oil, heavy oil, tar sands, natural gas, service companies, drillers, explorers juniors, seniors, dividend payers etc.? All the while, keeping your total portfolio down to 20 - 25 names?

Is it just a matter of picking 3 or 4 from any of those in the sector and going with them or is there not as much correlation among the types of companies listed above as I think?

Thanks for helping to shed light on this area.

Paul F.

Q: Hello, can you indicate which three sectors you feel will benefit the most from lower oil prices and why? I am thinking of placing my free capital in the ones you are recommending as I don't see oil prices rising anytime soon. Thank you.

» S&P/TSX Capped Composite Index
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» S&P/TSX Capped REIT Index

Q: Hi team:
I owned the above and my US exposure is relatively low as most of my equity is in the Canadian market
I would like to add the above as I have some cash
Would you say that it is safe to put 1/3 of my money in and wait for another 2 months to add another 1/ to see how the market would be ?
I am holding it for 3-5 years period, thanks Team!

Q: Hello Peter
The recent stock prices decline has given me an idea to open new portfolio "an exceptionally concentrated portfolio" that I found idea in your 5i Research Blog from July 20,2014.
Please give to me your 5 best at this time candidates for this type of portfolio that one can double down on them.
Thanks Andrew B.

Q: What caused stagflation in the 1970's? Do you think we are at risk of stagflation again?

Thanks,
Hans

Q: Thankyou for reassuring all of us in these troubled waters. I have quite a bit of cash to introduce back into markets. Is the 3 days of positive market action a good indicator this down turn may be over? I know you don't have a crystal ball but how do we deploy a substantial amount of dollars back in to the prescribed portfolios?

Q: Which Canadian companies should profit from 20% lower oil prices? Companies that use vehicles? Airlines, waste management, truck delivery, construction companies? How about CN and CP? Those might actually loose since oil production should decrease (less shipping)?

Q: Advice please on weathering this first time correction or worse for a rookie DYI investor (not my day job.)

I appreciate your calming replies about the fundamentals of the economy and the companies you comment on.

I have made only a total of 6 or 7 buys this calendar year and 1 good buy GWO offsets a few poorly timed purchases HSE, TA, SGY AND WCP

IN TOTAL IF I SOLD IT ALL, I would break even today, bearing in mind this is all together only 5 to 10 % of portfolio, would you suggest

getting rid of it all and waiting 30 days (by the way if I sold for a loss today when is the 30 day limit for claiming a capital loss? )

OR waiting things out because my selections above are fundamentally sound and I have a long time horizon (> 10 yrs )

thank you for the support !

Q: I have read with interest how many of the comments during this downturn refer to selling positions now. It is very important for investors to realize and remember, that it is during these downturns that the "smart money" begins to buy, not sell; perhaps not today, but soon. A 10% correction will take the TSX to around 13150, the DOW to 15600 and the S&P to 1800 and that is when there will be bargains to be had. Don't sell during these times; re balance your equities and fixed income and get your cash back in...just a thought :)

Q: Carl Icahn shorts S & P 500. He has taken these measures to protect his stock portfolio. He says the correction is going to get worse. Do you think your 5i followers should hedge their portfolio and, if so, what products would we use? It is nice that I can get this info. from 5i. The people I know wouldn't be able to provide me with this information. Dennis