Investment Q&A

Q: I am of the belief that interest rates are set to rise in the near term (although I have held this belief for the last Year). To play this thesis, I am looking at PROSHARES SHORT 20+ YEAR TREASURY ETF (TBF;NY). At today's price, this ETF is at a 52-week low so I feel that there will be greater upside potential than downside risk. I am looking at a 5% position as a hedge to my positions in interest rate sensitive stocks in the telecomm and enegy infrastructure space that will decline if interest rates do rise. Does this thesis make sense?

Also, in the event that the 10 Year Yield moves higher (say 3.0%), what impact will there be on Canadian and US Financials?

Thank You.

Q: Interesting article "Going Big". How would you suggest someone with the right risk tolerance approach such a strategy ie., would you start with say 5 or so stocks and double up with momentum by maybe selling a weaker performing stock? What stocks might be candidates currently? Thanks, Mike

Q: Hi Peter. I have been hearing rumors of a severe correction or even a crash of the markets. Last year in May, a friend of mine panicked and cashed in all his stocks and funds because of the same rumors at that time. It was obviously a huge mistake, given what the market has done in the past year. I know that no one can time the market with any real accuracy. However, I am getting a little nervous. Is it a good time to have more cash in my portfolio. In other words would you recommend selling stocks that have done really well in the last year in order to have the security of cash? Thanks for your great insight. Cam

Q: re: diversification, O& G and trending in general

I have consistently heard you loud and clear over and over again your sound advice to focus on long term rather than short term "market predicting" for lack of a better phrase.

Having said that there are at times when certain world wide situations effect a sector - such has the lessening of conflicts in the Ukraine & the middle east resulting in oil prices coming back down to earth.

The "majority" of recent commentary on BNN has suggested we may see a slight correction over the next few months - especially in O&G - after a very strong move. As such I have taken a small portion off the table from my O&G holdings and am now sitting on some cash.

What would you suggest would be a good sector to look at today and what names might you suggest in that sector that have good value based on their EBITDA and affordability with minimal debt?

OR... would you suggest sitting on 5% cash?

Thanks for all you do for all of us

Gord

Q: Acknowledging my high risk tolerance, I have 90% equities and 10% in Vanguard Canadian Short-Term Corporate Bond Index ETF (VSC) , the 10% portion is what I consider my "safety" and like the dividend payout which I reinvest in equities as it accumaltes.

I'd appreciate your current thoughts on VSC and my stratagy overall, is there a better "safety" play for me?

Q: What would you recommend for a total minimum investment for a portfolio consisting of seven diversified ETF's, for a period of about ten years. I have about $15,000 to invest. I was just wondering if this would be worthwhile, thanks.

Q: I have been hearing more about a China Real Estate crash. I have some new cash to invest and want to do so with an eye to defending/preparing for that possibility. What sectors would you look at?
Thanks

Q: Do you worry about another crash like in 08-09? If so do you have any thoughts about how not to get hurt?

Q: Hi 5i team
In my LIF acct I have 13% in cash and 13%fixed income ETF's and rest in equities. The cash and FI portion is enough for 5 years of my required payout. Should I have this much in cash or should some of it be at least in Fixed income? Also in my RRSP I have 10% cash and 18% Fixed Income ETF's the rest in equities. But I don't plan on taking monies out for 6 years. Should I be investing some of this in equities? Do I have too much in cash? I am 65.
Thanks for any advice you can give on this.

Q: Good Day 5i Team,

I am a new investor who is starting late in the game, I am 49. I will be investing $700/month into my wife's TFSA and $700/month into my own TFSA. I have trading authority on hers. I have reviewed the Model Equity Portfolio and am fine taking risk in order to grow my investments over the next 15 years, not much time I understand but better late than never right?. My questions are:
1. Do I buy 1 stock at a time each month with the $700 ($1400 total between the 2 TFSA's) or should I wait and buy every 2 months so I have a larger dollar amount to make a larger purchase and also reduce my trading fee?
2. Is it better to spread the $700 ($1400 total) every month equally between 10 stocks and just purchase the same 10 monthly?
3. Do I limit myself to only 5 stocks in different sectors with one of the above scenarios?

Or do you suggest something else?

Thank you very much. I know that these questions might seem remedial but I would sure appreciate some guidance.

Paul

Q: Hello,

I have invested in your stock portfolio (thank you) plus I added CAM and EFN (5% each similar with the others in the portfolio).
I have around 150k more to invest. Do yo suggest adding to the existing portfolio or adding new ones?

I was thinking about SGY, AVO, CXI, EH, CFN, WCP are they worth an entry point at their current prices or I should hold and hope for a dip? Do you have any other suggestions? I'm looking for growth, my biggest challenge is knowing when to sell.
BTW this is a non registered account.

Thank you for all your good work and patience
Marios

Q: Dear 5i team. I have a question about transferring funds from my Margin account into my TFSA. Every year we are allowed to add $5500 to the TFSA. I did this in January of this year, but instead of depositing cash I transferred stocks. I transferred $2131 dollars of STN at a 28% profit as well as $2664 of WEF at a 40% profit for a total of $4795 transferred into my TFSA (the rest in cash). In the transfer process from my Margin to TFSA do I pay tax on the profits for these stocks? When I got my questrade trading summary last year it stated CONTRIB for the type/ price when I did this transfer. To me it seems that the stocks were "sold" at the market price that day and then they were transferred into the TFSA. Is my thinking correct? Or can you explain to me better the tax responsibilities when doing this type of transfer to maximize returns? Thanks so much.

Q: My no-so-smart advisor (whom I'm leaving) got me to buy $115K worth of US stocks for my Can. open/non-registered account. (At the time, I didn't know any better.)The $115K is 30% of my open account. In addition, he sold me about $30K of US stocks for my RSP; the balance being Can. stocks. This is the opposite of what should be. Can. stocks belong in the open account, to be able to take advantage of the dividend tax credit. Some of the US stocks are "keepers"; good companies I'd like to continue to own, such as AT&T, Pepsico, GE, etc. The question is what to do now? Just sell and buy Can. stocks for the open account, and US stocks for the RSP?

Q: Exceptional service. I am 61 and through your advice trying to become more of an investor instead of a trader. Could I have your opinion on my stock portfolio which are all in either in a RRSP or TFSA. I will have a small company pension at 65 and I do hold some GIC's.
Thanks

1.Consumer Cyclical – 11%
CGX – 4%
NFI – 5%
RPI.UN – 2%
2.Energy – 19%
CPG – 5%
IPL – 3%
SGY – 4%
WCP – 7%
3.ETF (Bond)
ZHY – 4%
4.Finance
BNS - 9%
5.Industrials – 14%
E – 4%
NAL – 5%
WSP – 5%
6.Materials – 8%
CHE.UN – 4%
WEF – 4%
7.Real estate REIT – 5%
BPY.UN – 3%
HLP.UN – 2%
8.Technology – 10%
DH – 4%
DSG – 2%
ESL – 4%
9.Telecom
BCE - 5%
10.Utilities – 11%
BEP.UN – 5%
ENF – 6%

Q: First of all, I want to thank the entire team for their services. I think you are all doing a great job and I appreciate the advice 5i provides.
My question is related to when to sell an investment. I've watched the YouTube video that indicates investors should sell an investment when there is:
1) Negative changes to company of industry
2) Over-promising & under-delivering by management
3) Declining revenues
4) Changes in competition
5) High debt

I know people shouldn't sell when a stock has gone up, but how do we know when a stock is overextended / expensive? Is there a metric you use to determine a good exit point, or do you just stick with your 5 reasons? Thanks!

Q: Hi 5i Team,

You have stated in the past that in your ideal world, stocks would be classified with 15 sectors (itemized below). Over the past year, you have suggested target sector weights that a model portfolio should aim for. I am doing some mid year rebalancing / new capital deployment with my portfolio and hoping you can fill in your updated target sector weights for the next 6-12 months based on what you see in the economy.

Capital Goods / Industrials =
Consumer Cyclical =
Consumer Staples =
Energy =
Financials =
Health Care (CDN) =
Health Care (US) =
Information Technology =
Internet / Software =
Materials (Gold / Silver) =
Materials (Metals) =
Real Estate =
Retail =
Telecommunication Services =
Transportation =
Utilities =
TOTAL = 100%

(Risk Profile = 8 out of 10 with long time horizon, current portfolio consists of 45% small cap, 25% mid cap & 30% large cap)

Thank You.

Q: Peter, given the seasonal "sell in May" scenario, even though it seems irrelevant this year, combined with the extremely high TSX near record levels, would it not be prudent to wait till the summer to rebalance or increase current holdings, even in growth names like DHX, SJ, ACQ, AVO, AYA, BAD, SGY and WCP. Or are today's prices ok for a 3 year hold. Thanks as usual
Dave

Q: When asked to recommend 4 growth stocks on June 9th you suggested AVO,ACQ,BAD,and AYA. When asked a similar question today you suggest DHX,SJ,and WSP. Please explain why you would recommend completely different 'growth stocks' to the same query within a two day period? Otherwise when scanning the Q/A column for my own guidance I find this inconsistency confusing rather than helpful.
Thanks

Q: I have a $100,000 GIC coming due and do not plan to renew it. I plan to put $90,000 of it into the market. I like stocks with some growth combined with a decent dividend. I already have a well diversified portfolio. Would you please suggest some stocks that you would currently recommend.
Thanks for your great service.

Q: Should the internals of the market start deteriorating (preferably before then), what could DIY investors do, to protect their portfolios, aside from correct/smart asset allocation? Would buying inverse ETFS help and if so, could you recommend any for the TSX and S&P? Or if there is a better way, hope you share with us. (I am a survivor of the 2008-2009 crisis before being a DIY, thus the apprehension)

Because of this market experience, the quality of your unparalleled service is really appreciated. I have never seen such a deal. I marvel about what you do on a daily basis. I hope you company is there for the long haul.