Investment Q&A

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

Q: long term investor catching my breath

anything other than market conditions to be concerned about here after a very big drop?

Thanks for all you do

Gord

Q: Are global growth concerns significant enough to derail this market. Should we sit tight or lighten up. Thanks.

Q: In comparing my portfolio to your suggested weightings a couple of sectors need to be rebalanced.

The areas where I have the least exposure are:
1. Consumer Disc/ Staples (Total 15%) vs my PF at 5% assuming I have categorized the stocks properly. Current holdings are DHX, AW.un,CGX and ACQ. What would you add to flush out this sector?
2. Telcos (10%) vs my PF at 2%. I do hold T and BCE. Should I just add to these or do have additonal suggestions?

The adjustments will be done over a period of time as much of the new buys will be funded by selling energy stocks where I am sitting at a 21% weighting - even with pullback in this sector. (Another argument for diversification. I thought I was so smart earlier this year with a heavy energy weighting. Live and learn!)

Thanks yet again for you help.

Q: Please advise the % weightings of the various sectors in the TSE 300 & the S&P 500 and your current recommended % weighting in the various sectors of The TSE 300.
Thank you

Q: Hi , Do you think were heading for a Bear market and if so when do you think will be in one , the other day I read that we are currently in the eight inning of the Bull market how long will this last before the bear arrives.

Thanks

Q: The following have shown little change in the current correction. Is this the type of correction wherein the sellers will get around to worrying about these stocks/sectors, or does it look principally oriented to the energy sectors. Thanks
BPF.UN, VNR, ET.

Q: Hello 5i. There was an interesting article in Monday's Globe & Mail about retirement investing strategies. Intent is to help retirees protect their capital, given that their ability to recover from a major market crash could be more difficult due to more limited time horizons.

http://www.theglobeandmail.com/globe-investor/personal-finance/retirement-rrsps/two-ways-to-game-plan-for-retirement/article20937727/#dashboard/follows/

Would appreciate your thoughts on the article, and the two ways to approach stock market investing it describes.

As always, thanks for your advice.

Q: Hi Team,
I am getting very tempted to buy some stocks that have sold off(pembina, td bank etc...). I keep telling myself to be patient and wait for some evidence of buying however, there seems to be some good opportunities to at least start a position or add to an existing one.

Seeing this great clip from Warren Buffett is also influencing my decision (clip #4) http://thereformedbroker.com/2014/10/02/warren-buffetts-tv-appearance-october-2nd-2014/.
I am normally against averaging down, but I have noted that it can work well with GOOD QUALITY companies in case the correction still has legs. Anyways, could you and the team recommend how you handle the correction and give 2 names from each sector that look attractive for a long term investor.
Thanks again guys

Q: My cousin has never invested in the stock market. She has 100k and is thinking to invest in a portfolio of 20-30 different stocks now. Her time frame is 15-20 years. Understanding you don't have a crystal ball, what do you think of the timing?

Q: Hello
I recently read the following,
Warren Buffet flatly endorsed a simple portfolio of inexpensive index funds for his own survivors. My advice to the trustee couldn't be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard's.) I believe the trust's long-term results from this policy will be superior to those attained by most investors — whether pension funds, institutions or individuals — who employ high-fee managers.

If a Canadian was to follow this advice, and allocate some to a Canadian index fund, a U.S index fund and short term government bonds. What would your allocations be and what Canadian Index fund would you recommend? If you where to periodically rebalance the portfolio how often would you do that. Would you use this strategy in RRSPs, TFSAs and RESPs?
Also should the investor protect him/herself from U.S dollar currency risk?
Use the assumption that this is for long term investing.

thanks, looking forward to your comments.
Bryon

Q: Most of my investments are in SDRSP,RIF & TFSA accounts. I have started to build a trading account for dividend paying stocks in order to take advantage of the dividend tax credit. Currently my holdings are:
Aston Hill (AHF) 7%
BMO Eql Wgt Reit Index ETF (ZRE) 24%
Gamehost (GH) 21%
Ishares US hi Yld Bnd ETF (XHY) 26%
Valener (VNR) 20%
Cash 2%
Some of the percentages are high, but I prefer buying board lots. I have additional funds to put in which should reduce the percentages by half. I am ok with some risk. What would your suggestions be for adding to and/or changing the existing mix.
Great job on completing the bike ride dream & contribution to an important cause plus many thanks for all 5i does.

Q: Today, Reuters (Mike Dolan) published a piece "Financial Market Storm Brewing.." and the last paras stated:

"If investors are surprised by financial storm, it won't be because they weren't warned. Financial watchdogs have been waving a red flag about overstretched markets for the past year and stressed concerns again this month.

"There are increased signs of complacency in financial markets, in part reflecting search for yield amidst exceptionally accommodative monetary policies," the Bank governor Mark Carney said last week, citing conclusions of the G20's Financial Stability Board which he chairs.

"Volatility has become compressed and asset valuations stretched across a growing number of markets, increasing the risk of a sharp reversal."

Particularly because of Mark Carney's comments, this caught my attention. Any thoughts on how this might play out?

Q: hello 5i
my question pertains to rebalancing ones portfolio. I have done this usually once a year in Jan./Mar. Would there be a preferential time to do this?
thank you

Q: Hello Peter
Before I sign up for 5i Research my portfolio was made of 3 ETFs HSU.TO , SSO.N US and UPRO.N US.
My buying and selling was done based on Daily frame of S&P 500 and 3 EMAs. I my say that I was pretty successful with this technical approach and this method save me from loosing about 50% of my portfolio in January 2008 when EMA50 made "dead cross" with EMA 200.
My question is since from last September I follow your model portfolio (with small changes of stocks) will you be able to issue warning us if big correction like 2007/2008 will be coming on the horizon or should we go through correction like 2007/2008 without selling entire portfolio.
Id like to add that I still have separate portfolio of HSU ,SSO and UPRO based on three EMAs unfortunately this technical approach method does not work with individual stocks .
Thanks Andrew B.