Investment Q&A

Q: Hi Team
I have heard the term, window dressing, where the fund will sell their "dogs" and buy stocks that have gone up at year end so it looks like they have done well. My question is, if the sell at a loss, does that not show up in the year end results showing that they had a bad year?

Thanks

Q: I have cash to invest, mostly into ETFs and as a value investor the P/E of the S&P 500 is a stumbling block for me: 23% for IVV vs about 15% for XIU - so about 50% more. XEF has a P/E of 14.31%. The rule of 20 says P/E + inflation should be 20 or less. A hard question, but do I overlook the P/E of the S&P 500 and invest now with a long term hold or do I wait?
Thanks for your comments!

Q: Today on CBC an investment person said he expected interest rate cuts to start earlier next year than later. But he then said the stock market historically seels off during interest rate cuts. This was a surprise to me. Is this just his opinion or is it historically fact? Additionally, once cuts start (and I do not expect to get to the past lows in a long time) what parts of the market do you believe will sell off and which will be a benefit.

Q: I have holdings in all 11 sectors, 30% of my holdings are high yield and enhanced yield covered calls I have many of what are held in the covered calls as individual stocks. Also there is crossover to some extent in the cover call holdings. However some covered calls are OTM others ATM, with different percentages also some use leverage others don't. Thus I get the upside increase AND the dividend. I also hold growth stocks such as PBH, IWO , LNF, PKI. and others. Am I making a mistake here or is everything tickety-boo?
Thank you for your great service

Q: The Rule of 40 is a SaaS financial ratio which states that a healthy SaaS company has a combined growth rate and profit margin of 40% or more.

Do you prescribe to this rule? Why is this specific to SaaS companies and not other industries?

Q: I heard lot of money has been invested in MONEY MARKET or GIC. is there a way for regular investors to check when money is coming out of money market or GIC and investing in EQUITIES.

Thanks for the great service.

Q: With the US economy predicted to outperform Canada's next year, would you suggest tilting portfolios toward US equities? On a related note, both my TFSA and RSP are filled with US stocks, meaning addition US equities would have to go into a cash account. Can you recommend a website that clearly outlines tax consequences at various income levels in non-registered accounts for both capital gains and interest from US stocks? Thank you.

Q: The Fidelity International Value index ETF has done very well over the past year. Its seems like value style of investments has performed better then growth/ momentum style in the last year for the global sector. Do you think this trend will continue for international stocks or is it the other way round. Looking forward for the next 2-3 years would interest rates going down be more of a favorable environment for the valve stocks?

Q: I would like to keep "high risk stocks" in my non-registered account, aka trading account, rather than in my TFSA or RRSP or LIRA accounts. But I'm wondering what the attributes or metrics or characteristics of "high risk stocks" are in Canada or US. Keen to learn from you what to look for for such stocks....Thanks....Tom 

Q: Is your allocation recommendation specific to either the US or Canadian market or is it a blend of both?

Q: Hi,

After any stock breaks to all time highs, such as Lumine and Boyd lately, I know this is a sign of strength of the stock and I know you like when this happens. If I wanted to add to a current position or initiate a new one, what factors do you look at in order to buy?

For example, the companies may have had good earnings lately or analysts may have upgraded their price targets and initiated coverage. I know there are a lot of different unknown factors at work in the market, but what would cause investors to pay up and drive a stock up to new highs with no current news? Do you look at volume on the breakout or mainly just long term fundamentals? Do you look for the stock to hold that new level before buying? I'm not a trader, but more longer term focused investor now. I'm always of the belief that there are smarter investors out there that have more information than others, which causes stocks to be mispriced. Thoughts?

Thanks!

Q: Hello, I have a mortgage renewing in the next 2 months. Currently, my bank is offering a 3 year fixed 50 bps (0.5%) lower than a 5 year variable. The 4 year and 5 year fixed are only about 25 bps lower than the 3 year fixed so I don't think those are good options.
I'm curious to 5i's thoughts on where interest rates may go in the next 1-3 years? (I'm leaning to the variable as I think the BOC is going to have to cut rates over the next 2 years).
Thanks,
John

Q: I have 13% of my portfolio in diverse covered calls that hold blue chip companies. I am comfortable with that as I look mainly for income. The portfolio is composed of 30% ETF's including the covered calls and 70% individual stocks (16/56). there are a few growth but mostly dividend paying blue chip many that are repeated in the covered call ETF's. I am 77, and have a defined teacher pension.
Total positions are 56. This seems to suit my needs as I have survived so far with a steady income. Am I making a misake or does this seem a valid plan?

Q: Is LSPD recent results (Nov 2nd) represent a significant improvement or you would still stay on the side line before adding or starting new position? How would you compare NUVEI and LSPD today?
Thanks for your insight, Peter

Q: I'm split at 20% ETF and 80% stock. Going into 2024 where do you see the canadian market vs the S&P or MSCI EAFE ? The US has outperformed the other 2 in 2023 as usual but do you believe that this continues into 2024? Could you comment on the 3 and what are the chances for the Canadian and International markets to perform better than they have in the coming years?

Q: In your answer to Terry today you stated "we would suggest also looking at sector exposure in this decision, to see that sectors align with objectives." My objective is to secure a very comfortable retirement that includes travel with investments that are as tax efficient as possible. I'm 63, and struggling with my sectors. How would one with align their sectors with this objective. I know sectors are a personal decision and you can't give personal advice but I'm looking for an example as a starting place to make my decision. Thank you

Q: Annuities? To be or not to be? As a retiree I'm pondering whether to buy an annuity at a time when the payouts are at a recent hight. I'm not sure I see any advantage over buying say ENB. The company will likely be still around in twenty years with just as much assurance as an annuity provider. I'll get a dandy, tax-advantaged dividend ( not "guaranteed", I know) and still have my capital. can you comment on annuities and whether they make sense or not? thanks. al

Q: David's call is for Cdn bonds to outperform in 2024 due to the necessity of BOC to cut rates due to mortgage doomsaying. What do you think and if you concur what etfs should one buy?

Q: After the fed stopped increasing rates what was the average rate of return 12 months and 24 months in the TSX and S&P 500?

Q: Hi 5i,
I want to add a rail position. What’s your thesis on CNR vs CP?

Thank you!