Investment Q&A

Q: With the 10/2 year treasuries spread now at 0.11 for December 4, 2018. Would it be prudent eye up good quality stocks, in preparation of a recession coming?
And is this something you are watching?

Q: We recently received a letter from Manulife with an offer to buy out our Annuity contract with Income Plus. Rob Carrick had an article on the offer in the Sept. 22 issue of the Globe and Mail. I would like to ask your opinion. My original investment was 175,000, purchased in May 2008. Recent market value was about 217,000, for a some what dismal return of less than 2 percent. These types of fixed annuities have some guarantees, but are complex and very hard to understand. The buyout offer is 37,000 and Manulife would add that to our present market value and roll over our contract into a newer segregated annuity product with lesser benefits. It looks like we have 3 options: 1)leave our contract as is with Income Plus 2) accept the bonus and move our market value into their new and watered down annuity version 3) Take the bonus and cash out of Income Plus at market value.
In recent weeks, I have done an internet search on this type of annuity and now see some limitations that were not fully understood when we originally purchased: the very high fees, now about 4%; a lack of inflation protection; a declining insurance coverage as well as a declining principle, which will both go to zero if I live to a ripe old age. The guaranteed income for life, which is 13,400.00 per year for me, no longer looks so appealing, as I wish to leave something in my estate for the family.
The intent of the original purchase was to act as a pension as I am self employed ( rancher) and have not paid much into CPP.
Do you think that a basket of conservative blue chip dividend stocks and reits, might be a better choice, if we take the option to cash out and reinvest? We are not fans of USA companies, but realize that many of them are international in scope.
Thanks, Dave Bober

Q: Hi, I have my portfolio distribution
10% in a short term bond (RRSP)
50% in XUS (Registered)
25% in HXS (TFSA)
15% in my Non Registered Account (HXT).

Is it time to move to a more definsive strategy. I am thinking of shiftin about 30 % in the likes of BCE and another 20% to short term bonds. Would you be ok with this?

Thanks

Q: Hi 5i!
This more of a financial planning question than an investing question.
I recently read the book "Retirement Income For Life". It talks about delaying taking CPP until 70 to maximize the amount received. This is achieved by drawing down RSPs from retirement to 70 and taking 1/3 of your retirement funds and buying an annuity. The annuity pays income for life and the larger CPP payment will last for life also. The goal is to not outlive your money in retirement. I'd love to hear your thoughts on this strategy.
Thank you for your insight!
Dave

Q: Is there sector rotation happening? if so which sector looks better ?
thank you!

Q: Hello Peter & Ryan,

After 2 incredibly gut wrenching months on the markets and the so-called repricing of equities, today the markets were cheering and have pushed indexes on both sides of the border into what appears like a 'relief' rally>
My question is a 2 part question:.

1. I would really like your insights into what were market participants betting on today and perhaps going forward. Is this possibly a "head fake" setting the market up for another wild journey or do you think that the market believes that concerns around: (a) interest rates (do not have much further to go) and, (b) that the US and China might be able to agree on a truth of sorts this weekend.

2. If the above concerns (question 1) become reality in the next month or so, what is your advice to members? What should investors chip away at in order to perhaps recover losses and defend their positions. I realize this a very broad question, but would appreciate your top 6 defensive picks, regardless of asset classes, that will boost our portfolios in the next 3 to 5 years.

Thank you very and much appreciate your opinion,
Joseph

Q: Hi there, this is not exactly a stock related question but more of a general investment question. Between buying an investment condo property in Toronto (25% down) versus investing in the stock market (with no investments with margins), which do you feel would have a greater return over 15 - 20 years? Thanks!

Q: Hi 5i
I always thought tax loss selling was mainly a thing in the Nov/Dec timeframe. With the increased volatility in Oct / Nov is it possible to judge whether the volatility could be attributed to earlier tax loss selling or just general fear & profit taking? I'm not qualified to make a judgement like this and my question is more a request of what you'd expect for the remainder of the year and whether January would bring some relief.
I know you can't know with certainty but at a gut feel / guess what do you think the remainder of the year has in store?

Gullible :)
Mike

Q: Do you believe that this is the bottom and good time to bring new money or you would rather wait till there is some better sign?

Q: Hi,

Donald's analysis regarding Fairfax returns was quite interesting. You mentioned that timing is everything. The long-term MACD (a monthly trend/momentum indicator) for the S&P 500 now making a bearish crossover.A bearish crossover (sell signal) occurred at the 2000 tech bubble peak, the 2007 market peak, and the intermediate market peak in 2015. I came across this article and would like to get your opinion on it and keeping in mind timing as a big factor should we reduce the risk by lowering our percentage of stock holdings and get back in at a better time.

https://www.financialsense.com/blog/18799/markets-long-term-momentum-just-went-negative

Great service
Thanks
Ninad

Q: HI there: I am still in comfortable profit margin from investments in the three stocks above. I wonder what you think about taking profits (now 20 % lower for Apple) now and holding some money on the side, or is buying on this dip a good idea. Especially re Apple.

Q: 5i does a great job of alerting us to stocks good for buying. But I am wondering if you view it as also within your sphere to alert us when to sell (selling suggestions seem to come only after a problem and a large drop in stock price). For example, when a high-beta stock is at an all-time high maybe it's time to sell (or is the idea that you sell only enough to re-balance). But I have ringing in my ears from lots of sources "let your winners run". But it's hard to see a winner go up +70% over a year only to see it drop 80% in a few days (estimating here). I guess the game plan is if nothing fundamentally changed the stock will eventually recover the drop and then some.

Thank you for any insight you can provide on this.

Q: Hi guys:
In this correction, companies are so called on sale. Unfortunately retail investors only have so much money to deploy to buy shares. For example I own cargo jet and have done great on the name. Would it be wise to sell the winner and take the cash and add more shares to a savaria , New flyer , ccl , or pbh for example and dollar cost average. Or should I just stay put for my entire portfolio.
Thank you
Mark

Q: Are we near capitulation yet?

Q: AS per a question August 24 of this year I listed 10 stocks in my TFSA that were sound favorites at the time and i was down and down 7 percent.I have held on due to yours and fund managers advise and am now down 30 percent and am starting to wonder why hold on.I thought the market was close to being done a small correction but starting to feel total capitulation isn't close yet but may happen.High risk tolerance i guess i am not if the correction ends up 50 percent.Will take years to recover.

Q: The size of the Ontario Debt and ongoing deficit are staggeringly huge and will weigh on the economy for decades. And the resource economy out West is severely damaged. Are these not dominant macro factors that will limit Canadian equity returns for many many years to come? If I had a blank slate of where to invest should I not take one look at the Canadian economic picture and just take a pass, 5% position at most? Tens of billions of capital investment dollars have left Canada for good reason, should not we small investors do likewise? Would value your opinion. Thanks.

Q: I have followed your research and recommendations for a couple of years and have enjoyed the ride. I began with a liquidity of 'say $500k' so to speak. I invested approx half over a short period of time and kept the residual in cash. At my current age of 69, and having developed a distinct aversion to loss, I felt comfortable in maintaining this significant liquidity position. Now, with the markets in turmoil, rather than selling into the market, I am tempted to 'average down' and let go of the cash position I've maintained. I will not be in need of this 'fund' for at least 5 years or so. Would you recommend that I take this posture of buying more of what I have (which includes most of the companies you have in your balanced equity p/f), and if so, which stocks in particular would you recommend I add to.
Thanks,
cj

Q: I note that you have said (in Saturday's FP) that the market is currently not so worrisome because for one thing the VIX has not spiked above 30. Yet I have heard another commentator cite the same fact about the VIX to say we have to have a spike in the VIX before we hit the bottom and so the market will fall more. Same metric but to you it's good and to the other guy it's bad. Can you reconcile these two viewpoints?

On that, while the VIX may indicate not much fear or panic, there sure does seem to be a lot of panic based on the 11-20% drops I've seen on several stocks. Is that because these sellers are just not the ones into options and therefore they are not influencing the VIX?

Thank you.

Q: Greetings,

From now to about 12 months are you able to sense which 3 sectors are undervalued and which 3 sectors are overvalued ? Is there any sector in particular that stands out as ready to take off or conversely ready to crash ?

Thank you and Regards.

Q: Recently President Xi gave a speech indicating the intention to open up the Chinese economy, including " lowering tariffs for autos and other products and enforcing the legal intellectual property of foreign firms".These are things the Trump administration is seeking. Also in a recent dinner talk David MacNaughton indicated pressure from American farmers to reach a resolution.

Have you any thoughts on the possibility of the trade dispute being resolved and which of the 5i stocks would respond most positively?
Mike