Investment Q&A

Q: Good Morning Peter and Team,

I am in the process of adding 15% to my portfolio. Can you list in order which 7 companies you would add from your growth and balance portfolios at this time. Assume a well diversified portfolio and a long time horizon.

Thank you for all you do.

Wes

Q: When Yellen finally pulls the trigger to increase short term interest rates, do you think there may be a short term sympathy sell off of interest sensitive securities in Canada. I'm thinking utilities, telco's and reits may experience a correction in Canada. Do you think this will in fact happen and if so what sectors do you think will be most affected. Other than the lifeco's and banks any other defensive sectors you can suggest? Thanks Peter and team.

Q: Hi Peter,
I have a precious metals portfolio of streamers and producers as follows (in descending market value):
FNV, NMI, AEM, KDX, MND, FR, PG, SLW (note: PG is a near producer)
Since I am not a geologist, I have tried to discipline myself to investing in only streamers/producers that I perceive as having quality management. I believe in Pareto's principle aka the 80:20 rule regarding management. In fact, for the PM sector, it is probably more like the 96:4 rule - ie. Pareto's x 2. My question to you is this: if you were in my shoes, how would you do research on finding the top 4% management ?

Q: Do Vanguard ETF's actually own the shares in their ETF's or is it some derivative that they use? If they don't own the shares, what risk does this present? I seem to recall that there was a difference between Blackrock and Vanguard in this regard. Is that true?

Q: My wife and I have defined benefit pensions that meet all our needs. We are conservative investors looking for a 8-10% total return. I am proposing the following equity allocation to enhance our financial position and would appreciate any comments you may have. Thank you 5i team.

50% diversified blend of 5i covered stocks
15% XSP US. stocks CAD hedged
15% high yield bonds
10% ZRE real estate
10% CDZ dividend stocks

PS If I hold XSP in my cash account, would the dividends be subject to the US. withholding tax?

Q: Hello. Since I started investing, I've been told that selling covered call is the safest and easiest way to earn extra income. However, I've found that the cost of buying and selling covered call options in the Canadian stock market is extremely expensive. If the stock is called away, the bank will charge an extra $49 as handling fee per transaction for both sides (no matter the amount of the contract). Do you know if there are any investment institutions that offer no handling fee at the end of the expiry? I've heard that Interactive Broker may be one of them. Are you aware of any others? If I could switch some of my portfolio to a cheaper trading institution, do you think it is worth the hassle to sell covered call? MANY THANKS.

Q: Have difficulty understanding the sector alllocated for some stocks. For instance I thought NFI would definitely be Industrial but in my BMO portfolio it is classified as cons disc along with DOL - which I get. I want to increase my Industrial sector so could you go thru your three portfolios and list the stocks that would be classified in this sector? Thanks.

Q: What would your 3 favorite growth stocks be going forward (US or Canada) and 3 fav dividend stocks (US or Can)
Tks

Q: Hi Peter & Team!
Please could you provide some company names that should grow really well over the next 10 years and have great management teams. Thanks.

Q: Morning,

Just a question regarding how you determine returns for the model portfolios. Is it based on time weight return (Modified Dietz method), or is it a money weighted return (XIRR).

I'm trying to figure out how to determine my returns on my own portfolios, and have been using XIRR since the beginning, which do you use or suggest for a DIY investor?

Thanks.

Q: My partner and I are retiring soon on a portfolio of around a million dollars, comprised of more than 50 stocks. Compared to your Balanced model portfolio (22 stocks), the number of stocks I have in my portfolio seems to be too many. I have both large & mid cap stocks (85% of portfolio) and small cap growth stocks (15%) in the portfolio. The percentage I've allotted to each stock is not equal. Some of the smaller riskier stocks could be as low as 1% weighting in the total portfolio. My questions are (1) Is this a good investment strategy to include both balanced safer equity and higher growth riskier equity in a portfolio? (2) What should be the optimal number of stocks in a large portfolio? (3) Is there a general rule of thumb for the weighting of each stock category (large cap, mid cap & small cap)? I want to make sure that what I've done is correct, especially since we are retiring soon. THANK YOU IN ADVANCE.

Q: Hi Guys,

Am I still fine holding these companies in my U.S. portfolio, DIS, SBUX, V, HD, BRK.B and eft's SPY, QQQ, and VIG (All have a 3% weighting). 5 year time frame and low/medium risk.
My concern is that most of the individual stocks are in the Consumer sectors and I am overweighted in my total portfolio (25%) in these sectors.
thanks,
Jim

Q: I just wanted to clarify about dividends. What happens when one sells stocks before dividends are distributed? Do we lose the dividends in this case? Are dividends prorated for the period stocks are held? Is there any suggested good practice for this? Do etfs differ from stocks in this regard? Thanks very much. Shyam

Q: What does it mean when a company is a good allocator of capital ? Can you please give a few exemples as part of your explanation ? Thank you.

Q: Good Morning 5i.
I have some USD to invest so I'm looking for big Blue Chip dividend paying companies in the USA , 4 or 5 names would be greatly appreciated. I know the US market is not your specialty.
Thank-you

Q: Hi can you help assess the market today? The US Fed announced that interest rates may be raised this year, increasing the chances of one or two hikes. This sparked a sell off in metal and energy companies. Is this due mainly to a sector rotation to another sector due to the news, or are interest rate hikes normally bad for energy? Given this news, what sectors would you expect to do well and which ones to do poorly, or has nothing materially changed today? Then there is Goldman saying that there could be a large correction this summer - is this also related to the interest hike potential?

Q: Hello Team,
Can you help clarify for me what seems to be a contradiction. Markets are supposed to have priced in the possibility of a US rate increase sometime this year. Yet, when the Fed minutes released today (May 18) indicate that may indeed be the case, markets react with volatility (i.e., gold down, oil down, US dollar up, financial stocks up, etc.).
My question is, if the market has priced in a rate increase, why is there so much volatility when there is the hint it might actually happen?
Thank you, Michael

Q: I'm looking for 5 Companies with low debt and reasonable growth going forward. Non material, energy or financials, Thanks

Q: Hello Team,
In one of Peter's recent articles he indicated that sector selection was more important than the choice of specific stocks within the sector.
Could you advise which sectors you suggest would have the greatest momentum over the next year or two.
And, if you want to throw in a couple of sector gems I won't complain.
As always, really appreciate your help.

Q: Good Morning 5i,
Any thoughts on Premier Wynne's $7B plan to revamp Ontario's fossil fuel use? Is there something I'm missing here with this continued push for electric cars, now encouraging expensive electricity for home heating? Is she aware that over 70% of electricity comes from the burning of fossil fuels, nuclear, natural gas and coal in particular? Natural Gas is a cheap abundant clean burning fuel for home heating. Even all this discussion about electric cars, I think its very unlikely if not impossible to have all our electricity use provided from renewables? Even Lithium for lithium batteries is a fossil fuel that is mined from the earth, I used a friends brand new lithium battery lawnmower on the weekend and after only 10 minutes of cutting the grass the fully charged battery was dead and took over 5 hours to recharge. All this stuff seems absurd, where are the adults in the room lol..Seriously though it is concerning when they are using our tax dollars to pursue this nonsense, climate change has occured for Eons, this is nothing new and to tax your citizens with the belief that you are going to alter Macro climate change is absurd to say the least. Thank-you ( sorry for my morning rant)