Investment Q&A

Q: Are you aware of cases where guest portfolio managers on BNN got caught recommending stocks that the firm/themselves are shorting? It's hard to believe it's not happenning. My best example is Bruce Campbell of StoneCastle. His past picks are absolutely horrible (-43%, 93%, -57%, -88%, -90%, -70%, -51%). Are regulators actively looking out for manipulation through recommendations on BNN? I really hope so. I use this site to review past picks. Other members might enjoy reviewing past picks: http://www.stockchase.com/expert

Q: Peter and team:

If/when Ms. Yellen decides to increase US Rates what do you feel the impact will be on higher dividend payers such as utilities and riets.

What would be the recommended vehicle for parking funds for the next two years to safely preserve capital while earning some modest return.

Deduct two as you see fit.

Thank you as always

Phil

Q: Hi 5i, how would you be approaching the Brexit vote from a portfolio perspective? I have a few names that are very exposed to the GBP/USD exchange rate (i.e. CXR, IT and ESL). Should I be taking some off the table prior to this vote or is it too late and most of the fear is baked in to current prices? In your opinion what direction do you see the GBP going if there is indeed a Brexit? I've heard arguments both ways on long and short term. Thanks again.

Q: I'm sitting on some cash and will be purchasing a house in the next year. Which makes more sense - to put down a minimal deposit and invest the remaining cash or to put down a more substantial deposit?

Q: Greetings to the 5i team. The last question I noted on sector weightings was quite some time ago now. Your response to a member asking about weightings for an income oriented portfolio was I believe as follows: 10% Cons Disc, 15% Cons Staple, 5% Energy, 15% Fin, 10% Health, 10% Indust, 5% Real Est., 5% Tech., 10% Telco, 15% Utilities (no allocation to materials at that time, although I know you have advocated a 5% "insurance" in gold in the past). Would you please indicate any changes to those percentages if you were to answer the same question today? I'd also be interested in how they might change if the question was for a more income/growth balanced portfolio. On a side note, I think I consider my membership fee
mostly for research but partly for therapy, since I find your reasoned responses to various market fears a calming influence! Cheers,

Q: Hello:

I would appreciate if you can recommend some small cap Canadian Technology and Canadian Health Care stocks.

I would also appreciate if you can add the following Canadian Mining stocks to my watch list:

Canadian Zinc (CZN)
Polyment Mining (POM)
Excellon Resources (EXN)
Golden Predator (GPY)

Thanks a lot. Yasmin

Q: Well, the mining stocks are way up again today, and some analysts are talking about a bull market in commodities. I hold gold and oil only. Would you advise venturing into any of the other commodities? And if so which and what company?

Q: Matt's question about the U of T pension plan also sounded to good to be true to me so I looked on their website. The pension does not provide the value of the full salary, but rather what I've pasted below from the website:

1. Highest Average Salary/Wages is the annualized average of your highest thirty-six (36) completed months of
salary/wages, while a member of the Pension Plan, during your current span of employment with the University, prior to
your Early or Normal Retirement Date. “Salary/Wages” means your gross regular monthly salary before deductions,
annualized to 12 months for sessional employees and to the 100% salary/wages equivalent for part-time employees. “Gross
regular monthly salary” includes Academic Administrative Stipends, but excludes all other payments to a maximum salary
limit set out in the Pension Plan, currently set at $150,000.
2. Average Canada Pension Plan Earnings Ceiling is the average of the Ceiling established by the Federal Government for
Canada Pension Plan purposes during the last thirty-six(36) months of participation in the Plan prior to your retirement.
3. Pensionable Service means the total of all of the years you have been participating in the Plan, and any earlier University of
Toronto Pension Plans during your current span of employment (excluding participation in the historical part-time Pension
Plan prior to July 1, 1987). Effective July 1, 1987, part-time employees accrue pensionable service at a rate equivalent to
their percentage of full-time worked.
Your annual unreduced pension is calculated as:
• 1.6% of your Highest Average salary/wages up to the Average Canada Pension Plan Earnings Ceiling
• 2.0% of your Highest Average salary/wages which exceed the Average Canada Pension Plan Earnings Ceiling
• Multiplied by your years of Pensionable Services
The lower percentage app

Q: We plan to gradually tweak our (equity) holdings over 2016 to further optimize fees and diversification. Your thoughts on optimum geographic mix and how best to achieve that will be appreciated. (For context: Conservative, income-oriented portfolio, 1/3 equities, currently 90/10 Cdn/US currency and 80/20 Cdn/US stocks.) Thank you.

Q: I was recently told that if I sell my investment in AGF Fixed Income Plus fund, there was a penalty to be paid. I could not get much more info from the broker or the AGF web site.Is this a portion of their MER or can you enlighten me.
Thanks

Q: Hello, what do you think of MLPY and MLPN which I think are two ETNs traded on the NYSE? Both of them are high-yield investments correlatated to the price of oïl (if I am correct). Is it too risky? Thanks, Gervais

Q: I have 4 companies that make up a significant part of my portfolio (HCG, GIL, ATD.B, SJ). With the exception of HCG I have been trying to sell them at or near 52 week highs. I have been trying to sell them since the beginning of the year and so far I have been unsuccessful. What makes these trades difficult for me is that I would be buying all these companies if I did not own them already. My question is do you use the same approach when selling for portfolio allocation reasons versus fundamental reasons?

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