Investment Q&A

Q: Greetings 5i Research,

It has been said that it would be easier to turn a Newfoundland fisherman into a top banker than the other way around.

When I graduated in 1965, top dental incomes equaled top Canadian bankers' incomes. Today, top bankers earn more in two weeks than top earning dentists do in one year.

What happened? Was the investment in my education a poor choice?

(Not that anyone should feel sorry for dentists who, as a group, have replaced physicians and surgeons as Canada's top earners.)

Thank you for your well-thought-out answers to all my previous questions.

Milan

Q: I want to give my take on DFN, a split share investment vehicle. I realize 5i and probably every other good financial advisor does not favor this vehicle and would not buy this for their clients. Yet people are buying this product every day.

Please let me know how sound these thoughts are or if you have anything to add.

As an investment DFN is a road full of potholes. For one thing, the dividend could be cut off completely for as long as two years, although DFN has never discontinued its dividend. Along with that, the share price could plunge 30% or more. As well, the share price will probably degrade over the years.

Who would benefit from DFN? Someone who absolutely needs the 11% dividend every month in order to pay the bills.

However, they need to be cushioned against the potholes. They need a mental cushion that will allow them to withstand sharp drops in the share price, as well as survive a disappearance of the dividend for possibly as long as two years.

Therefore, besides the right mental attitude, they need a cash back-up that would replace an absence of the dividend for two years. On a 100k investment they would need about 20k in cash to replace two years of cancelled dividends.

They also need to realize that at the end of the day, perhaps only half of their original investment may be passed on to heirs.

I can see people in their 70s and 80s who are prepared for the aforementioned potholes buying DFN, so there may be a demographic tailwind holding up DFN for the next several years. Thank you for allowing my view to be heard, and I appreciate your response.

Q: I have a question about short selling. I have a direct-investing account. I wonder if my broker is allowed to lend my shares to third party for short selling? If so,
- What is the legal justification?
- How can I prevent that?

Q: The currently hold - CIBC CAPITAL TRUST CALLABLE 06/30/2019 TIER 1 NTS SERIES A 06/30/08 9.9760. I'm down about ~8%, and dropping, but collect nice coupon. What to do? Hold or move to higher ground.

Many thx. Steve

Q: My question pertains to market history. Could you comment on market activity during times of major conflicts. For example were the markets operating on a "business as usual" mode during world war II or did the market display different characteristics such as lack of volume or liquidity? Thank You

Q: What is your opinion on Investors Business Daily? Can you add any tips or words of caution in relying on this source?

Thanks,

John

Q: Are dividends from income trusts protected from taxes if they are held in a tfsa.

Q: If the Canadian economy is working on all cylinders WHY is the market not reflecting this. Markets should be a good indicator of the over all economy shouldn't it. Very frustrating!!

Q: The CAD is gaining value vs. USD lately.Where do you expect it to peak in the foreseeable future ?...say 6 months
Thanks,
Jerald

Q: Hello, i need your insight on gold. I was searching on goldprice.com for gold price in CDN$ AND US$. Why is gold price up in US$ and down in CND$ or vise versa any givin day?
Does it have anything to do with currencies? thanks.

Q: Hi, I would be interested in your views on $US denominated investments with high dividend/interest and moderate growth possibilities. Thank you.

Q: Hi Peter and Associates,

I hear some talk of tax selling as early as August? Some professionals speak of setting up their portfolios to avoid and/or to take advantage of year end tax selling pressures? Some sectors and/or specific stocks have seen modest to significant declines this year and risk seeing above average volumes of yearend tax loss selling?

Many experts do not suggest trying to time the market but also talk of good entry points to initiate a position if not starting with partial ones to begin. Then there are those who factor in seasonality or other technical indicators. Without wanting to sound pessimistic, more than a few guests on business programs express caution, have increased cash weighting to have dry powder in reserve.Markets are not seen as cheap but opinions vary as what to do?

Bottom line, market corrections are part of reality and one has not occurred in some time? What percentage cash might be viewed as a reasonable cushion for a middle of the road risk investor with a 65/35 (Equity/ Fixed Income) objective who would prefer to reduce equity exposure by building up some cash reserves at this time? What suggestions might you have in response to the above and specifically, what reduction in equity exposure might be reasonable and/or sufficient to have substance? Assume a 5% weight in gold forms part of the overall strategy and a sufficiently large portfolio to provide diversification and no over weightings within it.

Fundamentally, are there any specific strategies an investor might use or at least consider in the last months of any year and more specifically this year?

Thank you.

Mike

Q: Hi Team

I'm interested in adding to the fixed income component of my portfolio. I prefer active management for my fixed income, what would be three solid funds where the managers have flexibility to hold a broad range of fixed income (corporate, government, prefs, etc.)? PMO005 looks solid for a portion of the fixed income component, are there any other funds you would suggest? Thanks for your great service!

Q: I recently sold a stock in my RRIF with a small loss. May I buy it in my non-registered account before the delay of 30 days ? If not, what happens if I proceed to the purchase.

Many, many thanks,

Jacques

Q: I am looking for a short term bond fund, denominated in u.s. Currency. Probably something similar to xsb , only in the u.s. And not hedged. This will be part of my fixed income allocation. Any suggestions greatfully received. I did a search but couldn't find the precise instrment
Thanks

Q: Hi - I have a 8yr old child who has $40k to invest for their education - Expect to need it in 10 years - I know you don't give investment advise but What would you recommend to protect the capital (to some degree) but achieve some 6-8% growth target. What 4 or 5 ETF's would you consider - or would mutual funds be better?

Q: Good Morning: In my non-registered account I hold a number of equities on the Cdn. side of the portfolio that pay their dividends in USD. I am thinking about moving some or all of these over to the US side as a means of capturing some USD income. I am not particularly concerned about currency impact believing that over the long term the ups and downs will average out given the current vs historic USD/CAD relationship. My question here is simply whether or not there is some aspect of this move that I have not considered -- e.g. tax implications, buy/sell issues, etc. As always, thanks for your opinion.

Q: We hear so much about artificial intelligence as being the next thing. What companies in Canada or the US (aside from nvdia) have great traction in this space that are investable.

Q: Hi, what is the business sentiment in Canada among CEOs and business owners vs a couple years ago?
It seems everywhere in the news lately that Canada is just not as an effective and attractive place to do business with its increasing bureaucracy and threats of increasing taxes. From Ontario, where the high utilities are impacting manufacturing, to Alberta and BC where the anti-oil brigade seems to be determined to kill any new O&G, LNG and pipeline investment.
Is the news painting an accurate picture? Are CEOs and business owners more/less positive with trying to perform and grow their business in Canada in the current environment?

Q: Oil operations in the American southwest have been hampered by Hurricane Harvey, yet the price of oil has gone down today - is this because (hard to believe!) the disaster is not as bad as the market feared? Alternatively, if we should expect a disaster-induced price increase in the near-future, does this recommend any particular domestic oil producers?