Investment Q&A

Q: Like it or not there are market corrections. My question is about understanding investments and how they might react or respond to one, specifically ETFs.

On both Cnd and US business programs some commentators have expressed concerns about how ETFs could (would?) in their opinion be susceptible to far greater corrections than the markets themselves or what they track? The prime reason, they believe they are so broadly held, it could force a massive selling frenzy of their components? There is even some talk of a very large US private fund which uses them. It is considered by some rather secretive and creating suspicions as to their reasons? Sorry I do not recall the name. It would seem their fear, in a bad market, this fund might trigger serious downside consequences all on its own?

A seasoned professional with intimate knowledge and understanding of mutual funds said they are required to hold a certain amount of cash reserves for redemptions. If they become too high, they can actually suspend redemptions? The person identified one fund involved in the real estate sector which actually did during a sever correction. I understand real estate is a far less liquid investment but...?equities

My question, what safety measures exit with ETFs to avoid excess redemption impacts? Are there risk(s) a correction could expose, a potential Achilles’ heel of sorts? Something they have not yet revealed as an inherent structural risk?

I like their immediate diversification especially for foreign investments. Maybe I sound alarmists but I would like to believe I take the time to understand the products I use for investment and what to expect in both good and bad times. Are some types more vulnerable than others?

Any insights would be very much appreciated. Thank you



Mike

Q: Hi 5i Team - Would you be able to suggest a few companies with good growth prospects over the next one to two years. They can be from any sector even all from the same sector if that fits best. Dividends are not needed, in fact it's probably preferable that this type of company not pay a dividend. Any market cap size is fine and stocks not held in any of your three portfolios are fine too. Thanks.

Q: Jean earlier today listed a number of stocks in his/her portfolio as being in excess of 10%. You do not suggest there's a problem with this, so I'm wondering if it's okay to own larger percentages of individual stocks if one has diversified ETFs. I have been buying ETFs to consolidate holdings as I move farther into retirement to make withdrawals simpler. But I still have a lot of individual stocks that I'm keeping in the 5% range. I think I noticed elsewhere you recommend not holding more that 5% of a portfolio in ETFs( now can't find it, so perhaps I misremember). I suspect I'm just not getting something here. What do you recommend regarding this use of ETFs and individual stocks (and %s) for a person past the accumulation stage?

Q: http://www.businessinsider.com/stock-market-news-could-be-headed-for-one-of-worst-disasters-in-history-2017-10

Do you think the article is right or is this article initself flawed?

Q: In your answers when you state a company's p/e are you referring to the trailing twelve months(TTM) or to the expected current fiscal year or to next fiscal year based on analyst estimates?

Q: There has been a lot of gossip around my job side about a new investment in a cryptocurrency company called electroneum. To be honest, I have no intension of investing in it. I have just a layman's knowledge of bitcoin and blockchain and with all the hype starting to fly around this place I would appreciate a well grounded opinion of it. Maybe I could show them the answer you reply with.

Q: This may or may not be a question you can answer but any insight is appreciated.

My Mom is 88 years old, plays bridge twice a week and square dances twice a week and we spend 2 days a week having lunch She is in great health but, no one lives forever.

She has Property and investments worth U$600,000+ and she and I have reviewed her will which is in good standing. How can I best prepare on my end when the time does eventually come? And what hurdles can I expect as a Canadian inheriting US assets?

Thanks for all you do

gm

Q: Gentlemen,
I would like to have your opinion on Market Grader a fundamental stock evaluation software.
Thanks
BR

Q: Do ETF's change their dividends (increase/decrease), if so when do they re-assess
their payout.

Q: I don't know if you can answer this, but I file an 8840 for the IRS as a snowbird to prove a closer connection to Canada (my home and citizenship).
Because I own more than $100,000 worth of U.S. securities, I am beginning to be worried about having a too large percentage of holding in U.S. domiciled companies.
If I own an ADR of a European company, on a U.S. exchange, do I have to list it as part of my U.S. exposure?
My guess is no, but I would sure appreciate some clarity.

Q: Approximately when would you consider buying companies that may have been oversold from tax loss selling? Can you list 3 candidates that may be oversold with chance to rebound in 1H/18??

Q: The Canadian component of my income portfolio has AQN (12%), BCE (18%), CSH.UN (14%), DR (14%), XTR (12%), CPD (17%) and XHY (12%). What do you think about this diversification? I also have $100K in cash remaining to further deploy in Canada. Other than oil and gas, what Canadian income stocks would you suggest?

Q: Hi 5i team.
I have to sell several stocks and claim a capital gain. These of course are winners and I will probably buy all or most back. I was told to wait till trade settles to buy back which of course is several days. With the market climbing almost daily I worry about losing those gains or one or another stock jumping due to news or sometimes no news and not holding it.

I'm a believer in long term fundamentals but think short term technical analysis can be helpful here though I don't really have a good knowledge of this.

My question really is what technical indicators are best in this situation over a several day or week or two span. I have been using an MACD oscillator - exponential with periods 12, 26, 9 because it is available to me and seems simple enough to try to time drop in values (sell) for several days to hopefully buy back at same price or a little lower. Not looking to make big gains but to avoid loss of gains. Thank you in advance for this and all the helpful advice from this service.
Tulio

Q: Hi 5iResearch Team,

RIO stock price surged by just over 4% this past Friday but I couldn't find any RIO-related news that would have contributed to this jump. Would you please comment on what what may cause the stock price to rise.

Cheers,

Q: Thanks for all you do to help us in the market. Presently I have the following exposure to both Canadian + US financials
- US:PYPL, BAC,C,
- Canadian: BND ,RY,TD.
My exposure to this sector in total is 22% of my US + Canadian Portfolio. I would like to purchase another $100,000 (Cad) in Canadian banks to take advantage of the Dividends. PS the funds are presently in a bank account that collects very low reruns. Should I wait for a pullback? or go ahead without trying to time the market also what is the risk of my exposure being so heavily weighted to US + Canadian Financials? PS Interesting that PYPL has returned 40% in the last 14 mths + BNS just over 30%. Thanks

Q: 5i

I have cash in both TFSA's and regardless of sector what 3/4 stocks would your top picks be to be purchased in a TFSA


W

Q: Interested in placing direct investments in China, Japan & possibly India. Trading market must be US. Primary interest is Technology & Space.
This will be completely separate from our current traditional investments as reviewed occasionally with you over the years. Aside from established players in the above markets, I would consider vertically specialized ETFs that have a strong Bloomberg rating. Please deduct accordingly. Thank you.

Q: Recently came into inheritance of ~£100,000 and looking to purchase a basket of 5 - 10 global ETF's (minus Canada) on the LSE with the proceeds. Currently well diversified within Canada through RRSP, TFSA accounts etc. Seeking growth and income and mindful of MER's, would very much value your recommendations.

Thank you

Q: Hello team,

A couple of years ago you advised that your 'ideal sector classification' would be as followed:

Consumer Cyclical
Consumer Staples
Retail
Financials
Real Estate
Health Care (CDN)
Health Care (US)
Capital Goods / Industrials
Transportation
Information Technology
Internet / Software
Telecommunication Services
Energy
Gold / Silver
Materials
Utilities

I ask this question every 6-9 months when I am doing sector re-balancing. Given today's market conditions, what would be your ideal weighting for each of these for an investor who has a long time horizon and is a 7/8 out of 10 on the risk scale?

My current weighting breakdown is:

Consumer Cyclical - 12%
Consumer Staples - 9%
Retail - 2%
Financials - 9%
Real Estate - 1%
Health Care (CDN) - 3%
Health Care (US) - 2%
Capital Goods / Industrials - 14%
Transportation - 3%
Information Technology - 8%
Internet / Software - 15%
Telecommunication Services - 4%
Energy - 3%
Gold / Silver - 2%
Materials - 8%
Utilities - 4%

I find myself usually becoming overweight in Consumer Discretionary and Info Tech / Software as most of your top picks are in those categories. Any thoughts on where I should be scaling back / adding to?

Please deduct multiple question credits. Thank you.

Q: Hi there, I currently have no exposure outside of the TSX and the Canadian market. I know ETFs are often recommended as good ways to get exposure outside of Canada but I was doing research into mutual funds and the new Fidelity Insights fund managed by Will Danoff seems like it is performing well. In addition, it sounds like his Fidelity Contra Fund in the US seems to perform quite well over time. What are your thoughts on him as a fund manager and the Fidelity Insights fund for outside of Canada exposure? Also, there is the standard version and a currency neutral version - which I presume implies hedged and unhedged. If this will be a longterm position, which would be preferred between the two? Thanks for your guidance!