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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Hello,

I know they don't ring a bell at the bottom (or the top), but I am wondering whether any of the airlines, hotels, cruise lines or restaurants seem compelling right here. Not really the restaurants that are Covid beneficiaries like the pizza joints or Chipotle, more than the ones that have yet to recover. I am very concerned that with more gov't money being plowed into these industries the pre-restructuring shareholders would be wiped out. Thanks.
Read Answer Asked by David on August 24, 2020
Q: I would like to thank Paul L for his reference on August 10th to a Seeking Alpha article about factor investing. I have since read both the Seeking Alpha article and the associated book "Your Complete Guide to Factor-Based Investing" by Andrew Berkin and Larry Swedroe.

This book contains historical charts which plot the premiums over time for the main factors (i.e. market beta, size, value, momentum, profitability and quality). Based on these charts, it appears that factors work for several years before their success switches to its opposite factor (e.g. value outperforms for a number of years, then there is a switch, and growth outperforms). Given that the factors outperform for a number of years, the charts can be viewed as long-term trend charts. On these long-term charts, it appears fairly easy to see when the switchover takes place. Unfortunately, the charts in the book only cover the period of 1927 to 2015.

Do you know where I can find updated chart information which clearly shows factor premiums? I would like to understand which factors are "working" now, and where they are in the cycle so that I can properly position for any switchover. For example, although value and size outperformed in the decade of 2000, for the last several years, large US growth firms are dominant. On a long term factor chart, based on historicals, it may be possible to predict when the switchover will take place again, and a portfolio should be positioned for small, value stocks.

Do you agree with this approach? Do you know where I can find this information?

Thank you for this excellent service.
Read Answer Asked by Dale on August 19, 2020
Q: I am looking for some guidelines on when one should trim a position exceeding 5% of your holdings. I have a 7.3% a 6.3%, a 5.6%, a 7.0%, a 7.5%, and a 6.2%. 4 of these I have already trimmed some time ago. Is trimming more of a gut reaction or do you have something more concrete to guide you? Combined with this problem, when you do decide to trim, what (and why) % do you trim down to?
I have this problem, mainly, by following your excellent advice.
Your thoughts will be much appreciated. ram
Read Answer Asked by Ray on August 17, 2020
Q: I'd like to get your take on a piece in the Globe and Mail yesterday by Scott Barlow related to the Canadian dollar. It's position is that on top of a large rise the loonie has already experienced, we can expect it to go much higher compared to the US$. This obviously doesn't bode well for those with investments in US dollar accounts so I wonder if you think it might be better to shift some of it back to Canada, perhaps into hedged ETFs with US holdings like XMH or VSP.
https://www.theglobeandmail.com/investing/markets/inside-the-market/article-the-strongest-force-behind-the-market-rally-could-push-loonie-much/#comments
Read Answer Asked by John on August 11, 2020
Q: I would appreciate your views about the benefits of specific factors. I have read a number of articles which claim that over time, dividend growing stocks do better than stocks with no dividends or stocks with overly high dividends. Similarly, there are research articles which claim that "quality" stocks outperform the indexes. Increasingly, I see articles which appear to indicate that other factors such as momentum, women-led companies, socially-responsible firms, etc. also have improved performance. The ETF industry is now offering a wide variety of funds based on these factors (with higher fees than the broad based index funds).

Which factors, if any, do you see as offering outperformance of the broader based indexes over long-term time frames? Are ETF investors better to look for low-cost broad index funds, or should they seek specific types of factor ETF funds recognizing the slight difference in fees?

Thank you for your advice and insights.
Read Answer Asked by Dale on August 06, 2020
Q: Watched Jeffery Gundlach being interviewed by Daniel Martino Booth, his credentials are very impressive, I have always liked to listen to his view of the Worlds Financial System.
According to him the Fed will take drastic measures in Drastic times. example being they have already done so by violating the Federal Reserve Act, with their purchases of Corporate Bonds, Stock purchases will probably come next.
I was confused by his biggest fear that the FED might declare their Liabilities as " Legal Tender"...... could you explain what he means by that Statement. I assumed that their Liabilities where already Legal Tender in the fact that their liabilities are backed by the Tax Payers of America, or did he simply mean he is fearful of the Fed just printing 7 trillion and wiping away all the debt.
thanks Gord
Read Answer Asked by Gordon on August 05, 2020
Q: Hello 5i Team
Given 5i are not tax experts, could you please comment on the subject below as I could not find a clear answer.
1 - If I own, in a taxable account, a US based REIT (i.e Monmouth REIT) and if a portion of the distribution is "return of capital (ROC)", is the US ROC treated the same as Canadian ROC (i.e. deducted from the capital cost of the US REIT each year therefore reducing the adjusted cost basis)?
2 - Or is the US ROC "lost" and I pay tax on it similar to a dividend from a US corporation?
3 - I have noticed the US REITs do not post the tax breakdown of the annual distribution as the majority of Canadian REITs do.
Any suggested source of information for this topic?
Thank you
Read Answer Asked by Stephen on August 04, 2020
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