Investment Q&A

Q: This is a comment to your answer to Kapil regarding deductiblity of interest. I alawys thought that as long as the money that is borrowed be used to generate income "irrespective of it is a line of credit or a mortgage" then interest on this money is tax deductible.

Q: Hi,
I just came across the "Venture 50" list on the tmx money website. Please see link below. This is a good list of small caps that have had strong price appreciation and market cap growth (and that is all, there is NO other criteria to make it onto the list).
But 4 of the 5 venture-listed stocks in the 5i Growth Portfolio are showing up on this list which is a good sign (and WELL was there too, but has since moved up to the TSX).

Do you agree this is a solid list to use as an initial screen/filter for finding good investment ideas in the small cap space? For sure, more investigation is required because for example, I just looked at the #1 stock overall on the list (DYA) and it has no FCF, and expenses are rising faster than revenue, and it is just a 52-cent stock, and it didn't get the bump that others in green-clean energy/technology got from the recent positive market sentiment. It's worth watching but not ready yet..? Thx.

https://www.tsx.com/venture50

Q: In calculating the weightings of individual equity holdings, I use only my total equity holdings as the denominator and ignore bonds. Outside of Canada, my equity exposure is held in international ETFs, and I include these in the total equity when making the above calculation. Do you think that's the right approach? I go back and forth on whether to remove the ETFs from the calculation.

Thanks.

Q: Hello 5i team:
This is a suggestion and a question!
Not at all hypothetical or a thought experiment.
In the main newspapers G&M, FP and magazines like Moneysense there is a real case history of people who submit their stories and ask for suggestions. Names and identities are of course masked.
It will be nice to see such a feature say once a month in your blogs!

Question: If you were to construct a portfolio(s) with ETFS spruced with some stocks that generates 80k per year, how much capital one would need? You may want to apply your approach of Income/Balanced/Growth portfolio.
Your growth portfolio has done exceptionally well thanks to some highflyers like SHOP. But one can't rely on such phenomenon all the time! Hence my ETFs based approach.

Q: In your answer to a question concerning REAL you mentioned that the stock is cheap. Would you please explains what makes a stock cheap and conversely what makes an expensive stock. Thanks … Cal

Q: Dear 5i team:
I know that you have consistently and persistently been saying the portfolio construction and asset allocation percentages of sectors/stocks is very personal and therefore can't make suggestions.
Agreed!
May I request you to direct me/others to resources that will help us to structure a portfolio? Websites/articles/podcasts and such.
Thanks.

Q: Norbert's Gambit appears to work well to convert CAD to USD. However, this Gambit does not work for the reverse conversion. Do you have any suggestions as to how to limit your foreign exchange conversion fee, while limiting risk, when converting from USD to CAD?

Thank you for your insightful advice.

Q: With the possibility of the capital gains exemption being reduced or maybe even eliminated I am considering selling a few high growth stocks in my non-registered account and buying them back the same day in a TFSA where I still have quite a bit of room to contribute. First of all is this allowable under the Revenue Canada taxation rules. Secondly could you comment on whether this is a reasonable strategy to follow. And thirdly how likely do you think the capital gains exemption will be reduced or eliminated over the next year or so. Thank you.

Q: Your most recent report ask if the reader has seen the recent chart attack. I’ve searched the site and can’t seem to find it. Where can members find the recent chart attack posting.

Q: Hello:
This is a BIG picture question.
I read that a Great Reset is being engineered and apparently discussed at the World Economic Forum.
Is this one of the useless conspiracy theories or it it real?
These Trillions of dollars of debt cannot be wound down in a meaningful fashion and hence the reset?

Q: Hi Team!

Can you advise on 4 or 5 names in the energy sector you would recommend?

Q: How can I ascertain from the average Morningstar/others report if a fund is Leveraged ,2x,3x or not at all. for example BLK????
Art

Q: I have access to Morningstar through the broker. Morningstar’s analysis is often useful, but its ratings of companies covered are puzzling. Nuts, actually. A business starts doing better than ever and its shares rise as investors come to appreciate the rising value. Just at that moment, in comes Morningstar with its downgrades. It beats up a company performing very well by downgrading the rating of companies whose results are improving to Hold or Sell. Conversely when a business is stumbling badly and its shares drop, up goes the rating from Morningstar. One understands when analysts downgrade and explain that they still like the company but that they feel they need to go from Buy to Hold on the grounds of valuation . I have not seen Morningstar explain their ratings in a similar manner. If one reads Morningstar’s narrative, is it best to ignore its ratings? This is after all what one tends to with “target prices”. Or, am I missing something important?

Q: Just a general question. With markets at all time highs, but the virus is still a big part of our lives. While the market is forward looking, a lot of damage has been done. In addition, this would be the first recession with only 1 wave of selling as opposed to multiple waves. Do you think there are near term risks or are we just headed higher and try not to overthink it, but leave some cash on hand for future opportunities? How much cash? 20%?

Thanks,
Jason

Q: Hello Peter,
I would like your opinion.
I have about a 4% position in Gold and silver stocks and have been planning on doubling towards the end of the month before the seasonal period around Christmas to Chinese new year.
I was also reading today a Bloomberg opinion that calls for an end to the bull run. And the thesis is as follows:
1. The availability of vaccine 2. A republican senate that would put a lid on stimulus spending. 3. A stabilized US dollar perhaps even strengthening. 4. Inflation? Here I may go with a probability more than 50%
Do you think it is appropriate to double position in stock and bullion to 8 percent?
Regards
Rajiv

Q: What are your thoughts on new TLS ipo.

Thanks
Hector

Q: I am in my early 80's ,have large capital gains and plan to stay invested in equities as my parents lived to over be over 100.
I believe that the capital gains inclusion rate will be increased to 75% as early as December 31,2021 which is 50 years since the capital gains tax originated.
As a result I intend to begin selling the equities with the largest gains with a view of buying a portion of them back after leaving enough in cash to cover the tax.
Can I repurchase the same day or do I have to wait until after the date of settlement?

Q: Dear 5i
Between my wife and i , we have 3 RRSP and 2 TFSA accounts and 1 unregistered account .
In terms of stock picking for each account how would you go about choosing your stocks based on having 6 different accounts ?
For example i`d like to own 1-2 utility stocks per account and maybe 1 bank stock per account . Would you say that i`d be better picking a different bank / utility stock for each account OR just pick the 1 or 2 of the best stocks per category and have the same "best " stocks in each account ?
Thanks
Bill C

Q: Is there any advantage/disadvantage to buying a US listed stock in your Canadian RRSP account as opposed to buying US dollars and buying the stock in your US RRSP account?

Thanks for being such a great source of information.

Q: I am ussually not a holder of cash in my investment accounts. I have moved to about 15% cash by cleaning up some dogs and selling some assets that bounced back post march crash. The recent run has given me FOMO. My brain is telling me that the markets are crazy and there is no good reason for this recent run, the but the market is alway right. So I sit here asking myself "Am I acting like Trump or are the markets acting like Trump?" ....So my question is: if you did a 5i office water cooler poll how many think there will be a major second correction in next 4-6 months: never, unlikely, likely, 100%.