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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: In hindsight (which, as we know, is 20/20), I was overweight in tech and underweight in both materials (0%) and consumer cyclicals (4%). Given rising fears of inflation, I am of two minds.

A. Hold the course. Although four of my tech stocks are well below water - ARKK, KXS, U,and XBC - they are fundamentally in good shape and will rebound in time. And I've missed most of the upswing in materials and CC anyway.

B. Inflation is inevitable. I should sell off one or more of my tech losers (so I am no longer overweight in that sector), take the proceeds and invest in either materials or consumer cyclical to enable my portfolio to better cope with inflation.

If Scenario B is, in your view, the best to pursue:
1. Which tech(s) - and in what order - would you be inclined to sell?
2. If only one could be added to, would it be materials or CC?
3. What are your two favourite US consumer cyclicals today?
4. What are your two favourite US or Canadian materials today?

Many thanks for your guidance.

Maureen

Read Answer Asked by Maureen on March 26, 2021
Q: I am wondering if from a diversification standpoint, do you look at each investment account separately, or on a combined basis. For instance, is a full position 2.5% in each of 2 accounts, or 5% in one account? Do you hold different securities in both accounts if its a good investment, or do you keep your holdings between both accounts at say that of a full position. Would you not advise to have more than 5%, full position, between both accounts or would you be ok with 5% in each but this would then represent 10% of your total portfolio?
Read Answer Asked by Steven on March 26, 2021
Q: I am beginning to shift out of specific technology stocks and into technology ETFs simply out of personal preference from a diversification and risk allocation perspective. I presently own EARK and read with great interest the Morningstar article you posted last week (No Room for ARK) which presented some other perspectives on the ARK funds in general (going forward) including some of the challenges very successful actively managed technology funds eventually face when they become so large. Which brings me to a few questions. 1. Do some of the go forward challenges the US ARK funds may encounter also apply to the much smaller Canadian versions offered through Emerge, such as EARK? 2. Can you comment generally on technology ETF alternatives such as ZQQ or TEC? I am interested in particular about understanding the comparison of a more actively managed technology focused ETF vs. a more passive index tracking ETF or one (like TEC) that seems to be a hybrid in that it tracks an index but periodically rebalances. This can all be a bit confusing so any general explanations of pros/cons would help immensely. Thanks.
Read Answer Asked by Brad on March 26, 2021
Q: Could you please explain what it means when you say a company is priced at
"X" x earnings? For instance, in answering Ben's question this morning about TECK.B, you stated that it is priced at 7 x earnings, but on the TMX website it says that it has EPS of -1.61 and a P/E of -14.70.
Read Answer Asked by chris on March 26, 2021
Q: Is real looking more appealing at this levels?
Read Answer Asked by james on March 26, 2021
Q: "Asked by Jerry on March 25, 2021
5I RESEARCH ANSWER:
It is hard for us to comment on the specific strategy, as it does sound a bit like market timing if we understand it correctly (go to cash, CMR, then switch to financials/income, FIE). CMR is far less risky than FIE as CMR invests in money-market instruments. In turn, the yield is 0.24%. FIE has more equities, and in turn more risk, but also yields 6%. Due to the different risk profiles, it is hard to compare. If stability of the capital is less of a concern, and the income stream is more of a focus, we would be fine with FIE. But if stability of capital is the focus, CMR likely is the better choice. "

I just wanted to add a little comment to Jerry's question earlier on CMR. I used to hold CMR, but it hasn't paid a cash distribution since September 2020. So, aren't you taking the risk of holding without any benefit? (No return, no CDIC insurance, market risk. I sold my units because of this.)


Read Answer Asked by Wayne on March 26, 2021
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