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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: What do you think about buying TQQQ, for a risk-tolerant, long term investor who is interested in growth? The long term charts look very good, as long as one can tolerate the drawdowns. Might be a good time to get in now though.

Read Answer Asked by Michael on October 05, 2022

Q: Hello
I thought it would be good to diversify and collect some extra income from European High Yield companies. Turns out a war in Europe is not good for stocks or currencies.

I hold both hedged and unhedged in equal amounts and see the 7% performance delta due to currency. By the Math (currency move) it is clear a trade out of currency hedged and into currency exposed would be favorable in advance of any recovery of Euro and Stirling.

I don't make Bets. The switch is a bet on Euro and Stirling recovering former glory.

Would you sit on current holdings with both exposures? Move to currency exposure? Or just get out of European companies.

Thanks

YTD August

ZWP..... - 14.99 % (currency exposed)
ZWE..... - 7.56 %

Read Answer Asked by Dave on October 03, 2022

Q: I'm a bit underweight in the consumer cyclical sector and a bit underweight in my international allocation (the latter being somewhat of a chronic condition). I'm trying to make a buy decision between MG, ZDI and XEF. I already own the two ETFs and MG would be a new position. I understand that a direct comparison of a single company with an ETF is not possible and that you can't personalize sector weightings, but all else being equal, which one of these would you be most interested in today? Many thanks!

Read Answer Asked by Mark on October 03, 2022

Q: Hi...further to my recent questions regarding Eric's NRGI ETF, I just want to make sure I understand the tax treatment of this ETF before I purchase it.

According to his website, NRGI is 82% USA and 18% Cdn as of Aug 31/22.

Please correct me if I am wrong:
1. Any share price appreciation will obviously be taxed as Canadian capital gains.
2. Any dividends from a Canadian company will be taxed as Canadian dividends and received the dividend tax credit.
3. Any dividends from a USA company will be taxed as interest income.
4. Any "covered call" dividends from either a USA or Canadian company will be treated as Canadian capital gains (not 100% sure on this one).

So, ignore the share price appreciation aspect for now. Eric has stated the target distribution is 7%.

My conclusion is that the distribution could then be split into roughly 5% dividend (82% of which would be taxed as interest income) and 2% covered call (taxed as capital gain).

Q#1 = So, is it safe to say that the ETF would be taxed with roughly 4% being interest income tax, a negligible amount of Canadian dividends, and the vast majority being taxed as capital gains (share price change plus CC-dividend impact)?

Q#2 = So, I believe it still makes sense to buy this in a Cash Account...do you agree?

Thanks for helping me understand this one....Steve

Read Answer Asked by Stephen on October 03, 2022

Q: Hello
There are Youtube Investment Advisors pushing the theme of income investing. Nothing else matters, just the income. Not taxation nor ETF price action (Capital Value).

Given this ETF Theme of Covered Call Strategy (some leveraged 25%) are paying such a high distribution, in the right set of market events (down excessive period) can this strategy trade itself to zero?

They are certainly not making 15% income from dividends and call writing. So capital erosion must be the outcome in today's market.

I was holding covered call etfs from BMO during Covid crash. The strategy performed worse, even after distributions, than straight equity holdings. It was a terrible experience as there was zero downside protection and the strategy seemed to accentuate the drawdown.

Given the current environment (more downside in my opinion) are these ETFs setting investors up for an ugly awakening? ( distribution cuts, return of capital (One's own money), price decline and slowness to recover when markets come back)

Thoughts

Read Answer Asked by Dave on October 03, 2022

Q: I noted that Warren Buffett recently bought more oxy on the dip. I also noted that some time ago he sold his stake in Suncor. I need to raise my energy sector holdings and was planning on buying Suncor. Because it is a good company and because of the tax credit, versus a US counterpart. But I hesitate when I see Buffet continuing to buy. Does he know something that we donít know? Or, does he have a special deal that we donít have access to? I am thinking that if they are more or less equal that I would be better to get the one with the tax credit? But the question is whether they are equal? Or does oxy have an advantage that outstrips the tax credit?
Thanks for the great service

Read Answer Asked by joseph on September 30, 2022

Q: Retired, dividend-income investor. I own a full position in NNRG in my TFSA account.

I am looking to add an energy income ETF in my wife's Cash account. Because I am a huge Eric fan, I had naturally gravitated to NRGI, not even thinking there might be other alternatives to his income ETF. The question earlier today related to ENCC woke me up.

Could you please list some Energy Income ETFs that you think I should consider. I will then do some of my own research on each of your candidates. Is there one that stands out as head-and-shoulders above the rest?

NRGI is roughly 85% USA stocks. whereas ENCC appears to be very heavy (90%) to Canadian. Does this factor into the equation, related to income taxes and which type of account it should be placed in?

When overlaying ENCC and NRGI on your 6 month charts, they look virtually identical. ENCC has a 10% yield vs NRGI at 7%, although I suspect there will be special dividends in addition.

Your thoughts...thanks...Steve

Read Answer Asked by Stephen on September 28, 2022

Q: I want to crystalize tax losses in my non-reg account. Can you please suggest good proxies for IYT, VTV, VEA, and IWO? Thanks.

Read Answer Asked by Michael on September 28, 2022

Q: If the strategy to be pursued is to invest Canadian cash for 3 years believing in a stronger Cdn dollar against the US dollar and that let's say Cdn equities and US equities will strengthen equally, is it better to buy a Cdn dollar ETF that holds US equities or one that holds Canadian equities?

Read Answer Asked by Ken on September 28, 2022