Investment Q&A

Q: I have found that for some ADRs, the home country (eg., the Netherlands, Spain) withholds a portion of dividends, even when the shares are in registered accounts, and of course such tax can't be written off against Canadian taxes. Company websites don't seem to make this information available. Is there some way of identifying in advance when such withholding will occur, or can you offer more general advice regarding how best to invest in individual, non-US companies, while receiving the full value of dividends paid?

Q: I was in my car yesterday listening to CNBC when a chain of events occurred.
3.59PM - We look forward to to the results from Amazon's quarterly report after the bell.
4.01 PM - Interesting but AMZN is up 5% after the close. We await the results.
4.03 PM - We now have the results
4.05 PM - AMZN beats top and bottom line. The stock now up 10% "after hours"
Next morning the G & M reports the results. Stock is up 13% "after hours".
My questions are these . Who are these people that trade "after hours" and how do I get into this club?
Say I placed a $2000 US sale order at the beginning of the week on AMZN, is that only good during "normal" hours. What if I wanted to take that down after seeing the results? Or was it able to be sold at 4.01 PM yesterday?
How were people able to discern they wanted to buy the company at 4.01 PM? My guess, insiders who knew the financials prior to release?
Why does the SEC allow this? It only propagates the notion that the whole system is rigged.

Q: Hi, I have been doing some analysis around building portfolios with different volatility characteristics. I chose 'beta' to measure volatility, as it is available from several sources. However, I am finding large inconsistencies from different sources ( I am looking at BMO Investorline, BNS and Interactive Brokers ). The inconsistencies are material enough that the results are individually unreliable. Are you aware of a source for reliable 'beta' calculations or source of some other form of volatility statistics. Thanks

Q: With many markets currently expensive by historical measures, I wonder whether you could suggest either some regional or country markets that may offer good value at this time. One area that may qualify is emerging markets but I wonder if you may also have other suggestions. I realize this goes outside of your normal field, but I would appreciate any insights that you may have.

Q: I received a nice payment yesterday from the Amaya litigation. In a non-registered account, would this be regarded as a capital gain?

Q: In finance or investing media there is often reference to portfolio insurance. I did not know such a thing even existed. The discussion often makes a passing reference to “... buy the VIX.... “ If this is correct, how would one do that? If insurance--- I assume that means mitigating risk--- is unrelated to VIX , is portfolio insurance even buy-able (OTHER than by use of options)? If options are the only way to mitigate risk, do you know some reliable sources one can go to? If I am going to pull my hair out worrying about “toppy markets” (a favorite phrase of some market commentators) I would like to be able honestly to claim I did make best efforts before the said hair-pulling.

Q: What is YOUR definition of a momentum stock?
Please name companies in your portfolios that you Currently consider to be momentum stocks.
Thank you

Q: A few years ago, I had some losses on several semiconductor companies, foundries and equipment suppliers to the industry. Since then I have more than made up. I VAGUELY recall a financial analyst saying one should not buy chip companies when they have low P/E.... that one should only buy when they look expensive. Does this heuristic make sense to you ? If yes , does the suggestion apply to all cyclicals or just some sectors?
BUT how does one actually apply the ‘rule’ , in other words:
What specific ratios should one use, including inter alia :
Trailing P/E
Forward P/E
PEG
It seems counter-intuitive and migraine-provoking to *intentionally* buy expensive and later intentionally to sell cheap.
I am interested in YOUR thoughts.

Q: I look at the company profiles you provide (among other things) before purchasing a stock. I sort of like a stock with a low PB ratio. It worries me when I look further and see a low price to tangible book value. I'm not totally sure what it means to have a negative price to tangible book. No real underlying value compared to the value of a bunch of good will or patents? I'm ok paying for patents (I think) but I am less happy paying for good will as I think that is just management paying too much for an acquisition. Is there anyway to distinguish the provenance of the intangible assets? How do you view the intangible value stats? Does this even come into your review of a company? Or do you just consider intangibles "good" if the company performance by other metrics is "good". Could you please recap when price to tangible book value is a stat that is worth considering. It causes me worry sometimes and I hesitate on purchases to my detriment.
Thank you for your excellent service.

Q: Is there a way to hold the S&P index in an ADR or some other instrument that would turn the investment into a Canadian capital gain. (maybe I am just wishing) Could you explain how an ADR works. Thank you for your valuable assistance.
mike

Q: Comment on Kevin's question about the minimum withdrawal from a USD RIF. I don't know the answer but I believe they would use the FX on Dec. 31/Jan. 1 and not on the date of withdrawal. That would set the amount for the year and most brokerages will have a spot on your account page where they tell you that amount for the year. My withdrawal amounts show up automatically on Jan. 2.

Q: I am concerned about the concentration of FAANG stocks in the S&P 500 index. My understanding is that the concentration of the top 10 holdings in the S&P is near historic highs.

Do you feel this is a real risk? Would you recommend switching from a market capitalization ETF (e.g. VFV) to an equal weight ETF (e.g. EQL)?

Your advice is most appreciated. Thank-you

Q: Just a general comment on why there is no accountability(CEO,Board) for companies who fail miserably on managing the company never mind trying to add value for shareholders. Bombardier(Govt. handouts,mismanagment, etc). Thyssen Krupp same as above, Generel Electric??? - and most recently Boeing. Sure the CEO might get"Fired" with a multimillion dollar payout but why does the board always just get away with no repercussions as they ultimately allow the CEO to make the mistakes?

Q: What are the implications of holding Canadian companies, e.g. banks, on US exchanges in registered & non-registered accounts?

Q: I am seeking to understand why it makes sense for an individual investor to limit the number of equities to about 30, when ETFs have well over 100. Due to age I am considering switching more to ETFs.

Thanks for your great service - much appreciated!!!
Cyril

Q: Hello team: what are the advantages or disadvantages of purchasing Canadian Stocks listed on a USA Exchange-- using USA dollars? thank you for your time- jane

Q: I am a retired, conservative, dividend-income investor who is normally fully invested with a "buy-and-hold, but trim-add around core positions" strategy.
I currently have 2% in investable cash, with my portfolio set up exactly where I want it now...good asset allocation both via sectors and via individual position sizes.

However, I am also looking at the macro picture and things seem to be going parabolic. I am contemplating trimming to increase my cash position from 2% up to 5%. I understand in the past you have indicated that the key things to watch are interest rates are unemployment. They are both low, so "let it ride". So, what to do...let it ride vs trim? I know this amounts to market timing, which I know you are not fond of and, coincidentally, I am lousy at.

In your past life, as a fund manager, when did you raise or invest your available cash and what factors pushed you to do something or to just sit on your hands?

Thanks...sitting on my hands for now...Steve

Q: Hedging Strategies- With the recent run up of stocks, what are the suggested preferred options to protect ones portfolio gains from significant market correction to the downside? Selling existing stocks will lead to considerable taxation in my current scenario, with most investments being outside RRSP Accounts. Please provide a few ideas.

Q: Like many CDN Investors, I am overweight Canada. Plan to reduce that in 2020. Looking at candidates I find some "Canadian" investments have the majority of their assets outside the country. Example: BGI.UN - only 20% of assets are in Canada, yet it pays quarterly $CDN income. Seems it would meet my objective. Please provide names of other CDN-based candidates that hold a lot of ex-Canada assets and derive much/most of their income from those. Looking for US/International diversity and some $CDN income. I hold some US Pharma stocks directly and a Vanguard S&P 500 Index ETF (10% of total portfolio). Thank you.
IslandJohn

Q: Hi 5i,
I am just going to ask about your new U.S. disclosure policy when Sal asked first. So, I would just comment I have absolutely zero concerns about your staff’s potential investments in U.S. stocks and the integrity of your advice. The U.S. names are typically so big and liquid that 5i’s endorsement or not, in all due respect, would have absolutely no influence on the price movement of AAPL, AMZN, GOOG, ROKU or others. So, keep up the great work and the presence of these disclaimers, or not, on the U.S. names cause me absolutely no concerns.
Thanks again for your sage advice.
Dave