Investment Q&A

Q: Regarding share buybacks, do you agree with common commentary that they are a positive? I take the view that as a use of cash, they have only 2 possible positives for a company, but in general are a net negative indicator. In reducing share count, they reduce the total expense of dividends. And it would provide the opportunity to issue shares in future at a higher price without increasing share count, relative to pre-buyback level. However, that doesn't seem to happen very often. The negative perspective is that they send the message the company doesn't know what to do with cash and are simply buying themselves an increased EPS without committing to normal good business tactics to increase earnings and develop new markets.
In the context of return to shareholders, it is only the shareholders who sell that receive return. So in comparison to a special dividend it is uneven distribution of cash.

Q: I am bit lost with bond market performance. XLB NAV has gone up by 10% YTD. TLT also up by 10%. As bond yields go up with interest rate peaking the price will come down. Will the total return still be significant if the NAV comes down by 10% or more in next several years. My experience with some of the other bond funds I held previously generated negative total returns after holding them for many years.

Thanks
Ninad

Q: I'm underwater on a few investments and I'd appreciate you sharing your perspective on if you see these stock improving over the next 3-6 months.

Q: Our holdings mix is off what many advisors would recommend, ie 30% equity, 40% GIC, 30% recall preferreds. Our pref market prices are way underwater but all blue-chip and long-term holds for us unless we both croak. Please mull my question below in the foregoing context: I was nervous about our prefs for some time until having drilled down to try and better understand them. I feel better now, understanding that those recalled will be for the full $25 and, if not recalled, the new return will reflect a $25 per share value which will almost surely be higher than GIC's especially from a tax efficiency perspective. I guess what I'm asking is for you to advise if my take on reset preferred is correct and if any other considerations. Thank you.

Q: Peter please: I have owned a full position in JP Morgan since the lows of 2009 and have had a tremendous gain in this stock. I also purchased wells Fargo and Citigroup and some other top us financials around the same time and have held all this time. Recalling how US financial stocks plumetted in 2009 has lately given me pause. After ten years of building this wonderful gain, is it now time to sell (tax is a consideration here obviously) or hang in for the very long term in keeping with my usual long term strategy and risk my gains evaporating a la 2009. I gravitate to quality companies however I realize how poorly financial stocks can behave in a serious downturn and don't want to see my hard earned gains erode in jpm. Do you consider jpm a trade or a very long term hold. Side note I'm liking Facebook these days and considering ways to fund a FB purchase.

Q: Does Burton Malkiel’s blindfolded-monkeys-throwing-darts idea say that the portfolios of a group of perversely motivated investors trying to pick the worst stocks would be indistinguishable from the portfolios of investors trying to pick the best stocks?

I would appreciate your views.

Q: This is a follow-up questions about determining whether a company is considered growth vs income. Can I interpret what you said as being:

If the sales and EPS do not increase much, or stays the same, over many years, and the company offers a reasonable dividend then it is considered income.

On the other hand, if the sales and EPS increase steadily over several years, then it is considered growth, whether or not it offers any dividend.

And if the sales and EPS fluctuate year to year, it may be cyclical, which is a separate category.

If it does not fit into any of the above, then it is a company of that should not be considered investing in.

Q: just a comment to add to genes misery over rbc investing, i am a seasoned investor using rbc investing, been doing this for 25 years and rbc is by far the worst.
what they did with their watchlist is beyond stupidity, it is idiotic, i would love to switch to someone else but i have 15 accounts with them and switching would be even more misery. dave

Q: as a dedicated 5i follower I would like to address rbc direct investing and its new watchlist as it has become the worst tool that they have ever invented and I dislike it so much that I am considering changing all of my banking and investing to another bank. my question is which bank offers the best investing and banking platform in your opinion, thanks for the great service

Q: I am wondering how to classify a stock as growth vs income. In some cases it is obvious. A stock paying no dividend is surely growth (eg TOY PHO BTO ELD). And a stock that is stable, large, and has a solid dividend (3-7%) is surely income (eg ET BCE ENB BNS GWO). Please correct me if this is wrong. But in many cases, it could be either (eg SIS SAP PBH ATB.B FM TECK.B UNH:US).

Could you please tell me how you determine how to classify them?

Thank you,

Fed

Q: The VectorVest Smart Investor is a company which claims to have beat the S&P handily for the last 30 years. I am skeptical.

Can you comment?

Q: Hi Team:
I enjoy reviewing the portfolio analysis. Of course there are always concerns with data interpretation. I am slightly over weighted in DS (5.5%) and FFN ( only 1.8%), 2 companies that I now understand pay some of their dividends with 'Return of Capital'. Returns to date are; DS in RIF (-16%) + TFSA's (-13%, -19%) + RESP (-12%). FFN is in TFSA's (-29%, -30%) + RESP (-30%). Overall now big losers but still paying dividends (DS yield @ 10.15%; FFN yield @ 18.99%) except at the rock bottom time frame of December 2018. So, I want to sell. When do you suggest I take the hit? Do I sell all at the same time? Do I keep some portions? Of course some magical suggestions to make up the loss, especially in the RESP. Overall I am still at a positives in all accounts, so I have not made all bad choices but these are dragging me down and I am tired of seeing the red return. Thanks Ken ..... :-)

Q: My pots of money are: 10% resp,10% tfsa, 40% rsp, 40% unregistered
If I want a 30-30-30-10 split of CAD, USA, International and Emerging markets what should go where for best tax efficiency? My pots dont fit the recommended tax efficient locations for my investments perfectly ( growth in TFSA, USA div in RSP, cad div in unreg) so am considering:

TFSA is growth so I think any IWO or VEE would go here...I am a bit short to fit all my VEE and IWO in the TFSA so part needs to go somewhere else. ( likely RSP?)
My Unregistered accounts hold all my cad stocks ( mostly your balanced portfolio)
which leaves spy, vig, ve and xef in RSP. ( plus any excess of my iwo and vee growth)
what should go in the RESP( similar to TFSA or RSP?)?

Any suggested switches to where I plan to hold the above investments?

Q: Hi 5i team, is there any rules to buy and sell stocks that trade at daily volume of 500 shares such as BCI if one wants to set the amount at 50000.

Q: Hello,

With regard to PNN, you mentioned that a retail investor could build its own. Can you please elaborate on how to do it (example if possible). Would a 5 year maturity long enough ? Thank you

Q: Looking to add some ETF's in my accounts - can you explain the difference between funds that are Hedged and those that are not Hedged. What would be better to buy at this time and are they more suitable for a TFSA or a non registered account.
thanks

Q: Norbert Gambit - FYI:

5i has good thread here (https://www.5iresearch.ca/forums/viewthread/328), but this link has good concise broker-specific how-to info here (https://www.dividendearner.com/dlr-norbert-gambit/) titled
'Convert CAD and USD for less than $20 with DLR'.

Hope it is helpful to members; I just used it.

Q: I have some cash that I want to park for 6 months or so with the ability to withdraw
some when needed. Can you recommend something?
Thank You
Peter

Q: I have $ 50,000 to invest I would like to invest in some preferred shares I do not need the funds anytime soon Could you give me some investing criteria to assess whether the pref shares are good value I know alot depends on interest rates but i want to buy companies that are solid

Thank you
Paul

Q: I have an elderly parent who owns shares purchased a long time ago. The company it appears still exists, although may have reorganized. How would I find out who holds the shares so that they could be sold. Would the company have a record? I have the notice of annual meeting from computershare but nothing on there about the holder of the shares. Thanks.