Investment Q&A

Q: Hello Peter,
There have been many short sellers in the last few years in health care and now in Cannabis stocks. At this point, time will tell on Aphria, but for others like Valeant etc the short sellers were correct. I find it interesting that the brokerage firms, and analyst that covered these companies gave high marks and all of a sudden with a short report, they either revised their price targets or put out a release that the stock is under review rather than defend their own analysis. I am starting to question the analysis that is done by Canadian firms and their ratings. How is it that the short sellers are able to find things that the analysts covering these companies have not managed to even come across? Can you please comment as this is getting ridiculous when analysts and BNN Guests talk highly of companies and than we find out the shortfalls in these companies. Where is the accountability on these analysts and brokerage firms that put out good reports? Thanks very much

Q: With the 10/2 year treasuries spread now at 0.11 for December 4, 2018. Would it be prudent eye up good quality stocks, in preparation of a recession coming?
And is this something you are watching?

Q: We recently received a letter from Manulife with an offer to buy out our Annuity contract with Income Plus. Rob Carrick had an article on the offer in the Sept. 22 issue of the Globe and Mail. I would like to ask your opinion. My original investment was 175,000, purchased in May 2008. Recent market value was about 217,000, for a some what dismal return of less than 2 percent. These types of fixed annuities have some guarantees, but are complex and very hard to understand. The buyout offer is 37,000 and Manulife would add that to our present market value and roll over our contract into a newer segregated annuity product with lesser benefits. It looks like we have 3 options: 1)leave our contract as is with Income Plus 2) accept the bonus and move our market value into their new and watered down annuity version 3) Take the bonus and cash out of Income Plus at market value.
In recent weeks, I have done an internet search on this type of annuity and now see some limitations that were not fully understood when we originally purchased: the very high fees, now about 4%; a lack of inflation protection; a declining insurance coverage as well as a declining principle, which will both go to zero if I live to a ripe old age. The guaranteed income for life, which is 13,400.00 per year for me, no longer looks so appealing, as I wish to leave something in my estate for the family.
The intent of the original purchase was to act as a pension as I am self employed ( rancher) and have not paid much into CPP.
Do you think that a basket of conservative blue chip dividend stocks and reits, might be a better choice, if we take the option to cash out and reinvest? We are not fans of USA companies, but realize that many of them are international in scope.
Thanks, Dave Bober

Q: Just read David's question about the yield inversion. Over the years I have found these two sites to be very useful when considering the question of impending recession. Both are data driven. Worth a look.
http://scottgrannis.blogspot.com/
https://www.dashofinsight.com/
Mike

Q: Hi team,
I saw an interesting question last week on the metrics for evaluating stocks in different sectors. You did not mention the tech sector. I am curious on those metrics where there are many companies, trends, growth prospects, competitors, among others. Many companies show no earnings at all as they are investing for earnings down the road. So how do you compare these companies?

With the market unrest the past couple of months, I have looked more closely at your Companies section where there is a wealth of information. Take 3 cloud stocks that regularly show up on your favourites list: BOX, RPD and TEAM. None have earnings today. There are non-earnings metrics shown, such as price to sales and price to cash flow. On a price to sales basis, BOX is 4.5, RPD is 6.3 and TEAM is 22.3. Box is the winner with RPD a reasonably close 2nd. On a price to cash flow basis, BOX is 32, RPD is 620 and TEAM is 60. BOX again is the winner but RPD is a poor 3rd. I know numbers don’t tell the whole story, but I am not sure how to make any reasonable evaluations based on the metrics.

Thanks for the insight.
Dave

Q: Hi 5i,

I read on Bloomberg that the 3 and 5 year bond yields have inverted in the states. I know generally it's a good indicator of a recession. How worrying is this sign to you? Would it lead you to making any investment changes?

Thanks!
Dave

Q: I’m confused why short seller analysts are allowed to manipulate stock prices for their own benefit. What’s the difference between an influential short seller shorting a stock and than manipulating the price with a bad report and a ceo buying or selling stock before an earnings report?

Q: Hi 5i!
This more of a financial planning question than an investing question.
I recently read the book "Retirement Income For Life". It talks about delaying taking CPP until 70 to maximize the amount received. This is achieved by drawing down RSPs from retirement to 70 and taking 1/3 of your retirement funds and buying an annuity. The annuity pays income for life and the larger CPP payment will last for life also. The goal is to not outlive your money in retirement. I'd love to hear your thoughts on this strategy.
Thank you for your insight!
Dave

Q: Clayton was asking about unwinding the Fed balance sheet you replied that they need to sell assets and referenced bonds. What are the assets. How and why does selling them effect the stock market.
Thank you for the excellent service you provide.
Peter

Q: ANYWHERE IN YOUR WEB PAGE ONE CAN FIND WHERE THE STOCKS BELONG TO THE CATEGORY ,e.g. BRK.B,,BAM,A,GOOS ,,PBH,SIS and UTX
Thank you

Q: Hi, I am looking to buy some beaten down tax loss selling candidates. Which weeks would you consider to have the greatest tax loss selling and when is the last date in 2018 to sell for tax loss purposes? Thanks.

Q: Hi Peter/Ryan, if you have a lot of shares and gains in a stock and if you are expecting the stock to split. Is it better to sell before the split or after or does it make a difference. Whats the best way to handle this scenario. Thanks, Nick

Q: The US Fed has a very big balance sheet problem that needs to unwind - someday. I do not understand what that means to the stock market.
Please help me.
Clayton

Q: TD online broker does not allow me to buy some securities electronically. I can place the order over the phone and get the online price. I can however sell my existing positions electronically. Example of securities concerned are Versa Bank, GMP Capital, and about a dozen others. I called broker and was told this restriction was placed on the shares by the company. Never heard of such a thing, have you? I can trade these securities through my other on line broker ie. RBC
Any idea what is going on?

Q: This ETF has shown on May 31,2018 95 million Outstdg shares. On Nov 1 they had 99 million shares. which in my opinion diluted the value of my shares.??
I called them and they said, that they had to issue new shares as Institutional clients asked for it.I said why they did not come on the open market and bid up the price. He said it doesn't work that way. I said isn't it like a Central Bank who just prints more money.Can you clarify who is right? Am confused.Art

Q: I have been looking at Enbridge, and am confused about the increase in outstanding common shares. It seems that they more than doubled in the past 2-3 years. Is this from acquisition or from the company issuing more shares? Is there a way to tell for other companies (online), so I don't have to ask you for each one I find similar results?

Thanks!

Q: I wonder if you could help me understand INK graphs? I would like to buy more ALGN, but I was surprised and concerned when I saw what I assumed to be a lot of insider selling. Am I misunderstanding the graph? Thank you for all your help.

Q: Hi 5i,
My current strategy is to have a hybrid approach so that I have some of the income portfolio holdings, some growth and some from balanced. In addition I have taken the same approach with US holdings and UK/Australian (to a lesser extent) so my version is diversified (both by sector and geographically, well hopefully) and I think of it like a balance equity portfolio.
Generally how does this (balanced) approach compare to the income or growth portfolio which seems more targeted in its purpose. Are there persuasive arguments to follow one style over another?
Thanks
Mike

Q: Hi 5i: Are there any general observations to make about how markets and different sectors usually react once a yield curve inversion occurs? I understand that subsequent recessions may not typically begin until 9-18 months after a yield curve inversion but I’m wondering if bear markets in equities most often tend to lead recessions and by how much. Along similar lines, at what point during the sequence of events would you expect to hear a lot of talk about 'engineering a soft landing’ and expect to see ‘easing’ steps such as interest rate decreases? I’m happy to do a little further reading on this myself if there is a good info source you’d like to point me toward. Thanks!

Q: Apart from P/E ratios, is there a key valuation metric for a sector that would help one to select one stock over another in that sector?
There are many valuation metrics - P/BV, FCF, FFO, EV/EBITA, for example. Some are more suited to one sector versus another. Could you advise which valuation metric(s) you rely upon for each sector.
Thx

Sam