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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: Dear 5i
I just want to verify with you when you generally recommend a max amt of 5% in any one stock you mean 5% of the total of all individual stocks held plus cash held right ?
You generally don't include ETF`s of stocks such as ZDM,ZWH,VFV,and VGG of which i own .I`m including the cash component because of the intent to eventually use that cash to buy more stock .
I just want to be sure I'm understanding this correctly and not unintentionally investing far more in one stock then what i should be .
Thanks
Bill C.
Read Answer Asked by Bill on May 14, 2018
Q: Dear 5i
If i own a stock that pays a 4% dividend thats paid quarterly and i`ve got $10,000 invested then the quarterly amt paid would be about $100 correct ? ie 4% of 10k divided by 4 .
Thanks
Bill
Read Answer Asked by Bill on May 14, 2018
Q: Hi team,
I saw a comment earlier today about increasing your U.S. coverage, that I would also like to endorse. I realize that staffing and resources and the sheer breadth of the U.S. markets are significant constraints. Even though you do not officially cover the U.S., your comments are spot on. I discovered BOX from your comments; SQ as well if I recall. I am moving more and more funds to the U.S. these days, mainly for tech, some financials. Tech is a long term secular theme that will be here long after we are all gone. The TSX is such a narrow index; financials, oil and gas and materials. Perhaps you could consider venturing into the U.S. on a sector basis, where the TSX is weak, such as tech. Maybe add in consumer and financials.

I for one would be willing to pay a significantly higher annual subscription for U.S. coverage, just for certain sectors if necessary. I have subscribed in the past to several other investment services that were much higher in price and much inferior in service to yours.

Thanks for your consideration and as always, I appreciate the service.

That’s my 2 cents worth (in U.S., not Cdn).
dave
Read Answer Asked by Dave on May 11, 2018
Q: After a poor quarter, or other "bad" news announcement that causes a stock to sell off, how long typically does it take the security to find its new price level and stabilize (how long does it normally take for selling exhaustion to take effect)? What indicators can one use to see when this new price level has been achieved? Volume? Price stabilizes for x number of days? Thanks!
Read Answer Asked by WAYNE on May 11, 2018
Q: I understand that many former technology companies such as Google are being re-classified as Communications Sector. These companies are widely held in many ETF's and Index funds. This ultimately changes the ETF and Index components and may generate unplanned capital gains or losses.
Is this correct and in your opinion does it happen often?
thanks
Read Answer Asked by Ian on May 10, 2018
Q: Regarding questions on SIS and other companies that announce earnings release dates. Some announcements are made before the market opens while others are after market close. Do you think there is a tendency to announce after market close if results aren't stellar and to force share holders to sleep on it rather than announcing before market open and having a knee jerk panic sell off? Although some may worry until market opens in the morning and selling could be just as bad. Have you ever pondered release time frame versus good/bad results?

Thanks
Dave
Read Answer Asked by Dave on May 09, 2018
Q: Hi 5i,

This is a general question but I listed Tesla as an example. I am curious about the influence of shorts on a company's stock movement. I have a friend who says that the price of, say Tesla, is held back by a large number of outstanding short positions. And, ... if the shorts start to be removed, Tesla stock will take off. My own belief is that there are many significant factors on what a stock moves up or down, and I would say, shorts play only a minor role in the price movement. So my question, how significant are the short positions in price movement ?
Read Answer Asked by Jim on May 09, 2018
Q: Hi,
Borrowing to invest, Maybe this article will be of interest to some investors, Thx
https://www.theglobeandmail.com/investing/personal-finance/taxes/article-recent-court-ruling-offers-tax-guidance-on-borrowing-to-invest/
Read Answer Asked by Ben on May 08, 2018
Q: Hello Peter/Ryan,
I listed many names on the list in one question in order for other members benefiting from your advises as well. Feel free to deduct as many credits if it needs to be.

4-part questions:
1) Market rotation: Many solid consumer staples and industrial stocks went down significantly, what do you think of their directions in the next two years (I will get pay to wait if buy now) and what causing this downturn?
2) I list them in pair for long term hold over 5 years (pleas suggest a name that you like better)
FLR (Fluor-US) Industrials versus VEOEY/VEOEF (Veolia Env. ADR French) Environment-Water Treatment
DANONE ADR (French) versus Saputo
MDLZ (Mondelez -US) versus HSY (Hershey-US)/NSRGY (Nestle-CH Swiss co.)
KHC (Kraft Heinz-US) versus UL (unilever- UK)
PEP (Pepsi) versus KO (Coca cola)
3) Large international companies listed on US-OTC (over the counter) market instead of NYSE or NASDAQ to lower the listing cost and regulatory complexity of a stock exchange listing.
What to choose and ADR stock ticker ending with a Y (sponsored by a US Bank) or with a F (unsponsored) ? Why such a large price difference between them? In case of unsponsored ADR, how safe will it be time to sell the stock and time to get for the dividend declared.
In this case 52 weeks Low-High Veolia -VEOEY= 20.22 to 26.40 versus VEOEF = 19.50 to 26 (almost same dividend 1.03 versus 1.04)
4) Tax withholding:
Inside RRSP: none on US-UK co. shares and mostly 15% on European co. shares (anyway to get this back?)
Inside: TFSA: 15% in most cases (anyway to get this back)
Outside in investment account.

Thank you!
Read Answer Asked by Nhung on May 08, 2018
Q: Hi Peter, I am just wondering what the difference is between accounts payable vs. accounts receivable? Do they play a big role when you evaluate a company? What are the key things to look out (to exceed or not to exceed others) for each? Thanks!
Read Answer Asked by Michael on May 08, 2018
Q: From Jan 01/2014 to today, what is the largest / most significant dividend cut (or dividend "reset") of a large cap company that you have seen in the Canadian and US markets that you are aware of.

Thanks,
Mike
Read Answer Asked by Mike on May 07, 2018
Q: Hi Peter, Ryan, and Team,

Perhaps you could shed some some light on this ETF, as I believe there's a serious pitfall with the product. I sent First Asset an email yesterday, wondering about the so-called "reinvestment" that was "paid" on Dec. 28, 2017. I refer to it as 'so-called' because this $1.63 per share "reinvestment" does not give you cash, nor does it increase your number of shares! In other words, it appears to do nothing for me.

Here's the email I sent First Asset:

Hello,

I purchased 1395 shares of TXF on July 21, 2017. I see that on Dec. 28, 2017, the fund "reinvested" $1.63 per share. This would, in my case, be an amount of 1395 X 1.63 = $2273.85.

My broker, Scotia iTrade, increased the adjusted cost base (book value) of this fund, so I now show a slight loss when not considering the cash distributions received on Oct. 4, 2017, Jan. 4, 2018, and Mar. 29, 2018.

Here are my questions:

Should I see the amount of $2273.85 on the statement from my broker?
If I were to sell my shares of TXF today ($16.69 at this moment), would I receive 1395 X 16.69 = $23282.55?
What happened to the "reinvested" amount of $2273.85?

I look forward to an explanation of the above questions.

Here's the response from First Asset:

Hi Jerry,

The $1.63/unit amount is a non-cash distribution that was reinvested in the fund, which is why you see an increase in the Adjusted Cost Base. To answer your questions:

The amount of the distribution should be reflected on your statement but only as an increase to your Adjusted Cost Base. It wouldn’t increase the amount of units or the market value of your position in TXF.
If you were to sell your shares based on a unit price of $16.69 you would receive approximatively (1,395 x 16.69) – Adjusted Cost Base (including the $2,273.85) minus any other fees your broker my charge you.
The amount of $2,273.85 has been added to your Adjusted Cost Base.

I realize that 5i doesn't really care much for the covered-call aspect of TXF, but I was prepared to live with that. However, I certainly didn't expect the ACB (book value) to increase by the amount of this non-cash distribution! How does this help the investor? Am I correct in my assessment of TXF?

What would you replace TXF with to stay in the same sector, and one where the "reinvestment"is actually paid to the investor?

Thanks in advance for your guidance. I realize that this is a long and detailed question and your answer would be helpful to others. Please deduct as many question credits as you deem necessary.
Read Answer Asked by Jerry on May 04, 2018
Q: In my will ½ of the assets are to be shared between my grandchildren until the age of 25. There current age range is 2 year to 15 and new grandchildren are still potentially on the horizon. I would like to be able to direct the executor to invest in funds in your balanced portfolio transitioning to the income portfolio in the final 7/10 yrs. However your continued service is not guaranteed.
The prudent route for executors is to safeguard principle and stick to GIc’s. However for grandchildren that have a 10/15 or 20 time year horizon Gic’s seem to be a worst option compared to a well-balanced equity/bond portfolio.
I know this is outside of the scope of your service but I don’t know where to go and hope that you can give me some directional advice in this regard.
Thanks
John
Read Answer Asked by John on May 04, 2018
Q: In answer to Victor's query for free/inexpensive portfolio tracking websites, I actually think Yahoo Finance is pretty decent for this now (free, 15-minute delay on Canadian stocks), and the corresponding Yahoo mobile app is very good.
Read Answer Asked by Peter on May 04, 2018
Q: Greetings,

Can you provide a link or point me in a direction of where i would find a master list of Canadian companies whose dividends are eligible for the dividend tax credit.

Thanks for all you do.
Read Answer Asked by kelly on May 04, 2018
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