skip to content
  1. Home
  2. >
  3. Investment Q&A
You can view 3 more answers this month. Sign up for a free trial for unlimited access.

Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I've recently read that FAANG stocks should be avoided because they make up a large portion of the Dow Jones Industrial Index and the S&P 500 Index, meaning every ETF owns them. What you usually end up
with is a reversion to the mean. The more shares that must be bought with each investor purchase of an index fund, the more the performance tends to follow an “average” return. I would appreciate your thoughts on this statement, thank you.

Read Answer Asked by glen on August 28, 2017
Q: the question I keep asking my self is why do I buy recommendations. These three are your picks so bought but all have declined since purchase. I have no problem with volatility but what is the percentage decline that yo u should expect on these kind of stocks, down 12,10, and 15%. My limit is usually 18-20. so should I wait for my target or move on.
Read Answer Asked by Ross on August 25, 2017
Q: Hi Peter
Just went through my portfolio and these are my asset mix results.
Tech - 19.8 %
Basic materials - 17.9%
Consumer Cyclical. - 11.7 %
Consumer Non Cyclical - 9.4 %
Energy - 9.0 %
Financial - 8.0 %
Reits - 4.5 %
Health - 3.4 %
Telecom - 3.8 %
What do you think of my sector waiting? Any thoughts on sector performance going forward... Should I be shifting my percentage on any of the above sectors going forward from here?
Appreciate your advice always!!
Read Answer Asked by Mike on August 25, 2017
Q: Buy the dip. I hear this all the time. I understand and accept the concept of buying a stock which is down temporarily. But as a conservative investor, I look at the long lists of stocks on my watch lists and in a sea of red, my eyes are drawn to the green, to the stocks which keep chugging forward even on a day when the markets are way down. Unless there is some immediate news driving that stock, my inclination is to think "This is a stock with strong demand, and whose owners don't want to sell. I should buy that, not the ones which are dropping like rocks." What do you think?
Read Answer Asked by John on August 23, 2017
Q: Good morning Peter and Team,

I just read about David Driscoll's recent appearance on BNN, where he summarizes his eight steps to a winning "investing recipe":

Here are eight steps to a winning recipe:

Low fees: The lower the fees, the more you make.
Low turnover: By investing in businesses and not trading stock prices, transaction costs stay low and you keep more of your capital for growth.
Invest in companies that consistently grow their free-cash flows: These companies have the financial flexibility to raise dividends, invest in innovation and make strategic acquisitions.
Diversify globally: Long-term returns outside North America have historically been one per cent to two per cent higher.
Re-balance the portfolio when necessary: Having a high concentration in one stock can lead to trouble if that company’s stock price crashes to Earth (i.e. Valeant).
Avoid correlated assets: In 2008, all the Canadian banks fell 40 per cent, not just one of them. Pick one Canadian bank and move on.
Manage your cash prudently: Given that the market has risen for eight years, it’s prudent to hold some cash to take advantage of opportunities if the market corrects.
Choose stocks with above-average annual dividend growth: The average growth rate of stocks globally is about seven per cent. Those that grow their dividends faster provide investors with greater income to use in retirement. Their share prices also tend to grow at a faster rate.

Seems to me that Mr. Driscoll must be a 5i member, since most, if not all, of his points have been mentioned from 5i over the years! In any event, it's always reassuring to see other financial types who share 5i's philosophy!

You may publish at your discretion. Thanks for everything you do to help the small retail investor!
Read Answer Asked by Jerry on August 22, 2017
Q: Convertible bonds are obviously not exactly the same as corporate bonds due to the possibility of converting them into common stock. I was wondering if they are treated exactly the same as the other bonds a company may have issued as long as they are still in the bond form? That is are they they still guaranteed to be paid as long as the company is solvent and are they at the same debt obligation level as other bonds issued? Thanks you.
Read Answer Asked by Paul on August 21, 2017
Q: Good morning 5i Team:
My question regarding the six companies mentioned is about Equity by Geographical location.
Lets say I only have the aforementioned companies in my portfolio.
With the exception of BCE, all the other companies have a portion and sometimes a sizeable amount of their revenue coming from US or International divisions.
From the Equity by Geography scenarios I have seen; this portfolio would be considered 100% Canadian.
Am I misunderstanding this or should some of this portfolio be considered US or International even though all companies are Canadian.
Thank you as always for your concise, informative and professional advice. Wouldn't have the confidence to be a DIY investor without 5i.
Read Answer Asked by Dennis on August 18, 2017
Q: I'm confused by the following 5i answer excerpt in response to Dave's question on August 16th.

"5i Research Answer:
The key here is that when reading our remarks, our comments are meant to reference the 'company' and not the stock price. A declining stock does not make a company 'bad'. We cannot predict sector movements nor stock prices, but we try to focus on the quality of a company."

Do I take from this that 5i doesn't take into account the fundamental "value" of a stock when making its recommendations? If so, I feel this is missing the point in making profitable investment recommendations. The highest "quality" company may be the worst possible investment if its stock is outrageously over-priced.

There also seems to be some inconsistency here as well. In the same answer, it was stated that a company like CRH may have more investment potential than another company since its stock is oversold. Another answer on the 17th suggested that the asker not chase the stock of Chorus Aviation (CHR). These answers indicate to me that stock price is being taken into account in 5i Research recommendations.

So what is it, is stock price ("value") taken into account in 5i Research recommendations or is the "quality" of a company the only criteria used in making the recommendations?

Thanks,
Colin
Read Answer Asked by Colin I on August 17, 2017
Looking for more? Sign up for a FREE 14 day trial! No credit card required

We invite you to sign up for a 14 day free trial of 5i Research!
Experience all the benefits and tools we have to offer; stock research, model portfolios, Q&A with our experts, and so much more. Join a community of like-minded investors today!