Investment Q&A

Q: In my overall portfolio (RSP, RIF, Unregistered & TFSA) my low weighted sectors are:
2.5% in Telecom (BCE & T);
3% in Consumer Staples (WPK & ATD),
3% in energy (RRX, SPB, WCP, VET);
5% in Materials (SJ, SLW/FR, RUS);
6% in Health (GUD, SIS, ECI, CRH, CSH.un)
With the sale of RDM, I have some cash in my RSP which is mostly 'Balanced' equities. Which one or two of my underweight sectors would you consider the first place to deploy the cash in my RSP at this time? And what would your top stock selections be - of either my existing stocks, or new ones ? As always, thank you for your help.

Q: What is your view on market linked GIC's - BMO has one that guarantees your principle over 5 years and uses the interest to buy options etc. so investor can participate in some of the market upward performance. Is this a good strategy in a time and market that is well overdue for a major correction.

Q: Hello 5i team:
I understand that there are some issues regarding the lending practices of Home Trust and Equitable Trust. I understand that there some advisories to avoid adding new funds to these HISAs. Are their High Interest Savings Accounts-HISA-safe? I presume 100k CDIC safety net applies. Should one move the money anyway out of these HISA?
What are the other safer alternatives?
Many thanks.
Mano.

Q: Peter:

This week Ralph Garcea at Echelon Partners initiated coverage on Intrinsyc with a Spec. buy rating with a C$3.35 12m target. This is ITC's first analyst. As a former small cap fund manager did you pay attention to new reports from small cap's who are not raising capital? Do you think this report will begin to draw some institutional attention to ITC?

Q: if one thought that Canadian bank shares were overbought and expected them to decline in value over the next 12 months what shares/equities could be bought to profit from that opinion?

Q: Further to the questions today regarding a BNN guest comments on Tuesday Re: Exchange Income Corp., can you clarify the rules BNN has regarding their guests ability to trade in a stock they recommend. This may help member's perceptions of guests motivations.

Thank you.

Q: Hello,

I am gradually adding companies to my portfolio when the funds become available. My question is, should I also be selling portions of my stocks that are doing well to fund my next purchase? Or should I only do this if one stock has taken off and created a significant overweighting? I guess what I'm trying to decide is if it is more important to quickly diversify or to let time do its thing and patiently add companies when able.

Thanks,
Al

Q: Good morning 5i team,
How do you make the distinction between heat chasing (i.e. buying a stock that has gone up significantly due to popular demand) and momentum investing which you seem to like a lot and which, on the surface at least, consists in buying a stock that has been rising in price for some time? Going by all that I have read on investing, heat chasing is very risky and to be avoided while momentum investing is an approach you often recommend. When does momentum investing become heat chasing?
Robert

Q: If the government increases the capital gains tax, like it did in the past, does it affect the gains executed prior to March 22? If it doesn't apply to them, is there a reason NOT to sell my portfolio now and buy it back the same day? In my corporate account, I always will pay a 25% tax, whether I'm retired or not.

Q: Hi 5i,great information. Only wish I had found you sooner. I am a 60yr DYI investor, I inherited 100,000 and decided to invest with a CIBC financial advisor in a balanced ETF.
Now seeing your great site I am thinking to move my money, into one of your suggested model portfolio's (save on fees & diversify).
My personal investments are both ETF & stocks I am heavy in financials & precious metals. I have just recently started the google app which is helping me to identify where I am heavily weighted.
What are your thoughts to have mixed investments? Or move ahead doing all investments on my own? Looks like a lot of work to initiate but once engaged perhaps not so much work?

Thanks

What are your thoughts?

Q: Do you ever give any advice on market timing? For example, if you thought the market was at risk of a 5-10% correction, would you advise subscribers?

Q: Can you comment on an article posted on Yahoo Finance by a so called Crash Guru Sandy Jadeja who says the Dow could plunge by 30 percent this year. The dates to watch for are Marc 13 and May 11. How should small investors react to articles like this. Thank you.

Q: With anticipated increase in US interest rates fixed rate income investments are expected to suffer, examples are ZPL & PGL.

Any thoughts on why preferred shares are experiencing the opposite trend with substantial gains, examples TRP.PR.E & RY.PR.Z?

Q: Hello saviors,

Can you explain how beta of a security is different from equity risk premium? Aren't they essencially saying the same? Can you give me an example when you are comparing them?

Do you know a website that I can learn more about such topics?

Thank you!

Q: What can I say 5i ... excellent read in the March ETF Update.
Thank you,
Rick

Q: Just a comment
Over the past 3/6 months I have witnessed a significant activity in the micro cap and the small cap "bought deals" at discounted prices that are simply an insult for retail investors (Ie. the suckers..... I am one of those...). Discounts of 30 to even 50% are in the order of the day. The last one Acuity deal for 3000000 units at $ 3.4. Price this morning ... (drums rolling....) $4.25 at the open.
Well I have my idea about this gouging.
1/ Everybody is trying to is trying to grease their wheels before they cannot do it anymore, and nobody Ie. the Pros?? would buy acuity at 4.4 even 4. I agree and I would not except I am frustrated not to be able to get my fair share at 3.4.
2/ The market space has changed drastically with spreads so big that a mammoth would fit easily, Prices quoted are the reflection of TSX while in the meantime The pros are trading on Aequitas, Alpha, CSE, Instinet, Matchnow, Nasdaq CXC, CXD, and CX2...
3/ short sellers have a wonderful time in Canada, IROC nowhere to be seen or heard.

So what to do?
1/If you take ownership of your stocks take advantage of the gift that shor sellers give you (PHM anybody)
2/ Accept the fact that you are not the Alpha one around and that your power is limited, but refuse to be fleeced.
3/ Do not trade blindly Ie. open orders and follow YOUR stocks: Your level of comfort is directly related to your level of ownership.

Peter, your comment would be appreciated as usual.
CDJ

Q: Hi 5i team,

In order to further manage my market risk in a diversified portfolio, could you provide guidance on market cap range that would define small, mid and large cap? I believe small < 1 bio, mid 1 to 5 bio and large > 5 bio is a reasonable range, but wanted to confirm your opinion.

Thanks,
Angelo

Q: Hi 5i
Due to one of the holdings becoming a runaway success it has turned into approx 30% of the overall portfolio value (I know you think this is a bet on one company, leaving that to one side my question relates to the the weighting of the remaining holdings). I'm uncertain as to whether it would be necessary to adjust the weightings of the remaining holdings and in what way. Growth/losses in the other holdings appears to be masked/muted by the overwhelming good fortune that is the 30% holding.

Thanks as always
Mike

Q: Hi 5i
When market sentiment turns against a company due to a miss, for example, in this case, like-for-like sales growth (1st slow down in 9 years), but accompanied by a dividend hike and an acquisition among other positives, how significant would you consider one miss? In terms of market expectations are some metrics far more relevant than others ?

I think it's too early to know whether "something has changed" but market reaction was brutal on one of my foreign holdings today (I won't mention which as its not a CDN or US holding).

I know this is a vague question but I guess market sentiment baffles me sometimes.

Thanks for any comment, greatly appreciated.
Mike

Q: Gentlemen,
If I want to buy puts to protect $1.5 million in S&P500 Index fund against a 10% decline in the market in the next 6 months how many SPY options do I need and how much do I have to fork out. Does it matter where your broker is? That is do the options listed on TD have the same price as those listed on Scotia.

Let’s say the expiration date is September 15, 2017.

I appreciate it if you detail the math and where you are getting your price from.

Thank you for taking the time to teach me and my fellow 5I members regularly.