Investment Q&A

Q: Topic: interest rates and income stocks, particularly utilities in a "stagflation" scenario.

I understand your message regarding higher interest rates reducing the appeal of income stocks in a growing economy.

But what about stagflation? If interest rates spike, but the economy stagnates (some us remember the 70's) .... would stocks like the utilities still likely "stagnate" or drop as well?

Would anything do well in a stagflation scenario?

Thanks for any information or guidance you can provide.

Q: Hi Fellow Investors!
For those that haven't read the recent 5i blog on averaging down yet I would like to recommend reading it. It is an important topic and well written.
I would just add that averaging down beyond a normal portfolio weighting can put a big dent in one's longterm returns if things go wrong. In my experience you need a very high degree of conviction to average down and by definition such opportunities will only present themselves very rarely. Most investors cpuld do well to avoid the practice entirely, IMHO.
Cheers
John

Q: It seems to me Open Text is one of your top technology stock pick now, and I like it very much too. The only problem for me is that the company seems like to be paying too much to stock price and playing trick with the stock price. It has a split last year, and now it is splitting again. This is in stark contrast with companies like Google, Priceline, Amazon, not to mention Birkshire, etc. Is this a warning sign? I mean two splits in less than a year.

Thanks

Shaun

Q: Re form 1135. Are US ETF holdings exempt when held in RRIF and TFSA accounts when calculating amounts?

Q: If one wanted to shift 10% of one's portfolio exposure from Canada to the U.S. is it better to convert cash from CAD to USD and then purchase stocks on an American Exchange or alternatively use CAD to purchase American Stocks (that also list on the TSX) or ETF's (holding US Stock) that list on the TSX?

Q: 1) I am in the process of making a few changes in my portfolios and was wondering if you expect to be making any adjustments in the 5i portfolios in the next month or so ?

2) Is 5i still doing portfolio reviews ?

Thanks to the whole team for an outstanding service !

Q: I'm in borderline Top 1% Tax Bracket, so I'm looking for a Flow Thro Fund. The Sprott 2016 Short Duration closed early, run by Eric Nutall. Can you recommend another? And, since I'm maxed out in my RRSP & TFSA, is it ok in a Margin/Cash a/c?

Many Thank

Q: Please mention sectors you feel should be over weight in Canadian and US markets. Intuitively, in expanding economy I would pick Consumer Discretionary, Industrial and Technology. You may have different answer for Canada and US.

What proportion of portfolio should be in US stocks.

Thing you

Q: Hi Peter
I am reviewing my so called balanced portfolio.as we head into 2017
Right now this is where its at.
NON STAPLES 10%--STAPLES 9%--FINANCIALS 18%--HEALTH 9%--ENERGY 9%
INDUSTRIALS 11%--TECHNOLOGY 10%--MATERIALS 14%--UTILITIES 4%
TELECOMMUNICATIONS 2%--
AS YOU SEE IT IS OUT OF WHACK--COULD I PLEASE HAVE YOUR COMMENTS ON ANY
SECTOR YOU THINK I SHOULD REDUCE EXPOSURE AND ALSO ANY I SHOULD ADD TO-
IF YOU WANT ME TO ADD ANY STOCKS TO SAY UTILITIES OR TELCOM--WHAT WOULD YOU SUGGEST---I CURRENTLY HAVE AQN-BEP.UN-FTS AND T--I GUESS I COULD ALSO TOP THESE UP----IN THE OTHER SEGMENTS I HAVE AT LEAST 4 OR 5 STOCKS.
THANKS --HAVE A GOOD 2017

PETER

Q: Just wondering if you've read the book "the little book that beats the market" and heard of his magic formula investing? Is it too good to be true? Or does the methods and practices actually hold water for long term investing results?

Thanks!

Q: Can you give me your opinion on analysts or advisors that give their evaluation or opinion on a stock based on their 'model'. You probably know some analysts that appear on BNN Market Call. They talk with confidence about the 'model price' of a stock that is above or below the market. Tell me if I am wrong but, an opinion which is not substantiated by explicit critiria be it technical or fundamental, should be avoided if one does not want to follow an advisor blindly. I know that these guys do not want to give up their recipe and appear on BNN to recruit new clients but it should be clear that when they are on TV looking at their crystal ball, it is actually an 'infomercial'. Unless you intend to purchase, there is no point in following their advice because you do not know on what it is based on.

Q: Hello 5i
My main question is similar to a previous one.
We have 2 RRSP, 2TFSA, 1 non-registered, 1 non-reg. corporate accounts. We are presently with a full service broker(approx. 140 positions), but will be transferring to a discount broker. We are now taking income, mostly from the corporate account.
1)Would you suggest treating them as one when we build our new portfolio?
2)Our intentions are to have 30-35 positions. Is there a point where spreading over too many different accounts can make the portfolio less effective?
Thank you in advance, Bill

Q: is there investments for the Canadian markets that take advantage of volatility ,should the incoming US administration do some things that start to take down the TSX ? Thanks and have a super 2017

Q: If any one is interested in buying U.S. stocks I am going to read THE MAKING OF DONALD TRUMP BY DAVID JOHNSTON to give me added information.

Q: I think that a stock price can increase because:

1. earnings per share increase
2. multiple expansion

I understand #1. Can you please explain #2.

Q: What are your favorite blogs that you read everyday? Trying to increase my market awareness. If you were to devote one hour per day to your investments what would you do to "stay in the loop"?
Thank You Ron

Q: Please enlighten me on how bought deals work, using the most recent EIF bought deal as an example.

EIF floated new common shares at $42.45 per share recently and it was a bought deal so the underwriters bought the entire issue (plus the over subscription shares) for $42.45 per share. Thereby EIF received $42.45 per share (less the underwriter fees), while the underwriters assumed the risk in case if they cannot sell those shares at $42.45 or more. Am I correct so far?

In that case, with the EIF SP lingering under $42 a share, can I assume the underwriters will suffer a loss? After all why would you buy the new shares from the underwriter at $42.45 if I can get them cheaper in the open market?

Also if I were the underwriter, would I not be trying to drive up the EIF SP to over $42.25 to protect my deal?

Kindly shed some light on this type of transactions. Much appreciated.

Q: Hello

I am going to re-balance my family portfolio (by sector/industry mix and bond / stock mix) once the Dec 2016 statements come in.


In my family we have 2 RRSPs, 2 TFSA, and 2 RESP accounts.


In the past I would add up all the portfolios together and make a pie chart in Excel to find out our bond & stock mix and our sector/industry mix.


Before I start this exercise this year I wanted to have your opinion.

How do you recommend balancing? Each account separately or other???

Should I even consider BONDS inside my kids RESP since they are just 2 and 4 years of age?

Thank you for your help.
Regards
Stephane

Q: Income investments - preferred shares
On Jan 4, you posted an answer for an income investor, expressing approval of ZPR (BMO Laddered Preferred Share Index ETF). I am somewhat cynical about preferred shares, their being subject to the interest rate sensitivity of bonds, lacking the upside of common stock and generally lacking a fixed redemption date or any other assurance of capital preservation. I wonder whether, even on a reset date, they would necessarily trade at their face value. If I am right, I can't understand in what circumstances they would be suitable (without fixed redemption or as an interest-rate play with a high coupon). What am I missing?

Q: How much does Microsoft stand to benefit if the taxation is substantially lowered in respect to the repatriation of money they hold outside of the U.S. ? I've been a subscriber since 2012 and I'm looking forward to another wonderful year with 5i Research. Thank you.