Investment Q&A

Q: Just a note concerning Marios’ question about converting TD shares into US dollars. I am also with TD and their Buy/Sell spread for US dollars is about 1.5%. So in the end if you convert Cad dollars to purchase a US stock and then go back to Cad dollars when you sell the foreign currency exchange alone will set you back 3%. I consider this extortion! I typically use “Norbert’s gambit” with shares of the biggest Canadian bank (RY) to avoid these foreign conversion fees. One of the problems however, is that when purchasing shares in my Canadian account, TD makes me wait 3 days for the settlement until they can be moved over to my US account for sale there. Hence you end up with 3 days holding risk and price movements can either work for you or against you. I would appreciate if you could open this up to members to see if anyone has ever found a way to get around the 3 day holding period.

Q: Peter; I'm not sure how to phrase this but here goes. Since being a member since 2012 I have bought,sold and held various 5i suggestions. Some went up - some went down but overall I am so far ahead that I can only " suggest" to some of the more impatient members to try and remember that if they owned a mutual fund or ETF they would not have the opportunities available to them at 5i by sending in questions or queries etc . If you weren't pleased by a mutual fund or ETF's performance you can sell it. I guess at 5i you could just drop your membership. This is one of the reasons that I don't think a Forum is a good idea. Post if you wish. Rod

Q: Recently you endorsed selling options in a TFSA. I am wondering whether there are any drawbacks with selling options for U.S. companies in a TFSA? thanks for the great service
claire

Q: When looking at 'insider trading', the following appears. Can you explain what it means?

38 - Redemption, retraction, cancellation, repurchase -

thanks

Q: Hi 5i,

I have held ZWA in our RRIF,s for income for a couple of years. Recently added some ZWH which has a higher yield. Both are doing fine. What would you think of using just ZWH for the higher yield? These ETF,s do not represent total US exposure. Most US is held in other accounts.
Best regards, and thanks for your service.
Ted

Q: I saw on Canadianinsider.com that the chairman of TII just unloaded 450,000 shares in a "disposition by gift". What would this typically mean (ie transferring shares to a family member maybe)?
Generally insiders have been buying shares in the open market and adding to their positions in this company so I just wanted to clarify what this means and if I should be worried.

Q: Every time there is a quarterly reporting, there are a flurry of questions seeking your opinion of them.

While there may be annoying aspects to this, I do find it useful.

Whenever I read a companies PR release on earnings, everything seems fantastic to me (until I look at market reaction and see negativity where I thought all was roses)

Could you give a short (3-5?) list of the most important figures to look for in order of importance in your opinion so that I can do a realistic down and dirty evaluation on my own immediately?

Q: I will likely be retiring within a year, and plan to regularly draw a small amount of income from my investments to supplement my needs. I am slowly transitioning my holdings from a mostly equity oriented portfolio to include a moderate income portion. I am looking for buy and forget type of investments that pay a safe 4% or so dividend with an important caveat – capital protection. I am of the view that a 5-7% dividend has little meaning if you lose 20-40% of the principal investment amount in a short year or two. I understand that with greater safety comes limited upside potential which I am willing to accept. What would be your 5 top picks that best fit this requirement. I am willing to consider whatever investment type you feel is best suited between common shares, preferreds, REITs, income funds and corporate bonds or debentures. I already own T, BNS, AW.UN, BEP.UN, HR.UN, CSU.DB, XHY, CVD, CPD in case you were considering naming any of these so please try to select a few others (from any sector).

Q: Hi, Peter
You may be interested sharing and commenting this story with the 5I members in your Blog.
All the best,
Claude
http://www.marketwatch.com/story/help-my-short-position-got-crushed-and-now-i-owe-e-trade-10644556-2015-11-19

Q: Just want to say thanks to Julian for the info on the Yahoo Finance web site details.
There is a wealth of info there. Plan to put it in my favourites.
https://ca.finance.yahoo.com/q/ks?s=DH.TO

Q: I would like to add something I have learned since I have been with 5i for a couple of years now. I have learned an awful lot and no lesson has been more important than the need to diversify. Unfortunately, at first that simply meant to me holding companies in different sectors without enough regard for exactly where those companies earn their money. So when oil and commodities collapsed, not only did my purer plays (Tck, G, Sgy) drop but "associated" companies in other sectors declined as well (Rus, Bdi, Qst) so I realized I wasn't as diversified as I thought. Lesson learned.

All in all, I have been happy with my total returns over these past few short years. But I seemed to have achieved those returns by having some 2,3, and even 4 baggers while having lots of losers. Is this a "normal" situation or just a current sign of the times and the makeup of my porfolio? Is there a percentage of winners one should expect in a portfolio (assuming moderate risk)? Or will the losers often/usually outnumber the winners?

Appreciate your insight.

Paul F.

Q: Just wanted to thank you for your service. Its impossible to find this level of service outside. I think you made a good call removing Win from the portfolio. I think the overall portfolio approach works..most people complaining are buying individual stocks and picking and choosing one or 2 out of 20 or so stocks in the portfolio. I think people should pick one or two of the portfolios and buy a % of all stocks in that portfolio. I think you have given good thought to setting up each portfolio. I think it will be a good thing to have a write up/guidance about setting up a portfolio for new investors. cheers, Shyam

Q: Hi; This should be a simple question. If a large firm\investment bank is underwriting an IPO or equity offering, what specifically does that entail. Is that simply the firm\investment bank selling equity to client. Is there any fiscal inputs required from the large firm\investment bank. Secondly, if the investment bank is underwriting and providing analyst coverage isn't that an obvious conflict of interest. Are there no regulations for that?

Q: Hello Peter & team,

I've noticed that you receive many questions regarding info about short interest data on TSX stocks. As far as I can tell, Yahoo Finance has this data available for free and, I believe, fairly accurate. I was able to check the data for DH that you provided in your latest answer and it seems to be the same: "There are 4.2 million shares of DH shorted on the TSX, or about 4% of the float."

I'm not certain if it's *really* accurate in all cases, since I cannot verify against any other service, but in this particular case it was. Perhaps more checking would be required in order to suggest Yahoo Finance as a viable option for this info.

The short interest data (among many other key metrics) is available under the "Key Statistics" link on the company page returned by the "Quote" request. See for example the page for DH: https://ca.finance.yahoo.com/q/ks?s=DH.TO The data is on the right side of the page under "Share Statistics".

Also, a Yahoo Portfolio can be configured with a column for the "Short Ratio" data.

I hope this helps.

Best,
Iulian

Q: Incredible how you leave investors behind and telling them to sell win at rock bottom.if this was the only company that your advise would be wrong on.it would not be bad.
Scr,avo,win,gxi,bin,sgy....and many more.
Sure after they are out of your portfolio,everything looks fine again
Your track record is getting very lousy the least.
I am very disapointed in your advise

Q: Well, CXI is yet another 5i stock that went sour, I am at over 30% loss on this one (same as with AVO, HSE, AYA, and many others). Don't get me wrong, I like your service and have been using it for 3 years. Yet, my losses on 5i stocks exceed my gains even though I used to hold most of the stocks that you recommended. I understand that it is all about the right timing and the point of entry, so here is my recommendation: I would be very useful for subscribers if in the "5i summary portfolio" updates you would indicate the current level of confidence (based on timing on your last review and market events since) of your rating and risk level given current market/sector conditions. It would also be helpful is you add these parameters in your answers to subscriber's questions when you answer "it remains our favorite stock in the sector", "we would still rate it as buy", etc. I also question your practice of publishing portfolio returns for your overall portfolio (YTD and "since inception") , when you remove underperforming stocks (e.g. FM) from your portfolios and obviously disregard all losses there, the great results you publish are not really that representative in this context.

Q: I am a retired, conservative dividend income investor, with a well diversified portfolio of stocks, ETFs and mutual funds (AD, AQN, ALA, BCE, BNS, CGX, CPG, PBH, RY, SLF, WCP, WEF, WSP, XIT, ZLB, RBC Cdn Eqty Inc, Sentry Cdn Inc, Sentry REIT, Insured Annuities, Fisgard Capital), as well as a company pension and CPP.

Question # 1: BCE is 4.0% of my TOTAL portfolio, but 6.1% of just my EQUITY portfolio. When you discuss stock weightings, is it of the total portfolio or only the equity portfolio? What general guidelines do you recommend? I use roughly 2-4% per stock, and 4-10% for either ETFs or Mutual Funds.

Question # 2: My asset mix is 65% equities and 35% fixed income. Within equities only, my mix is 25% finance, 18% utilities, 17% consumer, 4% health, 14% industrial, 9% info tech, 10% energy and 4% materials.

I am looking for a very conservative, blue-chip, dividend-paying stock (> 3% dividend) to add and I'm not sure which sector to top up. Please point me to the right sector (or two) with 3-5 stocks to consider.

Thanks, Steve

Q: In your answer to Shyam's question you said, "We are comfortable with a small amount of leverage for investors with ongoing income and a decent diversified portfolio."

How much is a small amount? What percent of your portfolio?

Q: I always find myself fully invested and when an opportunity presents itself..for example Aya..I don't have cash to invest. How much cash should one hold in an account? Is it OK to borrow to invest? How does one make a decision to sell one to purchase another? Thanks.

Q: As you said the shorts have increased their weighing in intertain. How can an individual investor compete with the big boys? It seems the game being played is to short everything. I only know how to buy long but it seems every time I buy my stock gets shorted and it drops and I continue to get clobbered. So what is one to do? Just sit and wait for the shorts to cover when good news come out. It is so frustrating.