Investment Q&A

Q: Is it worth having a financial adviser managing an account under 200k for someone who has some knowledge of companies but not of their stock value (especially for blue chip companies) or should I try to manage my own portfolio on my own using 5i as my adviser? I would not be making daily trades of companies, it would be for growth of my equity portfolio, checking every month I suppose.
Current holdings since 2007: BMO BCE AGF.B TRP RY TRP BNS TRI POW (US holdings) GE BP. Thanks.

Q: Hi Peter
By chance I came across your post that stated that you had an accident last week while training for your bike ride across Canada in aid of Children with Cancer. As a member who has benefited so much from 5i I will make a donation to your cause. It gives me a new perspective when I am constantly worrying about not having enough money for retirement when I see teenagers worried about not making their next birthday. Not to mention what it must do to their families. Would you please post the link here, or more prominately on your questions page? I would like to see you surpass your total donations goal and there are lots of people, just like me, who would like to help.

Cheers,
Bryan

Q: a comment
"saw the details you posted about your serious training accident on Friday"

Some pro sports teams put clauses in their contracts prohibiting players from participating in some "rough" other activities for fear of injuring a valuable property.

Perhaps we should consider the same for Peter. He is certainly more valuable than a hockey player!

All the best for a speedy recovery.
Bryon in Elmira

Q: Hi Peter and team,

With all the questions you have seen and answered, is there anything you and your team have learned from starting 5i?
The site is still great.

Q: In this world of exceptionally controlled markets (stocks, bonds, precious metals..) it is a constant challenge to separate the propaganda shaft from the wheat reality.
So for those who consider that Macro awareness is still worth spending time on (I do!), I would like to suggest 2 sites (American unfortunately, as I have yet to find a Canadian blogger.. suggestions welcomed) that do a a decent job talking about it: Fact set Insight already mentioned who have expanded their posts lately and Sober look.
I like also Doug Short but it is much more technical and impose much more attention.
On the geopolitical front which may become the elephant in the room,I have yet to find one site or one blog so I am following many sites, also suggestions welcome.
On the economic front I like Investing.com which have a very neat calendar of daily world economic events extremely well presented and very useful.
Publish at your own choice.
CDJ

Q: Hi Team,

I can't help but complement you on how you handled a recent question by Paul. To me it exemplifies your service and value to all retail investors. It's a "poster child" of how client-focused you are.

I just want to say thanks again so much for your great service. I don't think I (and many, many other members judging by their posts) have experienced such great service in any field, let alone in the investment realm. Feel free to publish if you wish.

Here is the question and your answer for your reference:

June 19, 2014 (asked by Paul)

Question: Good Day 5i Team,

I am a new investor who is starting late in the game, I am 49. I will be investing $700/month into my wife's TFSA and $700/month into my own TFSA. I have trading authority on hers. I have reviewed the Model Equity Portfolio and am fine taking risk in order to grow my investments over the next 15 years, not much time I understand but better late than never right?. My questions are:
1. Do I buy 1 stock at a time each month with the $700 ($1400 total between the 2 TFSA's) or should I wait and buy every 2 months so I have a larger dollar amount to make a larger purchase and also reduce my trading fee?
2. Is it better to spread the $700 ($1400 total) every month equally between 10 stocks and just purchase the same 10 monthly?
3. Do I limit myself to only 5 stocks in different sectors with one of the above scenarios?

Or do you suggest something else?

Thank you very much. I know that these questions might seem remedial but I would sure appreciate some guidance.

Paul

5i Research Answer:

We take all questions :)

In this situation, even with low trading fees, we would wait two months and buy a larger amount of one stock. Spreading the amount amongst many stocks would be quite expensive on a fee basis. It takes away from diversification in the short term, but because you will investing on a regular basis your diversification will improve each month (buy a new stock every two months). In addition, volatility will be your friend: if the market declines, even better for your situation.

You may want to start with a market ETF such as XIU in the short term for 'instant' diversification. Then, your portfolio will not be just 1 (2,3,4,5) stocks. Adding stocks after an initial ETF purchase may serve you well. We would go beyond 5 stocks, but there is no need for 20 under this scenario.

If you stay disciplines, 15 years is still a very good time frame. With regular investments and growth you may still do very well.

Q: I recently bought VIG in CDN dollars as I was uncertain if I could do it in USD. Before proceeding with any additional US Stock/ETF purchases ,I would like to better understand what approach you would recommend . Firstly, I am new with managing my own investments, I recognize the exchange rate will be a factor and then I am wondering when I do sell in the future, do I have a choice in which currency to receive the funds in? Thank you for your assistance.Elizabeth

Q: Do you worry about another crash like in 08-09? If so do you have any thoughts about how not to get hurt?

Q: Thanks Rod for your great tongue-in-cheek comments, which mirror my own investing journey closely. Your Traders Anonymous group will likely be small, however, since most of us don't see the foolishness of our hyperactive trading until we are "really old" (over 45 in your youthful estimation).

Q: Good Day 5i Team,

I am a new investor who is starting late in the game, I am 49. I will be investing $700/month into my wife's TFSA and $700/month into my own TFSA. I have trading authority on hers. I have reviewed the Model Equity Portfolio and am fine taking risk in order to grow my investments over the next 15 years, not much time I understand but better late than never right?. My questions are:
1. Do I buy 1 stock at a time each month with the $700 ($1400 total between the 2 TFSA's) or should I wait and buy every 2 months so I have a larger dollar amount to make a larger purchase and also reduce my trading fee?
2. Is it better to spread the $700 ($1400 total) every month equally between 10 stocks and just purchase the same 10 monthly?
3. Do I limit myself to only 5 stocks in different sectors with one of the above scenarios?

Or do you suggest something else?

Thank you very much. I know that these questions might seem remedial but I would sure appreciate some guidance.

Paul

Q: Hello,

I have invested in your stock portfolio (thank you) plus I added CAM and EFN (5% each similar with the others in the portfolio).
I have around 150k more to invest. Do yo suggest adding to the existing portfolio or adding new ones?

I was thinking about SGY, AVO, CXI, EH, CFN, WCP are they worth an entry point at their current prices or I should hold and hope for a dip? Do you have any other suggestions? I'm looking for growth, my biggest challenge is knowing when to sell.
BTW this is a non registered account.

Thank you for all your good work and patience
Marios

Q: Peter; After looking back on my trading activity for the past six months I think a new self support group
would be a good idea. Even though I am up roughly 25% If I had kept my finger off the buy/sell button
i would be up about 35%, not counting trade costs. So for those who have the same problem welcome
to TA.COM - TRADERS ANNONYMOUS.COM-. Stop watching BNN.COM , reading the Globe and the Post, listening to every pundit and paid shill about why you should buy and/or sell a stock. Buy and hold
dividend paying companies that have a long track record of increasing earnings and dividends. Buy ETF 'S that mirror the general economy both locally and internationally. Balance them equally and forget about them until you are really old- say 45- then rebalance every 5 years. This is likely as hard as quitting drinking, smoking or gambling but the rewards will be worth it. Meetings will be ervery Friday after the market closes
and admission is a copy of your trading records for the past week.
This is obviously tongue in cheek and publish if you wish and add any comments.
Rod

Q: Good morning; When might I expect to see stocks like Badger, Painted Pony etc on the BNN ticker tape ?

Q: Hi Peter and Team,
I consider myself a short term, medium to high risk investor with perhaps some long term investments (more long term once I hopefully make some money!). I only have $20,000. to invest and would like your opinion of the percentage I should allocate to each equity. Should I stick with 5%, 20 stocks, $1,000. each? Or perhaps something different 10%, 10 stocks, $2,000. each, to be more profitable? Also would you recommend a mix of small cap and large cap stocks in a well diversified portfolio?
Thanks for your Great Service!
Brenda

Q: My question is on market cap balance / diversification in a portfolio. When I google market cap definitions, I came up with the following from a couple of sources:

Micro: < $300MM
Small: < $2BB
Mid: < $10BB
Large: $10BB+

Using this metric, my portfolio split for Micro-Small-Mid-Large is 10% - 35% - 25% - 30%. Since I am a young investor (30) who doesn’t need cash anytime soon, making regular contributions to my portfolio, long time horizon and higher end of risk threshold, I was ok (prefer!) the small cap bias. Especially with 5i research giving me insights on everything I own.

Having said that, I was going through some old questions in the members forum and found one where 5i defines market caps as, based on Cdn / Us Equity:

Micro: < $50MM / $75MM
Small: < $250MM / $500MM
Mid: < $1BB / $5BB
Large: $1BB+ / $5BB+

Using THIS metric, my portfolio split for Micro-Small-Mid-Large changes dramatically to 1% - 9% - 20% - 70%. This strikes me as very conservative as over 2/3rds of my portfolio is large cap.

My questions are:

1. Is the second breakdown described the correct way we should be looking at market cap definitions?
2. What would you suggest is healthy Micro-Small-Mid-Large cap split for my general investment profile?

As always, thank you for this excellent service!

Q: Is it possible for you to post your conversation with Globe & Mail from yesterday on the website?

Q: Hi all,

I am certainly learning a lot from this site. Is there a preferred time of day to place an on-line order and do you recommend setting a limit price when placing an order? My orders are going through at the high of the day.

thanks,
Janice

Q: I often read a comment from traders along the lines of "this stock is not a buy and hold --it is a stock you trade for profits " Can you suggest a few stocks that you " trade for profits " Thanx Robbie

Q: I just thought I would add a bit to Jeremy's question in regards to making a " In Kind" transfer of shares from a margin/cash account into a TFSA. This move is considered a deemed disposition by CRA and any gain is taxed accordingly however, what is interesting is that if shares that are in a loss position are transferred to the TFSA CRA does not allow the tax loss (so gains are taxed but you don't get the tax benefit of a loss) something to consider before moving shares that currently are down.

Q: I bought some BIP_UN@$44.46 yesterday in last 5 mins of trading. LevelII at BMIS indicated a 3cent spread to the best bid. A large # of shares changed hands in the last 5 mins at$44.29 where it closed. How does this occur? There are a number of exchanges listed in closing TX's. Is there a big sell order placed which chews thru the bid stack? How might the seller decide on his limit price? Can you tell me if BIP_UN is in a TSX index?
Thanks for the excellent info you provide.
Ernie