Investment Q&A

Q: Hi 5i team

I am look to purchase a diversified portfolio of stocks soon, and I was wondering if you had any recommendations for where to allocate the stocks in my two registered accounts (RRSP and TFSA). I have about 83K in my RRSP and 32K in my TFSA. Could you recommend a strategy, if any, with regards to the following factors:
(A) Growth stocks vs. Dividend stocks (or Dividend Growth stocks)
(B) Small, medium and Large cap stocks
(C) should each account be diversified to some degree with the 10 TSX sectors, or does it even matter which account is chosen if it's all for the same investor.

I am primarily looking for growth with a 20-year time frame

Thank you for the great service

Q: Hi 5i Team;

I cannot resist asking you this question, even though it may be controversial to request a comment on another expert's opinion.

Brian Acker, a regular participant on the BNN Market Call shows, has commented on a speech made by Bank of Canada governor Stephen S. Poloz. The speech was made to the Halifax Chamber of Commerce, and reasons a dim future for the Canadian economy.

My strategy to date, has not included US investments.

With the fall of the CDN $ have I missed the boat for US investments, considering the speech by Governor Poloz?

Your opinion on the described future is greatly appreciated.

Please publish at your discretion.

Q: Hello Peter
I bought NorthWest Healthcare Properties REIT (TSX: NWH.UN) in 2013. I now think it is structured as a Limited Partnership because they pay "distributions" and not "dividends", but their website doesn't actually say so. Are all .UN listings limited partnerships?

Their website does say : "If necessary an extra distribution will be declared on December 31 each year such that the REIT will not be liable for tax that year."

They also say : "In 2013, 100% of the distributions were tax deferred, by reason of the REIT’s ability to claim capital costs allowance. The adjusted cost base of the Units by the Unitholder will generally be reduced by the non-taxable portion of the distribution."

Their table on the website shows "Total Taxable Income Per Unit" is zero for 2013, but it says the amount is shown in Box 42 [on the presumed T-slip]. The distributions I have received are evidently a "Return of Capital".

Does that mean the distributions I received are not taxable in any way and does that mean they won't be issuing a T-slip to include in my tax return? I haven't received one yet and I have received no answer back from my enquiry to the company. I am ready to file my tax return now but don't know if I should wait till nearly the end of April in case they do send one.

Many thanks........... Paul

Q: Further to my question of March10/14, my wife owns Mawer Global Small Cap fund in her TFSA. She was advised by the company that no T3 tax slips would be issued for this fund, as mutual fund investments that are registered(RRSP & TFSA) do not receive T3 tax slips. If this is correct, does this mean that if she decides to invest in individual stocks of global companies in her TFSA instead of using the mutual fund, she will not receive a T3 tax slip either?

Q: Breaking news - BMO is now offering five-year fixed mortgages at 2.99 per cent, slashing its rate from 3.49 per cent.
Exit comment/question - "Say what?!"

Q: Hello Peter...Well, I'm better diversified by sector, now. And I'm focusing on another aspect of diversification of TSX stocks....market cap. This dividend/growth portfolio is made up of 46 companies with 25 large cap, 11 mid cap and 10 small cap. By small cap, I use an upper limit of $1.5 billion, and then mid cap, $5.0 billion....and all the company names are ones reviewed or frequently commented on/answered about. Now the question - does this diversification my market cap seem reason? Or put another way, for a right-on allocation by sector, does this market cap holds okay ? (The main reasons the number of holds is 46 are a result of purchasing matching/similar like securities, Goldcorp and then the smaller cap Primero, and in case of info tech, holding some half positions in 4 companies.)..........Continuing towards 5iR-ing it.
Thanks....Tom M

Q: Hello Peter
I have a policy that no individual security should exceed 5% of the value of my total portfolio. Normally when a stock reaches 5.5% I trim it back to 5% and invest the proceeds in the fixed income portion of my portfolio to maintain a 30% fixed income, 70% equity allocation. Over the past couple of years I have needed to trim shares of TD, RY, BNS, BCE, T, TRP and CU as they have all exceeded the 5% threshold. These stocks are held in an open account, so capital gain taxes must be paid on the dispositions. I know that the value of my portfolio would currently be higher if I did not follow this policy. Is this policy flawed? Should I just let the winners run?
Thanks David

Q: Your model portfolio in small print, for example, auto Canada p&l for 2014 -4.1. I was surprised to see that it was in a minus category since it was the best stock in the TSX. Is there a difference between a March 1st list February PDF and a March 1st 2014 Excel with no list? It has nice big print, and is easier to read. Maybe I am missing something. Please advise.

Q: Hello Peter...I'm interested in learning/improving about entering and exiting holds of stocks. And came across books by Alexander Elder....showing up on Amazon and at the local library. At first glance, the basics are easy to understand, and provide good building blocks. For me, I'll need to show more patience.

Thought I'd mention this resource reference for others.....Tom

Q: Dear Peter and fellow 5I team members, I, for one, appreciate your gentle and courteous responses to members who in the opinion of some ask too simple questions too often. We are the very people who need your conflict free investor oriented advice; I would be unhappy if you felt the need to separate out the beginners you are currently educating to a "forum" with its own agenda.
Thank you, again for your unique and valuable service.

Q: Hi Peter and team,

I have been doing quite well in the markets for the last two years or so, thanks in large part to your outstanding service. I have been an active member from the beginning.

My question is, as of today, if there was one or two sectors you would take profits in, which ones would they be?

Thanks

Stephen

Q: A response to Evan on a forum for discussion.

I have monitored a discussion board for 11 years. I know most have this problem

"head and shoulders above the type of audience that plague other investing sites. "

It is a time consuming exercise to monitor discussion and you must be prepared to eliminate any possible problem. I have the power to delete posts and/or ban posters. I also may be freer to eliminate problem posts/posters than the 5i team might be. I believe my forum is known for no conflict and especially no politics. I do not have any expertise that the 5i team could offer.

5i--I separate this in case you want not to publish this link--I am neutral on it.
I am at http://www.investorvillage.com/groups.asp?mb=6781&pt=m
Bryon in Elmira

Q: hi peter, i currently have my pension in stocks that are split between US and International companies the last year; after the good run they had last year, as the TSX was lagging, but still gaining, i am wondering if know is a good time to re-invest in the TSX and switch to totally TSX equities. Basically i am trying to decide which market has the better potential for large cap stock gains over the next 12 to 18 months?

thanks hugh

Q: Have you ever considered creating a 5I membership forum for members to discuss/debate stock holdings? There are some savvy subscribers here no doubt where it would be beneficial to hear some continued feedback on stocks bouncing ideas/thoughts etc; back n’ forth per your question/answer section, call it an added 5I advantage within your growing readership. Less experienced investors could sit back and observe taking notes/pointers – a learning forum if you may. Of course, having it closely monitored by Mr. Hodson and the 5I team to answer/clarify pertinent queries on stocks would be the main root of creating such a forum. There seems to be a short term outlook by some members on here as is evident by the barrage of questions on stocks on a weekly sometimes daily basis, there seems to be many repetitive questions on the favorite core of stocks with a short term focus which isn’t what 5i sets forth. I’m sure a forum like this might break away some of 5I’s time to give us more updated reports and perhaps blast out by mass email when a company reports on a quarterly basis/earnings etc; that you know will bombard with questions (why not hit many members with one mass email?). I’m sure there wouldn’t be a whole lot of policing to enforce on a forum with certain privileges revoked if the forum got out of hand as this seems like head and shoulders above the type of audience that plague other investing sites. I can’t be the only one to pose this question, your thoughts along this avenue would be appreciated. Thank you.

Q: My daily routine 7days a week.is to read your site,which improve my knowledge.Appreciate your explanation on the voliatility & volume on certain stocks due to index revision.It is very discenting to novice investors like me to see stock like CGX dropped some $1 on 250k volume @ the close. Please provide your expert opinion of the impact to additions(KEL & IFP.A were added) & substractions to the S&P/TSX index Please give us your opinion on CQE & PNE(think results recently released),which were tipped by Rob Lauzon on BNN on mar 13.Thinking of purchasing these few days Txs a lot. Peter

Q: Hi 5i Team,

On March 22 you answered a few questions about unusual last minute trading in BYD.UN, CRT.UN, NAL and ESL. There was significant increase in volume and price spike downwards in the last few minutes of trading on Friday. I was going to ask you the same question about CGX, THI, TD, and HCG. They all have the same pattern: huge volume in the last few minutes of trading, and large price drop at closing. You attributed this to the “TSX quarterly rebalancing” that occurred on Friday. I have a few questions about that.

Why were they all negative? If it is rebalancing why weren’t any price changes on the positive side? Is it normal that on quarterly rebalancing day they all fall?

In one comment you stated: “Several stocks were added to the index, such as Brookfield Renewable and Chemtrade, and others such as Atlantic Power were removed. Index funds and other funds following the index needed to make significant adjustments to their positions, resulting in a volume/block spike.” If they were added to the index I would have expected the price to increase. CHE.UN had over 2 million shares traded in the last few minutes, and was down about 0.5% for the day. BEP.UN also had a few million shares traded in the last few minutes, but was up about 0.5% on the day. ATP was down 2.3% on large volume at the end of the day.

If this is the normal phenomenon on quarterly rebalancing day I would like to take advantage of it if I was planning to buy around that time. When are the remaining TSX quarterly rebalancing days in 2014? I made some purchases on Friday, and had I known I could have waited until the last few minutes of trading.

Paul

Q: Hello Peter....I'd like to improve my timing of trading stocks as when to press the do it, execute button. By trading, I mean buying and selling shares related to an investment portfolio. Any suggestions for me or books/articles to 'study'?
.....Thanks....Tom M

Q: Hi,

I noticed that some days there are unusual big numbers of block trades - as per Financial Post - Block trades yesterday. Is there any special reason there were so many trades yesterday.

Thank you.

Bob

Q: Hi 5i I guess this is a commodities question. Analysts all seem to feel the Cdn. dollar is going to drop quite a bit further over time. Cdn. companies selling commodities at U.S. prices but operating in Cdn. dollars I would think would benefit. But with the Cdn. $ going down does this make a Cdn. company look less desirable to foreign investors Thx Gerry

Q: how to determine what is a good or limit p/e ratio per industry or stock?
Any resource to provide a guideline on historical data?

Thanks.