Investment Q&A

Q: 5i Team,

Can you provide a couple of your favourite consumer cylical names please? I own autocanada and magna but have more cash to deploy in order to get to my 10% sector target. I would prefer a couple of US names... perhaps a large cap and small cap for balance. As always, your opinion is GREATLY appreciated.

THANK YOU.

Q: I have been advised to safeguard my recent portfolio increases, which have been substantial, by selling shares equal to my profits, leaving only my original investment amounts. While an attractive idea, I am a dividend drip investor and removing the profits will reduce the "multiplier" effect they should have in a bull market. What would you advise?
David
PS: And of course keep up the good work!

Q: Would you consider offering a "top picks" of 5 or so companies, that get updated every quarter or half year?.

Q: hi team- allow me to apologize if you've answered this ? already.
here goes, will 5i be creating a 2014 model portfolio as well. thanks jane

Q: OK, here's one out of left field for ya! Bitcoin. As a speculative long term investment. It still seems quite shady to me, but there are others who feel it's destined to be the "next big thing."
I know it really doesn't have much to do with what 5i is all about but never the less I'm curious what your guys thoughts are.

Q: I was curious about your recent response to the 'screaming buy' opportunity. I've read a few of your responses about potential 'up and coming' companies that people have inquired about. They don't fit your requirement for a full recommendation but they probably peak your interest as a 'company to watch closely'. Maybe you can a category named in that way....ones on your 'watch List'. That way we know you have an interest in them but you are not giving a 'recommendation'. It would fit all those young companies that have some promising statistics. Just a though. Such a great service ....thanks.

Q: I have become a member recently and want to create an additional portfolio to my investments. Although the model portfolio was created a while ago, can i consider it as a model portfolio to start with if i were to invest today? And if so, do the ratings for each stock reflect the potential as of now, or should I pare them based on the YTD gains?

Q: We've talked in the past about screaming buys and it begs the question, how would you disseminate word to the members if you came across any stock that was, for one reason or another, a compelling buy. Indeed, would you even tell the members?

Q: Hello to all.
OK so this is the first adjustment in the model portfolio (AYA) ... I thought any moves would be much more dramatic,my allotment is not as precise as yours due to re-buying my dividends into Goldcorp and also I had DRIP which also has taken me away from exactley 5% holdings. Should a fella just stay where I am at or drop some Amaya. TY and thanks for the 28% !!!

Q: When I analyze the 5i Model Portfolio and the assignment of securities to sectors I see that some stocks get tagged with "Services" which could just as easily be tagged with something else. For instance AYA and CSU ("Services") are ones I would tag "Technology" along with ESL and SYZ and if they were thus tagged it would make Tech a 20% portfolio weighting based on cost and 23% based on current value (Sept.30). If you agree with this assumption would it be an indication that 5i highly favours the Tech sector over others, even though Tech is less than 2% of the TSX Composite? There's no doubt the performance of the 5i portfolio going forward is going to be vastly different than the TSX where 72% of the composite is Financials, Energy and Materials.

Q: I really appreciate your service guys.

I have a few stocks that I have made very good gains on this year. RFC.V, CSU.TO, STN.TO are all up by more than 45%. I see more upside for all of them. I was wondering from your guy’s point of view would you sell a portion of these to insure your gains or do you also see good upside on these stocks and would you hold on for now.
Thanks

Q: Could you give me your current view on Vale. I have concerns on it and am considering selling it and buying Pembina or Riocan. I am looking for long term capital stability and reasonable dividend.

Q: Cross Trades: - - could you please explain to me why a specific house cross trades LARGE amounts of shares to itself? Why is it done and what are the consequences? Are they covering a short position or another scenario? Thanks in advance.

Q: This is a response to Lotar's question. The fund would be prohibited from charging duplicative management fees. However, while a 2.3% MER might be in line for a Canadian equity fund, it is excessive for a Canadian bond fund, which is where the mutual fund on top has most of its funds - given the current interest rate situation, it may be almost impossible to make any money on the bond portion of the portfolio with that high an MER. Generally the higher the MER, the more that gets kicked back to the adviser, possibly the biggest conflict in the investment industry, one that has been banned in some countries and the Canadian regulators are considering banning as well on the basis that disclosure has been ineffective. With a 2.3% MER, probably 1% per year gets kicked back to the adviser (that would be disclosed in the mutual fund prospectus). For the adviser to put the money into a "balanced fund" like that rather than allocate the money between an equity fund and a bond fund most likely indicates incompetence or lack of integrity on the part of the adviser.

Q: What would you recommend as a first time investment for a young teanager that has about $1,000 of savings to invest?

I want my kids, who are in their early teens, to have some direct experience with investing; note that they are interested in this idea.

My goal is have them learn of the benefits, and risks, through some direct experience.

Also, what investment learning resources you would recommend?

Regards, Craig.

Q: ETF Short List question asked by Orion on Nov 1/13:

Horizons Funds has a seasonal ETF fund HAC.TO which came out about 3 years ago at $10 and it is now $13.59. The managers use seasonal and technical analysis to enter/exit positions. The managers (Brooke Thackery, Don Vialoux, and Jon Vialoux) appear regularly on BNN.CA video interviews. Thackery authors an annual manual on seasonal investing and has a free monthly letter and mid-month videos promoting the funds activities. Don Vialoux publishes a daily free letter at www.timingthemarket.ca where other ETF/seasonal articles exist. Also check out the structural differences between ETF's and ETN's. Yahoo finance has a components link to assess an ETF's components and weights. Trading volume of an ETF might also assist in determining 'best in class'.

Q: I have a mutual fund question, about a specific fund but more from an investment understanding perspective than picking on that fund. I know you're not fans of them, and the more I learn, the more I understand why (which is why I'm in the process of weaning myself away from our "advisor").

Our advisor has about 75% of my wife's $90k RRSP in a specific mutual fund, let's just call it Fund A from Company XYZ. This fund's investment objective & strategy is to "generate income and long-term capital growth by investing primarily in a diversified portfolio of Canadian dollar denominated fixed income securities". The funds top 30 holdings -- in fact, its top TWO holdings!, are 62% Company XYZ's (i.e. the fund company's) Bond Fund, and 37% Company XYZ's Cdn Dividend Fund, leaving 1% for everything else (unspecified).

Does this mean I'm paying the MER twice, once at the level of the fund itself, and again at the level of the constituent funds?

Would this situation, in isolation, be enough to get me out of this fund?

The funds MER is 2.3%, and its total return since the advisor bought it in July 2012 is 1.1%.

That certainly sounds like a good reason to get out of this fund especially and in particular.

Thanks again for all your investment advice, we beginning investors really appreciate it!

Q: Peter;
It was a pleasure meeting with you at the Money Show in Toronto.
As discussed, I was looking for a useful Software Trading platform to be used in conjunction with the on-line Gold Circle program provided by RBC. The two I found interesting & am now trying out are Worden Brothers, Durham NC USA "TC2000" & Inovestor Inc "EVA" from Montreal. Will give you my assessment of both next month.

Q: My father has a GIC coming due and is thinking of principal protected notes to add more equity without the risk. Whould you recommend this over an Etf?

Q: Hi Team, I've noticed some people ask you "If you were to cover this company then what back of the napkin rating would you give it", I like it when you give us a rating, it makes it easier to understand where that company stand on your point of view, I find it easier that way, compared to trying to understand some of your answers and reading between the lines. Now this is only a suggestion, because I know you already give a great service, but if you could put that rating when possible, it would help me out a lot in understanding you answer. If this isn't possible, I'm also ok with it...keep up your great work, and thanks for being there for us novice investors.

Post this if you wish (up to you).