Investment Q&A

Q: I don't know if you would be able to answer this question here..

We (myself and wife) have an operating company (software consultany) and a holding company ( transfer any savings and then invest ).

What are the benefits of adding my kids ( who are now around 19 ) as preferred share holders? Is there an article on canadianmoneysaver around this?

Q: Hi Guys,
Great insights!
Would you feel comfortable putting all your money into the model portfolio?

Q: hi team,

What's your view on low vol etf vs. using dividend etfs

Q: I have cash in TD's Premium Money Market Fund yielding .81 % and I am considering putting the money in Ing Direct Savings Account paying 1.35% interest. Are there risks which I am unaware of as the yield difference is considerable. I frequently sell funds to cover stock purchases and the TD money market fund is quite active with money flowing in and out. Thanks, Bill

Q: Hi Peter:

I am looking for an entry point to both ESL and PLB
Should I put in a 1/3 position and wait to see in case there is
a pull back in Sept/Oct to add more to my position ?

thanks!

Q: Dear Peter and Staff,
My husband and I have recently received an inheritance of $200,000. We are concerned about the future purchasing power of our pensions and riff income due to the effects of inflation. Please recommend a portfolio strategy (including stocks) that should give us an ever increasing stream of income at a rate that is greater than that of inflation. Many thanks, I look forward to your answer.

Q: Hi Team ; a question on short selling / long conv debs: How does the seller make money- they are responsible for the dividend on the shares and if the shares go up they get squeezed - if shares go down, they could lose on the deb? thanks

Q: Hi team, May I get your comments on Harry Browne's Permanent Portfolio that divides assets into 25% Gold Bullion (CGL), 25% Cash/Government Short Bonds (ZFS) , 25% Stocks (XIC/VTI/XEF/XEC) and 25% Long Government Bonds (ZFL)? This mix of assets is supposed to protect the investor through the different phases of the economy ie inflation/deflation/recession etc. Does this seem like a reasonable portfolio mix for someone that will retire in 15 years? 25% in gold bullion and 25% in Long Term Bonds seems like this would be a very risky mix going forward.

Q: Re GIB.A: is this an example of noise from sell side analysts?

"Deutsche Bank downgraded CGI Group to Sell saying the company's aggressive accounting has driven much of the reported margin improvement. The firm says CGI's top line growth is weak and lowered its price target for shares to $24 from $32." (Sept.3)

What I don't understand is: why not just say the outlook for the company is poor or shares are overvalued rather than smear the company's accountants? Any thoughts? J.

Q: Peter if you could add 3 extra names to your model portfolio for long term growth with a dividend or without a dividend (value, growth) what would they be at this time?
Tks

Q: Hi Peter & 5i: Just a suggestion and a few comments on tax loss selling and superficial losses. The suggestion is that something like "strategies of tax loss selling" might be a useful portfolio management blog topic.

The comments are these: If you are worried about the superficial loss rule when selling a stock that is down significantly, think hard about what you might want to do. Imagine you have sold the stock and you now have the proceeds in cash. You can take that money and do whatever you want with it. You can invest in any stock within your discount broker's universe. With that kind of potential at your fingertips, does it really make sense to buy back the same stock that you just sold? What would that decision be based on? Is it any different than your thinking if you had not sold it but were coming to the market with new money?

Second, if you are selling something that is down because an entire sector is down and what you are concerned about is not having exposure to the sector (e.g. golds), in many cases you can pick a different stock from the same sector that is down for the same reasons. There are a number of good gold stocks that have all been trashed this year. If gold goes back to $1800, they will all have blistering upsides, not just the one you might be selling to crystallize the loss.

If I try hard enough I can imagine a situation where I might have a strong conviction that an underperforming stock is just about to turn around (within the next four weeks!) and rocket higher. It pretty much has to involve a significant catalyst event that I am evaluating correctly but that almost everyone else is missing. That is an extremely rare circumstance and not one that usually applies to tax loss candidates. One option of course is not to sell the stock. But investors should probably be wary about being guided by an emotional attachment -- of not wanting to part with a stock that has hurt them "just in case it might go up." If "just in case it might go up" isn't a good enough reason to buy a stock in the first place, it probably isn't a good enough reason to buy it back immediately after selling it for a tax loss.

Q: Hi Peter. I am thinking about tax loss selling season which may get underway soon. Could you tell me if the 30 day rule applies if you sell a stock out of your cash account and repurchase it in your RSP or RRIF? Thanks for your help.

Q: Good Afternoon to all
TD Bank issues step-up notes callable every 6 months by issuer. A new issue October 2013 due October 2018 pays from 2.40 to 3.40 over the period. Considering the current low rates and risks of bond ETF'S would you recommend a small purchase 3% of total portfolio in this issue?
Thanks

Q: Re: Superficial loss rule
I hope you haven't previously answered this question. I scrolled back a long way and couldn't find it. If you have then please just ignore the question.
Can one sidestep the 30 loss rule by selling at a loss in one account (say, a direct trading) but buying back within the 30 days in another account (say, RRSP) or does the rule apply to the individual not the particular accounts? Thanks as always,
Neil

Q: I am a little overweight in utilities and am thinking of selling some TRP. I am thinking of buying AFN, NBD, MX or VET. Do you prefer one over the other? BAD is clearly an excellent company but I get the sense the stock has gotten ahead of itself.

8.3% of our portfolio is in energy - mostly gas (ARX, PEY & BNE) - not sure if I would be getting overweight in energy with the addition of VET.

Your thoughts would be appreciated.

Thanks

Q: This is a repeat of a question that I believe did not get through because of a time out.

It's almost a year since I purchased a 5i membership and will happily renew in Oct. I find the the Q&As most interesting and the more I read I find I seem to be picking up on subtleties. I do have a problem understanding what seems to be a subtlety with the grading system. It seems that 5i considers B- and certainly C+ companies more risky but suitable for income. I would think that someone requiring income would be looking for less risk and security of income.

To give you context I have recently taken control of my investments at a discount brokerage to reduce cost. I'm working toward building a portfolio that will provide 4% annually as a living allowance within a year plus a little extra to cover inflation and the odd treat. I hope I'm not being too optimistic or aggressive.

I now hold B- and C+ with AFN, CS, MCB, NAL and EH and wonder if I should consider replacing. I also hold 12 A to B stocks, a couple of blue chip Canadian large caps as well as ETFs that give me Canadian, US, Global less US and fixed income to round out the holdings.

I would appreciate comments on B- and C+ companies and my use of these as well any other thoughts you may have.

Many thanks,
Brian

Q: Peter,

I have an RRSP question. If you have Canadian ETF's with international exposure, is there a limit on how much of those ETF's should be as a percentage of your total RRSP portfolio. Lets say my Canadian ETF's with foreign exposure are 50% of my total RRSP portfolio, would this be allowed. Thanks

Q: I have $33,000 to invest for 2 years. At that time I may need some income and/or capital from it. I would appreciate any advice you can give on deployment of the cash. Thanks again for the great service and the education.

Q: Hi I must say this is the best information, I ever bought regarding stocks. It has saved me a lot of anguish, and mashing off teeth!! Do you look at companies like SYZ, and AVO, as terrific companies, or do you look at them, as they could be terrific companies. Thank you.

Q: Hi,

New member here but have a question as to your thoughts with regards to total portfolio diversification. Obviously the stock picks and model portfolio on 5i is limited to CDN securities. What would you generally advise in terms of percentage weightings of CDN, USD, and international equities? I am quite "overweight" in the CDN security area and try to purchase USD & international security ETFs to offset this.. Curious what your thoughts here are. Thanks!