Investment Q&A

Q: Hi Peter and team,
While P/E ratios are often used by investors to value a company, many pundits warn against using this metric in every instance. A number of investment gurus recommend using EV/EBITDA ratios. Besides being difficult to calculate, I see that it's not always recommended in every situation. Can you give me an idea which type of stock this metric is ideally suited for and if there is a website that provides that data?

Q: Hello 5i .my question this morning is regarding Ben Bernanke 's replacement.For the past 2 weeks i have been reading several articles concerning this matter.from what i understand the outcome could greatly influence stock markets.even Warren Buffet has stated in public that Larry Summers would be disastrous to equity markets. what are your thoughts and what is an investor to do ?

Q: A general question from a new investor - Do you predominantly use limit orders when buying a given stock?

Q: In response to edward's question re: trading in US funds at TD . To keep your funds in US currency you must call TD Waterhouse and request that the funds remain in US dollars.
Shirley

Q: RSP investment with USD asked by Edward

TD Waterhouse allows investment in USD. You have to ask TDW that you want to keep the USD currency. So you will pay the conversion the first time, then they will invest the USD cash in US Money Market Fund. Whenever you buy, you will see the transaction converted to C$, but someone in their Ottawa office will cancel the currency conversion the next day, and change the trade in USD only, and enter an order to redeem US Money Market Fund for that purchase. When you sell US stock, someone will convert that order back into USD the next day, and enter an order to buy US Money Market Fund with the proceeds. They keep a few people in their Ottawa office to do this. I was told they were going to make an RSP USD account so they don't need to do this manual thing, but a few months passed and they have not done that yet. The point is we don't have to lose currency conversion loss every time we trade, only the first time (which you can achieve by converting CAD to USD, or sell an interlisted stock on NYSE such as BTE RY or TCK), and the time when you want to withdraw funds from RSP as they only do CAD withdraw at the moment.
I found this 8 months ago when I wanted to sell a stock that was halted on TSX but continue to trade OTC in US, and have since use that proceeds to trade US stocks only, trading and investing in AXL MTG FNMA TEN PHH MITK ORI etc.

Q: Re US funds, I pay 30 dollars a quarter toScotia Itrade in my rrif and receive the bank's exchange rate which is a great incentive to trade US stocks.

Q: Companies are buying their shares back.What does this tells us on the long term? Your opinion would be appreciated.Thanks.Emml

Q: Peter; This is for Edward re the RRSP and US Funds. I deal at BMO InvestorLine and once you convert to
US funds to buy US equities it stays in USF. If you sell someting you just request settlement in USF . Rod

Q: Hi. I'm new to the service and excited about the fresh look at research and the personal advice. Would I be wrong to start building a portfolio using the 'A' rated stocks providing they are in different sectors and industry.

Q: Would convertible bond funds such as AVK-N, CCI.UN-T, NCD.UN or CVD-T be safer and/or more likely to hold their value than bond funds or reits over a period of time as interest rates increase and as primarily income vehicles in a conservative portfolio?

Thank you.

Q: If you were considering a US Model Portfolio, what would you do?...am I putting you on the spot?

Thanks, you are great!

Q: Hi folks. If we wanted a more conservative Model Portfolio, would you add any other companies or change the allocation from equal weighting to some other allocation? I would add a fixed income portion of approximately 50-60% and am not looking for suggestions regarding that portion.

Q: Peter - can you explain the merits of the 50-day, 90-day, and 200-day moving averages? Also, what is the best source to acquire this information for individual companies. Thank You.

Q: Hello Peter,
RE: Investment Strategy.
Do you subscribe to a policy of "letting your winners run' OR
Rebalancing to adhere to a 5% weighting ?
Thank you for your response.
Bill.

Q: More for Ted on GlobeInvestorGold: GIG in principle tracks unrealized gains and losses, but a major bug got into their software a few months ago that results in nonsensical numbers for $ gains and losses for periods in which you realize gains or losses, particularly for the specific stock sold. You might note in that situation there is no correspondence between $ gains and losses and % returns and it could be that the % return figures remain accurate, taking account of unrealized gains. I emailed them about it last month and got back a form letter response to the effect that for the low fees they charge (which happen to be far higher than 5i's), they can't be bothered to look into calculation problems. I'm still trying to pursue it with them.

Q: This is for Ted regarding Globe Investor Gold and tracking both share price changes as well as dividend income.

The Gain/Loss option shows $ increase or decrease in the value of a holding and total income(dividends, Interest, roc) to end up with a total gain or loss to date on a stock. This applies to both stocks that were sold and to stocks still in your portfolio.

Hope this helps.

Q: hi 5i,
1) do you think the US housing "recovery" will sustain. a lot of the inventory has been bought by private equity and large funds. now they need a buyer, who will that be?
2) do you think gold has turned, or do you see more downside?
3) do you see a significant correction in the US stock markets coming soon?
thx chris

Q: For Ken. Baystreet.ca provides daily changes to analyst rating of Canadian stocks under the ratings/research tab. It's free.

Q: Hi Peter. Great service. If you could please recommend a daily service that gives analysis' upgrades and downgrades on Canadian stocks, preferably mid to large caps, before the market opens. I am willing to pay for this service. Thanks.

Ken

Q: Hi Peter and Crew,

This is mostly a comment.

I am into my second year of membership and am very pleased with the service. My total question count is under 10 as I tend to 1) ask questions that are quite important to me at the time, and I want to word them as well as I can and 2) I don't want to contribute to overwhelming the Q/A process as I find it so valuable. I also read all the other Q/A's as the answers provide a great wealth of information. I also use the rating reports and model portfolio in my decision making process. All good.

I continue to recommend your service to others.

I actually wrote this note to compliment you on "the depth and quality" of the answers provided. The questions are always answered with a generous amount of background information to provide the foundation reasoning for why the answer is the answer. Most appreciated.

Q. Peter, what is behind the electronic door when I push the "submit button". How big is the team ?

Keep up the great work.