Investment Q&A

Q: Hello Peter, I have some US cash to invest in an RRSP. Can you please suggest four US 'growthy but somewhat conservative' stocks for a long-term (10+ years) hold. There is no need for current income. Also, I know you've suggested IWO as a US growth ETF. Would you be inclined to favour that for an investment now, or do you think that, with current near-highs and the upcoming election, it makes sense to wait until closer to year-end. Thank you for the terrific service!

Q: what is your current opinion on this etf and its relative position in your portfolio ?

Q: From Oct. 3 : Q: A headline article in Globe and mail " Why it feels like another financial crisis ----" gives a current p/e for the tsx of 23.6 Your macroeconomic report has it at 17. Is this a difference between trailing and forward earnings or am I missing something?/
5i Research Answer:
There is a difference between current and forward earnings multiples. For example, based on data from Thomson Reuters, the current P/E for the TSX is 17.2x and the forward P/E shows 16.7x. Some publishings do not distinguish between forward and current when reporting P/E so one may see differences from time to time. However, the P/E quoted by the Globe looks to be high regardless of the timing perspective. Different services also seem to use different sources of estimates; we do see 23X on some other services, but simply defaulted to Thomson here.

It seems to me that the difference between 17 and 23 is a significant distinction and would indicate the TSX is in overbought territory if the latter is true. A subsequent article in ROB on Oct 4 produced a chart (source Bloomberg) showing the PE ratio for the TSX "Composite" at 23.5 and the highest in 14 years with the widest gap with the US since 2009. Is it possible 5i Research data from Thomson Reuters is utilizing the smaller sample from the TSX "60" or another index to arrive at 17X?
How to know what the true number is for sure?

Q: Hi Peter and team, If interest rates go up in US but down in Canada what is the likely impact on CPD. Also, in a broad market selloff of greater than 10% how strong is the correlation of CPD to the overall market. Thanks

Q: What do you think of taking a position for a 5 yr hold in either of these? If you would take a position, which would you choose?

Thx, Carl

Q: What are the possible ramifications of the Carbon Tax as laid out by the government? How should investors protect themselves?

Q: I have these prefs in my rrsp,they are down a lot,paying between 5.5 and 6.4%,would I be better off holding them and hope they recover or selling them and buying etfs such as cdp,zdv or cdz.Any suggestion you guys have would be greatly appreciated.

Q: Hi,

I read the IMF has warned about the system risk posed to the financial system, including insurance companies, by Deutsche Bank. I own shares in GWO. Should I sell the shares and allocate the money into a safer company. If yes, which company would you recommend?

Thank you!

Q: My friends who invest in the housing I.e rental apartments/townhouses seem to be making outsize returns...I personally feel this is because their purchases are highly leveraged. They require only a 20 to 25% down payment to buy a rental property. I personally think it is much safer and easier using a diversified groups of stocks.. especially with the great advise from 5i.but to make outsized returns one needs to borrow money..Banks give preferential rates for home purchases.whereas equity purchases are treated as riskier investments.What are your thoughts on this? I would also like it if your members weigh in on this subject.

Q: As.noted in the A and A today some of the more speculative growth names Savaria Shopify New Flyer dropped today. Is it sector rotation into oil and gas after the OPEC announcement?
David

Q: I appreciate your comment about the PowerShare s&p 500 low volatile ,one in US dollar and in can. Dollar.Your comment about this ETF,and the pro and cons of having them.Thank you ebrahim

Q: In view of the effect on the market of the unknowns coming up in the next few months - with US election and its aftermath, and good possibility of US bankrate going up in Dec. I am thinking of going defensive. I have quite a few of the stocks listed in both your Balanced and Income portfolios, could you please list for me which of these stocks you would designate as best 'defensive' - (whatever that means). Thanks again, always look forward to hearing your comments.

Q: I have just recieved some new money to invest and woukd like to increase my expsosure outside Canada. Im thinking of a US index fund. Can you please tell me the difference between VUN/VUS, HXS and SPY? Which one is better? Do you think this is a good time to invest in the S&P with it at all time highs?
As always your advice is greatly appreciated.
Nancy

Q: Hi !! It is me again. Would you consider it be time to invest in preferred shares again? If you would you recommend straight preferreds or floating rate? Could you also recommend some? Cheers, Tamara

Q: Any comments on if this ETF as a safe place to park money in an income investment that won't get hammered by interest rate hikes in future, and is not locked in like a GIC (i.e. so it can be turned back into cash readily ... e.g. in case a major sell off in markets presented a buying opportunity).

- pays about 2%
- looking at all historical prices, it seems to preserve the capital nicely -- worst dips were only down 2% and came back up shortly thereafter.
- based on floating rate securities so to me, a rise in interest rates would not be negative for this ETF

Q: OK the Trump effect ... would it be prudent to turn all investments into cash lets say a week ahead of the US election (50 stocks X $10/transaction =$500) and if Trump wins ride out the wave of volatility and then buy back into the portfolios for another $500 hit possibly avoiding the chaos that would follow the Donald into his presidency? If Hillary wins would you expect a positive response from the markets?

Q: I have been a bit worried about the US market, as measured by cyclic PE it seems quite expensive. I have used the recent strength to sell some of my low conviction stocks and take half positions in what I consider to be better companies. My cash is now up to 10%.

My first question is do you think this cash level is appropriate for the market now? My second question is, given a pullback how would you deploy the cash. Immediately on the day of a big drop, say over 200 points on the Dow?. Or try to time the bottom using technical analysis? Or gradually ease into a position starting the day after a big drop in the market? Any other suggestions gratefully received.

Q: I have rate reset preferred shares (bought at $25 / share) which are presently 25% in value underwater because of the Banks of Canada’s unexpected prime interest rate decrease. At the time of purchase their interest rate was 4 to 4.5% & they will be subject to a rate increase in 2019 & 2020. I your opinion what is the chance of their value returning to near $25 in the next 3 years? I am wondering if I should sell the preferred now or hope that their value will appreciate sometime before their rate reset date . Thanks … Cal

Q: I submitted this question last Thursday. But I think there maybe system glitches that some questions get lost. This is a resubmitt:

Your balance portfolio has an impressive returns. Mine is way behind. So I searched your QA database, without success, to see if previous questions were submitted regarding a general strategy on how to migrate my stock/mutual funds/etfs holdings to duplicate your balanced portfolio for getting less hands on investing. I hold perhaps 80 stocks and I share perhaps 15 securities with your balanced portfolio and these are obviously to keep within the constraints of asset allocation. I have about 25% holdings in US companies. Your answer, I am sure, would be of great benefit to those members who are like me, are tired of chasing ellusive returns and wish a steady hands-off approach to investing.

So my questions are:

- Is it possible to give a guide line on how to migrate a portfolio to duplicate one of your portfolios? Do you think by adding few of your covered stocks with A/B ratings be a positive or a drage on performance?

-In searching your data base for questions like this one, using a key word like strategy, would I be able to find answer to such a question?
- Allocating assets between Canada and US in general terms, to enhance returns, without consideration to personal circumstances, what percentage allocation should one invest outside Canada?

Your program has helped me tremendously in focusing my portfolio after many years of haphazard approach to investing. So your help is much appreciated by the many members of this community,

Thanks a lot.

Q: what is your outlook on the market for the next three months and also the next year tsx dow jones and nasdaq?