Investment Q&A

Q: What are your thoughts on using covered call ETFs to increase the yield of a portfolio?

Q: There was a report from CIBC strategist titled " The Benefit Of Unhedged U.S. Equity
Holdings Is Moderating" due to persisting weakness of USD and the likelihood of USD remaining weak ( and decline more over time ) against CAD and other major currencies, as a result of Trade/Protectionist policies of current administration, for next 2-3 years.

The report also noted that traditionally CDN Mutual Funds, holding USD securities, were mostly rewarded due USD strength historically against CAD, resulting in superior performance in CAD terms. Also, CDN companies with sizable business in USA, also benefitted, as they report in CDN.

We noticed this in our USD Investment Portfolios, where YTD performance was lower by 7-8%, when converted in CAD, compared to its USD performance.

So, it's a two part question.

1. What is your view about about the weak USD thesis and whether it's always best to leave the USD stock portfolios, as is, since over long period of time, currency fluctuations cancel out to a Neutral.

2. If you concur with the CIBC strategist thesis, what are the possible options to Hedge the USD positions, for a Canadian retail investor ? ( Considering, MF portfolio Managers have access to sophisticated options )

PS: Since 5i team, manages a large fund of USD small cap, it might be specially interesting to have your thoughts.

Thank You

Q: Do you think if US tax gets approved then lots of international investors would sell off US dividends stocks or it would impact all the US stocks.

If there is impact do you think international investors would move to CDN or Europe or which markets they would invest.

Thanks for your great service

Q: Materials sector in Canada or US
In my 80s and we have very little to no exposure to any companies in any of the Materials subsectors.
I know that at our age we should probably invest conservatively and consider capital retention as imperative, but the advisers we had in our early income generating years had that strategy and we missed out on massive growth.
Since becoming a member of 5i, I have become bolder and made up a little lost ground, so I have some appetite for growth, but steer clear of absolute gambles.
What would you suggest for any stocks in the materials sector, where there is a moderate dividend, but ample room for growth?

Q: I’m trying to understand the impact US tariffs - and in particular tariffs on steel and aluminum - could have on our economy and certain companies. Tariffs make goods going into the US more expensive which means US costs increase. These costs a would normally be passed on to the purchaser or the purchaser would look to a new, cheaper supplier. If the US can’t produce enough of their own steel and aluminum and since this new tariff affects all countries doesn’t the US still have to buy from Canada? Excess capacity in the US could make up the difference but is there that much excess capacity there? And for something like potash which I think is irreplaceable don’t tariffs on that product just harm American farmers?

Appreciate your insight!

Paul F.

Q: I have read a synopsis of the recent Ray Dalio book, a guy who has a solid reputation in world wide financial circles. He sees 3 years max at the current rate of spending until the a U.S. hits a wall and serious defaults begin to happen,and the U.S. dollar gets hammered.I have no confidence that Carney can make any positive moves here in Canada to improve the economy . He showed his hand today. Everything will come back to his climate change issues, and dealing for years with native tribes, which will stall investment,and retard any hope of significant positive change. So, as an aging senior where do I go to best protect my capital here in Canada…..Gold, bitcoin, Swiss francs ?I’ve been a market investor for 55 years. Seen pretty much everything. I’m wondering if this time it really is “different”.
Thoughts?

Q: this breaking news from last night caught my attention - tRUMP does not have authority to impose sweeping tariffs against Canada and other countries, rules U.S. court
what will be the outcome of this for the US stock market???
but the US Supreme Court could over rule this over turn the lower court ruling as the majority on the Supreme Court favour tRUMP
Is it a time to but US stocks???.......thanks for your insights ...Tom

Q: There's been a lot of noise lately about widening bond market spreads and their potential implications. From your perspective, is this a meaningful early signal of broader market stress and if so, how might it impact public equities in the months ahead?

Appreciate your take.

Q: Given today's unsettled economic atmosphere, which investment sectors would you favor and in what proportion?
Many thanks for your stellar service!!!!!!
brian

Q: Update: According to BMO Investorline, item 2) below is not an option. The CRD has a different CUSIP (59516M104) than the NASDAQ listed stock (5949181045). Apparently this is true for almost all CDRs.

Hello,
I have 60 shares of MSFT in a non-registered account, and want to sell 18 shares to raise cash of about $11,300. I have capital losses in the account to offset the gains, so there should be no net tax.
To minimize transaction costs, I am considering three options:

1) Sell MSFT directly, and then use Norbert's Gambit to convert to Cdn$
2) Convert the shares the CDR equivalent, i.e. MSFT.CA and sell that in Cdn$ (not allowed according to BMO)
3) Sell MSFT for USD and then have the bank convert the shares (~1.6% conversion loss)

Which of these do you recommend?

Q: Curious how you think the dollar will do this year? Is it time to take some of my US ETFs and buy the CAD hedged version?

Q: Hi group what the suggested strategy to deal with proposed increase in withholding tax . I am hesitant to buy any more us stocks in my non registered +TSFA accounts ...maybe even sell some? i know we should wait until the prosed increase happens ...looking at US verses Canada stocks in general. Presently CAD are doing better so selling and replacing with CAD stocks may just work out just fine ...thoughts

Q: My question is on portfolio management, trimming rather than selling.

I'm hearing and feeling that some sectors and companies, or even countries like the US market, are a bit expensive, ahead of their skis, and might well be trimmed. I have done so for gold, for example.

I would like your opinion. Even if you don't agree with the premise, what areas would you trim on that basis.

Lastly, can you suggest some areas that do not fit that premise and are under-valued. I think this of oil and gas, for example.

I'd be grateful for a detailed answer on this and would be happy to spend a few points for it, as you see fit.

Thanks, as always, for your wisdom.

Q: How serious do you feel the aggregate global debt situation is? I have read that the total is now well over $300 trillion USD. Government and consumer spending seems somewhat out of control in much of the world. Let's put it this way -if the Earth was part of an interplanetary federation, would the aliens' financial authorities think we are heading towards bankruptcy?

Q: A lot of talk that the Private Equity market is a bubble about to pop and cause deep challenges. Any thoughts? Jamie Dimon very vocal about stagflation and again, a pop perhaps likely to occur. Any comments and insights would be welcome.

Q: Just read this in Globe and Mail - Canadian individuals who own U.S. securities directly are subject to a 15 per cent withholding tax rate under the current treaty. Under the new bill the withholding rate could ultimately rise to 50 per cent.
If you were me, what would you do???......tom

Q: Hi
How is Section 899 of the proposed U.S. 2025 tax reform expected to impact Lumine Group (LMN) in the short and medium term, particularly in terms of tax liabilities and profitability, given that it is a Canadian company operating in the U.S.? Do these potential impacts make LMN less attractive as an investment at this time?

Q: Hi 5i, thanks for the Market Update report today. It would be great to redo this employment analysis breaking out public (government) vs private (taxpayers) jobs. Thx.

Q: Hello 5i,

With the USA facing a Trumponomic meltdown, do see an advantage of purchasing CDR's for US stocks today?

What is the recommended % of a portfolio for Canada, USA, Europe, International, and Emerging markets. It looks like a little more global diversity may temporarily dent impacts from USA rhetoric and threats.

Thank you
D&J

Q: Where do you see US Treasuries going over the next 6-12 months, given recent weakness due to massive American debt. Is it a reason to exit US assets, including stocks, or do you see the problem resolved somehow? Is it a simple case of the US Treasury Market simply being too big to fail? Welcome your insights. Thanks as usual.