Investment Q&A

Q: Hello Peter, My question is about rebalancing for optimizing future growth with possible interest rate hikes. I have listened to an advisor who suggests the U.S. is the place to be for a large portion of my portfolio - consumer discretionary, health care with bio, U.S. financials, and technology. I am considering selling my CAD banks, telecoms, REIT's etc. to go into these sectors. Citigroup, Wells, Starbucks, Disney, NXPI Semi-conductors are what I am looking at. I am already in Abbot Labs and a SPDR Healthcare ETF. Does this sound like a good plan to you? Thanks, I so appreciate your opinion.

Q: Good evening Peter,

I would like your thoughts and insight on my below Investment strategy

I am an Investor, not a trader. I believe in owning great companies and never selling them.

I am 52 years old and have been managing our investments through a discount broker for the last 10 years with a Dividend strategy for my retirement.

We have both registered, TFSA & unregistered account's for my wife and myself and we do not have an employer pensions.

All accounts currently have a drip program and the plan is to have these accounts fund our retirement in 8 years.

I realize that the Canadian banks, utilities, telecom, pipeline, reits, ect...will be negatively affected by rising interest rates, which is mostly what we are invested in.

When rates rise, these stock prices will be lower, which I feel for our dividend strategy is good. This will mean via the drip program I will be able to buy more shares and therefore more income when the time comes to retire. I plan to never sell these great Canadian dividend paying companies we own.

Please let me know your thoughts on this stragety

Looking forward to hearing from you...

Thank you Gordon...

Q: How would someone protect their portfolio from a sudden correction?

Thanks

Q: I'm wondering if you could share your opinion on the reported rumblings in the bond markets and the speculation that equity market trouble is sure to follow. The reference is to the U.S. Markets as far as I can tell. Do you think there's a clear and present danger to Canadian equities?
Thanks very much.

Q: Hi Peter, Ryan and 5i team,

How do I make money in a bear market? If we go back to late '08 until mid '09 it was very hard not to albeit temporarily lose money. Are there ETF shorts you would recommend? Do you agree that when the yield curve inverts that its time to head to the exits, or by then will it have been too late? thanks so much for your help.

Q: Hi there,

I worked in the government for 15 years and I am 41 years old. I am eligible to get a transfer value for my service which would be roughly 250k within RRSP limits and 250K outside RRSP limits (or) I can collect an indexed pension pension of approx $2600 (todays value) at age 60. I did the calculation and I find that if I make about 7% I am better off than the pension plan taking the transfer value..Please give your opinion on this. Is this doable? If I do end up taking the transfer value can you suggest how I should invest it? I have a period of 20 years before I can withdraw from it. Would it be appropriate if I invest a portion of it by mirroring your model and divident portfolio? What should I do for international allocation? US allocation? Are there some investments which I can make which are not very market dependant? This is very important for me and I value your opinions. I realise this is more than one question so fell free to use more than one question credit as appropriate to respond. Thanks very much.

Q: I am helping my 82 year old father-in-law to do some self-directed investing (after talking him into selling some higher MER mutual funds). He is risk adverse and has always been in bond funds for safety. So I have him only in bond ETF's CBO, CLF, XBB, and a REIT ETF: ZRE. All held in his RIFF, TFSA and unregistered accounts (the majority unregistered). Is this strategy considered 'safe' with interest rates threatening to rise -or does he need more diversity? Would some small allocation in solid stocks increase risk or increase safety through diversity? Other ideas for his mix? These are pretty well his entire assets other than CPP and OAS income?
Thanks for your excellent site!
Paul

Q: What % range would you consider acceptable ( min to max ) for financial stocks for a middle aged dividend investor with 7 years to work and a goal of building up a portfolio that will pay dividend income upon retirement. I invest in all sectors with ETFs, individual stocks and a small number of mutual funds ( Chow etc ). My portfolio includes small mid cap and large cap, both in Canada and worldwide. I find even non industry specific ETFs are on average 20% in financial stocks. Tough to keep under 20% when you start buying PWF, BMO, BNS, SLF etc.

Many thanks

Paul

Q: I would appreciate your suggestions regarding my asset allocation. I am 74 and have an income portfolio that is 55% fixed income including preferred shares and 45% Canadian equity. The equity component is as follows: 15% financials, 18% reits, 17% utilities, 7% telecoms, 19% manufacturing/industrials, 17% technology, 2% healthcare, 5% consumer discretionary and 0% energy/materials. What changes to this mix would you recommend. Thank you, Barrie

Q: This question does not relate to a specific stock and may not be something you can predict, but would like your opinion on the Cdn. dollar. It has been hovering just above .81 cent mark which is above the 21 day moving average.
I would like your opinion if you think the $ will continue moving up?
Thanks . Enjoyed watching Peter on BNN today.

Q: With all the bubbles building up around us – bonds with negative yields, unbelievable levels of debt, USD artificially overvalued and its reserve status under attack from the Chinese – do you ever consider going into some sort of defensive shell to shelter from the coming storm? If so, what kind of a shell would that be? Do you think the CAD might escape some of the turmoil, due to less sovereign debt? How do you feel about gold?
I’ve been trying to play defense for some time now, by investing mostly (but not entirely) in small cap dividend paying Canadian stocks that can’t easily be shorted, or accessed by large US investors, avoiding financial services stocks, and having some gold stocks. I have thereby missed out on the huge rise in US stocks and bank stocks, but I think in the long run my strategy will probably still pay off. What do you think?
The top ten holdings (in decreasing value) that my wife and I have are KEG.UN, PPL, BPF.UN, CHE.UN, CGX, FCR, BXE, FNV, AW.UN, and GIL, out of a total of about 25 holdings.

Q: Hi Mr. Hodson and 5i,
Our equity exposure is currently 95% in Canadian large caps.
With all this talk about Canada's stagnating economy, we want to trim our can. large caps. We just trimmed Can. banks and Reits by 11% of the portfolio today.
The proceeds are to go into 5i portfolios, US, Eafe and Emerging Markets Etfs.
Please comment on following tentative Percentage Allocations for the large cap and International Sector portion of the equity:
Financials 13%. (Can.)
Telecom, Utilities, Pipelines 11% (Canadian)
Energy+Materials+Gold 12% (Can.)
REITs 4% makes it
Total Canadian large cap = 40%.
Healthcare 10% (US)
Tech+Industrials 13% (US)
Consumer Staples+Discret. 9% (US)
Small cap Etf 3% (US) makes it
Total US Sectors = 35%
Eafe Etf 17%
Emerg. Markets Etf 8% makes it
Total Global Etfs = 25%.
I would like your opinion on the above Canadian large cap 40% + US Sectors 35% + Global 25% equity allocation. Too much? Too little?
The portfolio is for growth, time horizon 5 years +.
Thank you so much.

Q: You may have seen the announcement of aluminum-ion battery technology: <http://www.theglobeandmail.com/technology/new-inexpensive-aluminum-ion-battery-set-to-outlast-competitors/article23829686/>. Understanding that this technology requires further development, doesn't it defeat the investment thesis for lithium mining (particularly as concerns automotive batteries)?

Q: I need help with strategy. I want to sell these stocks ( AC, GPS, MTSN, NLN, QST and TWD) to make room for stocks from the new growth portfolio. Is there some timing stratagem I can employ or do I “Just Do It”. GPS & QST & MSTN are at rock bottom and I think can only go up if I wait. NLN could bounce up (or down) 10% on any given day. TWD was always just a lark. AC has upward momentum currently. BUT! All the stocks on the new list I want to buy could all be going up too. What to do? Any advice on how to approach this will be welcome.

Q: I am at the point where bond maturities are reducing my interest revenue yet do not want to be overexposed to equities (currently at 50% - I am retired). Bond yields are very low. What strategy do I take? Do I reinvest in short-term Bonds hoping for the return of decent interest rates or move up the risk curve and use bond-like equities for better yield?

Q: Hello Peter
Is the shares purchase price the criteria used in order to determine the proper percentage allocation within the portfolio ? if the value of the shares decrease should you add in order to keep the the proper allocation ?
Thank You for the excellent service
Dan

Q: When starting to build the new Growth Portfolio,with $50,000.Is it better or more efficient to buy exact dollar amount ( $2500 per position for ex.) or by even lots? Also, should you start with the 5% positions first and then work you way to the 3% positions overtime?
Thank you very much for your expertise.

Q: what good cash vehicles would you recommend that are liquid and available in discount brokerage trading accounts.I currently have a large cash position as I have zero weighting in financials and oil and gas and don't expect to deploy these funds for 6 months or more.
Reading the questions there seems to be much discussion of $65.00 oil,with the reserve increases that I am monitoring,$35.00 oil seems a more realistic target.What are your thoughts?

Q: "Start shedding the deflationary plays such as utilities, consumer staples and telecommunications because that story has become as old and tired as the bond rally." So writes David Rosenberg in a basically anti-bond pro stock piece in the March 27 Financial Post where he assesses the impact on bonds and income stocks of interest rates rising even slightly. Do you think the 5%+ (growing) yield on BEP would offer a sufficient cushion over most other utilities in the face of rising rates or should profits be trimmed as Mr. R. suggests? Thanks, J.

Q: My question is not about Vivendi per se but rather about activist investors who buy large numbers of stocks in underperforming companies (such as Vivendi) and then pressure these companies to break up into smaller businesses purportedly to boost shareholder value. Does this tactic always have the effect of improving returns for shareholders? Or are there times when it's better to wait until the dust settles? When I think of CP's huge gains after Bill Ackman's involvement, buying this company is hugely tempting.
Robert