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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I am retired, living on dividend income and looking for more yield to supplement my income. Thanks to 5i, I recently became familiarized with covered calls and chose ZWU yielding 6.5%.
Now I am interested in Debentures. I recently read in 5i Q&A a question on CSU.db debentures that guarantees 6.5% plus inflation rate to yield 7.5-8%, and your response was that it's a quality security.
Regarding Debentures, are they simply traded like a regular stock with scheduled dividends paid that can be bought and sold as I see fit without penalty?
Debentures seem like a low risk way to get a higher yield as the price hardly seems to fluctuate. Is this an accurate assumption?
Would you recommend for an income investor to invest 5-10% of portfolio into 1-2 debentures for higher yield? If so, can you recommend 1-2 that look most attractive for a 1-2 year hold?
Read Answer Asked by Curtis on October 13, 2017
Q: Hello;
I am trying to understand/develop bench marks for stock screeners. I need input regarding 3 popular criteria; Price/Book; Price/Free(?)Cash flow and Price/Sales.
1. Please confirm suggest hurdle rates; Price/Book < 3.0; Price to Free Cash Flow < 10; Price/Sales ??
2. Which Cdn sectors can use these bench marks. I understand cyclical commodities have great seasonality/cycles and the above are not suitable. Please confirm and suggest sectors.
3. Should it be Price/Cash Flow or Price/Free Cash flow?

Thanks

Read Answer Asked by Shah on October 13, 2017
Q: I opened a self-directed RESP for my new born. Do you suggest starting with ETF's or specific stocks? If ETF's or stock, what do you suggest is a good starting investment and dollar amount for ETF or stock given that we have at least 18 years before needing the funds. If ETF's first at what point do we start investing in specific companies? I guess I'm also trying to get an idea of how to build my sons RESP portfolio.

Thanks.
Read Answer Asked by Jacquelyn on October 13, 2017
Q: Hi,
I am new to your website and service but find it great so far. I have not seen any discussion of stop loss orders. I use them on occasion to protect profits and cut losses, but sometimes with misgivings. Sometimes they save me money from a deteriorating position that I might otherwise be ambivalent about selling. Sometimes I just get stopped out and have to buy back higher. I am always trimming and adding and hence may be viewed more of a trader than a long-term investor, but that is my style. C'est la vie! Anyway, do you use stop losses in your portfolio management or do they not fit your approach to the market?
thanks
dave
Read Answer Asked by Dave on October 13, 2017
Q: I am about to start converting the cash in my sons (he is 21) TFSA and RRSP. He has $1,050 in each account right now and is in his budget to add another $4,000 to $5,000 in 2018. Should I start him with companies like PBH, SIS, ZCL? or should he start with an ETF or two for immediate diversification? Whatever he buys will be long-term holds (unless they are in the model portfolios in which case I will either hold/sell/buy as directed by 5i when you adjust the portfolios) but I would like to see his accounts growing steadily as well and help him get excited about investing. Any suggestions would be helpful.
Thank you as always for the great service and information.

Paul
Read Answer Asked by Paul on October 12, 2017
Q: David Driscoll was on BNN Market Call early last week, and while killing surplus time at the end of the show he underscored the importance of eliminating correlation risk in a portfolio (also mentioned in his point #6 here: http://www.bnn.ca/david-driscoll-s-top-picks-august-21-2017-1.835439 ). If I understood him correctly, this would mean not holding significant positions in multiple stocks within similar industries or with overlapping product/service offerings, presumably so that if one industry got hit, it wouldn't pummel two or more stocks at once and do damage to the portfolio as a whole.

Is this the thinking behind you not holding CSU and OTEX simultaneously in any of your model portfolios? Are there any [other] noteworthy correlations of this sort between any of the other stocks you cover and routinely recommend?
Read Answer Asked by Peter on October 12, 2017
Q: I currently have a little over $250,000 in cash which I want to park in a "no risk" account.
One of the big banks has a deposit rate of 1.15 for $250K and 1.05 for less than $250K. My first question: Is this my best option or can you recommend something else? My second question: should I be concern with the CDIC Deposit Insurance limit of $100K and spread the deposit over 3 banks?
Read Answer Asked by micheal on October 12, 2017
Q: Further to the cash balance question of Oct.10, iTrade has a superior product to the cash optimizer 0.25%. It is the Scotia Investment Savings Acct. run by Dynamic, so technically a MF, symbol DYN1300, min $1000 paying 0.95% (same as TD's ISA).
Tangerine often has special temporary deals for large cash amounts to 500K (current one is 2.5% till end Dec.). I don't deal with RBC but you could probably find something competitive with the above rates if you poked a bit.
Read Answer Asked by Jeff on October 12, 2017
Q: The question of what to do when one is worried about the possibility of a sharp market correction often arises. In the past you have proposed increasing the portfolio allocation to cash. As a complement to that strategy, what about tilting the portfolio more toward low beta (less than 0.5, say) stocks? I’m thinking of stocks like L, ECI, CSH.UN, KBL, SJ, SLF. How much protection - qualitatively speaking -do you think that would provide against the possibility of a sharp correction of, say, 10-15%?
Read Answer Asked by Philip on October 11, 2017
Q: Hello Team,

I have a regular CDN TFSA, with $43,000 invested, and i have a portion of cash allotted to a USD TFSA with $15000 invested. Between the two i need to generate safely with minimal risk $300 dollars per month? Can you suggest some income producing strategies that could help me obtain my goal? please include some equities.

Are the US and the CDN TFSA'S treated the same for tax purposes, when withdrawing investment income? charge me as a two part question!

Thanks,
Stephen

Read Answer Asked by Stephen on October 11, 2017
Q: This is further to the question asked by Maurice on Oct. 10
My brokerage (BMO) converts dividends from US $ to Can. $ for Canadian stocks that pay in US $. I have asked that the dividends not be converted thinking that the brokerage must be making money on the automatic conversion. Can I demand that they not convert the currency? If there any benefit in having them convert it?
Read Answer Asked by Helen on October 11, 2017
Q: I am new to this website but really enjoy the Q&A. A lot of people seem to target 5% as a full position, or 20 stocks. Your portfolios target 20-25. Over the years, my target has been 12 -15 stocks, or 7-8% being a full position. No particular reason, other than willing to take a bit more risk and easier to manage a smaller portfolio. In any event, how big would you let a winning position grow before you started trimming back to your original full position? SHOP being the current example of a stock that really took off but is now falling back.
Thanks for your great insight.
Read Answer Asked by Dave on October 11, 2017
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