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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: Hi 5i team.
I have to sell several stocks and claim a capital gain. These of course are winners and I will probably buy all or most back. I was told to wait till trade settles to buy back which of course is several days. With the market climbing almost daily I worry about losing those gains or one or another stock jumping due to news or sometimes no news and not holding it.

I'm a believer in long term fundamentals but think short term technical analysis can be helpful here though I don't really have a good knowledge of this.

My question really is what technical indicators are best in this situation over a several day or week or two span. I have been using an MACD oscillator - exponential with periods 12, 26, 9 because it is available to me and seems simple enough to try to time drop in values (sell) for several days to hopefully buy back at same price or a little lower. Not looking to make big gains but to avoid loss of gains. Thank you in advance for this and all the helpful advice from this service.
Tulio
Read Answer Asked by Tulio on October 16, 2017
Q: Thanks for all you do to help us in the market. Presently I have the following exposure to both Canadian + US financials
- US:PYPL, BAC,C,
- Canadian: BND ,RY,TD.
My exposure to this sector in total is 22% of my US + Canadian Portfolio. I would like to purchase another $100,000 (Cad) in Canadian banks to take advantage of the Dividends. PS the funds are presently in a bank account that collects very low reruns. Should I wait for a pullback? or go ahead without trying to time the market also what is the risk of my exposure being so heavily weighted to US + Canadian Financials? PS Interesting that PYPL has returned 40% in the last 14 mths + BNS just over 30%. Thanks
Read Answer Asked by Terence on October 16, 2017
Q: Interested in placing direct investments in China, Japan & possibly India. Trading market must be US. Primary interest is Technology & Space.
This will be completely separate from our current traditional investments as reviewed occasionally with you over the years. Aside from established players in the above markets, I would consider vertically specialized ETFs that have a strong Bloomberg rating. Please deduct accordingly. Thank you.
Read Answer Asked by Robert on October 16, 2017
Q: Hello team,

A couple of years ago you advised that your 'ideal sector classification' would be as followed:

Consumer Cyclical
Consumer Staples
Retail
Financials
Real Estate
Health Care (CDN)
Health Care (US)
Capital Goods / Industrials
Transportation
Information Technology
Internet / Software
Telecommunication Services
Energy
Gold / Silver
Materials
Utilities

I ask this question every 6-9 months when I am doing sector re-balancing. Given today's market conditions, what would be your ideal weighting for each of these for an investor who has a long time horizon and is a 7/8 out of 10 on the risk scale?

My current weighting breakdown is:

Consumer Cyclical - 12%
Consumer Staples - 9%
Retail - 2%
Financials - 9%
Real Estate - 1%
Health Care (CDN) - 3%
Health Care (US) - 2%
Capital Goods / Industrials - 14%
Transportation - 3%
Information Technology - 8%
Internet / Software - 15%
Telecommunication Services - 4%
Energy - 3%
Gold / Silver - 2%
Materials - 8%
Utilities - 4%

I find myself usually becoming overweight in Consumer Discretionary and Info Tech / Software as most of your top picks are in those categories. Any thoughts on where I should be scaling back / adding to?

Please deduct multiple question credits. Thank you.
Read Answer Asked by Ray on October 16, 2017
Q: Hi there, I currently have no exposure outside of the TSX and the Canadian market. I know ETFs are often recommended as good ways to get exposure outside of Canada but I was doing research into mutual funds and the new Fidelity Insights fund managed by Will Danoff seems like it is performing well. In addition, it sounds like his Fidelity Contra Fund in the US seems to perform quite well over time. What are your thoughts on him as a fund manager and the Fidelity Insights fund for outside of Canada exposure? Also, there is the standard version and a currency neutral version - which I presume implies hedged and unhedged. If this will be a longterm position, which would be preferred between the two? Thanks for your guidance!
Read Answer Asked by Michael on October 16, 2017
Q: In your model portfolios you hold 20-25 stocks. I am selling a home and expect to have about $750K to add to my existing $500K. I have always had a preference for keeping my holdings in a particular company smaller and thus having more diversity than that. In my new plan I would hold about 40 to 45 stocks. I am retired and a fairly conservative investor and focus on income but would add some growth in the new plan. Am I trying to diversify too much?
Read Answer Asked by Albert on October 16, 2017
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
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