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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 currently hold a significant amount of U.S. cash in my US dollar RSP. With the latest
surge in the Canadian dollar vs the US dollar can you recommend any strategy that can
offset further decreases in the value of my holdings in Canadian dollar terms in the short or medium term? I am 71 this year and I will have to convert to a RIF by the end of this year. Given the current geopolitical environment and extreme weather in the southern US the likelihood of any US dollar appreciation or strength appears dim in the near term. Would holding gold or gold producers help to hedge my US position?
Thank you for your advice.
Read Answer Asked by Oleh on September 07, 2017
Q: Hi team, what is an income investor to do in a rising rate environment? What are the sectors and equities that will be most impacted and what are the best sectors to invest in? Do you have any specific stock recommendations for income? I currently have many of the canadian banks, utilities and telcoms which have all taken a hit.
As always thanks for you advice.
Nancy
Read Answer Asked by Nancy on September 07, 2017
Q: Good morning Peter, Ryan, and Team,

Could you give two or three Canadian stocks in each of the following sectors that look to be compelling buys today?

-Consumer Discretionary
-Financial
-Health Care
-Industrial
-Information Technology
-Utilities

I may already own some of your suggestions but would be comfortable adding to positions if my weighting is reasonable. (my call).

Thanks in advance for steering us through turbulent times!
Read Answer Asked by Jerry on September 07, 2017
Q: Hi, This question is also triggered by the sharp rise in Canadian Dollar over past 2 months. Canadian companies which trade on both CDN and US exchanges have seen their share price lag on TSX. Shopify is an example, which has seen a spectacular move in US Dollar terms but not so much in CDN Dollar terms.

This disparity in dual listed stocks was so pronounced on Wednesday after CDN Dollar shot up to 0.82 Cents at 10 AM after BOC Rate hike was announced.

Which are the prominent dual listed stocks that come to your mind which have fair share of trading on US exchanges ? I guess, I am trying to position and manage my expectations for price movements of some of my holdings in this category.

Also I have some US Dollar cash balance. Does it make sense to buy/add these stocks in USD instead of CDN Dollar ?

Thanks


Read Answer Asked by rajeev on September 07, 2017
Q: This may seem like an odd question to some but I would like to make sure I actually understand what is being said rather than assuming I do. On business shows guests say, in different ways, they have increased their cash positions or decreasing their equity exposures. Although such statements might seem rather straight forward, can they actually have different meanings depending on who is saying it? All kinds of guests appear from pure 100% equity fund managers to individuals actually managing diversified portfolios for clients.

Assume one is operating with a vision of a fully invested portfolio having 40% fixed assets which includes their cash portion and 60 % equities.

When guests generally talk of decreasing their equity exposure or increasing cash positions is there a standard meaning? Say someone cut their equity exposure by 10%. Would that typically mean their equity position has decreased to 50% (60%-10%) or does it mean they reduced it by 6% (60% X 10%) to 54%? Conversely, how might one interpret a 10% increase in cash?
Some managers talk of maintaining gold positions. If a balanced portfolio manager referred to a 5% weighting in gold would that generally mean 5% of the total portfolio or the equity portion (60% X 5%=3%)?

Needless to say, substitute a higher number and it would make for meaningful differences depending on how you calculate things? Listening to some business show guests, I get the impression it does not always mean the same thing but no elaborations are ever asked by interviewers.

Could you please clarify what is generally meant? Thank you.

Mike
Read Answer Asked by Michael on September 07, 2017
Q: Greetings 5i Research,

It has been said that it would be easier to turn a Newfoundland fisherman into a top banker than the other way around.

When I graduated in 1965, top dental incomes equaled top Canadian bankers' incomes. Today, top bankers earn more in two weeks than top earning dentists do in one year.

What happened? Was the investment in my education a poor choice?

(Not that anyone should feel sorry for dentists who, as a group, have replaced physicians and surgeons as Canada's top earners.)

Thank you for your well-thought-out answers to all my previous questions.

Milan
Read Answer Asked by Milan on September 05, 2017
Q: I want to give my take on DFN, a split share investment vehicle. I realize 5i and probably every other good financial advisor does not favor this vehicle and would not buy this for their clients. Yet people are buying this product every day.

Please let me know how sound these thoughts are or if you have anything to add.

As an investment DFN is a road full of potholes. For one thing, the dividend could be cut off completely for as long as two years, although DFN has never discontinued its dividend. Along with that, the share price could plunge 30% or more. As well, the share price will probably degrade over the years.

Who would benefit from DFN? Someone who absolutely needs the 11% dividend every month in order to pay the bills.

However, they need to be cushioned against the potholes. They need a mental cushion that will allow them to withstand sharp drops in the share price, as well as survive a disappearance of the dividend for possibly as long as two years.

Therefore, besides the right mental attitude, they need a cash back-up that would replace an absence of the dividend for two years. On a 100k investment they would need about 20k in cash to replace two years of cancelled dividends.

They also need to realize that at the end of the day, perhaps only half of their original investment may be passed on to heirs.

I can see people in their 70s and 80s who are prepared for the aforementioned potholes buying DFN, so there may be a demographic tailwind holding up DFN for the next several years. Thank you for allowing my view to be heard, and I appreciate your response.

Read Answer Asked by Jerry on September 05, 2017
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