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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,

Are there any recent studies that you would recommend regarding optimal diversification (not CAPM)?

It seems these days that in bad markets everything falls regardless of sector, region, size etc. So I am trying to figure out if it’s worthwhile holding “safe” securities that return a fraction of what higher growth names would-since these safe plays still fall significantly in down markets, albeit much less than the high fliers.
Specifically, I am interested to see if someone (reputable) has proven that in the long run (10+years) it is worth holding ANY slow growth stocks returning say 5% per year and “only” fall 25% in down market versus having an aggressive portfolio of high growth stocks returning 20+% per year but fall 50% in a down market. I would think the compounding of high growth portfolio would more than offset the larger loss in a down market-but looking to see if this has been proven.

thanks!
Brad
Read Answer Asked by Brad on October 04, 2021
Q: I am trying to understand the impact of a 75% Capital Gains inclusion rate. Today with a 50% inclusion rate, assuming a 50% personal tax rate, you keep 75% of any taxable gain. With a 75% inclusion rate you would keep 62.5%, or 16.7% less. Is my math correct?

In a 75% inclusion rate, can 75% of the loss be used against gains? ie. a $100 gain would be offset by $100 loss meaning no tax would be due just as it is today?

If this is true, you may be best to lock in gains and save 16.7% if its a holding you plan on selling in the next year or two anyways. You can always buy it back immediately after locking in the gain. 16,7% seems significant

On the LOSS side, it seems more black and white. Today you can claim 50% of the loss and if there is a change to 75% inclusion rate, you can claim 75% of the loss next year. If there is no change to the inclusion rate a 50% loss claimed this year or next year is marginally better to claim now but if the inclusion rate changes from 50% to 75% it will be worth 50% more next year. It seems to me you are better off waiting until next year to claim any losses.

Is this a valid analysis or am I missing something.

Many Thanks
Scott
Read Answer Asked by Scott on September 27, 2021
Q: Just to be clear. If I journal a company from my CDN to US account, then the dividends are still subject to the Canadian dividend tax credit, even though they are paid in US funds.

The internet says: "
Since U.S. dividends are not paid from Canadian corporations, U.S. dividends do not qualify for the preferential Canadian dividend tax treatment. Foreign dividends, including U.S. dividends, are subject to tax at your marginal tax rate like interest income."
Read Answer Asked by Lucy on September 24, 2021
Q: Hi team,

I know you are fundamental analysts, but you mention technicals from time to time. I am curious on your thoughts of the RSI as an entry or exit indicator on a stock. I look at it, not so much to see if a stock is overbought or oversold, but more so to judge how a stock is holding up in a bad market. Do you use it in your analysis and do you have a preferred website where RSI data is readily available?

Thanks again.
Read Answer Asked by Dave on September 22, 2021
Q: Owning stocks is by nature an intangible asset. In the event, of lets say, a black swan event such as a cyber threat world wide and all our intangible assets are basically in digital form (as opposed to physical and tangible) what, if anything can an individual owning stocks do, if anything, to make that asset more tangible? I assume the stocks in all your model portfolios have been suggested because of they have been deemed higher rated companies, those more likely to survive any temporary stock market crash. But can we make owning them more tangible or are we fully at the mercy of the Internet?

Read Answer Asked by Lucy on September 16, 2021
Q: Hi team,

What is the value and signification of the Morningstar rating of stocks ? How is it arrived at ? Does it reflect the stock value, safety, potential, volatility ?
What is its utility for retail investors ? Which is the best way to use it ?
How do you use it in your recommandations of stocks, in your growth, income, balanced portfolios ?

Thank you for contributing to my financial education,

Jacques IDS
Read Answer Asked by Jacques on September 13, 2021
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