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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: Lately, a few analysts at BNN have mentioned about canadian banks being overvalued. I own TD, NA, BNS with about 4% each on the portfolio. All in registered accounts and above purchase price. Would it make sense to sell all (or some) and wait in case they correct ?. If yes, what can they be replaced with ? Thanks
Read Answer Asked by Alejandro (Alex) on October 31, 2017
Q: To help out the member who was asking about crytpocurrencies, I may be able to help. I have been trading cryptos since April. There is definitely a learning curve.

There are two kinds of exchanges; fiat-to-crypto, and crypto-to-crypto.

Fiat-to-crypto allow you trade dollars for Bitcoin (or ether). Bitcoin is the reserve currency; you need it (or ether) to get the other cryptos. In Canada, there is QuadrigaCx. It’s based out of Vancouver, and I think it’s okay. I used Kraken, which is based in San Francisco. I seem to get Bitcoin for about $100 less on Kraken than I see quoted on QuadrigaCx. As best I can tell, Kraken has a good reputation, and I think it also has insurance in the event of fraud. I got a Tier 3 clearance, so I can transfer about $30,000 per day, and about $250,000 per month. In order to transfer, I needed to wire it to a bank in Japan (!), so the wire cost me $50, then another $35 was taken by the bank in Japan. My first transfer took about a week, and I was nervous, not really sure if my $20,000 would actually show up. But it did. My last two transfers have been much slower, about 2 weeks, and I am still waiting for my last. I have heard there has been a surge in activity which has slowed things down.

Once you have your Bitcoin, although you can trade a few cryptos with Kraken, the selection is limited. So if you want a broad selection, you need to open an account at a crypto-to-crypto exchange. I use Bittrex. It has a good reputation. Poloniex used to be okay, but I think they have had some problems recently. I also had to open an account with Binance, which is a China-based exchange because I wanted to buy GAS, which at the time was only available on that exchange. (GAS is necessary for NEO, which will likely be the Chinese equivalent of ether, so hopefully good prospects.)

A few important things to be aware of. First, you should not store your cryptos on the exchanges, because crytos stored on exchanges have been stolen. Cryptos they should be stored on a wallet. A wallet is just a program on your computer to store your cryptos. Be careful what wallets you use, because some of them are scams, and they will steal your cryptos. I use Jaxx. It’s okay, but has been slow to update their wallet for Bitcoin Cash. There are different wallets for different coins. Don’t keep a lot of cryptos in wallets on your smartphone, because smartphones are not secure enough. If you have a lot money in cryptos, use a device like a Trezor. Very secure, and off the grid.

Be careful when transferring cryptos. If you accidentally send Bitcoin to a Bitcoin Cash wallet or a wallet for Dash or Monera, it will be gone forever. Also, the abbreviation for cryptos can vary between exchanges. Bitcoin is XBT on Kraken, but BTC on Bittrex. Finally, make sure to enable all the security options, like two-factor authentication, and make sure you write down and store all the passwords, etc, and store them in at least two separate locations, in the event of a fire.

Cryptos took me a while to figure out, but they have been very profitable for me. If someone is thinking of getting into cryptos, now is a good time, because there is tremendous institutional interest. None of the big money, such as mutual funds, has been allowed to get in, because it is new and undefined, but some ETFs should be approved in the near future, which should push the price up. And the hassles and learning curve is preventing a lot of individual investors from getting in.

I firmly believe crytptos are here to stay; the genie can’t be put back in the bottle. The more I have learned about them, I think they will radically transform the world of finance. But be prepared for major volatility. Every week somebody will say they are a bubble, or a fraud, or a pyramid scheme. Despite all this negative publicity, Bitcoin continues to hit new highs.

Finally, if you are going to invest in cryptos besides the big ones, like Bitcoin, ether, etc, you should subscribe to a newsletter like I did. There aren’t many of them, and they are expensive, but worth it.
Read Answer Asked by Donald on October 31, 2017
Q: 5i is my best source for Canadian investment information so I naturally turn here for a (possibly) difficult-to-answer question.

A guest on today’s BNN Market Call mentioned as an alternative to Shopify a small, growing company that sounded like “Hop-spot” or “Hot-spot”, but didn’t show or indicate a stock symbol. I searched for the symbol using a range of what I thought are plausible alternative spellings but turned up nothing.

With your encyclopedic grasp of what’s available to Canadian investors, could you point me in the right way to this (probably small-cap) stock?

Thanks
Read Answer Asked by Steve on October 30, 2017
Q: With the major devastation of some cities in the Southern USA in late summer I invested in Norbord as they have several plants in the vicinity manufacturing building materials. I invested in Norbord in August and the stock price started to climb in September until 2 things happened:
a fund managed by BAM had a secondary offering of Norbord shares owned by that fund at a selling price of $42.50 and TD downgraded the stock after upgrading it the week before. At approximately the same time Norbord increased it's dividend from $.50 to $.60. With the secondary offering I suspect that a number of the fund holders sold the Norbord shares realizing a quick profit but driving the market value down because a large number shares becoming available (approximately 4-5% of the issued shares). I expected a quick recovery but the TD downgrade seems to have affected the market value. Why did TD downgrade this stock? I think this is an excellent opportunity to buy this stock but I have not been able to find out why the downgrade by TD. Thanks
Mike
Read Answer Asked by Michael on October 30, 2017
Q: Hello Peter/Ryan & Team,

I do need to apologize to everyone about CLS. I decided to finally buy it so naturally the 12% decline the next day would happen. But I have smartened up and only started with a quarter position.

And you would think that I should start to smarten up about buying into negative momentum, but with that said, do you think I should be adding in the next couple months to get to a full position or wait off until momentum improves?

Thank you for all you do.

Wes
Read Answer Asked by Wes on October 30, 2017
Q: in an earlier question i asked about tax loss selling for rrx and you mentionned pxt and vet. I should have mentionned that I already own whitecap. in doing a little further research I noticed in another question you answered that you said whitecap could be a reasonable replacement for RRX. Wondering if this is still true and whether it makes a big difference which one is chosen
thanks for your great help
Joe
Read Answer Asked by joseph on October 30, 2017
Q: Hi 5i
Thanks for the service

I purchased TV recently seeing the momentum but clearly that has stopped.
With a purchase price higher than latest close and technical view of chart shows price breaking down, does one get out and wait for some pain to pass?

Chart movement indicates it could easily get back to $1.10; offering me a significant loss on initial purchase.

Would you please add some thoughts on the negative price action for this name?

Dave

Read Answer Asked by David on October 30, 2017
Q: Since 5i is not averse to the preferred shares of split corps, here are some notes that have been gleaned from the Quadravest website, listing the ticker symbols of several (not all) of their preferred shares and the approximate dividends:

LFE.PR.B - 6% dividend with no suspensions ever since 2006
DFN.PR.A - 5% dividend with no suspensions ever since 2004
XTD.PR.A - 5% dividend with no suspensions ever since 2009
BK.PR.A - 5% dividend with no suspensions ever since 2006

FTU.PR.B and XMF.PR each suspended dividends for nearly a year during 2009-2010.

I believe DFN.PR.A has the longest history of paying dividends and also the most diverse holdings. Its chart since inception is mostly breathtakingly level, though it lost nearly 30% in 2009-2010.
Read Answer Asked by Jerry on October 30, 2017
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