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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, I was planning to buy floating rates preferred shares to profit from future rates increases. Many preferred reset shares have a floating rate counterpart. At reset, the 3months floating rate shares may, under some conditions, be converted to the 5-years fixed reset and vice versa. Sometimes the floating shares are forced to convert if the float is too small. (Example : Enb.pb and Enb.pc which have a reset date in May 2022). First question: In general can a company redeem only one and not both « linked » shares. Can they redeem the floating shares any time or only at the fixed reset date?.

For strategy, would you choose a cheap low coupon floating share (some lower than 1.5%), giving up on a higher short-term yield, but with more leverage when rates increase, thus good capital gain. In this case, would a 2 years time frame be a good one or too short? Or would you choose a higher coupon (many between 2-3%) and a longer time frame?

All rate-reset preferred shares I hold had already a nice move in 2021, I do not think there is much to be gained right now. Many are being redeemed. The banks’preferred will disappear in the next years and are priced accordingly, too expansive. That’s why I’m interested in floating-rate shares. Some perpetual preferred (BCE, BAM, ..) have floating rates linked to the prime rate, also very successful in 2021. Easier to bet on ? (I own already BCE.pr.b and BCE.pr.d)

Best Wishes for 2022 to the team.
Read Answer Asked by Denise on January 11, 2022
Q: I am trying to understand bond diversification better. I have a long term portfolio of mostly equity exposures and some XBB. Do you generally recommend further diversifying bond holdings? Eg to an inflation protected fund or more global exposure or specific maturity profile (eg shorter maturities)? If so could you recommend ETFs for diversification purposes?

I don’t want to over complicate things but also want diversification to different market scenarios in the spirit of an « all weather » portfolio. In particular real return bonds seem useful for this compared to XBB. I would be grateful for your thoughts. Thank you very much.
Read Answer Asked by Chris on January 11, 2022
Q: Just did a revue of my PORTFOLIO ANALYTICS and have a couple of questions as follows:
Under Fixed Income Defensive I have CBO, VGG & ZDI in my TFSA. Are these okay here or can be added to or any deleted?
Under International Allocations I have VXC, XAW, XEF, VEU & XWD in the TFSA. Are these okay as they are or shoud I be considering some changes?
Best wishes for the New Year and thanks for your great service!
Read Answer Asked by Terry on January 11, 2022
Q: If you would like to do a short term trade with a long position are calls a better option than purchasing the stock?
Read Answer Asked by mike on January 11, 2022
Q: I am looking to get some broad exposure in my portfolio outside of Canada and the US. I came across the CIEI ETF and it seems to have a good mix of solid names (and some dividend payments) from what I can see online (https://www.cibc.com/en/personal-banking/investments/etfs/international-equity-index-etf.html). I am looking for a 10+ year hold and it would be in a TFSA. My only issue is that is a new ETF - and was wondering if it would be suitable for a 10+ year hold or if there is something more established that you would suggest.

Thanks and all the best for a safe and profitable 2022 - really like your service!
Read Answer Asked by Rossano on January 11, 2022
Q: So I read in the G&M that household savings are at record numbers ; some $ 300 billion , twice the average of the last 2 years , yet I understand that Canadians are in debt to an unprecedented degree. How can this be ? The savers and debtors must be not the same person. Personally, I believe the boomers will come to the rescue of the many indebted GenX and Millennials by passing their sizeable assets over upon their last gasp.
Any thoughts ?

Derek ( boomer)



Read Answer Asked by Derek on January 11, 2022
Q: I know you answered a question this morning regarding CELH but I think there is some information you may not be aware of. On Friday Li Ka Shing and his friend Chau Hoi Shuen filed a 424B5 supplemental shelf offering to sell their 12.4M shares (16% of CELH). This is why the share price has tanked over 25% including todays drop. It worries me coming on the back of the news that there was an SEC inquiry in Dec of which we still don't know the details. Makes you wonder if the largest shareholders are bailing before the news drops? Anyway I worry this negative momentum will keep going. I never like panic selling into news etc. What are your thoughts?
Read Answer Asked by Adam on January 11, 2022
Q: I hold all 3 in a non-registered account, and spin-offs from U.S. companies can bring unnecessary complications at tax time (86.1 elections requiring paper tax filing) - I just want to avoid that whenever possible. Given market efficiency theories, the value of the spin-outs 'should' be in the stock close to spin-out time. Given that, does your Bloomberg advise as to when the ex-dividend dates will be for the spin-outs of these 3? Thanks very much....
Read Answer Asked by Warren on January 11, 2022
Q: This small cap was over $200 a few years and is now under $1. Does it have any positive attributes and possibly a chance to do better given the supply chain issues?
Read Answer Asked by Brendan on January 11, 2022
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