Investment Q&A

Q: Re: your advice to Gary this morning.

Through BMO Investorline we transfer stock in-kind directly from RRSP to TFSA.

If there's insufficient cash in the RRSP, we'll contribute just enough to cover the withholding tax. So we don't have to sell any shares.

We're slowly winding down our RRSPs and transfer only enough, in low-income years, to be able to recover the withholding tax. (Seniors often have enough tax credits to make that possible.)

Q: Hello 5i, My financial advisor for my RRSP is with Scotia Wealth Management and I'm not happy with him. If I want to take control of my account do you know what the procedure is? Also are there certain types of investments that can't be in a self directed account?

Q: I am going through my portfolio and finally looked at my balances per sector. Overall it isn't terrible, but I do have to make some changes. I have some Tech positions that I can lighten up and get down to 20% and I have some cash I can add. I have quite a few questions, so please take the credits needed.

Sector Percentage
Consumer Disc 11.75
Consumer Stap 6.41
Energy 7.28
Financial 16.16
Healthcare 5.12
Industrial 7.74
Tech 24.16
Materials 6.3
Telecom 3.69
Utilities 4.54
ETF's/Cash ~7


Should I consider Enbridge a Utility or Energy? Below i have it as a Utility. My other utility is BEP.UN. Should I add to one of these or add another position. They are ~2% each so I could go up on both, or add a third.

I see Magna and CCL are Consumer Disc, but can they also be considered Industrials?
For Industrial I have SIS, WSP, and QST. I was thinking of New Flyer and something else to get my industrial weighting closer to 15 %. Maybe ZCL or is that considered Energy? Or a US industrial?

Do you consider Chartwell Healthcare?(it is above)

Which sector should I focus on first and do you see anything that should be addressed right away. I know tech is heavy and the money should go to other sectors, but which area is lacking the most, Industrial, Utilities or International?

I have approx. 22% in US stocks, but I only have 1.75% IN TDB911 and about 5% in a few US ADR's for international exposure.
What ETFs should I look at to get international and emerging markets exposure?

How much of ones portfolio should go towards stocks Outside of of North America?

A lot of the companies I do own have international exposure such as CSU,MG,TOY,CCL,MX ect;

I am 39 and have fairly high risk tolerance if that makes a difference.

Thanks again for your great service and advice.

Q: Hi Peter, Ryan & 5i Team
Re: Income Tax
When writing Covered Call Options; what is the tax rate on the money received? Income, Capital Gains, or It Depends?

Q: With so many potential valuation and growth metrics available, it's hard to know which ones are REALLY important. I would love to use a handful (3 to 6?) of metrics that I could use to screen companies in order to create a "to buy" list.
Do you have any recommendations for a group of "must-use" metrics?

(Some that I am considering are: EV/EBITDA, PEG, Price/Cash flow, P/B, Price to Sales, P/AFFO for REITs, Debt/Equity, Dividend yield, Dividend Payout ratio, and a company's history of raising the dividend)

Would I want to use different metrics for growth vs. value companies?

Also, is there some place that I can look up a company's metrics (i.e. EV/EBITDA, P/B, etc)?

Thanks!

Q: Hello 5i Team

1 - Is there a readily available list of all the Sector and Industry classifications which are assigned to companies. I have had no luck finding it on the internet.

2 - Are the Sector and Industry classifications the same for the Canadian and US markets?

The only method I have found is checking the individual companies on the TMX Money website. A slow tedious process.

Thank you for the great service.

Q: BNN sited a report(back tested 20 years) that stated free cash flow yield was the best indicator of how a how a stock will perform in the future. Are there any US or Canadian etf's that use free cash flow yield as the key metric for stock selection. Also can you provide the top 10 FCF yielding stocks in Canada. Is there a stock screener that provides this information. Thank you for your great service.

Q: I SOLD TEVA have $ 4000 USD as could you provide 4 or 5 safeish names in the us markets for the above.( HAVE ENOUGH BANKS STOCKS )
Thanks
Yossi

Q: Medical Laboratories and medical testing clinics seem largely to be owned by private corporations. Is this correct ? If so, which publicly traded corporations may be positioned to acquire private medical labs or to make other investments in the medical testing field ?

Q: Greetings Peter and team,

Again, thank you for your logical answers to my previous questions.

In the 60s, a self-made, wealthy graduate of the Benjamin Graham, Columbia University program which warren Buffett praises, recommended that investors keep half of their portfolio in cash. When the market drops 10%, he recommended that they use a third of that cash to buy stock bargains. Today, that would be a US market index ETF. If the market drops another 10%, he recommended that they use all their cash to buy bargains, again, say a US market index ET. And if the market drops another 10%, he recommended the investors margin their portfolio fully.

I would appreciate your views on this seemingly risky approach to investing money not needed for near-term use.

Thank you,

Milan

Q: I'm 45 years old and want to buy some canadian growth stocks. Will you please suggest (in order of preference) 5 or 6 growth stocks with some sort of dividend yield. Also, will you indicate the best place to hold these stocks (rrsp, tfsa, cdn). Thank you.

Q: With the latest trend to electric vehicles it would seem that cobalt producers would be an attractive investment. However, my effort in finding an ETF or even a major producer specializing in cobalt hasn't gone well.

Do you have any suggestions on any potential candidates?

Q: Hello
Need some advice please. 62 and recently retired. RRSP's are almost maxed out but only a few k in TFSA account.
As my income is now at its lowest point (CPP),I'm
thinking I should start moving some RRSP funds to my TFSA?
I'm considering a mix of ETF's such as VAB,VCN,XAW or perhaps some of your Income stocks and funds such as CPD,XHY,BCE and BNS.
Note that I do hold most stocks in the balanced portfolio.
Thanks for your great service.
Gary

Q: I recently saw a feature on BNN that indicated a study by CITI that said the most reliable metric to use is free cash flow per share when evaluating a stocks performance and future growth potential. Is this something that you can use when you screen and include in a company report

Q: Just a comment, I’ve been a member since you launched your site. I read a load of investment things daily, and your offering is unparalleled. While I don’t ask many questions, I truly benefit from the Q&A every day, and of course the insight gleamed from your portfolios.

Since your company has grown a lot, obviously the demands - the sheer volume of questions alone - has clearly grown with it, because over the last while I’ve noticed a very big difference in your answers. They’ve lost the choppiness: the quick, short, get-to-the-point way in which they were always written. Now, they’re very smooth, all corners are rounded, very well-written quite frankly, so I assume that answers are now being dictated, and a ‘writer’ is putting them together for publication. Very nice, easy to read in a mellifluous kind of way. But I have to say, I miss the choppiness!

Had to comment on it, it’s just that marked a difference. Thank you for the excellent service, I look forward to staying with you until you hang up your hat!

Q: The recent hand wringing (and rightly) over CRH (haven't owned for years) has made me question what rationale retail investors use to buy and sell. I understand why advisors suggest a buy and hold strategy. But can't understand why retail investors need to be tied to that philosophy. I'm making a leap and will assume most members of this site use a discount brokerage. Given the almost insignificant cost to buy and sell (assuming buys and sells of more than $10,000), isn't a more active approach to trading a reasonable proposition? I use technicals to take the emotion out of the equation and would love to know what buy and sell discipline you would suggest. Having personal buy/sell rules might help investors feel better about making these decisions.
Thanks for all your support and advice over the years.

Q: Just watching BNN and an analysis by CITi reports that a consistent metric to use is free cash flow per share .....FCF/S.
When you eveluate a company and do a report,do you screen and report this metric?
Thanks

Q: I would like to hear your opinion on holding a cash position inside a stock portfolio (not counting any sort of life emergency fund). I read lots of company (Berkshire, Apple, etc) are building up big cash position to better pull the trigger when a market downturn occurs. If it can temporarily be good for a company, is it the same for an individual investor ?

If we take my current situation, I am 27, no debt with a decent job income which I put steadily towards stock investing. I currently hold a 5% cash position as a buffer between my income and my investing. Do you believe it’s enough ? Is my strategy of buying over time with my income without building a larger cash position my best option ? Would you consider building a larger cash position 8 years into a bull run as market timing ?

Thank you !

Q: Hello 5i,
I just wanted to say "thanks" to Claude for sending the Morgan Stanley article and to 5i for putting in the Q&A - I really enjoyed that and got more than one chuckle out of it! Quirky, but not without value - thanks!
Cheers,
Mike

Q: Peter
From Morgan Stanley, i think, a well written little dose of common sense...
print or keep for you

NEW YORK – The S&P 500 closed at a new high on Wednesday in what analysts hailed as the accumulated result of several hundred million people waking up every morning hoping to solve problems and improve their lives.

The index finished up 4 points. Goldman Sachs strategist Bill Blake said the move was the result of unidentified marginal buyers being a little bit more motivated than unidentified marginal sellers. “We’ve now had 241 years of people in daily competitive pursuits to do things a little better, and those benefits add up over time. Mix that with some good luck and where we happen to be in the business cycle, and here we are,” he said. “My job is to sound smart, but you can explain this stuff to a five year old,” he laughed.

Corporations earned $5.89 billion in after-tax profits. Financial advisors and middlemen took in $710 million in fees. The difference, Blake said, would accrue to investors over time.

Analysts warned of several metric tons of dopamine and cortisol careening through the global economy, which they said created a near certainty of poor financial decisions. At some point, Blake said, these bad decisions create social proof and feed on each other, leading to recessions. “When is the next recession?” he asked. “I don’t know. Whenever the second mortgage you took out to buy a boat to appease your insecurity convinces your brother in-law to do the same, and his boat gives the boat salesman enough misguided confidence to become a day trader, and then all three of you crack under a collective bout of geopolitical bad luck or something. But we’ll move on.”

About 9,000 new businesses formed on Wednesday. Another 8,200 dissolved. Analysts expect the trend to continue, calling it an “unmistakable example of basic capitalism.”

Fifty-five million American children went to school Wednesday morning, leveraging the compounded knowledge of all previous generations. Analysts expect this to lead to a new generation of doctors, engineers, and problem solvers more advanced than any other in history. “This just keeps happening over and over again,” one analyst said. “Progress for one group becomes a new baseline for the next, and it grows from there.”

Three dozen political pundits yelled at each other on TV in front of an audience of 75 million. Meanwhile, a couple hundred million people were reasonable and productive in front of an audience of zero.

Just over 1,700 patents were filed at the U.S. Patent and Trade Office, with a few expected to change the world over the coming decades. “Pretty damn cool” said Sarah Donald, a PTO spokeswoman. “I wish more people paid attention to this kind of stuff.”

Facebook stock fell $0.23 to close at $169.16. Four-hundred seventy one news outlets covered the move. No one knows why.

Analysts expect more of the same tomorrow, with the trend continuing into next week.

* Nothing, and yet everything, about this post is accura