Latest Stock Buy or Sell? Make More Informed Decisions!

Markets. There is some good and some bad with the change of government in Alberta. They are going to up the royalties and taxes. When he looks at ETFs he likes the energy sector, he sees a 5-10% correction coming. The market is not finished worrying about the new government in Alberta. China is going to do whatever they can as they have some growth challenges. They have some real issues for a number of years. The stock market rally has nothing to do with economic outlook, but is purely speculation. The PEK-N tracks China. It has more than doubled in a year. The spreads are terrible in this one so it is not good for getting in and out, but it tracks the Chinese stock market.

TFSAs: Can you only have 5% in any one security in a TFSA as Larry recommends in general? This does not apply to ETFs. If you have 20 holdings in a $40k account, you are looking at $2k per holding and at 9.95 per trade it is very expensive. So don’t use single securities, but rather use ETFs.

BMO is the largest provider of ETFs in Canada. Google “BMO ETFs” and it will show you how to use them in portfolios. Advisors with big banks should have no trouble buying ETFs from other banks for your portfolio.

It has 27 time earnings and should become mature at some point and then the multiple drops to 20 or 18. He is worried this one won’t retain its multiple much longer. The stock has done nothing wrong. If it fails to make a new high and then starts to break trend line and make lower lows, then you can predict the multiple is going to contract. A lower multiple means at least lower appreciation in stock price.

Gov’t of Canada Bonds – ETFs containing short, medium and long bonds. He thinks rates will stay low for the next decade. Central banks are printing money everywhere and it is not generating inflation. It tells us that the aging demographic is a far more influential factor to the inflation story than the printing of money. See education segment of today’s show.

You can’t look at the multiple, but rather should look at the peg ratio, which is over 3, so you are paying a lot. When or if they start to disappoint, which they are not currently, this can cut in half in 6 months and you have to consider that. Use tight stops. It could keep going for a couple of years before going down.

It tends to be levered to the success of Alberta and Western Canada. This one took a hard hit when oil prices rolled over. You have to ask if oil has bottomed. He thinks it will range between $40 and $65. If it gets near the lows it makes sense to accumulate, but don’t expect a massive recovery.

Preferred Shares. Perpetuals will fall when interest rates rise, but resets will come back as they reset.

Educational Segment. Fixed Income. There are 4 ETFs he wants to focus on. In the following table ‘Duration’ is the sensitivity to interest rates.

The 10 year German bond is at 0.57% and Greek 2 year is 20.16%. Canadian 30 year is 2.29%. Now look at a 1% move up in interest rates:

• The German bond moves 10.5bps
• The Greek bond moves 50.6bps.
• The Canadian bond moves only 5bps.

The longer your duration, the less sensitive they are to interest rate increases. Dividend stocks have tremendous volatility to interest rates (twice the standard deviation). Increasing bonds reduced volatility to a portfolio dramatically.

Stock vs. Stock. IPL-T vs. PPL-T. Both are excellent companies. The Alberta election has some negative implications for these. PPL-T has the better risk return profile going forward. Both will grow their dividend single digits.

Stock vs. Stock. IPL-T vs. PPL-T. Both are excellent companies. The Alberta election has some negative implications for these. PPL-T has the better risk return profile going forward. Both will grow their dividend single digits.

Markets. We are getting into a later market cycle. Valuations are getting stretched and sectors doing well are more speculative. He tries to stick with blue chip dividend payers and they are underperforming. There is some value in energy and materials producers. Banks and utilities are a pretty good place to be also. He is going to watch the US Fed June announcements. The late 90s were the last time the NASDAQ hit an all time high. It is looking a lot like the 2000 and 2008 corrections just before they began. He likes high quality defensive blue chips. He gets about 4% in his portfolios.

Wait for a correction or a call on increasing interest rates before buying? Timing markets is unsustainable. His business is not about timing the market. If he gets a client with lots of cash he averages it into the market over 6 months or a year.

Banks. He has 4 of the 5. They should be core in everyone’s portfolio. They pay solid dividends and are pretty well run. He likes BNS-T the best right now. RY-T is second.

(Top Pick Jun 5/14, Down 27.26%) It has held up okay considering the sector. They did not cut the dividend in 2008 and aren’t considering cutting it now. They are run very conservatively. They are a low cost producer. They have a deep asset inventory. Only 6% of production is in Alberta. 9.18% dividend.