Latest Stock Buy or Sell? Make More Informed Decisions!

Market. Volatility has been ultra low, almost non-existent. Part of this is because investors are now becoming more accustomed or used to being bombarded with information. The last 5 years was more of the early stages of that. Access to information has never been as great as it is now. The early stages of that caused investors to over manage their accounts. The bigger risk is when you start to build immunity to bad news and you don’t see any volatility. That’s when you start seeing equities get ahead of themselves. Some volatility is a good thing, because it provides stocks with a reality check, and helps their valuations stay in line.

Gold. He has been quite bearish on commodities as a whole, particularly oil and energy over the last year. The last time he held gold was between June/07 until late 2012. In the last few months, he has started taking a weighting in this again. It is less of a call on gold going to $1500-$2000, but more from a portfolio construction perspective. We can’t get complacent because we have had no volatility and markets continue to head higher and higher. He started building some insulation into portfolios, without expecting any sort of a meltdown.

45 years of age. Are 50% dividends and 50% growth/higher risk a viable plan? At this age, you don’t need income, so there isn’t a necessity to invest in dividend paying stocks. His strategy is, whether you are 10 years from retirement or already retired, dividend only names. Even if you don’t need the income, dividend paying stocks is a great starting point. Generally, you are buying a business that has decades of earnings history behind it.

Just acquired $1 million. What do I invest in? The 1^st question you need to ask is, do you need income from that capital. If you don’t, that allows you to have a little more volatility in your portfolio, and a longer-term time horizon. He would still use dividend paying equities, but if you don’t need income, it gives you some flexibility in terms of how much of it is in stocks versus Bonds. Focus on quality names. He is never more than 5% in one name.

He respects their business and what they are doing in terms of being global, especially with their exposure in China. It also pays a dividend. All of that is positive. The issue he has is that it is a hard stock to make money on. They recently reported earnings having a strong quarter. With their dividend of about 3.3% and trading at 11 or 12 times, that yield and Price to earnings valuation is very much in line with where Canadian banks are right now, and he would rather own Canadian banks.

How many sectors do you need to invest in to be diversified? There is no magic number. He is a bottom-up investor, so he looks at the business to see how they make money, what the risks are, what the balance sheet looks like, debt, etc. There is no reason to stay away from any one specific sector. Generally, there are good businesses at reasonable valuations in all sectors.

REITs? He has no exposure to the sector. If you are there for yield, you can get a similar yield in a lot of other Canadian companies, if not better. If you are there for share price appreciation, that space has skyrocketed over the last 5 years, and looks very rich on a valuation basis.

Has no exposure to REITs because of valuations. Also, these names are ultrasensitive to even a whisper of interest rates going up. Any time you buy into an asset class that has done as well as REITs, combined with how sensitive they are to interest rate movements, it is a risky proposition. However, this one is top of class.

There are still lots of uncertainties. If you are buying it now, there is a significant component of speculation. It is a little too rich for him, in terms of a risk.

A utility stock? This has run up a lot, and he wouldn’t expect the same rate of return on a go forward basis. About half of this is power generation with about half being distribution. They have invested significant capital in the generation business.

A utility stock? This has run up a lot, and he wouldn’t expect the same rate of return on a go forward basis. Focused on growth and bought a large acquisition in the US. That will provide them with upside and growth potential, and they’ve indicated that they expect a 8%-10% dividend growth trajectory.

(A Top Pick March 17/16. Up 17%.) Sold this recently. They are still undergoing a move from the traditional business, which is still making money, but they have been very aggressive in making acquisitions.

(A Top Pick March 17/16. Down 26%.) This has been a tough name. He sold his holdings in February. Their hep C and HIV drugs have been under a lot of pressure from competition and lower drug prices.

(A Top Pick March 17/16. Up 30%.) Historically, this bank has always traded at a discount to their peers because they are fairly concentrated in the Québec region. Feels it is now expensive at current valuations. He has trimmed his position.

In all the banks, this has participated the least over the last year or so. In valuation, it is one of the cheaper banks. You’re getting a little more of a dividend and a cheaper valuation. The big question is their US acquisition, and how that is going to play out. For a longer-term hold, this is a great buying opportunity. Yield of about 4.8%.