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volatile stock chart (From photos.com) (oxign)
volatile stock chart (From photos.com) (oxign)

Earlier Discussion

Q&A: How to invest for the long term in a volatile market Add to ...

Bruce: I am looking to invest in dividend paying stock to start building other income for retirement (in 10 years) Where can a person get the best research on Canadian stocks and should I set up a DRIP for now and change to paying cash later in retirement years?

Joel Clark, KJH: I'm not sure where the best research is - very stock specific and sector specific plus we rely on our own research as the street tends to be quite biased. Re-investing dividends is a smart strategy.

Mark Iradian: I just got a new job and plan on getting a home with 3 or 4 years. I'm under 30 years old, so I understand I have a lot time under my belt. What type of asset mix should I be aiming for asset growth?

Joel Clark, KJH: If your savings is for the equity in your new home then keep in near cash, as that will ensure it is there when you need it. if it is in your rrsp I would take a more balanced and long-term approach.

Grant: Your outlook for Global Real Estate for a long term investment?

Joel Clark, KJH: If you mean in the private market then its hard because successful real estate investing requires good local knowledge - obviously the US is an interesting area given in some states prices are down 50% so represent good value. hard to make a general statement about global real estate.

Guest: What do you think with investment portfolio of 60% in financial stocks (common and pref) with 20-30 years horizon?

Joel Clark, KJH: Without knowing your entire personal details and the financial stocks you are referring to I’d say that’s aggressive. I think the prefs are quite over valued.

Guest: I manage my 79 year old father's RRIF. He only has about $71 000 left in the account, so don't want to be too risky. Have him $20 000 in BMO monthly income fund and mixture of ETFs, including $20 000 in monthly income ETFS (ZMI, XTR), $10 000 in short corporate bond ETFs, $3400 in Cdn preferred shares ETF, $3 000 in horizons enhanced income ETFs (HEX and HES.UN) Given your comments about interest rates and bonds in future, am I still okay with my dad's asset allocation?

Joel Clark, KJH: Not knowing his drawn-down rate, it's tough. Given his age historically that’s the right allocation probably but you might experience some mark to market volatility in those bonds funds. owning direct bonds that have a maturity payment would be safer.

Myra: I just sold $20,000 of my position in the MSCI ETF at a loss of 10%. Do you think this was a wise move considering the on going volatility of the markets and the European debt crisis? I'm not sure what to do with that U.S. cash now. Any suggestions?

Joel Clark, KJH: Hard to answer not knowing your full picture - the economic issues and volatility will be with us for quite some time so if its unsettling to you then keep it conservative.

Gordon: Is it too late to invest in utilities and REITS generally ? Are they fully valued ?

Joel Clark, KJH: They are more fully valued then less - so risk-reward isn't so favourable.

Grant: Your views on annuities?

Joel Clark, KJH: Extremely over-valued, given buying them at 30-year low in interest rates.

Chris: Can you explain how preferred shares will react, generally speaking, in a rising interest rate environment?

Joel Clark, KJH: If they are perpetual preferreds then they will go down as they are effectively a bond without a maturity - in a rising interest rate environment they are the most risky thing one could own.

Mike: What approach to performing detailed due diligence on company executives/senior level management can you recommend?

Joel Clark, KJH: I would start with searching the internet for news but on a more granular basis would talk to industry folk who would have a sense of reputation and competence.

Ggg: You say bonds are a bad move right now. What about a bond mutual fund?

Joel Clark, KJH: Even worse, as no effective maturity - act like a perpetual bond.

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