Mailbag Questions: Demographics, Carnival Cruise, Depositing Money, and Selling Winners Today

Each month, we select a handful of questions that were asked by clients or soon-to-be clients. We like to post our answers online because others may have that same question as well. Here are a few of the things we were asked about most recently.

Question from Toronto: How do I compare to the demographics of the rest of your clients?

The average client is 49 years old and 59.6% are women. The majority live in Ontario, followed by a decent footprint in Alberta. We have representation in Nova Scotia and British Columbia as well. Right now, we have 55 clients with the expectation to add another 3 very soon once the paperwork is signed over the next few weeks.

Question from Alberta: We are thinking of booking a few cruises over the next few years and we learned that if we hold 100 shares in Carnival Cruise's stock and can prove it, we get a $250 US credit per cabin each booking. What do you think? Seems like a low point to buy some… about $1900 for them. Is this a dumb idea and is the cruise business dead money or risky? It is a per booking thing so that kinda works like a dividend at 10% and if we do two in a year that’s a pretty decent dividend equivalent.

While the client here is only asking our opinion, sometimes a client will tell us to make a specific trade. If that happens, it’s called a client-directed trade. Some firms won’t accept client-directed trades because it is an extra company for their staff to follow if the stock is purchased. While these requests don’t happen often, when we’re asked, we’ll research the idea for a client and do what’s in their best interest.

The law requires us to only execute a client-directed trade if it is suitable for the client. “Suitable” is a buzz word in our industry with a ton of regulatory commentary behind it. To determine whether it’s suitable, we research the stock and then compare that investment’s attributes against the personal circumstances of the client.

We’ve executed two client-directed trades in recent memory. The first was a small position in Fairfax Financial so that the client could attend the Annual General Meeting. The second was a position in Take-Two Interactive Software, a gaming company. Both were suitable for the respective client for their own specific reasons.

Our restrictions list, which is the complete opposite of a client-directed trade, gets mentioned more regularly. When we sign up a client, we ask if there are any stocks or industries they never want to own. We have a handful of clients that want to steer clear from oil production, weapons, cigarettes, retirement homes, and pharmaceuticals.

With respect to this client’s specific question, $1900US is an immaterial dollar amount relative to his entire $1,800,000CDN portfolio, not to mention the fact that cruise demand is still robust. These were scary stock charts to look at during the pandemic, but at the moment, the wind is at their sails. CCL is a name we follow. For these reasons, as well as a few others that are specific to this individual, we picked up 100 shares of CCL so he can claim that $250US credit for his next cruise!

Question from British Columbia: I want to make regular deposits to my account but might often forget. How can I make it happen?

There are three easy ways to deposit new money into any of your accounts that as custodied at the National Bank Independent Network.

1. You can make an online bill payment (the payee is National Bank Financial and the memo section should state your account number, which is on all of the monthly statements we send to you).

2. You can mail a cheque to National Bank’s office on King Street in downtown Toronto.

3. You can visit a bank branch and provide the teller with your National Bank account number.

If you want to make regular recurring deposits but don’t want to deal with the hassle of logging in to your bank account to initiate the transfer every few weeks, we can set up an automatic withdrawal program to take place on the same day of the month.

Many clients that get paid on the 15th, for example, opt to have their deposit sent automatically to their National Bank account on the 16th.

Question from Toronto: I just have a question regarding my portfolio. Considering some stocks have appreciated in value much more then when we bought them, would it not be wise to sell at their peak and use that money to buy another stock. 

We like to let our winners grow rather than take quick profits. Most investors make the mistake of taking profits too early and well before their investment thesis has fully played out.

Each quarter, we take a fresh look at each stock we own when quarterly earnings are released & the companies host a conference call. If we’ve lost faith in our previous investment thesis, we’ll sell the stock to buy a new position.

The stock doesn’t know how much you paid for it, so we look forward at future projections rather than the rear-view mirror.

However, if an investment surpasses 10% of your total portfolio, we consider that to represent over-concentration risk. We’ll trim an over-concentrated position back down to under 10%, even if we still like the stock. It’s a risk management procedure that’s wise to follow in case that over-concentrated position came out with a bad news story one day that caused the stock price to fall by a large amount.

-written by Jeff Pollock

DISCLAIMER: The opinions expressed in this publication are for general informational purposes only and are not intended to represent specific advice. Any securities discussed are presumed to be owned by clients of Schneider & Pollock Management Inc. and directly by its management. The views reflected in this publication are subject to change at any time without notice. Every effort has been made to ensure that the material in this publication is accurate at the time of its posting. However, Schneider & Pollock Wealth Management Inc. will not be held liable under any circumstances to you or any other person for loss or damages caused by reliance of information contained in this publication. You should not use this publication to make any financial decisions and should seek professional advice from someone who is legally authorized to provide investment advice to assess your goals and objectives, personal circumstances, and make an informed suitability assessment.