Ask The Experts - January 2026
All answers are provided by 5i Research.ca
Q: Can you elaborate a bit on your philosophy “Letting Winners Ride”? This is very difficult to do when consistently managing position sizing. I own companies that are becoming larger allocations in my portfolio and they feel like “Winners”, so why should I trim?
A: The philosophy stems from a market saying of 'watering the flowers and trimming the weeds'. Sometimes investors prefer doing the opposite: when they see a position doing well in their portfolio and another performing poorly, they will sell the winner to add to the losing stock, but statistically, stocks that are rising and hitting new 52-week highs tend to perform better than stocks hitting new 52-week lows.
It seems obvious, but one of the best strategies in the market is to buy rising stocks. Often, we see investors try to buy stocks that are declining or down because they feel that inherently means it's at a 'discount' and this feels 'safe' for investors. Often times, doing the safe thing is less profitable than the action that worries investors most.
Stocks that are hitting 52-week highs are likely rising for a reason, and this can be fundamental, news-driven, or a trend that most investors have not picked up on yet.
Q: Similar to how you don't like giving price targets, isn't having a "starter" position a similar sin? Just like how lump sum investing is better than dollar cost averaging, wouldn't it make sense to just go all in (to the goal percentage of portfolio you'd like to have)?
A: Traditional finance theory, and using historical data suggests that lump sum investing typically yields better results than dollar cost averaging over the long-term - but, knowing how much of a role psychology plays in investing, we prefer the dollar cost averaging approach.
Similarly, we prefer to begin with a starter position (we like 1.0% to 1.5%) to build a position, watch how the stock moves, and this allows us to be 'psychologically invested' in the name. From here, we can decide to build it out or remove it entirely based on how it trades. On paper, there are many stocks that look good, but in reality, timing and reinvestment risks are real. Entering a small-cap stock that looked good on paper, but at the wrong time, and with large size, can be detrimental to a portfolio.
Q: I understand that your recommended portfolio allocation is one-third Canadian, one-third U.S., and one-third International. Could you share a bit more about the reasoning behind this approach?
Specifically, is the one-third Canadian portion meant to help limit the amount of Canadian companies in one’s portfolio, essentially to protect against being overallocated in your home country?
Similarly, if someone was based in the European Union would you recommend one-third EU, one-third US, and one-third International?
A: This is a general guideline and not really a one-size-for-everyone set up. The thesis is several-fold: a) Canada is a very small part of global markets and there is a home-bias which can reduce both diversification and returns if one is over-concentrated in one region. b) The U.S. continues to look attractive and is perhaps 'safe' if we go into global recession. c) That being said, other markets have a very big valuation discount, and potentially could continue their rally from this year and outperform North American markets. We would likely have the same allocation (with Europe replacing Canada) for a European-based investor.
Q: In today’s environment of instant information and volume of information, how far back in time should you use information for decision making (with the exception of financial data)? Is it 3 months, 6 months…?
A: Financial data of course is key, but we like to look back quite a way back to get a sense of how a company manages expectations. In other words, does it promise a lot and then deliver? Or does it just promise? How does it deal with problems? Does it 'blame' or does it seek a solution? What is executive turnover like? How often does the company issue stock? So, the answer really depends. We think it is important to look at past events and performance and commentary.
Q: What do you think about the recent insider tech sell off by Peter Thiel, Jeff Bezos and Mark Zuckerberg, and others? Is this a signal of an incoming technology and general market crash?
A: Insiders sell for a variety of different reasons (personal expenses, supplement income, etc.) but they usually only buy for one reason. Insiders sell shares all the time, especially as share prices rise in a bull market. We find it is very difficult to attain any major signal from insider selling.