Booming banks, a potentially 'raging' energy stock, and whether the Trump honeymoon is over + MORE Nov 29th

A roundup of investment ideas for active investors

Q: I noticed the unit price of some iShares ETFs changed radically last week. For example, the iShares MSCI Singapore ETF (EWS) shot up from around $10 to $20 overnight on November 7. Another fund went from $14 to over $28. What’s going on here, and how would it affect investors?
— Chris
A: If you wake up to find the unit price of your ETF doubled overnight, you might be tempted to think you just scored a 100% return while you slept. But unless you’re an eternal optimist, you’ll probably realize that isn’t the case. What’s happened here is called a reverse share split, or consolidation. Although the price per share of these iShares ETFs doubled (or in some cases quadrupled), the total value of each investor’s holding hasn’t changed, because they now own correspondingly fewer units.
If you’ve ever traded stocks, you’re probably more familiar with a regular stock split, whereby a company increases its number of outstanding shares by some multiple, reducing the price of each share by a proportional amount…

Q: In a TFSA, I hold a mutual fund that holds U.S. blue chip stocks. Am I penalized?
—Stephen
A: Tax-Free Savings Accounts can be great. Most of the time, your investment returns are tax-free. Sometimes, however, you may end up paying tax—and not even notice.
I assume this is what you’re asking, Stephen, when you ask if you are penalized for holding U.S. blue chip stocks in a TFSA. Blue chip stocks tend to pay dividends and U.S. and foreign dividends are treated differently in a TFSA than Canadian dividends or interest income.
Canadian dividends and interest are specifically tax-free in a TFSA, when earned, when withdrawn, whenever. Non-Canadian dividends, including those paid by U.S. blue chip stocks, are subject to withholding tax in a TFSA.
The IRS levies a withholding tax of 15% on dividends paid to Canadian resident investors. Whether you own U.S. stocks directly in your TFSA or you own a Canadian mutual fund or exchange-traded fund (ETF) that owns U.S. stocks, the result is the same…

Q: My boyfriend and I have lived together for the last year in a house he bought before we met. Now, we plan on buying a place together. But when I asked my bank advisor how to use the Home Buyers’ Plan, he said we no longer qualify because we are not first-time buyers. Is this true?
—Amanda, Calgary
A: The confusion has to do with when you and your boyfriend are first considered a common-law couple. Typically, provincial rules dictate when this designation applies, but under federal law a couple is considered common-law if they’ve lived together for at least a year. To qualify for the federal HBP, you must be a first-time home buyer, or someone who has not owned, or lived with someone who has owned, property in the four years before applying to use your RRSP money through the HBP. So your bank advisor is correct: You don’t qualify as a first-time home buyer because you lived with your boyfriend as a common-law spouse and he owned property. Also, unfortunately, neither of you will qualify for the Home Buyers’ Tax Credit, a rebate of up to $750 given to first-time buyers (based on the same criteria as the HBP)…

NEW YORK, N.Y. – The latest on developments in financial markets (All times local):
4:00 p.m.
Solid gains in several big health care companies led major US stock indexes to end modestly higher.
UnitedHealth Group climbed 3.6 per cent, the most in the Dow Jones industrial average, after issuing a strong forecast for earnings next year.
Energy companies ended lower as the price of crude oil slumped.
Investors seemed to doubt that an OPEC meeting this week will produce meaningful production cuts.
The price of oil sank nearly 4 per cent. Among energy companies, Hess fell 3.8 per cent.
The Dow rose 23 points, or 0.1 per cent, to 19,121. The Standard & Poor’s 500 index climbed 2 points, or 0.1 per cent, to 2,204. The Nasdaq composite edged up 11 points, or 0.2 per cent, to 5,279.
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11:45 a.m.
Stocks are turning higher on Wall Street as the market shakes off an early stumble.
Real estate and health care companies are doing the best in midday trading Tuesday, but the energy sector is still lower because of a drop in the price of crude oil…