Investment Q&A

Q: The CEO of Brookfield made the following comments in recent Letter to Shareholders: "With no meaningful inflation on the horizon and high unemployment numbers, there is an expectation that interest rates will stay low and that stocks that were not bolstered by the pandemic trade will recover....Low interest rates will continue to drive demand for alternative investments. Interest rates appear to be set to stay in a lowish band for several years".

Any thoughts on the low inflation comments? Thanks
Robert

Q: There is a lot of talk about a shift to value stocks. What is and how do I identify a value stock and can you give some examples of current opportunities in your portfolios and generally please?

Q: Hello 5i Team
I have questions about the market run up in general as of late ?
I own all 5i research stock in the portfolio and plus others that 5i has recommended . I am getting mix signals about the market for this year. I have done very well with your recommendations , looking for directions on the market outlook for 2021? Please deduct credits as appropriate.
Regards
Claudio

Q: I keep hearing the equity market will move down when the Fed begins to indicate rate increases are on the way, when that occurs where would one go as Bonds will also fall when rates rise? I'm just looking for safety with a modest yield, say 4%.

Q: I am looking for suggested sector weighting’s for a senior (75 plus), mostly conservative, investor.
Much appreciated as usual - ram

Q: Good afternoon, I am starting to get nervous.... hearing lots of predictions on BNN from different sources of market being in dangerous territory and tech bubble about to burst. What is your advice?

Q: i understand anytime is a good time to buy stocks, but I feel this recent rally is slightly overdone Is this run up a combo of Major trading firms covering any shorts they may have on their books as reddit chases different asset classes and maybe some institutional cash being put to work?

Q: When the Gamestop frenzy was active Wednesday the market dropped 600 points. When it was restricted Thursday the market recovered. Now the market is plunging again. Is this mere coincidence or are funds which have to cover their shorts being forced to dump shares in other stocks on the market in order to get the cash to buy gamestop? In other words, how much of the fall the last few days is due to the actions of the reddit gang?

Q: I'm currently holding about 30% of my portfolio in cash. Partly as a hedge and partly as liquidity should there be a market correction upcoming. The rest is invested in blue chip dividend paying stocks and a couple growth stocks.
I understand you don't give personal advice on weighting ands risk level but would you consider this too /very conservative?
I'm looking for suggestions to park the cash to make some sorta of return and can only come up with CMR but yield is so low not even sure if its worth it. Thoughts?

Q: Hi Peter,
Is market going to crash? or big correction? Your opinion please.

Thank you.

Q: What percentage increase do you believe the Dow, Nasd and TSX will be this year. I understand we will have many political, economic, social and health issues to overcome.
Clayton

Q: I have $60,000 in an RDSP that I am transferring to a self directed account. At least $6000 of new money per year will be available for new investments. I have a 20 year investment horizon with a balanced to growth focus. Luckily I subscribed to 5i in September and have been closely following the Questions and Answers, your posts and updates, and company reports.

I will use the sector allocations you provided to Tom on Jan 6th for 2021. I need your guidance on how much of the portfolio to invest in the Canadian and US markets, and other geographic regions / countries. For the Canadian market I plan to invest in individual stocks. For the rest of the portfolio I will use ETFs.

Q: Should investors change their goalpost metrics of valuing companies when investing?
Nowadays many complain about seemingly high valuations of many companies.

In the past, companies with a high P/E ratio would raise alarms - now it seems it's de rigeur - Apple has a P/E ratio of 43 for example! Does this go hand-in-had with investors accepting very low interest rates?

At first I thought it crazy that a company like Apple would earn $1 for every $43 dollars of share price but then realaized the US 10yr treasury currently gives me $1.09 for every $100 of principal .

Should the yardstick of what constitutes fair value be changed in light of these lower interest rates?

I know there are many ways to value companies but what would you say would be a 'fair' P/E ratio nowadays? Benjamin Graham had a formula and I'd like to see your opinion.

Q: This week, Yellen said: “Neither the president-elect, nor I, propose this relief package without an appreciation for the country’s debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big. In the long run, I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time.” What she does will surely have a big impact. What are two guesses for what she will do?

Q: There seems to be lots of buzz in the media lately about dividend stocks being hit hard when inflation/interest rates rise. What are your thoughts on this? Isn't this just short term noise for the long term dividend investor.

Q: Since 1974, with my 1st investment in koffler stores (shoppers drug mart),I have looked for some rational reason to purchase a stock.
Obviously I have seen some times that I cannot explain. Today is one of those days.
I own fdx market cap 60 b more or less
I see door dash has a market cap of the same
How can this be reasonable in any way.
Have investors lost their collective minds or is it possible we are entering a dangerous time in the market .

Q: Hi 5i
Bitcoin is a real head scratcher for me. I can't see why anyone would use it as a form of payment considering stories like "that pizza purchase years ago is the equivalent of millions in todays value" or "I have a couple of password tries left before my disk is encrypted and my millions are lost forever" ... so there's goes the asset / store of value argument. Maybe I'm getting old but I just don't get it (having said that I bought a small amount of ether and ripple as a learning exercise a few years back and still hold it ).
In any case, the real question is with more etfs/companies piling into bitcoin related investment, if it were to grow to such an extent as to be bubble territory and subsequently experience a severe pop, would it have any side effects on the rest of the market or specific sectors of the market do you think? i.e. would it ever be anything to be concerned about ?
Thanks
Mike

Q: 10 Years Treasury Yield is rising fast laterly. Is that a result of Fed asset purchases slowing down? Where can we find such information (such as monthly or weekly purchase amount)? Thanks.

Q: With high Canadian government debt, increased money supply and excess stimulus spending, I feel inflation is a growing concern. Your thoughts on real return bonds (XRB) and commodities including Tek,B, and Suncor as well as the Can$ in the coming year?

Q: What to you consider the long term consequences of the Democrats now having control of the Senate and House of Representatives with regards to prospects for Enbridge? Of immediate concern is the rumoured pending announcement by Biden to cancel the XL pipeline in an effort to appease the left leaning members of his party.