Investment Q&A

Q: The Fed has basically said that it will keep interest rates low for the foreseeable future, and allow inflation to run a bit higher, to average 2% longer-term.

It looks as if we will be heading into a new investment environment where interest rates could be lower than inflation for an extended period of time. In this type of environment, what factors, sectors and geographic regions do you see doing well? Given the high current valuations for high tech and FAANG stocks, do you continue to recommend overweighting this sector for the next few years?

Thank you for your valuable insights.

Q: If we found a Covid-19 vaccine tomorrow, what are the most depressed companies now that would benefit the most?

Q: What would you conjecture would be the market's response if the following were to occur: 1. Biden wins so decisively that Trump leaves with very little resistance 2. The Republicans win the Senate and 3. Shortly thereafter, we come up with a successful vaccine ? Thanks.

Q: Hi Peter and Team,

Now that the second wave of Covid is deemed to be officially here (at least in Canada), do you have a sense that another steep market drop is inevitable? I was reading an article by Rob Carrick in the Globe today, and his advice (verbatim) is, "Anyone who has money that they cannot afford to lose in stocks should get it out, right now. This includes seniors who don’t have their cash cushion set up, home buyers who got tired of earning nothing by keeping their down payment money in a savings account and, more broadly, anyone who will need their money within five to 10 years."

Sounds like Rob is pretty convinced that a significant drop is likely, but my inner gambler voice is telling me that most people expect another quick market rebound (like from April-August), which may negate having a steep sell-off in the first place. Any thoughts from your vantage point? Thanks. Brad

Q: I just recently retired and within my portfolio have approx 60% in Bonds (As per above) - while these have been a great hedge against the equity holdings, I am considering either selling some of the bonds listed above - approx 10% and moving these monies into either high yield bonds - ie CHB or ZHY or if not into high yield bonds possibly a high yield dividend fund like XEI or ZWC or ?
While I would like to increase the income on these monies - do you think this is a good time to make this move?

Q: Hi,

I use these two broad ETF's to get exposure outside N.A. I'm in my late 30's and a growth investor. I know you can't give personalized advice, but what would be your suggested allocation towards these four buckets, VEE, XEF, Cdn, and US stocks? I have a spreadsheet to keep track of my holdings and allocate my holdings based on where they trade, although many companies may generate revenue in other countries. Is this too simplistic? I'm just trying to keep it easy to manage.

Thanks!

Q: To what do you attribute this mornings sharp sell-off?

Q: Hi,

1)What 2 sectors of the economy (not technology) would u be most confident of appreciating in the next five years? Consumer discretionary? Healthcare? Utilities? Banks?
2) I'm a medium risk investor looking a for a US etf with reasonable beta and sustainable growth. Can u suggest 2 or 3? It can have some tech but not be mainly tech as I already own AMZN, Apple, Netflix, Zoom, Shop.
3) Are there any CDN version etf's that cover the same sectors of the US? Can you suggest 2 or 3?

Q: Hi,
Pardon my ignorance ,but I would think that what Jay Powell said today (16 Sept) would actually be bullish for stocks and gold.
My reason is that low interest rates for a long period of time will induce people to take risk and invest in stocks in order to conserve their purchasing power. They will also borrow more money for purchases etc. In addition, as interest rates remain low , the money supply is being inflated which should actually cause the dollar to fall and hence, commodities like gold that are quoted in US dollars to actually rise.
However , after his speech and even after market close, the markets, including the futures are pointing down and so is gold. To my surprise, the US dollar is up.
My last point is, if the entire worlds central banks are inflating their money supply, should this not have the added advantage of markets benefiting and that will include gold too.
Is my concept of economics skewed?


Thanks,

Q: With some of the advance news coming out re the content of the upcoming throne speech, what impact will the speech itself have on the TSX, and what further impact will implementing the policies have on the TSX should this government remain in power. Is there anything proactive an investor should be doing to protect their portfolio for this? Thanks

Q: Hi 5i,
I'd like to ask another one of my "what are you thinking these days" questions.
Obviously predictive and won't hold you to it but what's the mood on the street and what would expect short to medium term?
Just curious
Thanks
Mike

Q: There is no doubt carbon energy stocks are out of favour for many reasons, not least of which is the green movement. The future is all leaning toward electric vehicles (which I agree with), but I also realize electricity isn't going to appear out of nowhere. I could be completely wrong, but I don't believe wind and solar will be able to replace fossil fuels anytime soon. It's "very" possible more sustainable energy will appear down the road to replace fossil fuels, but so far I haven't seen a golden goose. I also think the Big Tech Companies are getting away easy when it comes to climate change. They are using a lot of electricity (and producing Co2) to run the steadily growing Data Centers (the Cloud). They claim they are using mostly sustainable energy, but I don't buy it. At work, even small communication rooms need a fair amount of cooling. Also most computer components, phones, etc. are throw away items filling landfills. So this is just an opinion I have today which could change, but wondering what your thoughts are on this?

Q: hi. clearly, the stock markets are highly manipulated now with direct government purchases of stock and bonds, and with central banks manipulating rates to the extreme lower side to force investors into stocks. the markets clearly are out of step with reality on Main Street. do you think this matters anymore, or is the stock market and it's players also post truth now?

Q: Morning team,

I've recently taken some profits and have some cash to deploy for long term holds. And I would be interested to know what your top investment "themes" would be for the next 5+ years are? For instance, ideas that come to mind for me are Cloud computing, "green" investment, and cyber security. Are there others that you find more intriguing? And which companies/ETFs would you recommend as investments?

Thank you again for you insights!

Q: From what I am reading the federal government is going to go significantly increase spending in the next budget [latest number I am seeing is $100 billion]. This will take Canada's debt well over $1T, probably a further downgrade in Canada's debt rating from the current AA. As a retired person would I be correct in thinking a larger part of one's portfolio should be shifted to basic materials including precious metals, to foreign and US bonds and to a healthy cash balance in foreign currencies such as the USD, GBP and EUR?
As you are aware inflation is a killer for people living mainly on pension income so I'm trying to look forward and take action in small steps over time.
Thanks.

Q: I am wondering where you see the Canadian dollar headed in the near term and early 2021. If I am interested in purchasing US equities do you think I should convert now or wait for our dollar to go higher. Since I am also anticipating volatility in the next few months I don't want to miss my chance at converting and acquiring US equities. Thank you!

Q: hi 5i,
Would you please comment on this article;
David Rosenberg: No matter how you slice it, markets are in a bubble of historic proportions; And the higher they are, the harder they fall.
https://financialpost.com/investing/investing-pro/david-rosenberg-no-matter-how-you-slice-it-markets-are-in-a-bubble-of-historic-proportions/wcm/ccfab059-78b1-480e-8b01-b3ae4cefe8d0/

thanks

Q: How worried should we be?
The current government seems determined to bankrupt Canada
The latest headlines:
Parliamentary Budget Officer States, "The federal government has no more than one or two years to rein in the hundreds of billions of dollars in deficits it is wracking up through coronavirus spending, or risk the debt being “unsustainable.”
- And there have been recent reports of plans to increase spending, with CBC News citing one Liberal insider as saying the government plans on spending “on a scale we haven’t seen before.”
- Trudeau plans to roll out an “ambitious green agenda”. He said the country needs to focus on a green economic recovery to climb out from the effects of the COVID-19 pandemic.
- Trudeau has also touted the need for expanded employment supports, including new child care and social spending.

This is very disturbing and seems to confirm a government that is completely out of touch with reality and economics, and leading Canada down a path of debt that our grandchildren will be paying for.

What are you thoughts? How badly could this play out? How concerned should we be?

Q: Hello 5i team,
Let’s say the S&P500 decreases by -15% from its high earlier this week over the next few days or weeks for no specific reason other than stretch valuations, COVID, elections and fiscale stimulus uncertainties. By how much would you expect each of the following stocks (DND, DCBO, LSPD, REAL, DSG, WELL, XBC, VEEV, BYD) to go down (a guesstimate for each)? Among other of your favorites, what other stocks could see an even worst correction?
Thank you for your collaboration, Eric

Q: Any bad news causing the TSX has a big drop today? Specially, the technology sector declined more than 5%, any reason behind?