Investment Q&A

Q: Hi 5i team.

I am interested in your analysis of the following.

Given the markets appear to be trading at higher multiples vs "normal", can you please comment on what the current levels are, what the median levels would be (that history shows us) and what the market levels would look like if a reversion to the mean took place?

Many thanks.

Q: Hi folks.

With all this talk about higher inflation (new shiny object for the media) there has been very little discussion on the explosion of debt Countries have embarked on, pre, and since the onset of Covid. Seems like this appears to be a coordinated effort throughout the developed world, and as a result, no one seems too bothered, Including Conservatives.
Are there any lessons in history we can draw from? How does 5i think this all gets resolved over the next decade or two, assuming it will take a bit of time to generate enough growth to cover all this?
Are we headed for multiple Japans where the Gov't owns all or most Gov't issued bonds to control interest payments. Does this scenario create even more inflation with depreciation of currencies and a race to the bottom on exchange rates? Way above my pay grade so please take a stab at opining on this for us.

Many thanks.

Q: I am currently over-weight in Financials (more than 50%) in my portfolio. I am in the process of slowly re-balancing by first of all moving some $$ into Utilities & Telecommunications. What would be a reasonable % of portfolio for an average investor to have in Utilities & Telecommunications?

Q: I am reading "Machine Learning for Algorithmic Trading" by Stefan Janson. It states that algorithmic trading in '19 accounted for 35% of institutional trading (excluding HFT) that is increasingly dominated by ML driven systems (Rebellion Research, Sentient, Aidyia,..) and of course we all know about Renaissance.
I am curious about any comment you might have on that topic, do you see value in this for your style of trading and maybe even considered using it. Your results are already spectacular, so my question is driven only by intellectual curiosity.
Peter

Q: What are your thoughts on the market and a big correction? Several articles of late saying it could happen sooner than we think, the most recent being a G&M article by George Athanassakos, wondering if you saw that one?

Thanks,

Cam

Q: I noticed huge collective volatility in a few stocks that I follow for the period May 13-May 21. Beaten down growth stocks rocketed up; C3.AI up 40%, PLTR up 16% and XBC up 36%, while a typical copper producer CMMC was down about 25%. It looks to me that there is a huge amount of speculative money out there looking for very short term gains, pouncing on anything that looks undervalued and shifting from sectors that have had a good run. I guess that it means that the individual investor has a high probability of getting whipsawed and that long term investors should not be overconcerned with short term volatility. Do you have any comments on this? Thanks, David

Q: In light of the expected recovery and the need to get goods and materials to the users and markets I am wondering what your opinion would be with regards to investing in transportation companies and if you feel this is a viable area to invest in, what companies would be a top investment and is there an EFT that may also be a consideration.

Q: Hi group - how deep is the correction going to be (i know its only a guess) When would you deploy cash into the market . What's you top pick for each of the 6 main sectors / why? thanks for your guidance

Q: What is a growth focused investor to do in this market? I understand the shift and aversion from high growth/tech names into value stocks and the fears of higher inflation/rates affecting markets going forward are hard to predict in duration. Many growth companies are reporting solid earnings, however are still falling with the market backdrop. With a 5% cash weighting currently and as I see some of my position weights in my growth stocks decrease because of this market drop, does one A) increase exposure now to value names and sectors that could benefit in the short term such as materials, industrials, energy or B) further add to quality growth names if one has a longer horizon (8-10+ yrs) such as WELL, LSPD, VEEV, TOI, NVEI, U, DOCU, CRWD and just ignore this short term shift in sentiment? I just don't want to be catching a falling knife in some of these growth names but I see some great entry prices to add a bit at these levels with them being 30-40% off from the recent highs. Thoughts?

Q: Hi Team,
As a growth investor my stock portfolio is about 75% high growth tech weighted (mostly US) and has now fallen 25% or so from peak during this rotation. I have so far been hesitant to trim or sell anything up to this point. Is it time to bite the bullet and cash out part of my holdings and buy into other sectors that favour inflation? Or do you think the damage is near done here and possibly start adding to beat down quality growth names? Right now the sky is falling for my type of portfolio and trying to decide which way to go. Or perhaps just do nothing...
Thanks
Shane

Q: May I please have your comments on the earnings for both companies. Thank you

Q: Good evening (or morning, as the case may be!)
I have been asked by friends (a couple, she is 72, he is 81) to help allocate $500K from sale of a house (going to rent an apt. since he is going blind) for a dividend income stream to supplement their pension income. Their hope is to have 4.5% to 5% dividend return, with no major concerns about capital appreciation.
1) I can recommend certain equities (such as PPL, ENB, CM or BNS, SIA, LIF, CPX, EIF for example), but wonder if there might be 5 or 6 others they might add to the list.
2) Would there be any ETF's you could suggest that pay a dividend in that range with a reasonable fee?
3) As another consideration, I have taken a look at annuities, and wonder if you might know where they could purchase same (most likely joint) safely and with a good return. They do not have any relatives so inheritance is not an issue.
4) Last of all would be whether you might suggest a mix of these three (ETF, Annuity, Equity), and if so in what percentage.
Of note, they are not interested in investing globally as they have concerns that the US dollar will be falling and they worry about other countries. The "sleep factor" is important here. Their diversification will be in Canada alone.

Thanks! Please deduct as many credits as you feel warranted.!
Paul K.

Q: With the supposed supercycle in commodities (I'm thinking metals oil and lumber) is it too late to jump in now? What would derail the commodity run?

Q: Hi Peter, Ryan and Team,

I was wondering about what is the best course of action for an investor when interest rates rise? Should we get out of growth stocks and move to consumer and noncyclical stocks? If our time frame is 5+ years, should we just stay the course? What 3 or 4 stocks would you recommend when interest rates rise?

Thanks for your helpful advice!

Q: What do you think is the remaining downside in this market? 0% or 5% or more than 10%? It does not bother me because markets go up and markets go down!
Many thanks
Clayton

Q: In your opinion, which sectors of the market would you consider to have the best momentum for the remainder of 2021? Would it be tech, biotech, health care, industrials, mining, gas & oil, or value stocks? Which areas to you predict to be most promising in Canada or in USA? I am wondering where to put some extra cash.
Thanks.

Q: Retired, dividend income investor. I'm curious of your reaction to mega-investors such as Buffet and Lee-Chin, who have substantial hordes of cash (in the 50% range). They were in the news in the last couple of weeks, basically indicating that the time in now, to increase one's cash allocation. They are finding it difficult to find value in the market and certain sectors are in bubble territory (my understanding of their message).

I know that there are investors on both side of every trade. I also understand that if one removes the biggest names from the S&P, that there is reasonable valuation still there. My own personal belief is we still have room to go, due to low interest rates, increased vaccination rates, recovering economies, reflating the supply chains around the world...the list goes on.

I normally am fully invested, with virtually no cash. However I can't help but wonder whether I shouldn't increase my cash allocation...even though that puts me in the camp of "market timing". I suspect part of your answer will be to increase the cash to your level of "sleep at night" comfort.

Just curious of your thoughts on where we are in the market cycle. Thanks for your help....Steve

Q: Hi,

I'm seeing more and more evidence for inflation being a real thing that is not yet formally accepted by US or CDN governments. Evidence is obvious increases in the price of some common items (food, lumber, metals, housing) and also an uptick in commentary on the subject by some trusted SA authors.

Can you provide some sectors that typically benefit from increases in inflation (Gold, Finance, etc) as well as some specific company plays that would benefit from increases (Can or US).

Thx,

Cam

Q: Good Morning,
My portfolio, although generally diversified across all sectors, is definitely tilted toward growth stocks and technology. It reached peak value in mid-February, but things have gone downhill since. The market shift to value, materials, financial, and industrial stocks continues to push my personal NAV lower. I know this is driven by the fear of increasing interest rates and inflation. I have only made some minor tweaks to my mix of holdings, but in your experience, is it time for investors to lighten up significantly on growth stocks, or will the pendulum swing back with so many positive earnings reports. Of course, this is somewhat of a market prediction question, but do these trends last for years? My investment horizon is about 5 years. Any insight would be appreciated. Thank you for your excellent service, which (by the way) is attributable to substantial gains in my portfolio since I became a member.

Brad

Q: A few questions about the blog article "The Bigger Short" by The Intercept. Do you concur with the thesis that there could be a crisis in U.S. commercial real estate due to the overstatement of the retail borrowers ability to repay loans and mortgages and the repackaging of such loans into trusts (similar to residential mortgages before 2008)? If I read it right U.S. banks and other lenders could be in jeopardy. Would there be a similar situation in Canada and would companies such as BAM.A be susceptible. No rush on answering and take as many credits as necessary. Thanks.