Investment Q&A

Q: Peter and His Wonder Team
My question is about this possibility of a Debt Jubilee. I have been hearing more about this lately. I am not a "doomster" but have studied history long enough to know unusual events can and do occur. So in the USA the debt load on families is extremely high, university loans over a trillion, car loans and mortgages also high and of course local, state and federal government in serious debt. All the while the middle class is shrinking as wages have lagged behind as automation and productivity has steadily increased in the past 20 years. The Republicans have moved to a strong conservative position. At the same time the Democrats continue to promise more hand outs. So the theory goes that in the 2020 election the Democrats may promise Socialized Medicine for all, a Universal Basic Income Monthly Check and a Debt Jubilee which eliminates student and other loans which will be a dream come true for the shrinking middle class. In other words there may be a radical move to the political liberal left so the Dem. can regain power. I know this Debt Jubilee is not a new concept and is attractive to many. If so there will be losers as wealth is redistributed. Your comments pease. If this were to happen where should a little retail investor run? My first thought is gold since inflation and panic should sour.
Thanks!

Q: Our 35 year old son parted ways with his financial advisor and I have been chosen to invest the sizeable cash balance in his rrsp. I get that you discourage market timing. Many are talking about a late 2019 correction; who knows. I can average in over 6 months, but that is little help if the above correction happens. I can average in over 18 months; is this practical. I don't want to be the one responsible if he suffers a large draw down.

Based on your years of successful investing, please help me benefit from that experience and comment what you would do in this situation. The etfs mentioned would be the investment vehicles.
Thank you for your input.

Q: Would you be able to comment on this article and suggest some defensive strategies to prepare for this?
As always, thanks for your insight.
https://www.washingtonpost.com/business/economy/beware-the-mother-of-all-credit-bubbles/2018/06/08/940f467c-69af-11e8-9e38-24e693b38637_story.html?noredirect=on&utm_term=.1408c8689773

Q: With Michael's Q on D. Rosenberg interview. What I am curious about was DR's call on the Fed fund rate for next year. He was saying it should be 2.75% now and that this is what it will be next year. As I heard DR he was saying the market is unprepared for this eventuality. So first, do you think that is a reasonable observation i.e. market unprepared for that large a rise? If so, is it enough to cause a 10%-20% pullback?

TIA

Q: Hi there, I watched an interview this evening with David Rosenberg who was predicting a recession in 2019. My first question is what is your thoughts on this and do you agree with his perspective and second - while I know you are not in favour of timing the market, how would you approach/adjust your portfolio if you believe we were heading into a recession? For a person no fixed income portion, would you stay 100% invested in equities or move into a partial cash position - if so, how much cash? This bull market seems like its in extended innings, however the economy seems to be doing well overall and earnings seem strong. What do you think the best approach for ones portfolio heading into the 2019 or 2020?

Thanks!

Q: It’s becoming increasingly clear Canada is facing challenges on many economic fronts from increasing regulatory burdens, inability to attract foerign capital and sub-national debt at the provincial level. Given that these, among many other, factors make Canada a questionable destination for investment, I’m wondering about your take on what this means going forward. Apart from an increased international focus, are there some Canadian companies doing business in Canada you feel can benefit from a potentially deteriorating economic scenario in Canada. I've recently taken a position in GSY and am considering DOL. Your thoughts on these and other suggestions would be greatly appreciated.

Q: I am interested in your views on the current market cycle. How much longer do you think price appreciation in the Canadian housing and stock markets will continue? And what would be factors that could cause a weakening in those markets?

Q: A lot of banter back and forth and possibly a trade war that could even go Global if it happens .
Can you give me a list of stocks that could be hit the hardest if this happens?

Q: Ian Harnett of Absolute Strategy has talked about Canada being one of the countries most likely to experience severe financial crisis, due to the (high) house price to income ratios. We've been hearing about a decline in housing prices for years but it doesn't happen. But assuming a collapse in house prices WERE to occur, what sectors of the Canadian economy (if any) would be least affected ?

Q: I am new to 5i. My question pertains to portfolio management within 5i portfolios.

I have read your paper on when to sell a security - it is an interesting article. I am wondering if you have a similar paper on when to buy a security? Members who joined at inception have benefited by your portfolios. I am following your BE portfolio and have slowly transitioned my exiting portfolio to resemble your BE portfolio. At the end of last quarter I purchased AIF, ENB, WSP, SJ, SLF, KXS, COV and VB. With the exception of WSP all are underwater.

I have read enough of your posts to gather you avoid market timing and instead take a long view of five or more years. The markets in the USA are late cycle, rising rates, inflation and global tensions are front and center. On several occasions you recommend members raise cash to protect against market downturns however your BE portfolio has a 3% cash weighting .

My question is - do you have a paper on when to purchase securities you have deemed worthy of purchase and how should members raise cash within your portfolios?

Thank you

Q: There's lots of chatter about a secular rotation out of stocks and into bonds. The US 10 year treasury bond has crossed over 3% and lots of speculation about more interest rate increases coming from the Fed. I've seen declines in my bond proxies (REITS, Utilities, Pipelines, Infrastructure, etc.) over the past few weeks but in recent days lots of talk from talking heads and analysts suggesting that the market has peaked and could be time to rotate. What is 5I's position?

Carl

Q: what do you think of david rosenbergs column in todays globe, why this rise in interest rates has me very concerned.
personally i think he is far more correct than wrong.
and please do not answer with for every viewpoint there is an opposing view.
rosenberg backs up his article with facts. dave

Q: Hi Peter
Recently several high profile investment advisors have predicted an "eminent crash" in the markets. Any suggestions on how to protect oneself in these uncertain times. Do you believe a crash is eminent.
Thanks.
Cam

Q: In a well diversified portfolio which one of these three companies would you choose for a long-term hold and with a view of an increased probability for a recession by the end of 2019? Can you please comment on your investment rationale?
Thanks

Q: Hi Peter,

With the TSX not doing much in recent months, are there any sectors in it that are starting to look good? Any sectors that could see some positive movement in the near future? Any recommendations in those sectors? I'm looking for growth with medium to high risk.

Thanks as always. Please deduct as many credits as appropriate.

Q: I know you are not a fan of market timing. However, with all the action coming from the Mueller investigation of Trump I can't help but digest and interpret the news as a tightening of the noose around Trumps neck. I've gone to 20% cash and might not be done yet. I've committed to sitting here until Mueller resolves one way or the other.

My question is how have markets reacted during previous impeachments (eg. Nixon, Clinton)? Obviously negatively, but to what degree and for how long? Would international equities be less effected?

Best.

Q: I've noticed very divergent opinions on the future of the Canadian dollar versus other currencies. My own opinion is it's headed down but, as you know, these things are difficult to predict especially when unknown political decisions can suddenly change things. Do you have opinions in this area? How do you anticipate the Canadian dollar will perform versus the US dollar, the Euro, the Pound, etc? Do you make recommendations regarding the amount of foreign exposure in investment portfolios based on forex implications. If so, where (US, European, emerging markets, etc.) and what percentage?
Feel free to choose your own time periods if you feel able to answer this.

Q: I was wondering what your thoughts are on using Put Options to protect a portfolio in the event of a market crash?
Thanks, Bill

Q: Is Canada closed for business while we wait for NAFTA results ? Not building Pipelines is a negative for investment in Canada. The tree hugger's seem to be in control of our Natural Resources. The First Nations are directing Mr Trudeau. as to development.of our Natural Resources How do international Investors view Canada as a place ti invest ?
Are these Investors avoiding Canada ? RAK.

Q: Hello,

In your opinion, why does the TSX continue to underperform compared to the majority of markets around the world? What do we need to do to fix this?

Regards,

Robert