Investment Q&A

Q: What was the sector rotation in the US you spoke of yesterday?? It was "a fairly strange market day with a giant US stock reversal."

Q: SOX has been on a hot roll this year. I know you commented positively on Q3 earnings but any idea subsequent to that as to what has lit the fire?

Thanks

Kim

Q: Hello:back In the 1990’s the tsx and the Dow were just about even. Today there is about a 10000 point difference. In general terms, can you explain why this has occurred. Also I have read in several articles that the tsx usually lags the Dow by about six months to a year. (Either up or down). Do you agree with this statement. If yes will the tsx begin to narrow the gap in the next few years?

Q: A question about Geographic Diversification.
Percentage of Canada, USA and World Stocks?
What is the recommendation? For 2018?
Thank you.

Q: Hello Peter,

1) Your thoughts on Midas Gold. I was thinking of purchasing some based on the possibility of the Idaho Project going ahead. Is it viable at 1300$ Gold
2) Your thoughts on New York City disposing of Energy Infrastructure. Seems like everybody is down on Oil and Gas. I'm thinking this is a start of a trend to move away from the energy companies engaged in Oil and Gas. And will it negatively affect oil and gas.

Kevin

Q: Hello 5i team,
S&P Dow Jones Indices and MSCI recently announced revisions to the Global Industry Classification Standard (GICS®) structure for 2018. I think it would make a great topic for a 5i blog. In the meantime, I have a some questions: (1) does this announcement confirms that we should not always follow blindly industrial classification? (2) the classification is not always up to date, especially in developing industries (internet, telecom, media, communication) or when companies are transitioning activities? (3) Investors should allow themselves to split classification 50%/50% for some companies? (4) Could you list some companies that you think are currently "misclassified" by index providers (SHOP communications?) including companies either under coverage or in 5i Research portfolios or that will be reclassified?; (5) Would you agree that this announcement confirms that long term investors should not care that much about short term sector weighting fluctuations (rounding to the closest 5% is good enough) and should focus on selecting the best investments (stocks) whatever the sector, while just avoiding too high sector concentration, instead of doing mandatory diversification among all sectors in less good companies (for exemple recently : energy)? My main point is: many investors will change the composition of their portfolio (trade) following S&P and MSCI decision while their portfolio exposition (economic drivers) will not have change. Reading most 5i Research questions every day, I see many questions about sector allocation. I thought my questions would help some clients. Any other thoughts?
Thank you for your collaboration, Eric

Q: what is outlook / recommendation for cdz

Q: Hello 5i team,
In light of the uncertainty in NAFTA. If a company is exposed to the states in any way and they wish to give guidance as to the impact of a NAFTA collapse, would this be given in the MD&A for a company?

Andrew

Q: You have mentioned on occasion that the Tech sector tends to be the hot sector during the last quarter of the year.
The market is behaving quite well at the moment with a reasonable amount of optimism. Do you expect there to be a shift from investing in the tech sector to other sectors given the current investment climate?
Which sector(s) would you think will most benefit from any possible shift of funds in Canada and the US? Or has it already happened?

Q: I feel like I'm consulting an oracle here but I am wondering what your thoughts are on an impending correction. My concern is with respect to the amount of people chasing up tech and marijuana stocks especially. Everything has risen so much in the last 6-12 months that I can't help but think we are over due for a pullback. Would it be wise to sit on the sidelines and wait? I hate to miss out on the party but I'd rather lose a bit of upside here and be able to take advantage of a possible major pullback than be the last one out the door after the party is over. Thanks in advance.

Q: Curious for your thoughts regarding the potential impacts on companies such as WSP and Stantec (companies that provide services in the US vs sell products) resulting from a collapse of Nafta.
Thanks
Joe

Q: Norman Rothery recently wrote an article regarding the CAPE ratio. He indicated that the CAPE was above 32 where as the median value is aprox. 16 implying that a S&P market correction of 50% would be needed to bring the market down to its median value. The article was very convincing as are all his articles, they seem to very well researched and well presented. Could you comment on this CAPE ratio and how much faith would you put it. Thanks Ron

Q: I think the US tax cut has the potential to be inflationary. Investors will have more money in their pockets as the US indices go up and at the same time US government debt will go up since tax income declines but spending does not. The government will be borrowing more to fund their operations. Inflation will help the government as they can use depreciated dollars to pay off their debt. I don’t really buy the argument that increasing economic activity/wealth will somehow flow into back into government coffers replacing the revenues lost to the tax cuts. That being said are gold mining companies a good hedge against inflation? Inflation seems to lead to higher interest rates which is bad for gold. We own some AEM but our weighting is a bit light. Any recommendations?
Thanks
Jim

Q: I am wondering if the current bull market has a lot to do with new investors coming into the market. As it becomes cheaper and easier to invest, and the importance of utilizing TSFA's becomes more apparent, it seems to me more and more people are opening TSFA's and buying stocks. As volumes increase does that not necessitate higher valuations in general?

Q: For a relatively young investor (mid-30's), is there anything "wrong" with having mostly small and mid cap stocks? Is this ever recommended, or should an investor have a minimum % of their equities as large caps?

Q: I have been using 2.6% as the TSX dividend yield for 2017. Accurate? I read 2.8% somewhere recently. Thanks for your help in clarifying. As always this simple metric is surprisingly hard to find.

Thanks!

Kim

Q: Until recently the pundits were claiming the Can dollar would be going lower in relation to the US dollar, in the last week or so that tune has changed. Given the recent CAN dollar strength, what does your Crystal ball say going forwards? ( and why, US Tax? move to commodities?)
Much thanks

Q: What would you consider the top sectors that represent value opportunities in 2018 in either Canada or the US?

Wishing everyone a healthy, happy and prosperous 2018.

Thank you for your valuable assistance.

Q: I believe there is not much opportunity in the the technology and health sectors in Canada, so have invested in USA to gain exposure to those sectors. Are there any other sectors where investing in USA be preferable to maintain proper diversification by sector?

Q: Listed above are the stocks i currently have in my TFSA Would you suggest selling any of those listed and what would you suggest adding for 2018? All are approximately equal weight in my portfolio?
Thks for all that you do

Marcel