Investment Q&A

Q: It seems that Japan's economy is in trouble and that we should all be taking note. The Japanese are the largest foreign holder of US Treasuries . If they start selling those Treasuries what impact would that have on the US economy and on the rest of the world ? There is an article in the Financial Post this morning entitled "Japan's Bond Market is flashing Red" Why investors should pay attention. Your comments would be most appreciated.

Q: I understand it is impossible to predict, but do YOU feel it’s wiser holding cash at these All time highs? Wait for a drop and pounce? Or buy at these numbers as All time highs indicate excellent businesses, assuming a long term hold.

I am about 25% cash. Too much in this market ? Thanks

Q: What is the Bloomberg U.S. Pure Momentum factor index?

Q: A question of how to take profits on a stock that’s has run up. If a stock has run up 80% for example, do I take the initial cost base off the table or do I take the profit off the table to redeploy. Idea is to keep the stock in play but also take either/or and reinvest it

Q: Do you know of a site that lists the component companies of the TSX Venture Index by weight in the Index? All I can find is an alphabetic listing, and a top 10.

Q: In the Globe and Mail, July 16, there was an article by Scott Barlow called "Valuations and market concentration are reasons for concern." He likens the current Technology sector to mirror many of the same realities as the 2000's- before the dot com bust. What is your opinion?
As always, Thank you for the fantastic service too and helpful guidance. Ric

Q: I am currently taking CSC and in the textbook they talk about negative interest rates happening during Covid in the US and that they have happened in Japan or in Europe. I don't understand why firms would choose to buy bonds that guarantee them a loss of money when in theory they could choose to just hold cash. Could you please provide some clarification on why firms or people would buy (nominal) negative interest rate bonds?

Q: Everyone, as an example Brookfield has a number of companies under management. I assume CSU will be doing the same. How many companies under the same umbrella should you have. BAM and CSU are great companies with superior management but when is enough enough? Clayton

Q: Over the very long term, say 50 years or 100 years, longer if you know, what is the average return on the US and Canadian stock market including dividends? Say for the S&P 500 and the TSX Index. How have more recent returns, say over the last 10 or 20 years, compared to the very long term average? Do you expect the long term average to be a reasonable expectation for the next several decades or are there market forces at work that would tend to increase or decrease those expectations? I understand the last question requires a bit of guesswork.

Q: I am a senior and have been a member of 5I since you started. Between us "we" have been very successful!
I want to give back in the form of an endowment to our local Church to continue providing funds for a couple of local charities that feed and provide to those less fortunate! I will be allocating shares to Canada Helps to provide the seed funds, probably 100-200K.
I know stocks would be very difficult to administer, but ETF's less so. Also, maybe they can only do Mutual Funds.
If mutual funds do you suggest MAWER?
If ETF's and using some of your previous correspondence do you continue to to suggest ZSP, XIC, VIU, and CDZ.
Any help you provide would be greatly appreciated as we meet with the Church Staff.
Warmest Regards Gordo

Q: Hello 5i,
largely thanks to you, I have made a fair bit of money over the past few years. Certainly, more than I would have made on my own. Thank you. But, I am thinking that in my mid 70's I should start thinking about preserving it in order to pass it on. I know that stocks are you're forte, but i noticiced that you have been generous enough to give advise on other matters, as well. I will try to make this question not too close to portfolio planning advice and so hope you can advise me. In reviewing literature I notice that people say at this stage in life, we should not be looking out too far. Therefore shortterm bond etf's are best. AGG, which I own, for instance, is discouraged because it goes out to six years and there could be a downturn at just the wrong time. They also mention holding tips, corporate bonds and a GI C ladder. I didn't think that I would need these latter assets. Just bond etf's in US and CDN. I also thought government would be better than corporate, as well, because they would be more secure. Anyway, I hope that at this point in the game you can also dsirect me to the right choices, as you have in the past. Here is a list of assets suggested:

short-term Canadian bonds XSB or VSB Core stable income
Short-term corporates ZCS Slightly higher yield
Laddered GICs (1–5 yrs) GICs from brokerage Guaranteed principal
U.S. short Treasuries VGSH Safe USD diversification
U.S. short TIPS VTIP Inflation hedge
High-interest savings ETF CASH.TO or PSA Liquidity buffer

Q: Sir: What 2 US and Canadian stocks or ETFs do you see most unfairly punished now, and most likely to reward , down the road. Also could you suggest one non US value ETF or stock that cheers you a lot? Thanks-JP

Q: Hi Peter and the 5i Team,

The recent performance of QSR has been quite lacklustre to say the least. If you were buying today, in what order would you buy QSR and its major Canadian peers (AW.UN, MTY, ans BPF.UN)?

Thanks for your valuable insight.

Q: what is the annualized return of SPY, QQQ and XIC over the last 20 years. I thought I read an answer where you said the S&P only was 2% including dividends which seems too low.

Q: How does the BBB affect Canada?

Sheldon

Q: The US is on the verge of approving the BBBill which, according to the CBO and other analysts, will add massively to the US debt. and commensurate debt service questions.I know that we have fretted for decades about US indebtedness and it's been an ongoing nothing burger as the US keeps chugging along, leaving Canada and other markets in its wake. However, this time, the debt charts forecast skyrocketing debt, not a gradual increase at all. If, or when, interest rates climb, is this not a disaster waiting to happen or Is this time different? How can we tell if/when it's time to reduce our US exposure? Is the bond market our only reliable barometer? What are your thoughts on this unprecedented development? What should small retail investors be watching out for and what moves, if any should we be considering? Many thanks.

Q: Hello, I have been thinking about initiating a long-term position (6-10yrs) in Costco for a while now.

My long-held view of the US dollar remaining strong and stable has changed; I have resolved to continue holding my US dollar securities through whatever this is but not buy more US currency at this time.

The issue is whether to initiate a new position in:
1)COST using existing $US or
2)the Costco CDR in Canadian $

Which option, in your opinion, represents the best risk-adjusted return over the next:
A)6-10 years?
B)1-5 years?

Does your response for A) change for beyond 10 years?

I know there are way too many variables here for any ‘correct’ answers but it is still interesting to have 5i’s perspective.
Thank you. This is an awesome service!
-Trevor

Q: This is a general question to try and clarify many of your answers. Often when someone asks an opinion between to similar stocks the response comes down to both for diversification. I totally agree with diversification, however you also often comment that more than 20-30 positions is not necessary or manageable. I have struggled trying to have a balanced portfolio, including some income as well as growth and including all sectors. It doesn't seem possible. But your answers do make me consider other possibilities.

Thanks, Lyle

Q: Peter, could you comment a little about yesterday’s piece of Scott Barlow in G&M about the 11 market aberrations - citing BMO chief economist Doug Porter? Thks

Q: Everyone, I have made a few dud investment decisions, such as waiting too long to sell Valient and Lightspeed. If you are in that position what metric(s) do you use to say - it’s time to move on. Clayton