Investment Q&A

Q: Good Morning Team 5i & Everyone,

Do you know how leverage, leveraged ETFs and options affect stock prices? Like is it some buying/selling by market makers in the after hours or once per month.. maybe once per week? Or maybe not at all. There are many statistics showing that retail is using record high leverage.

Thank you for indulging my curiosity.

Sandra

Q: Hello team,
There has been a lot of negative news lately regarding private equity and private credit. Can you provide some insight as to extent of the issues with this segment and if this is something that could extend to a significant downturn in the whole financial sector similar to the financial crises we saw in 2008-2009.

Thanks for shedding some light on this for me.
Paula

Q: Dear Team:
Not sure who the author of Rockets and Duds is/are.

What methodology do you use? Percentage of price increase is obvious. Do you look at Technical Analysis? (Momentum oscillators) Can one use that methodology to identify the rockets BEFORE they take off?! Any predictive variable?
The second part of the question, sticking to the same Rocket metaphor, once you identify the Rockets, can one benefit from the "After burn"! :) Till the module falls off!! Catch the momentum and ride it for a little while! LOL.

I wonder how your rockets have fared from the time you published them.
A cool home work for me!

Just for fun question.

Q: Can you provide some context around who you include in the “The Best Stock Ideas”
section of your website?

Q: Everyone, what are the three things for the markets to push higher? Clayton

Q: Vix has climbed from $14.48 on Jan 9 to $30.95 yesterday. Do you think we are nearing a contrarian buy signal?

Q: Everyone, If you were teaching someone about investing, what are the three most important things you would want them to learn? Clayton

Q: I read the following on Nate's substack: "The largest debt-funded infrastructure buildout in history has an unpriced dependency on a noble gas.

The five largest US cloud and AI infrastructure providers have committed to spending between $600 billion and $700 billion on capital expenditure this year. Seventy-five percent of it is AI infrastructure. Google’s co-founders Larry Page and Sergey Brin have reportedly said they’d rather go bankrupt than lose the AI race. Goldman Sachs projects total hyperscaler capex from 2025 through 2027 will reach $1.15 trillion. Every dollar of that spending assumes the chips arrive on schedule. The chips come from fabs in South Korea and Taiwan. Those fabs require helium to operate their lithography machines, cool their wafers, and detect leaks in their vacuum chambers. There is no substitute for helium in any of these processes.

A third of the world’s helium supply came from a single industrial complex in Qatar. That complex was hit by Iranian missiles three weeks ago. It is offline. Parts of it are destroyed. The strait through which its output ships is closed. And the specialized containers that carry liquid helium vaporize their contents within 48 days. The clock is already running."

Do you buy the argument that is being made by Nate about a very significant impact from a lack of helium? Do you think the impact has already been priced into the market? What would you suggest an investor do if he is invested in the affected mag 7 stocks?

Thanks.

Q: Overall, my portfolio is very balanced, but I have gone with higher growth in my TFSA. I hold GOOG, META, NVDA, NBIS, BN, AXON, MELI, LMN, and ZEO. What is the max percentage of the TFSA that you would hold in GOOG and NVDA? Could you suggest some new stocks with good momentum that would balance out my holdings? Thanks.

Q: Hello Team 5i and Everyone,

Unless Trump pulls a rabbit out of his hat, from what I’ve been reading the closure of the Strait of Hormuz falls into the category of “too big to fail.” And since the price of oil affects nearly everything globally, one would assume that we’re likely to see price increases soon enough in nearly everything as it is passed onto the consumer. (Like food, unfortunately.)

In another service I subscribe to a member there has a background with global oil logistics. In their assessment, if the war ended today it would take 4 months to get the shipping lanes fixed. 6 months to restart the oil fields at 85% original flow. 4-5 years to fix the LNG plants. Meanwhile countries are starting to hoard oil and oil products too, which only adds to the global demand when we really need to be destroying that demand at the moment. They equated that we need to destroy as much oil demand as we reduced during covid, but this time we need to do it with price.

At least with the problem of the tariffs, if the current US administration had snapped their fingers at any point last year and got rid of them, in theory the problem would have been solved “instantly.” But that doesn’t seem to be the case here because of the drones and missiles hitting the oil refineries. And sadly, especially for the people living inside this war, this is turning into a pretty big mess.

So what I’ve been mulling over is:

What effect would prolonged higher energy costs due to the closure of the Strait of Hormuz have on the data centre & AI buildout, etc and the debt being used to finance these projects? I’m under the impression that the AI buildout is supporting the US’s economic growth at the moment. Also seems like Space X, Anthropic, Open AI are all trying to IPO this year as soon as possible. The KOSPI which is over-concentrated in semiconductors looks like it had a blow off top recently.

What other important potential problems have your attention at the moment that the increase in energy costs could exacerbate?

Any further comments would be appreciated.

Thank you & appreciate the big brains at Team 5i,

Sandra

Q: No one knows how the war will play out and whenever there is a sign it could end the market rallies. Assuming Iran plays tough by economic warfare on US, not giving in, not negotiating, not opening up strait, markets will continue to sell off, oil rise, inflation rise, growth slow. My question is how much pain could the market endure in this scenario and would there eventually be a bottom with a new normal of an ongoing war like Russia/Ukraine? I know it is not a good scenario but want to be prepared for all. Are you staying fully invested or using stop losses?

Q: I keep reading how the S&P is trading at high values compared to historical values and because of that is risky. do you think that etfs that track the S%P 500 (e.g. ZSP) are more risky than a mid-cap ETF such as ZMID or XMC which are trading at their historical values?

Q: Question about middle east . You ve already answer how someone can be positioned in case the conflict stop in 2-4 months and I am well positioned (gold , BTC, tech stock ) the more I informed myself on that war the more I see there is a definitive path for it to last longer . I ve learn how supply routes , production, refineries take a long time to go back on track and the longer it gets , the more complicated it is. It’s not only oil but nat gas too. Qatar facilities have been majorly affected and the Qataris say it will take 2-3 year to rebuild. And this is as of today . So I’m trying to think 1st 2nd and 3rd degree effects. Could you advise on how an investor could position a part of its portfolio for a longer lasting war . They are a great series of pod cast about that in the last 2 weeks on Odd Lots for those interested. Please feel free to propose various ways , ( I know Nutrien is a good example) on how I can allocate a part of my portfolio to gain / hedge on that possibility. Can be through etf, commodities, sectors , specific companies etc. ideally getting some upside with not crazy amount of downside if war does finish soon(ish) . That would also be a great subject for your podcast . Thanks !

Q: How long did the last stagflation in U.S. last?

Q: 2nd question of the day. I have these laggards in US account. No holding of MU. Would you sell these 3 to buy MU? Also, BAM down, good time to add? I have them at almost 3%. With bringing up to 5?

Cheers,

James

Q: What companies present an oppurtunity purchase during this war turmoil? Assuming the Iran war ends in 2-4 months

Q: Being mostly a "dividend long term" investor ,I did not invest in tech stocks up to now, except for some specific etfs . Considering this kind of "switch" from tech to energy stocks in the markets,and new valuations of major US tech stock ,I just started to invest in this sector.What is your view versus the opportunities and timing for investing in major tech stocks actually ?

Q: While the VIX is high, what companies and sectors would you be buying?
Many thanks

Q: 6 weeks ago you said this: "While a correction could happen anytime, we aren't really expecting giant problems. There is cash on the sidelines, rates may move lower, and investors have shown excellent resiliency in the face of all sorts of global issues."

Have you adjusted your opinion given the state of the world?

Q: Can you please provide a brief commentary on how you think AI will evolve in the next 5 years (economy, labor market, possible deflation and change in economic model projected by some). I know its a hot topics that can fill books. I am just wondering about your insights. Thank you!