Investment Q&A

Q: I hold some TLT and have obviously entered into too early. But I am prepared to be patient.
My question is more about the Billionaire Ackman article last week where he states he is shorting the 30 year treasuries. Now, is he doing that simply because he feels the it will be a long time before the Feds actually start lowering rates or, is there something else out there that I do not understand about long treasuries?

Q: Hi Team,
Shop is falling again today despite earnings beats and price target increases across the board. Is it a good time to buy the shares from todays profit takers? Also in general do you see this market sell off sparked by the fitch downgrade of the US credit rating a buying opp? There has been some brutal sell offs over the last 2 days. Which names would you be looking to buy in this weakness? Thanks

Shane

Q: Hi,

This is a BIG picture question. I don't see any questions so far on 5i.

First Japan apparently makes an about turn in their interest rates? The articles that I read went above my head! And now Fitch downgrades the US credit rating. Again too much for me to understand.

What does it all mean to ordinary people like me? Many of my friends who are all seniors mostly say, cash is King!

I know you like to be fully invested.

Any words of wisdom?
Many thanks in advance.

Mano.

Q: Lost returns from listening to esteemed, perennial doomsayers. Includes David Rosenberg.

https://ritholtz.com/2023/08/10-wednesday-am-reads-341/

Q: Everyone, where will the market go once the DOW breaks above the previous high and when will it break above the previous high? Clayton

Q: Hi Peter,

In a long-term account (20+ years), could you please describe what asset allocation you would choose (including %)? Would you stick to stocks and bonds and gold, or are there any other asset classes you'd want exposure to?

Thanks as always!

Q: I am working with my son (age under 50) to help him put together a stock portfolio. Considering that the US and Canadian markets have significantly different sector weightings what would you recommend for reasonable diversification in a growth weighted portfolio? I thought you had dealt with this type of question a number of times before but haven't found previous responses.
Thanks, Hugh

Q: For over 12 months ending June the number of TSX 52 week lows exceeded the 52 week highs.
I notice that all 3 business days this week the number of 52 week highs have have exceeded the 52 week lows
In your opinion could this be a further sign that the TSX is entering a bull market phase.?

Q: Peter; The perennial “ bear”, aka Rosenberg, basically just trashed the BOC last rate bump, saying the 2% level , they want is there. Could you comment on whether you agree or don’t and why ? Thanks.
Rod (;Publish if you wish) .

Q: My portfolio is recovering well, but still down about 5% down from its high because of the small caps that I own. They are all cheap and profitable companies, but some are still down 50%. If we go into recession will they crash? How should I deal with these companies? Should I be taking losses now to protect from future losses? I just don't understand the market right now because usually small caps are the first to recover. My original plan was to sell 1/2 after they recovered but that isn't happening.

Q: The S&P is now 25% above the low of October. Based on the statistics from previous recoveries ( you had an interesting report on these, which I can't find) where are we (likely) now? Near top of recovery phase or with significant room to run?? Thanks Jim

Q: 10:31 AM 7/11/2023
We would appreciate Peter's opinion because we are concerned about the litany of advice we hear against large portfolio concentrations in individual stocks or sectors because we are repeatedly told this is bad.

But in your answer to Angelo's question on the 7 giant US technology companies on June 23rd 23 you said "some investors like concentration. In fact, done right, concentration is one of the better ways to increase wealth. But for a general investor, we would suggest a cap of about 30% here.

5i seem to be content with 15% in the Brookfields

June 22nd to James you said "We typically get nervous as our [individual] weightings approach 10% and caution against a 'one stock' portfolio".

In our own portfolios of Canadian stocks, as long term forever holders would not the same logic apply to hold a 30% or more weighting in the 5 big Canadian Banks through all the ups and downs of the markets, for steady dividend income with some growth?

One family member has comfortably held RY since 1968 and 10 shares bought 55 years ago have grown to 326 shares today through 4 stock splits and dividend reinvestment when available, and never regretted or worried about it.

The same logic must surely apply to holding other large sector positions: 15% in 3 Pipelines, 35% in 7 Utilities, and 2 Telecoms.

I know most Brokers and Advisors like to advocate "diversification" and "trimming" and switching to "hot" sectors but it seems to me that much of these strategies are designed, even with the best of intentions, to just encourage trading and switching to generate fees.

So Peter's best advice please - in the end how bad is it to just hold a concentrated Canadian Blue Chip portfolio in Financials, Pipelines, Utilities, and Telecoms with a small 15% scattering in some other sectors? This way we have few worries, no foreign currency risk, miss the thrilling scary ups and the frightening crashes [like Nortel and Concordia], but sleep at night.

Thank you............ Paul W. K.

Q: All three stocks have been setting higher highs and higher lows since mid April. Have you heard any news on why these three stocks are having a positive uptrend recently? All three have crossed the 50 and 200 day moving averages. Clayton

Q: Hi 5iResearch Team,

My question is general. Recently I came across an article on Bond-reform proposal by Federal Government. In which it was mentioned by a group of institutional investors that this means higher interest rates for companies, provincial governments and other bodies that issue bonds. If that is right then will not mortgage cost for the home owners will go up?

I will appreciate if you could give some info on this money lending cycle.
 
Thanks

Piyush

Q: What evidence is there that the rise in interest rates have been the reason why inflation has declined?

Q: In many questions asked there seems to be some expectation that interest rates will go down at some point in the relative near future. Do you think this is a valid expectation? Employment remains strong; housing market prices are holding; with some limited exceptions we have not seen significant layoffs…. Why would the Bank of Canada reduce rates anytime soon? I suggest that we had such low rates for so long, people expect that to be the new norm. We are only now
approaching the level of rates that were ‘normal’ for a very long time. What am I missing?

Q: your thoughts on Bitcoin? Not that they are right but it seems many huge asset managers are becoming interested again. For now, I believe Bitcoin is a store of value and is yet to make the tranition to unit of account. In terms of asset allocation, would it make sense to allocate a small percentage of one's portfolio 'in case it catches on'? Do you see an asymmetric upside vs limited downside and would that not justify a small position?

Q: I hold a significant percentage of my portfolio in XEC and am happy to have the exposure to add diversification. It has been a bit of a drag on returns for a while now however, and it has me wondering — what are some plausible scenarios moving forward where emerging will outperform? Have there been significant episodes in the past 100 years or so where emerging was at the top of the index return lists?

Q: Dear amazing 5i employee,

I trust that you are well!

An analyst at 5i noted (in answer to one of questions) that there are dozens of trading opportunities available in the market right now. Would you be able to list some of those opportunities? By trading opportunities I mean simple trades (buy low, sell high).



Yours kindly,
David

Q: Supposing that an investor had three registered accounts of roughly equal size that they wanted to change from equity ETF's to a fixed income allocation for their portfolio, and these accounts would have to be converted to RIF's in 6 years. Let's also assume that we get one or two more small rate hikes this year, then interest rates flatten and begin to come down slowly over the following several years. Which of three options would you choose on a risk/reward basis? 1. Just hold money market funds currently paying 4.5%+ 2. Barbell XSB and XLB using two accounts, and put XBB (or ZAG) in the third (avg. yield close to 3 %? with potential cap. gains) 3. Put TLT in all three, yield close to 3%? maybe highest potential cap. gain? With the BOC policy rate going up close to 5 points since the start of 2022 the bond funds above fell anywhere from 10%+ to 30%+. Does that imply that if the BOC rate went back down 2.5% that they would rise 5%+ to 15%+, or you can't make that kind of straight line assumption? Maybe there is a way better option, but I don't really want to tie up funds in GIC's and don't want to try to pick individual bonds either. I also considered something like PSA but no cap gain upside there and the money markets probably pay as much interest or more. Thanks for your thoughts.