Investment Q&A

Q: A colleague of mine, who is both a student of history and risk adverse, has suggested there are significant parallels between what is occuring in the market today and market conditions leading up to the 1929 great depression. In particular, he points to what he believes to be grossly inflated p/e values across all sectors of the North American market. I do not share his views and would be interested in your thoughts - backed up with a few pertinent statistics - regarding both my colleague's historical comparison to the late 1920s and current p/e values. (I am well aware books could be written on this subject, so looking for just your top-line opinion.) Thank you.

Q: I believe cash flow is a better measure of profitability for E & P companies. Would that also apply to software companies? Or would EV/EBITDA be an even better measure for software companies?

Thank you,

Q: hello 5i:
recently, someone asked the following question:


Q: What role do charts play in your ratings/recommendations?
What indicators do you most favour?
What formations do you feel are most helpful in your assessments?

Thank you,

John
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Asked by John on August 01, 2025
5i Research Answer:

One of the most important ways that we use charts in our views of individual stocks is based on momentum. A stock that is hitting new 52-week highs, showing a strong uptrend of higher highs and higher lows is an indicator to us that something is likely going right at that company.

Aside from trends and momentum, some employees of the firm like to use RSI, bollinger bands can be important for potential breakouts. For chart formations or set ups, we have seen a lot of 'cup and handle' formations work recently, as well as 'inverse head and shoulders patterns' in the broader markets.

Most importantly, we have found that using a longer-term RSI coupled with historical forward return data, and strong fundamentals to provide one of the most interesting combinations.

Please elaborate on what parameters are used for longer term RSI (eg 7, 14 et), and if you are referencing, for example, a 5 year weekly chart. What is meant by "historical forward return data": is this the amount of meeting/beating earnings projections? Personally, I use longer term PPO as I've found its helpful. Comment?
thanks
Paul L

Q: In your response you gave to Jon on August 1 you said that one of the most interesting combinations you use for stock analysis is "historical forward return data.

To me thats an oxymoron 'historical forward return'

What do you mean by that.

Thanks

Sheldon

Q: You often speak of money on the sidelines. I understand the logic of this as people want higher returns and eventually get lured back to equity markets. But can you provide some granularity of where the sidelines are? Are we talking GICs, Bonds, cash, Gold, money market funds or what?
What do you think about the thesis that investments in money market funds simply never come back to equities but rather move from shorter to longer duration vehicles?
When speaking of this move to the sidelines, are we talking mostly about individual investors? And finally where is this information available?
Thank-you.

Q: So I’m thinking if Trump imposes a 15 % tariff on all countries , how is Canada’s competitiveness changed for all countries except the US ?
Under CUSMA 90% of all trade in goods are tariff free. It will be the renegotiation of this agreement in 2026 to be most important.
How’s my thinking? Thanks. Derek

Q: An advisory service that I follow on X seems reasonable and has made the following comment today which I have seen variations of popping up with more frequency:

"Markets speak louder than headlines.

If good news can’t lift prices, risk is rising.
If bad news can’t sink prices, a bottom is forming.

Distribution has been underway for 2-3 weeks, lots of weakness under the hood. The indices are the last to roll over."

Is 5i of the mind that the market is running out of gas in the near term and poised for a pullback? I know that you are tilted more bullish in the long term but would you suggest waiting on new deployment today on the assumption that comments like the above are correct or at least likely? If you could explain in detail whether you agree or disagree I would appreciate it.

Q: Further to some news commentaries today, do you have any thoughts on market reaction if Trump discontinues trade negotiations with Canada and just imposes a flat tarriff? If that does happens can you suggest some income stocks that are potentially less at risk? Thank you

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