Investment Q&A

Q: You have discussed bear markets and crashes often in the past as typically short painful spans of time, duration usually as 6-12 months.

What about "recessions"? Please provide your top 5 coaching advice / tips for investors in terms of understanding and weathering recessions.

thanks
Ernie

Q: It's hard to identify the market "bottom" in a timely manner, of course, but what might be the best indicators that a sustained recovery has probably begun or is soon to begin? Are there some good bellwether stocks to watch for this purpose? Are there other indicators, such as particular market indexes, or volume or volatility measures, or "mood" surveys, or economic statistics? Where should the primary focus be?

Q: I would appreciate your comments about the oft used term “momentum”. Once the markets do bottom, all of us, like it or not, will or should be momentum traders.

Q: Do you pay attention to all negative headline fueled by wallstreet strategists who seems to become negative after such a bad start. In december, almost all of them were somewhat positive albout the prospect of 2022.

Q: Which stocks -Canada or US -would you recommend for a 5% portfolio weight, with suggested entry price and rationale.

Q: I'm more a scavenger than a predator, as much interested in dividends as capital gains. Right now, however, I see opportunity in the growth sector as it collapses after years of ridiculous rises. My intention is to sell off bond funds to pick off the debris of this collapse.

First question: Now or wait?

Second question: What are your choices given this scenario, US or Canadian? Bear in mind, I'm not interested in the 5 or 10 yr wait. I'm looking at a bounce back after half the herd has jumped. I want reasonable growth prospects, a price to earnings ratio that isn't stupid and a margin that also isn't stupid. Say, for example, Apple.

You get it. I also don't expect perfection from you. No one ever got it from me.

Q: The only commodity I see that has bust is lumber from 1250 to 650....If inflation lingers (high key component commodity prices) for 6 -12 months while the Fed raises interest rates to damper economic expansion , a V shape recovery seems less likely.The losers I've sold has been creamed by further 25-50% down side(eg. ANRG,PINS,TFII).....How does the DYIer protect/invest his capital within a portfolio given a U shaped recovery? Are there some better performers/sectors that lead the way out of this mess?

Q: Hi Team,

With the assumption that retailers have an inventory problem there seem to me there are 2 outcomes:

1. Retailers take a hit on the products and sell at a lower price
2. Wages rise bringing more disposable income to purchase said inventory

Is there another case I don't see? How do you see this playing out?

Thanks!

Q: With the probability of a June interest rate hike and GIC rates following,

would a lot of people be moving into GICs and out of stocks.
Thank You.

Q: Hi, I liked the reference to the CNN Fear&Greed Index in one of your Updates (Nov21). Would you have some comments on it with the awful market behavior since then. Do technical analysts or investors rely on these Indexes for decision making (F&G, VIX, Baltic Index or others) ? Thank you.

Q: https://www.theglobeandmail.com/investing/investment-ideas/article-the-stock-market-is-still-dangerously-bubbly-plus-four-reasons-why-the/?utm_medium=email&utm_source=Globe%20Investor&utm_content=2022-5-13_18&utm_term=&utm_campaign=newsletter&cu_id=nVp9GpU7OpyOBgUaQxyFDw%3D%3D

Link to "The Stock Market is still dangerously bubbly"

I have been a blue chip dividend investor for almost 2 decades and have been more recently challenged to incorporate "growth stocks" and don't have a feel for this sector at all.

Please provide the 5i response or rebuttal to the bubbly status of the market?

Do larger growth stocks example, Googl, apple, Microsoft and amazon. represent a safety over the "average" growth stock?

thanks

Ernie

Q: Market Call - David Driscoll - He said that at the top of the market (S&P 500) people were ready to pay 26 times earnings. $26.00 for every dollar of earnings - it is now 20 times earnings. He said that in the last big market correction, earnings went to 16 times earnings. That is what he is waiting for before he puts his money to work. Your take on this?
Thanks,

Q: So all of a sudden all the stocks which have seen nothing but strong momentum for days, weeks, months, are a big buy. Stocks down 30-40% just this month, down 20% this week, are shooting up. I assume this is not everyone getting together and deciding to buy the stocks which have been pummeled, even though they'll probably all drop again tomorrow. It's programmed trading kicking in on some sort of signal we mere mortals don't get. What would that signal be?

Q: I have lived through the 2000/2001 tech wreck and the 2008 market correction and this market is just as ugly.What reasons do you have for believing we are near a market bottom. Has capitulation has already happened? Is the VIX telling us anything?Are rising rates not going to overwhelm government debts?An extended recession seems inevitable. IMHO

Q: TSE60 hasn’t dropped as much as the S&P500. Reducing individual stocks risk and moved into TSE60, would it make sense to now move to the S&P 500? Or is the expectation that the TSE60 won’t drop as much as the S&P500? Where do you see the most up side potential from here.

Q: I've seen you mention in the Q and A that the bottom is likely close. And I've seen that in other analyst articles etc. But if the reaction is to the increase in interest rates and they keep going up, then why would the market bottom now? What are the chances that the market will be higher at the end of the year? And what happens if we then go into recession?

Q: I found this excerpt from a December 29, 2000 New York Times article instructive:

From 1995 through 1997, the bull market was good for almost every company. Then, starting in 1998 it became more selective and by late 1999 and early 2000 it was focused on a fairly narrow group of stocks -- many of them highly speculative. The big market news of 2000 was the bursting of the bubble for many of them.

The collapse of Nasdaq appears to have damaged consumer confidence and contributed to the poor holiday sales this year. But most investors have stuck to the stock market, even as they abandoned Internet retailers and saw Microsoft lose 62 percent of its value. The Dow Jones utility average is up 46 percent in 2000, its best showing since 1943, as utilities profit from increased demand for power after years when few new generating plants were built.
End of excerpt.
In 2001 we had a 8 month recession.
Sound familiar?
I realize that there are a lot of differences now. We have the supply chain issues caused by the pandemic and a war which has caused a temporary spike in oil and gas and some agriculture related shortgages. in 2001 we had a recession. All this will pass. Not clear who will be the winners in the next 18 months. My guess is, all that money to be spent on infrastructure, anything to do with electric cars and weapons. Follow the money.

Q: Hi Peter, Ryan, and Team,

In reading answers to questions posed by others, I get the impression that 5i isn't in favour of averaging down as an investment strategy, due to the potential for further losses. These possible losses are of course greater for individual stocks and less so for ETFs, according to what I've read.

However, if a non-registered account contains some cash, and the holdings are ones that 5i has made positive comments in the past, in what order might you consider adding to the following?
HXS (down 8.86%)
SJ (down 18.7%)
TCN (down 12.62%)

Thanks for your guidance and respected advice.

Q: Hi 5i
Just curious. I realize there’s always 2sides to a trade. So with the market going down for a while now, who do you think is doing the trading.
Retail selling/buying or smart money in there somewhere.
Peter thanks to your advice over the years I’m watching the market and not doing anything irrational and definitely not worrying about today or tomorrow.
Thx

Q: Yesterday would have been Benjamin Graham's 128th birthday. Born in London on May 9, 1894, Graham founded the disciplines of security analysis and value investing, was Warren Buffett's mentor and wrote the classic book after which this newsletter is named.

Graham knew hardship. His father died when Ben was only eight years old, and the family business -- importing porcelain and decorative objects -- fell apart. His mother's brokerage account was wiped out in the Panic of 1907. Graham never forgot being sent to the bank as a boy and hearing the teller ask whether his mother was "good for five dollars."

Then, in and after the Crash of 1929, Graham's investment partnerships were almost wiped out. He went on to build one of the greatest investing track records of the 20th century, but he never forgot the lessons of loss:

Don't invest using borrowed money.
Never pay too much for the prospect of future profits.
Never count on greater fools to bail you out of reckless risks.
Above all, your results depend much less on how markets behave than on how you behave.
As fear fills the air and financial markets around the world continue to totter, do yourself a favor and read -- or reread -- what I consider the most important paragraph about investing Graham ever wrote. It may, in fact, be the most important paragraph about investing anyone has ever written:
Peter; Publish if you wish. Rod