Investment Q&A

Q: Hello 5i Team,
Recently my sister and brother-in-law sold their restaurant business. They are both in their early 50's. They've been working hard for 30 years and don't have many investments other than a few mutual funds. They would be conservative investors, so, mostly dividend growers. If you were recommending someone starting a portfolio of 15-20 names to build a foundation on; which companies would they be?

Thank you very much,
Brent

Q: Good afternoon, I am starting to get nervous.... hearing lots of predictions on BNN from different sources of market being in dangerous territory and tech bubble about to burst. What is your advice?

Q: Hello -
I have a concern about the grossing up of Canadian dividends (non registered account) affecting my OAS when I reach 71. By that time I will be forced to RRIF, I'll have my CPP, and I also have a company pension that I will be drawing from prior to that.

I know you are not tax experts, but wondered if you see anything wrong with my thinking here. I am leaning more towards lower paying dividend paying blue chips in that non-registered account. I already have ATD.B and CNR. Are there any other quality Canadian companies that you are comfortable with in this "lower dividend" category?

Alternatively I was thinking I could "swap" some investments. i.e. have more Canadian dividend payers in my RRSP and have my emerging market ETF's - ZID and VEE - in my non-registered account. Do you think this is worth considering?
At least those dividends would not be grossed up. Although the trade-off is that you lose the dividend credit.......sigh.

Q: The shift to EVs has now increased with intensity and resolve. With many governments now mandating this pivot it would seem investments will need to recognize and not fight the trend.
What are the favourable ways left to invest that are not overpriced. I would like your opinion in the many parts of the sector from battery components, assembly, and technology.
Please feel free to deduct questions appropriately for your response.

Q: In researching the recent Gamestop madness, I have read that many of the shorts will expire on Friday. Given that the shorting hedge funds have been doubling down on their positions:
https://www.wsj.com/articles/citadel-point72-to-invest-2-75-billion-into-melvin-capital-management-11611604340
is there any possibility that there is a cascading effect of hedge funds potentially getting liquidated? I know that speculating in this matter is akin to mental gymnastics, but I think that the GME holders are here to prove a point about the shady dealings on Wall Street. Is it possible that a showdown between greedy hedge funds and Robinhood/Reddit millenials leads to a wider market shock?

Q: I have looked at the delinquency rates for credit card rates on the St Louis Fed site and the third quarter of 2020 shows a significant decline which, given unemployment rates, seems surprising. Do you know if the data reflects reality or is it affected by moratoriums / forebearance?
Thanks
Mike

Q: I have $60,000 in an RDSP that I am transferring to a self directed account. At least $6000 of new money per year will be available for new investments. I have a 20 year investment horizon with a balanced to growth focus. Luckily I subscribed to 5i in September and have been closely following the Questions and Answers, your posts and updates, and company reports.

I will use the sector allocations you provided to Tom on Jan 6th for 2021. I need your guidance on how much of the portfolio to invest in the Canadian and US markets, and other geographic regions / countries. For the Canadian market I plan to invest in individual stocks. For the rest of the portfolio I will use ETFs.

Q: Should investors change their goalpost metrics of valuing companies when investing?
Nowadays many complain about seemingly high valuations of many companies.

In the past, companies with a high P/E ratio would raise alarms - now it seems it's de rigeur - Apple has a P/E ratio of 43 for example! Does this go hand-in-had with investors accepting very low interest rates?

At first I thought it crazy that a company like Apple would earn $1 for every $43 dollars of share price but then realaized the US 10yr treasury currently gives me $1.09 for every $100 of principal .

Should the yardstick of what constitutes fair value be changed in light of these lower interest rates?

I know there are many ways to value companies but what would you say would be a 'fair' P/E ratio nowadays? Benjamin Graham had a formula and I'd like to see your opinion.

Q: There seems to be lots of buzz in the media lately about dividend stocks being hit hard when inflation/interest rates rise. What are your thoughts on this? Isn't this just short term noise for the long term dividend investor.

Q: Since 1974, with my 1st investment in koffler stores (shoppers drug mart),I have looked for some rational reason to purchase a stock.
Obviously I have seen some times that I cannot explain. Today is one of those days.
I own fdx market cap 60 b more or less
I see door dash has a market cap of the same
How can this be reasonable in any way.
Have investors lost their collective minds or is it possible we are entering a dangerous time in the market .

Q: Hello! Wondering if you still like TMX group and Thompson Reuters. They both seem to be trading sideways when many stocks are gaining. As well, I know you really like BAM but this too, has been heading lower when many stocks like financials and insurers are going higher. In a diversified portfolio is it better to have a mix of different companies and just be patient with stocks that are doing nothing, as opposed to selling those (which may have potential) and moving into something like TD or SLF which seem to have more momentum right now. Dividends and growth are my objectives. Thank you!

Q: 10 Years Treasury Yield is rising fast laterly. Is that a result of Fed asset purchases slowing down? Where can we find such information (such as monthly or weekly purchase amount)? Thanks.

Q: What to you consider the long term consequences of the Democrats now having control of the Senate and House of Representatives with regards to prospects for Enbridge? Of immediate concern is the rumoured pending announcement by Biden to cancel the XL pipeline in an effort to appease the left leaning members of his party.

Q: Hello
In Friday's (Jan 15th) Globe & Mail, Clyde Russell warned that the 2020 bullishness on commodities may not continue into 2021 because China's massive buying spree seems to be ending (e.g. Dec imports of copper were down 8.7% from Nov's imports etc). What is your view on commodities for 2021?
thanks

Q: I was wondering if you have an opinion on the risk coming from possible political stability/volatility in the US. While I would guess your answer is status quo, it is hard to think of a more alarming political situation, and right now, increased susceptibility to a subsequent event, such as an outside threat.
Also, somewhat related: with the stimulus package now priced in, do you still think that there is a catalyst ahead for another leg up in the market? Is it any different from our current theses (environment, pot, tech, industrial, gaming etc)?

Q: EMA and FTS are both trading below their 200 dma and at their support prices.
Is there anything fundamentally wrong with either company to account for the drop? Or is money just rotating out of utilities?
I have 1/2 position in each and am thinking to add to them on this dip.
Would you suggest to add now at these prices? Or wait for them to turn up and over the 200 dma as they may just drop further?

Q: Hi 5i ,
I plan to increase my exposure to oil and agriculture. while doing my research, valuations and the RSIs have increased substantially. For example, stockta.com provides the following Alerts for LUN and TECK.B -"Stochastic Overbought Reversal' which I assume means that a reversal can happen any day. I assume that some holders are likely to take some profit soon. Most of what I have read says that you should wait for the RSI to come down but I also understand that the RSI can remain elevated for some time. Should I wait? or could these sectors be on a tear?
Please advise and thank you for your help

Q: Hello 5i team
As a front line (nearly retired) physician, I recently received a Covid 19 immunization. It's difficult to express the REMARKABLE sense of gratitude and euphoria that I observed among everyone involved . Suddenly, we felt liberated from the danger of this scourge that we face daily. Our next exciting job is to immunize our fellow citizens as fast as humanly possible and as we do, this euphoria will spread to society at large.
After my immunization I bought a new car and we're booking our fall and winter travel plans. This manic behaviour, I believe, represents the tip of the iceberg for pent up demand which will be unleashed upon the world.
At the risk of being labelled a mercenary can you identify some sectors which are still beaten up and likely to surge-I'm thinking energy but other suggestions welcome (prefer etf's with a dividend to keep me invested until the recovery occurs-would supplement with high conviction stocks)
Thank you. As always, I value your opinions, Regards gary

Q: I'm now seeing many many people on different social media platforms, including very young people, talking about day trading, leverage, how much money they made on this or another stock. It reminds me very much of the tech bubble when, overnight, everyone became a stock market investor and guru. Are you seeing any of this and is it going to float prices higher do you think?

Q: Helping my son with his investments which are as follows: MAW 106 24%,MAW 106 20%. VUS 21%, VEF 18%, VEE 8%, ZJG 6% and XQQ 3%.Feeling there is a bit of an overlap with some of these investments eg XQQ and VUS also with MAW 150 and VEF to a degree. Any advice is welcome ,stay as is , reduce holdings or increase some..He prefers ETF's and Mutual Funds (Mawer) and is a bit risk adverse but does realize markets go up and down though and is young( mid 30's ) enough to handle declines. ! Thanks.Paul