Investment Q&A

Q: What's your view of Covid 19?
In the event the contagion is contained, should we expect a meaningful market rally or would the damage done to the economy be felt for a longer period at this stage. Simply looking for your outloouk and gut feeling. Thank you!

Q: How does one preserve capital at times like these if one is fully invested, mostly in equities? This is defintiely not the time for changing sector allocation...How does one deal with having a full position SHOP for example? Thanks.

Regards,

Shyam

Q: You may recall my question a couple weeks ago when I had sold all equities and was building a defensive portfolio of inverse etfs (HXD, HQD, HIX, and volatility HUV) and asking for further suggestions for the troubled times ahead. I noted that this coronavirus is not a one off event (like 9/11 or the 2008 crash) but a steadily worsening situation on a global scale that was sure to lead to major declines (especially given how overbought N. Ameican markets have been) and also stoke volatility. My thinking was that having made the "trend my friend" during the 11 year bull market, it was high time to give the bear a chance. The virus was the spark, but it could have come from elsewhere, as we saw with the oil shock yesterday.
Needless to say, the returns on the bear bunch have been stellar (I keep moving up the stop losses to lock in any gains when the markets decide to turn positive). Each 'bad' day is putting more money in the coffers for the days of capitulation when it looks like the tide is finally turning. (Disclaimer: I don't recommend this approach to everyone, as leveraged etfs can bite both ways, and one must always use stop-losses). Many experts are chanting the old mantra "the best thing to do is do nothing" and advising us to keep our long-range objectives in sight. One problem with this is that after such routs, markets often look for new leadership and favor new sectors of the economy. This happened after the tech crash, when it was back to bricks and mortar.
My question concerns methodology: I don't really understand why anyone would hold any equities through the kind of rout we are witnessing (except maybe virus-driven names like Clorox or some of the Pharma companies working on vaccines). Isn't it far better to sit on cash (cash is king and queen) or do a bit of contrarian investing in order to keep eking out modest gains through the market mayhem? Then, one can rest easy until the dust finally begins to settle (instead of losing sleep wondering what the next day or next moment will bring), and gradually leg into your favorite long-term positions on the worse days? Am I missing something?

Q: Good evening,

I have $100,000 sitting in my account and have been very patient to enter the market over the past couple of years. Right now seems like a good time to max out my TFSA and invest a large portion of this money but the question remains where/how? Individual stocks? ETFs?.

I’m 30 years old, have no debt and rent. This money I guess can be considered my savings so there’s no timeline as to when ill need it. With an outlook of 2-10yrs being invested with a moderate risk tolerance (would like to see some decent returns) any suggestions?

Q: I see your 5iresearch ETF growth portfolio holds WXM. I also separately asked if WXM was a income or growth ETF. Your reply included comment that WXM fee of .65 % was high and the 5 yr ROR not very impressive at 5.12 %. Is it an ETF worth holding or not ? I am confused

Q: Given the drop in interest rates, I would appreciate 5i's view on Rate Reset Preferred Shares. I am a senior with a 60/40 portfolio of fixed income to equities and a focus on quality names, income and moderate growth in capital. What would 5i think of my selling a bond, taking advantage of recent price rises, and putting the proceeds in a Rate Reset Pref share (or ETF) for a longer term hold. Would 5i please suggest one or two names to consider.
Thank you.
Edward

Q: What would you look for in timing a buy? The vix at over 80? In particular I am interested in adding to my position in Verisk Analytics but this could apply to any stock.

Q: Any interesting happening in the markets the last little while? The price drop has been swift, but given where the S&P was in December 2018 (2416), there still seems to be some room on the downside. Is this a good level to start buying at? Different issues were affecting the market in each instance, but it still seems early to be a buyer right now.

Jason

Q: I am trying to understand how a payroll tax cut rumour can spark a potential bounce in the market and if a big bounce (should it happen) is just an artificial bounce or something to take seriously? To me it would seem that coronavirus is only just beginning to be felt in North America and that rate cuts and tax cuts can't change the impact of fear and potential shut downs. My question is do you think the market has fully priced in the impact of coronavirus on the economy or has it just reacted to the headlines with another probable leg down when earnings are dented?

Q: The only thing that didnt go down with the rest of market was an asset class called Pensions. I believe the assets behind all pensions when south including the deterioration of the credit quality of the bonds held within .Is it possible that pension holders may feel the same pain as other asset holders?

Q: For investors with high level of cash and based on current information available, how would you deploy capital going forward?

If we experience another big drop in the coming days, would you advise waiting for more stability. I did buy stocks today but remembered that I bought in too early in the last downturn.

Thank you for the special report today. Much appreciated.

Q: Hi, I have a bunch of cash looking to deploy in this carnage. I'm a bit underweight in international and emerging markets, however I'm a bit worried about putting new money into these markets compared to the US market when markets do bounce back. How would you recommend I deploy new $ into international, emerging markets, and US/CAD markets over the next few months?

Q: Looking to buy this morning. What do you think would be the least risky of sectors? Banks and telecoms look good to me.

Q: Peter; Would you consider this “ capitulation “?
Thanks

Rod

Q: What is your general "gut" feeling about this meltdown? If the Dow does not breech 25,000, does that indicate a bottom forming or do you see a prolonged period of share price damage?
No one doubts the seriousness of the virus, I wish they would call it the "new flu" as the present name sounds so ominous, but compared to the 20,000 plus who have died this season from the flu, it seems the media reporting "each case" is causing some serious panic both in life in general and in the markets. What is your overall assessment of the present conditions and can you take a stab at how long you think this will be so dominant in the news cycle. I guess when it's the second or third top story, it will be time to buy a lot!
Thanks.

Q: With the major down swings/upswings this last week or so, what type of investor are you seeing most active in the marketplace (and are we able to see this info publicly). Are these "mainly" the big institutional players unloading positions or loading up causing huge swings or is it the retail investor...or both
Also, are you seeing the majors starting to step in with more conviction on the dips?

Q: I was averaging in the market just before the correction and only deployed 35 % of the cash I had. Thanks to your advice in the past on that i was disciplined ( despite my emotions fighting the plan for months) . I feel like we have a great opportunity now.
Is it an average in - say 3- 5 % a week or see how it goes to catch an upward trend to and keep the gunpowder dry for now.
ps - II know you don't have crystal ball -just looking for a smart plan to execute - to keep my emotional investor guy under control

Q: Something that would be of enormous help to members currently buying stocks on dip (as opposed to ETF(s)) is a write-up that identifies companies (other than energy companies) that have balance sheets in a state where much lower sales for over a year could mean bankrupcies or share dilutions. I'm looking at forestry stocks, for example, and question what will happen if their sales go down 50%. Will they be able to pay their debts if this goes on 12-18 months? Even A&W, which appears on the surface to be a safe and boring income stock. What if sales go down 50% for a year, could franchise be under enough pressure to be forced to walk away? Buying a franchise is very expensive, afterall. I realize this could take time to write something like this, but no-one in the news is talking about the fact that some companies that need a minimum of sales before running in trouble with debt. Would appreciate your thoughts if you think this thesis is without merit. Thank you team!

Q: Nazim asked a question today that has been on my mind, "why hold stocks?" To follow up on your answer in which you opined that much of the downside may already have factored into prices, how can that be? The market is only down to levels it was at in the fall/summer. I am a long term investor but I moved to cash last week because of the risks. In weighing the potential downside risks (which could be huge) vs short term upside, why stay in the market? I just don't see how the effects of this virus will not be a lot worse than what has already been accounted for in the market. People are not going out, travelling, etc. and this must have a huge effect on the market going forward. Is this not a recipe for a recession? In which case, why not get out of the kitchen?

Q: how did low interest rates in japan affect there pension funds . did any get cut.or did employees have to pay more. thanks brian