Investment Q&A

Q: What do you think about leveraging into this decline. For example I could borrow $100,000.00 on my line of credit at 1 over prime. Prime currently at .75 percent. The interest is tax deductible. I could spread the investment out over 5 stocks that are paying over 5% and just let the dividends pay off the load. I have enough faith that we are close to the bottom and have no doubts that most blue chip stocks are not going to drop that much more.

Q: I hear you when you say that we shouldn't be too involved in playing the exchange rate between the Canadian and American dollar. But would this not be a reasonable way: buy sunlife in American dollars, since i have them. If the Canadian dollar goes up i sell in canadian dollars. If it goes down, i still have my American dollars in Sunlife that i had before
Looks good but am i missing anything?
Thanks

Q: Hi 5I,

Looking back to 2008 the utilities sector held relative well to the meltdown of the TSX. This time around ZUT is following the TSX down. One would think people still need hydro to heat/cook.

Can you comment on why this is happening? Is there a fear these companies will become insolvent due to their balance sheets?

Thx,
Chris M.

Q: With all the selling taking place, I am curious about what characterizes a buyer now. Someone suggested that companies are doing a lot of buying of their own stocks, which doesn't make sense to me. I would think a lot of average investors looking for bargains, especially high yields, are doing the buying. I would greatly appreciate your opinion on this.

Q: After the "blood in the streets" kind of day we have had today, March 12, was I "crazy" to add to my holdings of the aforementioned? Are their dividends as reliable as I perceive them to be? FYI, I am a year away from retirement at age 60 and value dividend income for a portion of my portfolio.

Q: Q1. Can you describe a bit what actually happens when the FED says they will inject US 1 Trillion into the market. Where will that money go and is it a loan? In the 2009 recession, it was a loan to the collapsing banks which I think eventually got paid back.

Q2. Regarding increased dividend yield on falling values of stocks, how does this work? The funds are changing hands outside of the company, so if share price drop was the only thing to happen, theoretically the continuation of the dividend should not be in doubt. Maybe the business of the company might drop for some reason if share price drops.

Most grateful for all the guidance you provide to investors and the education you offer on the function of the stock market.

Q: First off I just want to say thank you so much for your special report you issued last week. For a young investor like myself who has never been through events like we currently are experiencing your advice has been extremely valuable to help navigate these uncharted waters.

I have been sitting on some cash and would like to increase my technology (both Canada and the US) exposure as it is low right now. I am comfortable with moderate risk. I have a few questions on this subject so feel free to subtract as many credits as you see fit:
1) For Canadian tech companies, after reading your special report and the Q&A's, it seems you like CSU, KXS, DSG, and SHOP. Would you recommend buying these individual companies (or others?) or would XIT be a reasonable alternative with these 4 companies composing ~61%? Or is there another tech etf you would suggest?
2) For US tech companies (or any US company for that matter), with the Canadian dollar being low, would you recommend looking at specific US companies or a Canadian ETF that holds US tech companies? I am worried the exchange would eat into possible returns. Do you have any recommendations (e.g. I have seen you mention XQQ for an etf, SKYY highlighted in etfupdate, and companies like MSFT, GOOG, TEAM, etc)?

Thanks for all that you do.

Q: Dear 5i;
I watch the Asian and Futures market in the evenings as a guide or possible indicator as to what North American markets might do the next morning / day and I'm sure I'm not alone in doing this .
I find it extremely irritating and unfair that I'm unable to take advantage of anticipated increases or decreases in the US and Can markets as a result of the Futures market being significantly up or down as the North American markets are already up or down big time before the markets are even open for trade ( ie the pre-market trading ).
Am i missing something here or are all of us ordinary investors stuck with this unfair system ( in my view anyways ) ?
Thanks
Bill C.

Q: Given that there are two sides to every trade, I was wondering: when the markets undergo panic selling, who is buying? Any insights you can provide would be appreciated.

Q: Hi Guys,
This question has probably been asked before but what's the best website or sites to see company insider buying and selling?

Thanks,
Charlie

Q: Interest rates are dropping but bond funds are getting clobbered - they normally would go up - is there fear that huge numbers of companies are going bankrupt such that bonds will not be repaid? It doesn't seem to matter whether short term or long term bonds - they are going down. XBB down 3%, ZAG down 3%, ZCS down 4% today so far. This seems crazy. Is this a buy opportunity for corporate bond funds or is the great depression about to happen and everything should be sold into cash?

Q: A few times I've seen replies to member questions about oil companies and their debt to cash flow metric (OXY and OVV ring a bell, and 5X and 3X respectively ring a bell too, if I remember correctly). Are you calculating this? I don't see it in security details in 5i or my broker's site (or on other finance sites). Is it a question of having to read the balance sheet and cash flow statement, and if so what are you comparing? "Total Debt" (rather than "Total Liabilities") to "Total Cash from Operations" for the year ? For OXY the data I get presented (source is Morningstar via online broker) are Cash from/Used by Operating Activities + Cash from/Used by Investing Activities + Cash from/Used by Financing Activities = Increase/Decrease in Cash, however, I'm guessing you just use the first number, which for 2019 is 7.3 billion (so 38.6 debt / 7.3 total cash from operations = 5X)...is that correct? or do you get the ratio from somewhere else? Thanks

Q: In view of the severity of the selloff, would you accelerate buying stocks in this market or spread the over 6 months or more ?

Any indication what the new multiple looks like for the US and CDA markets vs foward earnings. I suppose it s anyone's guess but I thouht you might have interesting comments. Thank you!

Q: Hi, I am surprised bond index funds have not performed great at this time either? Which ones are doing well? Today is another bad day...investors brought to their knees..I personally have several lessons learned..One of them being never feel shy to take profits off the table due to tax consequences. .The second one being, the day you feel like selling your bond fund in order to purchase more equities ( while assuming that this would be for the short term)..is the day you should be selling more equities.. cheers,

Shyam

Q: Hello,

I am wondering what your thoughts are on the eventual recovery? We won’t know 100% until the virus plays out further but best guess, what do you think a recovery will look like?

My thoughts are that once the virus is under control we may see a quick turnaround in the equities market due to the economies ramping back up, but I am concerned that if this virus continues to provide more questions then answers we may be stuck in a longer downturn.

Keeping the recovery in mind, what are your thoughts on picking away at a Russell 2000 position over the next few weeks/months and what effect will a rising loonie (if Russia and SA work through this spat) have on the dollar hedging. Is it best to buy the Canadian version or the US version with this drop in the loonie and hopefully the eventual recovery in it.

TIA

Q: Hi 5i team,
Publish if it is any help or not. There is not much to do in the market these days, as it is what it is. I am just catching up on the Q&A and notice some negative comments about 5i on repairing damaged portfolios. Well, I don’t put any blame on 5i. We are in a bear market. I have been around the markets for a long time and bear markets happen, although this one was the quickest from peak to trough, although I doubt this is yet the trough. In a bull market, cash is trash. In a bear market, cash is king. You have said many times in your answers that asset allocation is our own personal decision. It is up to all of us to manage our own portfolios, raise some cash once in a while, review our asset allocations and to be able to sleep at night.
Thanks for all your work, especially during rough patches.
Dave

Q: So if they close the markets for an extended period, does one still receive the dividends?
Have they ever had a "brokerage holiday" akin to the "bank holiday"
Thanks.

Q: I always thought that it is wrong to regard bond etf's as fixed income. With all the equity carnage I also suffered a 4.46% draw down on XBB today. Individual bonds have a maturity date at which time your principle is returned; not so with XBB. Can you explain the reason for XBB falling off a cliff today. Thank you

Q: Your thoughts on this pls Peter/Ryan and team: with the VIX over 72 as I ask; historically (and I know all bets are off in this environment) and a best guess: are we "somewhere" near maximum panic?
Fyi I have been a net buyer over the last couple of weeks, panic creates opportunity imo. Your thoughts and opinions have been invaluable even though some have been hammering you for your answers..thanks!

Q: Hi 5i
Just so you know, I was going to ask a very similar question to the one asked about potential portfolio adjustment. I too read into your answers as preparing to repair a damaged portfolio.

My concern here is after reading most of 5i answers and trying to align thinking like long term manager, 5i takes this opportunity to wholesale change the portfolio. To make a move of this nature for an investor with skin in the game would suffer huge losses where it is a key stroke for 5i.

I can only hope to be profitable sometime again in the next ten years.

Dave