Investment Q&A

Q: Tony Seba's video paints a picture of massive disruption coming by 2020ish. His thesis is that the convergence of electric and autonomous vehicles, solar efficiency, etc. will disrupt many industries and especially transportation and energy business models.

Have you seen any of these types of projections? It’s a bit of a longer video but you might take a peek at it particularly near the end where he connects the dots.

If true, we had best be getting out of pipelines and rethinking renewable energy, let alone the many other industries that this may impact. For example, if people reduce significantly their purchase of vehicles and simply allow autonomous vehicles to drive us around, we won’t need nearly as many parking lots, and this will free up land for housing in urban areas.

Is this guy credible? Any thoughts?

Best regards ... Kirk

https://youtu.be/2b3ttqYDwF0

Q: In this rising interest rate time, are these two
Funds ok or is there a stronger chance that they may have a poorer performance than a g.i.c.
They represent about 30 % of our r.r.s.p.
Between them
Thanks for the advise






Thanks for the advise

Q: Although experts appear to need to constantly leave some measures of doubt, there are overwhelming signs a lot of these massive swings are electronically induced and some forms of ETFs the catalysts with the wishing hour all too predictable. I also find indigenous how clear calculations are presented to how each 1/4% rise means important profits to some industries but when it comes to those which are hurt, no hard numbers only a herd response of bad and avoid! Are not rising rates a sign of a better economy? Consider the avoid list: Electricity and heating, rents, telco bills they do not rise? Fundamentally, is not the formula I/R =V? So only the" R" is going up and the "I" at banks? Are analysts raising/ reducing their target prices on interest sensitive stocks while their prices are falling precipitously and yields rise close to typical average market returns over an extended period? It may be coming but any recent published downgrades I have access to are not sounding loud alarm bells or screaming "FIRE"!

Odd, overtime US TV specials on what is occurring and one of the how to protect yourself go toes is to consider the fundamentals of the stocks you own? It sounds good but to be polite very misguided momentum thinking stills seems to override any sense of good basic underwriting principles. How surprising, currently at the top of the BUY list by the experts putting their two cents in: Invest in companies that benefit from high volume trades! Well that is where the momentum is clearly positive!

Do I have a question? Actually yes, are there ways or signals to indicate the factors which are causing such volatility have burned themselves out and the shakeout over? Values which actually represent investing opportunities? It may be sound cynical but is there any hope of getting back to some resemblance of investing where fundamentals rather than financially engineered products are the real catalysts ruling markets or should we expect one calamity to the next ? Clearly no person can compete with AI programmed responses that override all else!

It would seem due diligence by doing your homework is no longer at the top of making a decent return and more importantly keeping it. Things do not only go in one direction, that is understandable but, what is currently going on, certainly cannot enhance the US system or its markets which again seems at the root of the problem impacting many, if not all markets!

Any insights you wish to make would be gratefully appreciated. Thank you.

Mike

Q: I have a question about bond yields and interest rates. I just read an article on marketwatch saying that the 10 year bond yield "has an effect on all parts of the economy, as it influences everything from borrowing costs for the smallest and biggest companies, to rates for fixed and adjustable mortgages, car loans and credit cards".

I think i understand how it impacts borrowing costs (firms that need to issue new debt have to pay more?) but I thought the fed rate is what influences the prime rate which effects adjustable mortgages and other loans.

I understand that a higher yield on bonds makes some stocks less attractive in comparison (like dividend stocks) but i don't get how the 10 year bond yield is so important/scary for the market.

Could you please explain?

Q: What do you see as the best strategy to benefit from downturns like what we’ve seen lately. Is it just make sure you always have cash to deploy when one happens or is there some stock/fund that is average most of the time but really benefits from the pull backs somehow?

Q: I am curious in your experience in the past with similar corrections 10% or more. What are the companies that benefit from the eventual recovery? Is it the companies hit hardest in the correction that rebound or the companies that weather the storm and continue to outperform?

Q: What are the pros/cons of holding Canadian companies, e.g. banks, in US markets instead of Canadian markets for non-registered accounts?

Q: 5I
When looking at a company's ability to pay a dividend the common ratio people look at is the dividend payout ratio. However from reading some of your information over the years I realize there is much more to it that that. Can you please list the other important factors such as interest coverage, free cash flow etc. Listing them will be fine. I will search and come up with the calculations and then go to the financial statements.

Thank you

Paul

Q: Will 5i Research be offering any direction in regard to opportunities within the
existing cannabis stocks or pending IPO's. This also applies to cannabis support and off shoot industries such as dispensaries.

Q: Subscription to the globe and mail provides excellent spreadsheets for your portfolio as well as watch lists with news

Q: Today in a question from John he asked about spreadsheets, I too was looking but in fact Action Direct can provide the info he is looking for. Under the My Portfolio tab, click on Analyze and Rebalance, in there you can create a group of all your accounts. Once you have a Group, sector weightings and position size is one click of the mouse. I wouldnt waste my time or yours with this submission except for the fact this knowledge has been a bit of a game changer managing my portfolio - keeping sector weights and position size in line.

Q: Suggestion about dividend payment history. I use the charts of online brokers as far back as they go and in the events i put dividends. Put the cursor on the bubbles and I see the changes. The records go back 10 years +.

Q: Greetings:
In one of your recent answers you stated that a particular company had a p/e of 33 and expected growth of 25%. In order to stay even, if investors pay 33x don't you need growth of the same multiple. Please explain.

Thanks,
BEN.

Q: I am interested in zwe for the European exposure and the high dividend. However I don’t understand what a covered call etf is or how it works. Can you
explain the mechanics in layman’s terms.

Thanks

Q: During market drops/volatility like what has happened the last couple of days is it a good approach to buy some small cap to make quick gains when the markets recover? Your advice is much appreciated. Thanks. Shyam

Q: Hello Peter,

I just read your article entitled "Five Signs That This Market Party Might Be Winding Down" in the February 2, 2018 issue of the Financial Post.

In this article, you advise that, "Like any good party, there does come an appropriate time to leave." Specifically, you say that if the economic climate changes to a situation with increasing inflation and slower growth, "this would be a sure sign to get out of the market for a period of time."

I have only been a member of 5i Research for a few months, but I have extensively read through your answers to all questions, the blogs, etc., on the website. You consistently advise members that market timing usually doesn't work. This article seems to contradict one of your key tenets of successful long term investing. Has your philosophy changed, or am I misunderstanding something?

Thanks.

Brad

Q: I have been administering a 7 figure + portfolio for a good friend. At Christmas he asked me to liquidate $1M as he was feeling nervous. Given the events of last week it may have been a prescient call! In any case I am charged with finding a good short term home for the money and thus have been delving deeper into the fixed income world. There I have encountered "Bankers Acceptances." May I have your views?

Kim

Q: What is your feelings about using an inverse ETF such as the above to protect a portfolio against North American interest rate increase over the next year?

Q: Hi Team, I realize that dividends are an important part of any portfolio and I know that 5I regards "Drips" very highly and I agree. Since I have no recollection of the investment world with high interest rate, how is "Dripping" affected in a rising rate market in the long run? Especially the utilities and the Bond Proxies.In the past how have names like TRP, FTS, EME performed. The higher yielding names in my portfolio in the utilities space are T and AQN. Should I keep dripping them? I am not worried about the other sectors stocks with dividends just the utilities.Thank-you in advance! Sam

Q: Greetings Peter and Team:
As i understand it real return bonds have three parts ( ie ) an issue price
a stated interest rate and an inflation factor which applies to the last
two. If they are purchased or sold before maturity the loss in the
value of the principal could exceed the inflation gain if interest rises
very much. Hank Cunningham thinks they are dangerous instruments.
Is my understanding correct? They are also very thinly traded at present,
which may change as rates rise. I am interested in USA Tips. Could you
please advise if they are much the same or can be redeemed before
maturity at par because they are treasury bills, or are they essentially
bonds like real return bonds? Also are TIPS readily available or are spreads wide? Please outline the traps with both but mostly TIPS.
Thanks,
BEN