Investment Q&A

Q: Everyone, what are the three things for the markets to push higher? Clayton

Q: Vix has climbed from $14.48 on Jan 9 to $30.95 yesterday. Do you think we are nearing a contrarian buy signal?

Q: Hello Team 5i and Everyone,

Unless Trump pulls a rabbit out of his hat, from what I’ve been reading the closure of the Strait of Hormuz falls into the category of “too big to fail.” And since the price of oil affects nearly everything globally, one would assume that we’re likely to see price increases soon enough in nearly everything as it is passed onto the consumer. (Like food, unfortunately.)

In another service I subscribe to a member there has a background with global oil logistics. In their assessment, if the war ended today it would take 4 months to get the shipping lanes fixed. 6 months to restart the oil fields at 85% original flow. 4-5 years to fix the LNG plants. Meanwhile countries are starting to hoard oil and oil products too, which only adds to the global demand when we really need to be destroying that demand at the moment. They equated that we need to destroy as much oil demand as we reduced during covid, but this time we need to do it with price.

At least with the problem of the tariffs, if the current US administration had snapped their fingers at any point last year and got rid of them, in theory the problem would have been solved “instantly.” But that doesn’t seem to be the case here because of the drones and missiles hitting the oil refineries. And sadly, especially for the people living inside this war, this is turning into a pretty big mess.

So what I’ve been mulling over is:

What effect would prolonged higher energy costs due to the closure of the Strait of Hormuz have on the data centre & AI buildout, etc and the debt being used to finance these projects? I’m under the impression that the AI buildout is supporting the US’s economic growth at the moment. Also seems like Space X, Anthropic, Open AI are all trying to IPO this year as soon as possible. The KOSPI which is over-concentrated in semiconductors looks like it had a blow off top recently.

What other important potential problems have your attention at the moment that the increase in energy costs could exacerbate?

Any further comments would be appreciated.

Thank you & appreciate the big brains at Team 5i,

Sandra

Q: I keep reading how the S&P is trading at high values compared to historical values and because of that is risky. do you think that etfs that track the S%P 500 (e.g. ZSP) are more risky than a mid-cap ETF such as ZMID or XMC which are trading at their historical values?

Q: Question about middle east . You ve already answer how someone can be positioned in case the conflict stop in 2-4 months and I am well positioned (gold , BTC, tech stock ) the more I informed myself on that war the more I see there is a definitive path for it to last longer . I ve learn how supply routes , production, refineries take a long time to go back on track and the longer it gets , the more complicated it is. It’s not only oil but nat gas too. Qatar facilities have been majorly affected and the Qataris say it will take 2-3 year to rebuild. And this is as of today . So I’m trying to think 1st 2nd and 3rd degree effects. Could you advise on how an investor could position a part of its portfolio for a longer lasting war . They are a great series of pod cast about that in the last 2 weeks on Odd Lots for those interested. Please feel free to propose various ways , ( I know Nutrien is a good example) on how I can allocate a part of my portfolio to gain / hedge on that possibility. Can be through etf, commodities, sectors , specific companies etc. ideally getting some upside with not crazy amount of downside if war does finish soon(ish) . That would also be a great subject for your podcast . Thanks !

Q: I am sitting on a fair bit of cash in my portfolio and would like to start transitioning into dividend paying stocks. I have looked through the income portfolio and notice that quite a few of them are near all time highs. I know you don't like trying to time the market but do you think it would be prudent to wait for the current market volatility to pass before starting to build positions. Looking at Stingray group and TD, they have both almost double in the last year. Thoughts?

Q: In a recent answer you stated "while we might not be too excited about the outlook for real estate". Could you please expand on your thoughts. In addition to a diversified stock portfolio I hold considerable investments in rental income properties - multi-residential and commercial in the Kitchener/Waterloo area. At 69yo I'm considering going more conservative like increasing my GIC holdings.

Q: What are your thoughts about what is happening to silver now a days? Silver usually good for inflation, yet not good when US$ strong. Seems like we have opposite influence going on now and US$ strength winning. Is that all there is influencing silver, some say market is being influenced by the paper silver and some large institutions allegedly. do you think that has anything to do with it? Seems to me, with all the demand for silver, inflation etc, silver should be headed north, not getting slaughtered. Your thoughts please.

Q: What companies present an oppurtunity purchase during this war turmoil? Assuming the Iran war ends in 2-4 months

Q: Your thoughts on where short/medium term interest rates are heading, along with inflation.
Your thoughts on where the CAD is heading.
Thanks

Q: Being mostly a "dividend long term" investor ,I did not invest in tech stocks up to now, except for some specific etfs . Considering this kind of "switch" from tech to energy stocks in the markets,and new valuations of major US tech stock ,I just started to invest in this sector.What is your view versus the opportunities and timing for investing in major tech stocks actually ?

Q: While the VIX is high, what companies and sectors would you be buying?
Many thanks

Q: 6 weeks ago you said this: "While a correction could happen anytime, we aren't really expecting giant problems. There is cash on the sidelines, rates may move lower, and investors have shown excellent resiliency in the face of all sorts of global issues."

Have you adjusted your opinion given the state of the world?

Q: Can you please provide a brief commentary on how you think AI will evolve in the next 5 years (economy, labor market, possible deflation and change in economic model projected by some). I know its a hot topics that can fill books. I am just wondering about your insights. Thank you!

Q: Everyone, What are the three most important things investors should be doing right now in the stock market? Clayton

Q: Can you help me understand why one would hold a company like Amazon with a 10% return in the last 12 months and 40% increase in the last 5 years compared to an ETF like VOO with a 20% return in the last 12 months and 73% increase in the last 5 years?

Where I struggle is, why take on the added risk of holding an individual stock compared to a diversified ETF? Clearly it’s shown to out perform the individual stock.

I understand holding both are likely ideal, but can you provide a reason to not sell Amazon and add to VOO? Thank you

Q: time to move from energy producers into financials?

Q: In the last five days, the S&P is down 1.58% while the TSX is down 3.29% (as per G&M). I'm curious about why Canada's stock market, heavy with oil companies, would fare worse than the US, which is actually the one at war. Any ideas?

Q: Hello,
When does it make sense to borrow from a line of credit for non-reg assets vs contributing after-tax cash to an RRSP?

I don’t want my taxable income in retirement to be any higher than it is projected to be.
I also have access to a line of credit right now.

You mentioned recently:
“ Typically investors look for more stable and reliable dividend-payers in a non-registered account….. …we like BNS, TD, ENB, FTS, CNR, SLF, BAM, CSU, AEM.

So, if I want to minimize my taxable income in retirement, when does it make sense to borrow to invest in those dividend-paying tax-favoured stocks?

I believe the short answer is “when the after-tax cost of capital is less than the expected after-tax return”. Correct?
If so, why doesn’t anyone with some borrowing capacity borrow to invest in my situation? (Risk-aversion?)
Thank you.

Q: Hi Peter and 5i Team,

Peter, a great article in today's Financial Post.

So far today, there's a sell-off in just about everything. Where is all this money going? Are there any free sites that can give some insight?

Thanks as always.