Investment Q&A

Q: If we are in the bottom of the 7th inning of a secular bear market and the financials, utilities, telco and other high dividend payers are starting a price reversion from high p/e's brought about by the abundance of cheap money, what sectors would you go to while this plays out. I am 70 and may not have enough years to stay invested in the yield play sectors and then wait for the recovery.

Assuming this process is in place would you care to venture a guess as to how severe the correction may be.

Thank you Peter.

Q: Last question to 5iR for 2015…and it is about 2016. I would like your comments on the target weights for portfolio asset allocation. (Details include a portfolio made up of a 20% income segment, 10 % growth and the balance of 70% balanced……and the dollar denomination, 80% CD$ an 20% US$)

CS 10%
Retail 5%
CD 10%
F 10%
Real Estate 5%
E 5%
Pipelines and services 5%
Health Care 10% (CD$ and US$ 50/50 split)
IT 20% (CD$ and US$ 50/50 split)
Industrial 15%
Material/Mining 1%…the plug figure
Transport 2%
Utilities 2% other than pipelines.

……thanks for keeping on the investment rails in 2015

May all at 5iR party well to ring in 2016!…..Tom

Q: I am baffled at the discrepency between forecast and actual numbers of the US weekly oil inventories. This week a plus of 4.5MM vs a forecasted reduction of 1.8MM. Can you shed some light on what could create that much variance on a weekly reported number?

Carl

Q: I am wondering what your reaction is to the proposed 4 rate increases for 2016 and 4 more for 2017. My impression was that the rate increases would come much more slowly. Was this your expectation and what the effects would be on the US and Canadian economy and equity markets.
Many thanks
Mike

Q: Hello Peter and Team,

I bought this ETF a few months ago hoping to participate in Europeam equity rebound. So far not much has happened. Your thoughts on this ETF and please recommend any if you feel will participate in rising European stock prices. Thanks, Rossana.

Q: I WONDER IF YOU COULD PROVIDE ME WITH YOUR INSIGHT INTO WHERE YOU FEEL THE U.S. AND CANADA ARE IN THEIR INDIVIDUAL BUSINESS CYCLES.
THANKS,
RANDY

Q: Good Afternoon: My question is really currency related rather than Visa specifically. I own a few US stocks including Visa which fortunately for me I purchased when there was not as much difference between the US and Canadian dollar. As a result of stock performance and the difference in currency valuation I have done well. I would like to make a few more US purchases but cant make myself do so with the almost 40% hit. In my opinion some time in the future our dollar will get stronger. Do you have any suggestions or can you recommend Canadian companies or ETF's that I can buy without being so concerned about the currency. Thank You.

Q: I have tended to rebalance my portfolio annually (usually in the summer) but will trim a stock at any time if it increases significantly. First, is annually enough? Second, does the continued and precipitous drop in energy and energy related stocks change your answer to the first question? If I wait until I think oil has hit the bottom, aren't I guilty of trying to time the market? But if I buy "too soon" (i.e. balance quarterly), I keeep putting money into a losing sector.

Appreciate your insight.

Paul F.

Q: Peter; I think I saw some babies being thrown out with the bathwater this morning - what do you think? Rod

Q: Is the market still
In tax loss selling mode repositioning for the new year or is there something fundamentally wrong with the volatility?

Q: I have cash available to invest. I take it i5R prefers to buy positions when the market is rising. Looking into your crystal ball, what do you forecast as a good time to purchase equities? And what sectors, sub-sectors would you prefer for a two - three year period?……Thanks

Q: When the market was doing well, all the analysts were positive on the future of stocks. Now that there have been some stumbles, the bears seem to be coming out of the woods. They say that quantitative easing and a zero interest rate policy has created a stock market bubble by forcing yield investors to switch from bonds to dividend paying stocks. I even heard one analyst on BNN say that this feels like the tech bubble of the late 1990's. I don't really feel that multiples are stretched. Although some high yielding dividend stocks are trading at higher multiples than 10 years ago when interest rates were "normal" and some high growth stocks are trading at rich multiples, overall the market does not seem over valued. Of course, if we see double digit inflation and much higher interest rates, then I would expect a significant pullback. Otherwise, the market feels like it has room to grow. I would appreciate your thoughts.
Thanks,

Q: What's your current opinion on the Cdn and US economies and it's impact on the current investing environment. Do you feel we're close to going into a recession in either country?

Q: Earlier this week, Frances Horodelski mentioned the large number of short positions which exist on the CAD and few other currencies. Almost unprecedented levels. The suggestion from one of her guests is that, under these conditions, a significant and sudden reversal of the CAD against the USD could happen.

Would you agree with that? i.e. on both the reversal and the magnitude?

If this happened would it likely last for a while or more likely be a pop and drop scenario?

Thanks for your opinion on this.

Q: If I anticipate a rise in silver prices would this ETF be a good purchase and hold till silver has risen. Any other thoughts on this ETF. Thanks.

Q: Just a quick comment. You have commented in the past that too much news is negative and investors should avoid too much media and static. I get the e-mail on black Friday and it does cast a shadow of indecisiveness. The question is simple. Are you at 5I bullish or bearish on the next 12 months in a general sense? You don't have to be specific on sectors et. but rather how do you see the market (Canadian/US) I'm just simply trying to filter out all the news and concentrate on the big picture which you guys have a much better handle on than I have. Thanks for all the good work. Cheers

Q: Hi folks: How will gold and silver react if (when) the bond market crashes?

Q: I hold some XHY in my margin and TFSA. The Canadian dollar has come down since I purchased about 2 months ago. The prediction is for a lower dollar. How risky is this downward slide , should I sell now? I just bought for the increased yield.Thank you,Phyl

Q: Is FTS at any risk as far as being coal-dependant ?
Thanks for your help.
Sam

Q: Hello Peter & 5i team,
So far so good in 2015, even though it was a tough year ; the equities (all canadian) I own have generated a 12.6% total return to Nov 20.
But these equities represent 82% of my RRIF portfolio ; this means that I’m sitting on 18% cash which I hesitate to redeploy.
You say that the US economy is pretty strong ; well, I’m not so sure about that. It is rather the best among a lousy bunch; in other words, in the kingdom of the blind, the one-eyed is king.
The S&P 500 rally is of low quality in terms of lack of breadth ; in 2015, its top 10 performing components represent over 100% of the total whereas that ratio was less than 20% in 2014 and slightly more that 10% in 2013. That’s a bad turn of situation.
The relative performance of the Russell 2000 vs the S&P 500 is in decline due to lack of liquidity in the small cap sector (which is the engine of growth). That’s no good either.
The Retail sector (consumer discretionary), which is a very important sector in the US economy, is dominated by only 3 names : Amazon, Netflix and Expedia. That’s hardly reassuring.
The US$ keeps gaining ground ; that causes enormous pressure on Emerging Markets debt and constitutes a substantial headwind on US multinationals profitability.
To top it all, the 2-year US yield is going up contributing to a flattening of the yield curve ; if (and its a big if) this situation perseveres for a few more months, we could face an economic downturn.
This is my rationale as to why I hesitate to redeploy my cash and look forward to your counter arguments,
Thanks as always,
Antoine