Investment Q&A

Q: Bill Carrigan on Market Call maintained that there was a rotation from Health Care etc. to hard assets--energy in particular. Even though I can't see much of a future for energy or gold, the stocks still seem to be acting like there is a rotation to them while health care and IT are underperforming.
Do you have any observations?

Bryon in Elmira

Q: Hi 5i,

There are a couple of things I don't understand about this recent rally.

It seems to me that it is due to the US potentially slowing down, and hence delaying interest rate increases. If this is true, are we to expect this rally to end soon (since a slower US economy must eventually be bad for stocks) or does this rally have legs?

Also, if the rally is based on delaying interest rate increases why are companies like SunLife rallying. I thought these companies were going to benefit from rate increases so the current environment should be negative for them?

Any help you can give me to clear up my confusion would be appreciated.


Thanks,

Q: Given the trade deal that was signed today would you have any sector-stock selections that could benefit. What would you recommend for a protein stock. sap, hlf, Clearwater or mapleleaf.
Thank you as always.
Chris

Q: Hi, what would you consider appropriate weightings (%) to the following sectors in an all equity portfolio in today's market?

Communications
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Materials
Technology
Utilities

Looking to create a more diversified portfolio and seem to struggle on an appropriate weight for each. Thanks!

Q: Hi Peter and team the markets seems to have more worse days than better are we going back to the 2008-2009 days slowly. How bad are things is it a specific underlying problem (China, Recession, US raising rates fear) seems that nothing is making the market turn around? Thanks Nick

Q: Apparently Carl Icahn is shorting the market. Do we need to worry about big bear market? What is your overall strategy? Thank you.

Q: Market is droping like crazy should we still hold?.

Q: Just a comment, really.

It's hard to avoid somebody talking about the stock market today if you have a radio or TV on. Now, if you also consider the huge volumes (which none of the talking heads mentioned - at least none that I heard) I suggest we are seeing the capitulation and the end of this rout is nigh. Maybe even tomorrow. That of course, doesn't mean we have smooth sailing from here. Only for now.

Q: Can you provide updated opinions on the US Dollar? Are we seeing a repeat of the early to mid 80's run into the USD? Seems to be crushing everything in it's path..

Q: Can you clarify what the effects are and what you expect they will be on a mostly Canadian portfolio given that the U.S. interest rate is expected to increase soon and that the Canadian rates have just been decreased. I was expecting Canadian dividend stocks to strengthen given a lower interest rate here, but that doesn't seem to be the case. Certainly utilities like IPL and ENB are weakening (but perhaps that's more to do with the perception of them as energy stocks). Other Canadian dividend paying companies also seem to be weaker, such as banks. Does the U.S. interest rate always have the strongest effect on Canadian stocks, no matter that the Can interest rate goes in the opposite direction ?

Q: Hello Peter & Co,
My RRIF portfolio in entirely denominated in Cdn$. In order to invest in US stocks, the wise thing would have been to convert a portion of the portfolio to US$ when both currencies were at par; but I did not.
To convert now would cost me some 30% in exchange rate; I would not mind that if our loonie would remain at current levels. But that would be an irresponsible assumption because, even though there could be some additional downside in the short term, our currency would eventually move up (say by 10-15%).
So, the return from the US investments would have to be reduced accordingly.
But I am generating for the past 6 years a 17% compound return per annum from my Canadian holdings (when 7% pa would have been sufficient to meet my "wants"). The math here does not seem compelling to me with a hurdle of 17+(10 to 15)%.
So, unless I'm missing something, is this all worth the hassle?
Thanks,
Antoine

Q: Hello, my question is about the "Macroeconomic report card". What is the definition of "TSX Comp.Yield"? On the macroeconomic report card of June 15th, you report a yield of 3.30%, is this the dividend yield only? I am asking because it seems to me a little bit high. (same question apply to the S&P500 yield). Thanks, Gervais

Q: IF A GREXIT COMES ABOUT I THINK THERE COULD BE SOME SHORT TERM BUYING AND SELLING OPPORTUNITIES AS WELL AS ON OPPORTUNITY TO REBALANCE YOUR PORTFOLIO IF YOU HAVE SOME CASH. I WOULD APPRECIATE IT IF YOU COULD LET ME KNOW YOUR THOUGHTS ON WHAT WILL HAPPEN TO INVSESTMENTS IN THE FOLLOWING AREA IMMEDIATELY AFTER GREXIT HAPPENS (I KNOW THIS DATE IS OBVIOUSLY A PERSONAL DECISSION):
GOLD
CANADIAN MID-CAP COMPANIES
CANADIAN SMALL CAP COMPANIES
TECHNOLOGY COMPANIES
FINANCIAL INSTITUTIONS
THANKS FOR ALL YOUR GREAT ADVICE IN THE PAST.
MIKE

Q: You have recently commented on a number of stocks which have declined "on interest rate fears". Why aren't rate increases already be reflected in stock prices ? Markets have known for ages that interest rates are likely to go up - though only slightly, and probably before year end. Is stock price volatility due to interest rate fears a reflection of speculative action ?

Q: It seems every time I turn on BNN, I hear some pundit spouting baseball analogies: as consensus goes, we are apparently in the 9th inning of a bull market, maybe even the bottom of the 9th. A few managers have commented that we're batting into extra innings and that a correction is long overdue. What does all this mean, in real terms?

It seemed to me we had a correction in October -- my portfolio took a good 10% hit, and although I've recovered nicely, and have even outstripped what my "pre-correction" gains were, it seems I can't differentiate from a "correction" (with a small "c") as opposed to THE CORRECTION, (all caps). Pardon the cheekiness, but ... really ... !? they leave themselves open to such interpretation.

I would dearly love to hear from Peter what his take is on all this correcting that's going to be happening. Should I shore myself up now, before the flood hits?

In 2008-09, I was not fully invested, and so never took the hit that many of my colleagues and friends did, simply because I had a lot in cash, so I have no personal experience on what it feels like to be corrected.

Thanks, as always, for your advice.

Q: I'm wondering if you could share your opinion on the reported rumblings in the bond markets and the speculation that equity market trouble is sure to follow. The reference is to the U.S. Markets as far as I can tell. Do you think there's a clear and present danger to Canadian equities?
Thanks very much.

Q: Hi there,

I worked in the government for 15 years and I am 41 years old. I am eligible to get a transfer value for my service which would be roughly 250k within RRSP limits and 250K outside RRSP limits (or) I can collect an indexed pension pension of approx $2600 (todays value) at age 60. I did the calculation and I find that if I make about 7% I am better off than the pension plan taking the transfer value..Please give your opinion on this. Is this doable? If I do end up taking the transfer value can you suggest how I should invest it? I have a period of 20 years before I can withdraw from it. Would it be appropriate if I invest a portion of it by mirroring your model and divident portfolio? What should I do for international allocation? US allocation? Are there some investments which I can make which are not very market dependant? This is very important for me and I value your opinions. I realise this is more than one question so fell free to use more than one question credit as appropriate to respond. Thanks very much.

Q: What % range would you consider acceptable ( min to max ) for financial stocks for a middle aged dividend investor with 7 years to work and a goal of building up a portfolio that will pay dividend income upon retirement. I invest in all sectors with ETFs, individual stocks and a small number of mutual funds ( Chow etc ). My portfolio includes small mid cap and large cap, both in Canada and worldwide. I find even non industry specific ETFs are on average 20% in financial stocks. Tough to keep under 20% when you start buying PWF, BMO, BNS, SLF etc.

Many thanks

Paul

Q: Keith Richards at Value Trend Wealth Management who appeared on BNN Market Call Tonight is of the view that S&P500 could see a 20% plus correction this summer. His reasoning was primarily based on Technical Analysis. He also mentioned that at present, retail investors (dumb money) are twice as much bullish as sophisticated investors like pension fund managers (smart money). What are your thoughts on this prediction for an imminent market correction?

Q: With all the bubbles building up around us – bonds with negative yields, unbelievable levels of debt, USD artificially overvalued and its reserve status under attack from the Chinese – do you ever consider going into some sort of defensive shell to shelter from the coming storm? If so, what kind of a shell would that be? Do you think the CAD might escape some of the turmoil, due to less sovereign debt? How do you feel about gold?
I’ve been trying to play defense for some time now, by investing mostly (but not entirely) in small cap dividend paying Canadian stocks that can’t easily be shorted, or accessed by large US investors, avoiding financial services stocks, and having some gold stocks. I have thereby missed out on the huge rise in US stocks and bank stocks, but I think in the long run my strategy will probably still pay off. What do you think?
The top ten holdings (in decreasing value) that my wife and I have are KEG.UN, PPL, BPF.UN, CHE.UN, CGX, FCR, BXE, FNV, AW.UN, and GIL, out of a total of about 25 holdings.