Investment Q&A

Q: For the past while I've been hearing about an opportunity in small caps and how they are undervalued versus large caps. Typically I consider diversification between fixed income vs equity, and then diversifying by geography and then by sector. However, I'm curious on your thoughts on the proportion of an equity portfolio that is invested in small cap vs large caps?

Of course, understanding that you can't provide personal advice and it highly depends on an individuals timeframe and risk tolerance.

Q: If you were setting up your investment portfolio for 2025, what would you want as your optimal concentrations per sector?
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All the best in 2025!

Q: Many are feeling the market is high. Certainly, we can't expect another year of 20% growth.

I'm interested in a strategy of maintaining those gains. Does that mean pulling money out of stocks that seem overgrown, or does it mean investing new money into areas that have not been part of the recent rise.

What sectors do you think these are? I nominate well-known companies (especially tech and giants like Costco) as overgrown even if they are good companies, and energy and small cap as part of the second group.

How does this compare with your thinking?

Q: Interview of 3 economists this month wich similar conclusions :"markets are extremely ( and historicaly) overvalued" , all anticipate some correction in January and "roller-coaster" after..No mention of sectors though ...Do you agree with this overvaluation thesis, and if this were the case ,what sectors would be less at risk ?

Q: Canada has accelerated both inflow and outflow of Foreign investments in Canada since Liberals took office. The Liberal government is abandoning ship, Canadian dollar is nosediving, and our deficit continues to spiral out of control!
Canadian stock investors like us here on 5i are taking big risks in buying Canadian stocks only to see our dollar erode, our stocks erode, and our investments erode.
I feel the only way to combat these issues outside of our control is to buy American stocks and investments as the more I invest in Canada the more Trudeau and his Liberals will find ways to screw my hard earned dollars, that are getting smaller by the day!
Your thoughts, thank you!

Q: Everyone, what is your biggest regret about investing? Clayton

Q: There can be little doubt that investors, since the elections of successive Trudeau administrations, have become increasingly wary about sinking money in Canada. Outflows double inflows of capital and our dollar's value has fallen by 20% retarding ROI's for investors. What is 5i's outlook for the Cdn$ and investment going forward?

Q: Can you expand on relationship/correlation of Macro Market Models in Market correction situation or because market correction is inherently unavoidable and ? relatively short cyclical event it doesn’t affect/correlate with the Makro Markets Models ? Thank you .
Miroslaw

Q: We own shares in a bunch of TSX listed Canadian companies like the banks, SHOP and AEM etc that are also listed on the NYSE. I feel the USD is going higher or perhaps I should say the CAD is going lower. The same may hold true for the European and Chinese stock exchanges, with all the currencies going lower against the USD. At some point I wonder if the Federal reserve will start to lower interest rates if the USD goes too high. Mr. Trump will be happy!
Not sure if it makes sense to shift the TSX traded stocks over to the US side of the ledger. We also own a lot of US listed stocks on the US exchanges. In away the low CAD has made the purchase of CA stocks using USD cheaper! What's your take? Any thoughts you have would be appreciated.
Regards,
Jim

Q: When are we going to have a correction?

Q: Thoughts on the US rate cut and markets going forward? Should we be more cautious and take more risk off the table going forward? Thanks!

Q: what with the significant pull back late in the Wednesday stock market, will the US market crash??? Also what is in store for Canadian stock market???.....Keen to hear your take!!!....Much thanks....Tom

Q: Is rotation into other investments groups required or necessary in anticipated market correction or as long as the individual portfolio is within the required target one may ignore such event ?

Q: I just finished reading the psychology of money and am looking for more books to read in the financial sector that you recommend

Q: The Canadian market has been weak lately, and I think Trump's potential tariffs will mean more weakness near term. Rather than top up a TFSA in January, how about waiting for the near term anxiety to produce lower prices, and then get in?
John

Q: What is the impact of the proposed Trump Tariffs? Is this the reason for weakness in rails, oil and gas, and in general, the TSX lately? Happy holidays and thanks for all you do!

Q: Hi Team,
Is it just me or why do I get the feeling this market is getting a bit “out of whack” in some areas . It looks to me like people are selling the solid winners such as Nvda , for names such as Tesla and Bitcoin. Am I the only one that thinks some of the moves made since Trump got in will end up painful when the hype fades and there’s no real meat to back the valuations ? It’s almost like the irrational excuberance phase has kicked in like it did at the end of 2021 before the tech sector crashed. Except this time only in certain high flying names.

Just looking for your take on things as they stand today. Stay the course ? Join the Tesla party and fly into the sun ? Or buy the laggards perhaps in undervalued areas (Gsy , or even add to nvda dip for example, or trim nvda if the justification is there …which I don’t think it is) . Hard question perhaps!

Thanks ,
Shane

Q: In response to why NVDA might be experiencing weakness, CNBC has been talking about:

MON, DEC 16, 2024

The Exchange with Kelly Evans
FROM THE DESK OF KELLY EVANS

 
AS OF MON, DEC 16, 2024 • 11:24 ET

What Just Happened.

 
"The market's most important stock is faltering," the CNBC headline aptly reads this morning. And as our Fred Imbert catalogs, Nvidia shares are down 3% in December while the rest of the market is up nearly 4%, and are down nearly 10% from their November 7th all-time highs.



Now, a tiny correction in a stock that's up 164% this year, and 9x in two years, is hardly reason for concern. But there could be a meaningful reason why the shares are stalling out here--and why shares of another chip company, Broadcom, are suddenly soaring.



It goes back to this fascinating discussion between Chetan Puttagunta, a general partner at venture capital firm Benchmark, and the anonymous fund manager known as "Modest Proposal" on Patrick O'Shaughnessy's podcast a couple of weeks ago. I'm no technical expert in AI, but here's my best effort to summarize their discussion.



Namely, has the arms race to develop the biggest, best, and fastest large language model--the kinds of model that uses hundreds of thousands of Nvidia chips in massive data centers--begun to stall out? A few marquee players, like Meta's "Llama" and Musk/X's "Grok," are still plowing ahead, but the broader market may be starting to shift.



The shift is happening because (1), Meta's Llama model is open-source, and therefore start-up teams are now able to use it to produce smaller, more targeted AI models for specific use cases, and (2), the "training" of large language models using both real and synthetic data has stalled out, giving way to a new era of grading them based on their inferencing ability, also known as "test-time compute."



And if this shift is happening--and the podcast only barely got into the chip implications of this--then it would make sense if demand were also starting to shift from a land grab of Nvidia's workhorse chips, to a market where Broadcom's "custom" chips could suddenly become a very important player. Indeed, Stifel CEO Ron Kruszewski told us that's exactly where his firm is looking as they begin to deploy AI.



And boom--Broadcom's earnings last week confirmed its sudden rise as one of the foremost players in AI. Its overall revenues soared 50% from the year earlier, and its AI revenues were up a whopping 220%. The shares surged more than 20% the next day, putting it above the trillion-dollar market-cap mark for the first time. And they've kept rising, adding another 6% today.



Now, if this shift is real, there could be further implications, ranging from expected data center power usage to perhaps reigniting a start-up boom in AI that many beleaguered Silicon Valley investors thought might never come. And Nvidia could still come out just fine, as top analyst Vivek Arya told us last week, even as he raised his Broadcom price target.



But the shift would certainly explain why Nvidia's performance has been more muted lately.



A final player to watch, by the way, is Marvell, another custom chipmaker. Its stock also surged 20% earlier this month--and is now up 102% this year--after stronger-than-expected earnings. For now, though, it's still a much smaller $106 billion market cap.



So perhaps what we're learning this month, in other words, is that Nvidia may be ceding its crown (to whom exactly, we don't know yet) as the most important stock in the market.



See you at 1 p.m!



Kelly

Q: Happy Holiday Season all! Our question is not about a specific stock but rather we will need to take a fair sum out of our TFSA and/or non-registered account within a month or so. We will need to sell stocks from a well diversified portfolio. Can you give us any direction as to which sector it would be best to target for this withdrawal. We would likely re-invest the money over the course of te next 12-18 months.

Q: Hi 5i

What are your expectations for the upcoming year for both Canadian and US markets?
It's understood that you can't foretell the future but gut feel is the ask.
Thanks