Investment Q&A

Q: Hello Peter and the rest of the 5i Team. I have been investing on my own for about the last 5 years and have done ok primarily sticking to well managed, established companies. In the last year or so, I have added some more "growthy" names, which you guys have suggested and have worked out very nicely (thank-you). My concern now is trying to hang on to what I have made. I hear a lot about the market cycle and money rotating out of one sector into another. I am also picking up on future inflationary concerns and how now is a good time to start buying gold stocks. Also, interest rates are so low and really have nowhere to go but up. Government debt levels are mind-blowing? What does this all mean for the market? I know that having a balanced/diversified portfolio is important and it is difficult to time the market, but based on where we are in the cycle, is there historically a preferred sector that I should be moving some of my money into? Gold, resources, financials, real estate? Or is it time to take some profits and increase cash positions? With interest rates so low and eventually moving up, does it make sense to buy bond funds/ETFs? Can you please help me make sense of all this and suggest a few names to consider?
Hopefully my question makes sense. Thank-you.

Q: Good morning 5i
thanks for the prompt answer to my question yesterday. I need just a bit of clarification on the answer, though. I was keeping companies like Alphabet and Microsoft along with etf"s because I thought they might have an outsized upside in the future. You say, thought, that all these stocks can be found in a typical etf and then go on to suggest another handful of stocks. I am not sure if you mean that because Alphabet, Microsoft etc, are so well represented in the etf's that I don't need to hold them separately and focus instead on stocks similar to the ones mentionned?
thanks

Q: Could you please tell me what % of the world economy the following countries/regions
have:
U.S.
China
Japan - Asia pacific
Europe
Many thanks.

Q: Hello Peter,
Please watch this link....it's only 1min. This is very worrisome. Pierre Poilievre suggests "lock away your money". What would you suggest? If decide they want to go after ou savings (which BTW I think it's very possible), what would they "grab"? How would they go about doing this assault?....Do you think they could go after trading accounts? Or maybe the cash on trading accounts? Maybe savings accts., GIC's, etc.
How do protect ourselves?
As you may know, Trudeau w/NDP (which represent majority) are in agreement to tax on the equity of your home (principal residence) when you sell it. Also, they are planning (maybe they've already done it, don't know) on taxing inheritance to pay for all the free money they are giving away.....BTW Canada apparently has the highest debt, by far, of the G20.
Thank you very much!
Silvia

https://www.facebook.com/PierrePoilievreMP/videos/4692225587515077/

Q: Thanks for the quick answer. Just a follow up to my "renewables" question. My 3rd question was meant to compare ZUT versus the covered call equivalent ZWU (not ZWC, which I also own). Rereading your answer a few times makes me believe that you thought the intended comparison was between ZUT vs ZWC...not so.

It appears to me that the total return for ZUT handily beats that of ZWU. My question related to where we are in the market cycle. My understanding is the covered call overlay system works best in a slightly rising, flat or slightly falling market...I think. Otherwise the CC ETF will underperform in a bull market. So, based on where you believe we are in the market cycle, which ETF is best...ZUT or ZWU. This ETF is intended to improve my asset allocation by increasing my Utilities and Energy exposure. Again, I already own ZWC. Based on where I think we are, I am leaning towards ZUT for total return. Your thoughts?

Thanks for the clarification...Steve

Q: The Schiller P/E ratio is 37.21 today, higher than it was on Black Friday, 1929, and second only to it's maximum of 44.19 in Dec. of 1999. This overvaluation is confirmed by the Market Cap / GDP ratio. Those extreme highs were followed by extreme corrections. How should we prepare against such an eventuality?

Q: Hello Peter and Team,

Looking to for an inflation hedge for my Son's mother in law. She just sold her house and has all her money in cash. She isn't very comfortable with investing so gold won't work. We are slowly putting her TSFA contribution in VBAL as we need some growth for the future (approx. 25% of the cash), but that is all she is comfortable with investing. What are your thoughts on ZRR? Is there any other product you would recommend as an inflation hedge?

Q: Hello 5i team:
This is a suggestion and a question!
Not at all hypothetical or a thought experiment.
In the main newspapers G&M, FP and magazines like Moneysense there is a real case history of people who submit their stories and ask for suggestions. Names and identities are of course masked.
It will be nice to see such a feature say once a month in your blogs!

Question: If you were to construct a portfolio(s) with ETFS spruced with some stocks that generates 80k per year, how much capital one would need? You may want to apply your approach of Income/Balanced/Growth portfolio.
Your growth portfolio has done exceptionally well thanks to some highflyers like SHOP. But one can't rely on such phenomenon all the time! Hence my ETFs based approach.

Q: USD vs CAD crystal ball question. The chatter i am seeing is presure on the USD and a loss of stature for the USD as the fiat currency of choice globally. It is still number one and the benchmark but not the rock it used to be. IF the USD continues to stumble AND resources that are lagging strenghthen it could create a negative headwind for my USDvsCAD holdings and favour putting money in CAD or hedged investments. Would it be wise to hedge for this possible outcome, is it likely in the next 6-12 months. In your reply feel free to go down the rabit hole of predicting the end of the Fiat currency model as we know it...

Q: Hello:
This is a BIG picture question.
I read that a Great Reset is being engineered and apparently discussed at the World Economic Forum.
Is this one of the useless conspiracy theories or it it real?
These Trillions of dollars of debt cannot be wound down in a meaningful fashion and hence the reset?

Q: Prior to the Covid pandemic I was stockpiling cash in anticipation of a long, overdue market correction. Still buying and selling but mostly selling. I can imagine that a lot of us retirees where doing the same. Most of my portfolio I left untouched assuming yield protected it from a major downturn. Wrong!!

I never really sold but waited for the portfolio to recover as value came back in fashion. I also bought beaten down value stock (banks, insurance companies and large, unloved tech companies, etc.) as this progressed.

My question to you is this. Has my generation (approx. 140 yrs. old) stockpiled enough cash going through this to continue driving this recovery up. I suspect that this is a difficult one to answer but I didn't have anything better to do since I was dropped from the Olympic Team.

Q: Just a general question. With markets at all time highs, but the virus is still a big part of our lives. While the market is forward looking, a lot of damage has been done. In addition, this would be the first recession with only 1 wave of selling as opposed to multiple waves. Do you think there are near term risks or are we just headed higher and try not to overthink it, but leave some cash on hand for future opportunities? How much cash? 20%?

Thanks,
Jason

Q: If there is a post-U.S. Thanksgiving (seasonal) rally, which sectors do you expect to be strongest?

Q: I am ussually not a holder of cash in my investment accounts. I have moved to about 15% cash by cleaning up some dogs and selling some assets that bounced back post march crash. The recent run has given me FOMO. My brain is telling me that the markets are crazy and there is no good reason for this recent run, the but the market is alway right. So I sit here asking myself "Am I acting like Trump or are the markets acting like Trump?" ....So my question is: if you did a 5i office water cooler poll how many think there will be a major second correction in next 4-6 months: never, unlikely, likely, 100%.

Q: Do you think Tech my trade sideways for a while as the valuations may have to catch up? I am overweight Tech still and i am finding it hard to sell some of the stocks that have been good to me. Which sectors might you overweight or lean to now with the news that some vaccines may be out in the next 3-6 months?
Thanks

Q: Hello,
With the media and other financial write ups all talking about this great sector rotation out of growth and tech stocks into value stocks seems a little over blown to my logical mind.
Its made to sound that stocks , in the "Packaged software " sector like
-LSPD, DND, REAL, NVEI ,VEEV etc are part of that big rotation.
When I think about this, I beg to differ and am of the opinion that these stocks will become even more relevant in the future of our economy irrespective of Covid.
Have I lost my "marbles" or being too naive to think that way?
Your feedback is always appreciated.
NB* I do own these stocks that I mentioned.
Thanks,

Q: Hi 5i team,
Last week was about the 4th big rotation from growth to value this year. This morning Moderna announced success with its vaccine. All the fund managers are now adding extra 10 lb. value weights to their barbells. My barbell has been heavy on the growth side. While you often give target sector weightings, you don’t tend to do it between growth versus value. I know you are growth managers for the most part but does this 2nd vaccine and change in market sentiment now give you pause to consider placing more of a value tilt on one’s portfolio?
Thanks again for the insight.
Dave

Q: Peter; We had a Trump rally when he was elected- could we another one if,as, and when he leaves?
Rod

Q: With one news there is a possibility that some other firms might also be sucessful in finding one so if more good news come in which stocks will benefit?Or do you think
market has over reacted with pfizer news?

Q: What worries you about the economy today.
Clayton