Investment Q&A

Q: I have heard comments from diverse sources that there will be a massive movement of investment from bonds into equities at some point. Would you comment on this topic as to what catalysts could cause such a move. Does 5I agree with the concept? Has such a shift happened in the past?

Thank You
Clarence

Q: A month ago, Tom asked a 5i Office straw poll: What % cash is your group holding in their personal accounts. I am curious if you could provide an update on your response:
It averages out to near zero. A few have 10% to 15% cash, but this is offset by several using margin. Many are expecting a second drop, but of course the more expecting this the more it is priced in. We continue to think the market needs to 'chill' a bit. Things are not THAT great, and the expectations for a V recovery are high, and it may not be as fast as investors think. We think slow buying remains a good strategy over holding lots of cash, however.

I ask as I was expecting the market to chill but continues to move higher. I am about 15% cash right now and was wondering if I should keep slowly deploying.

Thanks for your excellent service!

Q: I started a new portfolio mid June and invested 50% of the funds; so far its up 10.5%. I'm planning on investing the balance in the same stocks, would you suggest I wait a bit longer perhaps after the 2nd Q results or further out? It's a long term investment; I believe you suggest buying over a period of time, just trying to get your thoughts on when.

Q: Are tech stocks a bubble?

Q: Polls currently indicate that Trump will lose the US presidential election, and the Democrats could possibly win both the Senate and Congress as well. If this were to take place, what do you see as the risks/opportunities for the US market? What sectors/ETFs do you feel will do well in a fully controlled Democrat US government?

Blackrock has recommended that the US will underperform both Canada and Europe over the next 10 years. Do you agree with this assessment? Should investors be reducing their US holdings and reallocate to Europe and Asia? If yes, to what extent?

Thanks again for this amazing service, and your excellent advice.

Q: Good morning... Eric Reguly of the Globe and Mail wrote an interesting article for Saturday’s paper “Big Tech can’t keep rising when the economy is sinking”. He concludes by stating that “The Big Tech companies have had a fabulous run and have saved the broader equity markets from collapsing. But they can’t keep soaring when the economy that propelled them relentlessly upward before COVID-19 hit is sinking.” What is your take on his thesis? Thx

Q: Hi guys,
I am maintaining both rrsp and resp portfolios for my family with time horizons of about 20 years and 10 years, respectively.
The investment strategies have been the same thus far, and I have followed a balanced approach of identifying growth, blue chip and a nominal 15% fixed income in each. I have a combination of ETFs and stocks from your model portfolios.
With the objectives and time horizons in mind, would you deploy the same investment strategies across accounts at this point? Thoughts on what investments you would recommend?

I am also aware of the tax ramifications of the accounts, and am more interested in thoughts on risk and time horizons.

Thanks

Q: What would be the reason why there are not more mergers and acquisitions in this environment? I would think with interest rates virtually nil that businesses would want to buy something in the same space in order to grow. Cheap to borrow right now.

Q: Tech companies are at all time high, it feels that we are again reaching a tech bubble. Is it time to lighten-up on tech companies/ funds/ETFs. What are the signs of reaching bubbles and how does this compare to previous cases of sector bubbles?

Thanks

Q: Hello 5i,
I read your answer to Jim today re: COVID 19 and a "second wave".
While I realize this virus is unique and how it reacts is somewhat unknown, your comment about a second wave happening now in the US was expected gave me pause.
My understanding is a second wave happens after a marked decline in initial infections(New York/New Jersey). As I see what is happening in the US now it seems this is a continuation of the first wave due to poor management in the states showing increases and that a true second wave could affect New York and New Jersey (and the rest of the country) later this year. I'm hoping for the best but fearing the worst is yet to come. I would appreciate your feedback!
Thanks
Dave

Q: We are now down about 7% on the S&P from the recent high. The virus is rising vigorously in parts of the U. S. If you guys were traders ( which I know you are not) would you see this as a signal to take profits and raise cash?? Or, to put it another way, do you see a likelyhood of a correction back close to the 200-day average, where we are now?? Thanks Jim

Q: I am well past retirement and trying to consolidate my stock holdings into ETFs. I. may not last long enough to complete this transition, but I'm moving in that direction! My latest thought on this is to divide my Canadian equity between ZLB and CDZ the first for stability, the 2nd for dividends, and for US equity ZSP. I'm staying away from other International stocks at this stage. Does this seem reasonable?

thanks

Q: As much as I dislike US leadership at this time I'm concerned about market impact if the other guys get in particularly to my energy stocks. I'm considering going to 50% cash to await the results. Is there anywhere to park cash that would provide the highest return before the election and where would you invest after? Am I being too pessimistic?

Q: We often hear that the market is doing well because of the Fed. It has printed money to buy treasuries in an unprecedented amount. The proceeds from the sale of the Treasuries is sitting in the Treasury General Account (TGA). The TGA normally has $300 - 500 billion to cover a few days of spending. It now has over $1.5 trillion, supposedly for COVID related spending. There is a theory that the Treasury is delaying the spending of the $1.5 trillion in the Treasury General Account until closer to the election, so it can hand out some goodies. Once this money hits the money supply, it will give the markets and economy a "sugar rush" creating a hyper-bubble. Then, after the election ... Look out below! Can you please comment on this theory.

Q: Hello,

With Bank of Canada growing it's Balance Sheet, what will this mean for the stock and housing market in Canada? Do you expect further asset inflation? What do you recommend Canadian investors do?

Thanks!

Q: Hello 5i,
I invested in some US stocks when USD/CAD was around 1.42. Those stocks went up but the progression of USD/CAD down ate into the profits. I know that we don't want to predict the implications of FOREX but do you think that US economy will rebound and recover faster and return to higher values (1.40+) and allows Canadians to eke out more profit?

Q: hi there, just wondering about your thoughts on this hedge fund's piece published today and what are your thoughts about equity market in general about a historic bull market?

"Investors could be looking at a ‘lost decade’ in the stock market, the world’s biggest hedge fund warns"

https://www.marketwatch.com/story/investors-face-a-lost-decade-in-the-stock-market-according-to-this-warning-from-the-worlds-biggest-hedge-fund-2020-06-18

Q: Thank you for your reply to my previous question regarding sector weighting and the information on etfs for each sector.

I understand weightings should be a personal choice, however, in the past, you have provided general guidance which I found very helpful, example below:

Asked by M.S. on October 02, 2018
5I RESEARCH ANSWER:
With a conservative tilt: Cons. disc 10%; Cons staples 10%; Utilities 10%; Telecom 10%; Real estate 5%; Industrials 15%; Energy 5%; Materials 5%; Info Tech 10%; Health Care 5%; Financials 15%

Would appreciate if you can provide an update to that , or if 5i decides to stop providing that guidance, I will respect that decision too.

Thanks

Q: My Daughter and Son in law have some funds in savings and want to start investing, for a couple starting out with over 100k what percentage and what etfs would you suggest, when I started I was XIC 30% , XSP 40%, VEE 5% and XBB 25%. That was a long time ago and Im sure things have changed.

Q: I have been following your advice of slow buying. For recovery plays with a one to 3 year timeframe (US election and possible normalcy returning post-COVID) is Canada or US better positioned? If all things are equal I favour Canada to avoid the nuisance of Norbert's Gambit etc. But if there is a compelling difference I'd like to use that to my advantage. I have some XIT, AC, SU and LNF and I am finding it hard to wait for the slow buying due to FOMO. How slow is slow enough? Thoughts appreciated.