Investment Q&A

Q: Should investors change their goalpost metrics of valuing companies when investing?
Nowadays many complain about seemingly high valuations of many companies.

In the past, companies with a high P/E ratio would raise alarms - now it seems it's de rigeur - Apple has a P/E ratio of 43 for example! Does this go hand-in-had with investors accepting very low interest rates?

At first I thought it crazy that a company like Apple would earn $1 for every $43 dollars of share price but then realaized the US 10yr treasury currently gives me $1.09 for every $100 of principal .

Should the yardstick of what constitutes fair value be changed in light of these lower interest rates?

I know there are many ways to value companies but what would you say would be a 'fair' P/E ratio nowadays? Benjamin Graham had a formula and I'd like to see your opinion.

Q: This week, Yellen said: “Neither the president-elect, nor I, propose this relief package without an appreciation for the country’s debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big. In the long run, I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time.” What she does will surely have a big impact. What are two guesses for what she will do?

Q: There seems to be lots of buzz in the media lately about dividend stocks being hit hard when inflation/interest rates rise. What are your thoughts on this? Isn't this just short term noise for the long term dividend investor.

Q: Since 1974, with my 1st investment in koffler stores (shoppers drug mart),I have looked for some rational reason to purchase a stock.
Obviously I have seen some times that I cannot explain. Today is one of those days.
I own fdx market cap 60 b more or less
I see door dash has a market cap of the same
How can this be reasonable in any way.
Have investors lost their collective minds or is it possible we are entering a dangerous time in the market .

Q: Hi 5i
Bitcoin is a real head scratcher for me. I can't see why anyone would use it as a form of payment considering stories like "that pizza purchase years ago is the equivalent of millions in todays value" or "I have a couple of password tries left before my disk is encrypted and my millions are lost forever" ... so there's goes the asset / store of value argument. Maybe I'm getting old but I just don't get it (having said that I bought a small amount of ether and ripple as a learning exercise a few years back and still hold it ).
In any case, the real question is with more etfs/companies piling into bitcoin related investment, if it were to grow to such an extent as to be bubble territory and subsequently experience a severe pop, would it have any side effects on the rest of the market or specific sectors of the market do you think? i.e. would it ever be anything to be concerned about ?
Thanks
Mike

Q: 10 Years Treasury Yield is rising fast laterly. Is that a result of Fed asset purchases slowing down? Where can we find such information (such as monthly or weekly purchase amount)? Thanks.

Q: With high Canadian government debt, increased money supply and excess stimulus spending, I feel inflation is a growing concern. Your thoughts on real return bonds (XRB) and commodities including Tek,B, and Suncor as well as the Can$ in the coming year?

Q: What to you consider the long term consequences of the Democrats now having control of the Senate and House of Representatives with regards to prospects for Enbridge? Of immediate concern is the rumoured pending announcement by Biden to cancel the XL pipeline in an effort to appease the left leaning members of his party.

Q: I’ve held a small position in SJB as sort of an insurance if the market were to take a tumble like it did back in March. Although it’s performed poorly the rest of my portfolio has performed well (many thanks to you). I’m considering selling & rebalancing but thought I would get your opinion. Would you ever recommend a strategy like this? Or is simply staying diversified a better option?

Q: Hello
In Friday's (Jan 15th) Globe & Mail, Clyde Russell warned that the 2020 bullishness on commodities may not continue into 2021 because China's massive buying spree seems to be ending (e.g. Dec imports of copper were down 8.7% from Nov's imports etc). What is your view on commodities for 2021?
thanks

Q: I was wondering if you have an opinion on the risk coming from possible political stability/volatility in the US. While I would guess your answer is status quo, it is hard to think of a more alarming political situation, and right now, increased susceptibility to a subsequent event, such as an outside threat.
Also, somewhat related: with the stimulus package now priced in, do you still think that there is a catalyst ahead for another leg up in the market? Is it any different from our current theses (environment, pot, tech, industrial, gaming etc)?

Q: Markets are very high. Do you anticipate a crash like last year? And how should we position ourselves at this time? Thank You.

Q: Hello 5i team
As a front line (nearly retired) physician, I recently received a Covid 19 immunization. It's difficult to express the REMARKABLE sense of gratitude and euphoria that I observed among everyone involved . Suddenly, we felt liberated from the danger of this scourge that we face daily. Our next exciting job is to immunize our fellow citizens as fast as humanly possible and as we do, this euphoria will spread to society at large.
After my immunization I bought a new car and we're booking our fall and winter travel plans. This manic behaviour, I believe, represents the tip of the iceberg for pent up demand which will be unleashed upon the world.
At the risk of being labelled a mercenary can you identify some sectors which are still beaten up and likely to surge-I'm thinking energy but other suggestions welcome (prefer etf's with a dividend to keep me invested until the recovery occurs-would supplement with high conviction stocks)
Thank you. As always, I value your opinions, Regards gary

Q: I'm now seeing many many people on different social media platforms, including very young people, talking about day trading, leverage, how much money they made on this or another stock. It reminds me very much of the tech bubble when, overnight, everyone became a stock market investor and guru. Are you seeing any of this and is it going to float prices higher do you think?

Q: What would be the top 5 trends you see for 2021 and what 2-3 stocks would you recommend for growth in those areas? (US or Canada)
Take as many credits as needed.
Thanks!

Q: I currently have 4% of my overall portfolio in Consumer stocks (DOO and GOOS). Having a difficult time trying to talk myself into increasing my overall percentage of Consumer stocks but have noticed you were up to 20% Consumer in a recent suggested sector distribution you made. Why so high for Consumer?
thanks, John

Q: Hello and thank you in advance for your reply!
We are hearing more and more talk about a disconnect between the stock market and underlying economies. How sustainable in your view is the current market surge (ie: is this typical of any January), or should we be concerned about another significant correction like last March? If the latter, any recommendations you'd make with regards to less volatile or more defensive sectors, or a more balanced portfolio distribution? With best regards, Aaron

Q: With a Democrat Senate, higher government spending, rising inflation and an expanding 10 yr yield, what would be your fixed income allocation for the next five years? Do any of the above choices make sense? Thanks.

Q: Good morning - I was reading an interesting GS report which is calling for a structural bull market for commodities, starting in 2021. Let's say GS is correct. Assuming that, what would you suggest for a Canadian investor, both at home and in the US. Also, is there an ETF or two that you would suggest to address this assumed trend. Finally, do you think GS is on or off target here?
Thanks

al

Q: Hi guys,

Should the Democrats hold all 3 houses, what is your prediction for the North American markets. Drastic sell off or same as before.

Thanks

Jim