Investment Q&A

Q: Hi 5I,

In your blog on markets specifically the S&P 500 you state: "If we go back to 1990, the average trailing P/E ratio for the S&P 500 is 19.9. Currently, the P/E ratio is 19.3. Over the last five years, the P/E ratio has averaged 21.5. Looking at forward P/E ratios, the S&P 500 has averaged 15.8 and is currently sitting at 17.6."

My question is what do see for earnings based on current market conditions ? If in the last recession in 2008-9 we saw earnings drop by 50% then how much more can this index drop? The low for the S&P 500 was approx 780 back then, and if makers the same assumptions then we could get to around 1500 to 1800.

Thanks,
Chris M.

Q: While our politicians and others say this is unprecedented, the truth is it has happened before. The 1918 Spanish Flu killed 33 million world wide because they didn't know much about prevention and soldiers were returning from war. Some areas did close borders and practice self-isolation. Even the word quarantine comes from the 40 day isolation period in the middle ages. What happened after 1918?
Markets improved, then there was the 1920-21 depression (maybe war related) followed by one of the biggest bull markets ending in the 1929 Great Depression.

We haven't used the word depression yet but a depression is a fall in GDP of 10% or more or a Recession lasting more than 2 years. I think it is likely that we will have a technical "Depression" and using the word may send markets lower. Either way we are not finished and we need to test the lows and see some real light at the end of the tunnel. But it will end and return to normal and higher prices. My thoughts as I sit in self isolation. Stay safe everyone.

Q: 3 days up in a row. Should we be buying?

Q: Hello All,
Why would stocks raise just because of the stimulus.
The Streets are empty and companies are laying off people or are closed. No production, no income, only stimulus money from governments which is not backed. There will no quarterly earnings now and for the second and perhaps 3rd quarter!
Why is the market bull crazy, doesn't make sense.
Thank you, Frank

Q: Hi Peter, VCN and XAW are in one portfolio, VXC is in another. Would you add to these or is there a better choice considering the Canadian dollar or Covid? Thanks.

Q: With what appears to be both Canada and the US now passing massive stimulus packages, would you consider now a good time to start taking some positions on companies while they are down? Or do you think there is still room to bottom out in 2-3 weeks when the virus starts to hit us (and the US) like it has Italy and other places?

Thanks!

Q: Hi there,

The market has rallied hard over the last 3 trading days. Still it is far off from the all the highs when looking back. In your professional experience and years of investment experience, can you comment on where you think the market goes from here? Do you think this is a head fake / bull trap and we are heading lower in the coming months and there will be better entry points over the next 6 months? I've heard more people say U shaped recovery, and a couple saying V shaped. What is your positioning on this? It would great to hear your perspective on the current market and where it might go over the next 12 months.

Thanks!

Q: Does this have the look of a bear market rally or a sustained push higher. Stocks have moved really quickly off the lows...it seems overdone in the short-term given remaining headline risks and possible future waves of the virus? Hard to determine, but what are your expert opinions?

Thanks,
Jason

Q: Looks like the markets are liking the financial aid packages approved in the last day or two but do you think that this bounce is warranted? Would you start deploying cash here in both the Canadian and US markets or wait for less volatility? What does your experience tell you? Thanks.

Q: During this downturn in the market I believe 5i said it could be a V recovery. At the rate we are going we should be back to normal very shortly. I read 5i questions and write a lot of answers pertaining to me over the years. Do you see this recovery going at this rate or will there be a noticeable pullback? Thanks Dennis I really rely on your service

Q: What is the one stock you would suggest to go all in with this correction?

Q: Re: Article appearing today. I have never agreed with David Rosenberg. This time I think he might be right. What would you place the odds of his view of the market proving correct?

Q: I know currency's are very difficult to forecast. However, I will ask this question anyway.
With the CDN $ hovering around $.068 do you recommend taking hedges off or leaving them on ?

Q: I'm thinking of switching etf's, selling VGG and buying VSP to take advantage of tax loss selling (VGG) and also buying into a CAN dollar hedged fund as the CAN dollar has taken a beating lately and should rebound looking forward, appreciate your professional opinion? Thank you!

Q: Want to get your opinion of what’s happening in the market today? Fear of missing out rally? Did you expect stimulus package in U.S. to create this much optimism when the virus is still spreading like wildfire in places like New York?

Q: Do you think we've seen the bottom now that the USA is close to a stimulus deal (as of writing today). I was wondering whether that stimulus announcement will be the last bit of good news for awhile. I'm trying to decide whether to wait for further lows which seems to be what everyone was calling for or whether to go in with a part position now. Your thoughts today on the stimulus deal and what may be to come would be appreciated. Thank you.

Q: David Rosenburg said on BNN: "I think that in short order we have all gone from talking about a recession to a steep recession, and now I think that we are talking about some form of Economic Depression, which might not have a formal definition, but it is a steep plunge in economic activity over a period of time, and then coupled with a very abnormally weak recovery."
The market is very spooked. Can I get your reaction/opinion, please.

Carl

Q: Lots has happened since your March 9 special report. Which ones are now your favorites?
Any other names you find interesting or sectors to avoid at the present time?
Thank you,

Q: I have asked a question today and here is another question that is related and comes with the same caveat that i do not know much about bonds/debt/fixed income; beyond the basics.
From what i saw on TV, the selloff in equities would force pensions to sell debt.That should depress the corporate debt prices? The central banks would buy mortgage backed securities. Who would purchase corporate debt, specially high yield? Would that also make the fixed income bonds issued by canadian banks more attractive(cheaper)? Would it also indicate that equity selloff is near bottom or reached bottom?
Would you prefer to buy bonds/debt or equity when there is a little stability? And could you please suggest some?
Thanks.

Q: What do you estimate the remaining decline in the market will be? I have read that the decline could be between 10 to 50 percent. Also, what do you think the market will end up at the end of the year?
Clayton