Investment Q&A

Q: amazon , shopify etc , shares have soared during the pandemic season. If things begin to turn around and people leave their homes to shop again , what might a person want to be invested into to ride the next wave excluding big names like Costco and home depot Etc, thanks. no Rush on the answer.

Q: If we were to see rotation into value and cyclical stocks in 2021, which 5 Canadian value stocks and 5 Canadian cyclical stocks would you recommend. And what are the probabilities of such a rotation happening? Tnx

Q: Hello Peter,
From what I have been reading: The cash positions within pension and other investment funds is at historically low levels. The trend over the past few weeks has been a shift from growth and technology to cyclical and value stocks.
On the flip side, the technology sector generally does well to start the new year.
I have done well with growth stocks mostly in the tech sector and have a couple of holdouts such as DXCM, AYX GH that have not performed. And I am also fully invested.
Should I look to raise cash by trimming my gains, which would be in tech, mostly US except for some CAD such as DSG, LSPD OTEX etc? Or, should I sell the growth holdouts for cash? Should I even raise cash and invest in cyclicals and value such as TT, RTX, US financials or any other you may suggest. Or should I just ride the growth portfolio into January and spring of 2021?
Looking for your magic eight ball answer.
Regards
Rajiv

Q: In a Globe and Mail article yesterday, Candice Bangsund of Fiera Capital was quoted as saying "Fiera is overweight on Canadian stocks now because it’s “where we see the most upside potential,” she says. “We expect the [Toronto Stock Exchange] will outperform the U.S. market in 2021, which is a sharp reversal from what we’ve seen.” If I could chat with her I would say "WHAT?".....Me, I thought Canada rides on the coattails of the US....The family is well diversified across Canadian and US stocks. But with new TFSA contribution room for 2021 for 4 accounts, what guidance would you provide with respect to investing new money in Canadian or US stocks or do a combo?
And pop a bottle of champagne to celebrate another good year of  5iR guidance to couch guy like me!!!......Tom

Q: I usually aim to invest 60% in Canada, 30% in the US and 10% outside North America. With US markets quite high again, is there more opportunity internationally and is a heavier weighting in that direction warranted?

Q: What 3 sectors do you expect to do best over the next couple years.
Please list in order of preference.

Q: According to a recent report by Statistics Canada, household debt has been on a steady rise since 1990. What effect, if any, do you think this could have on the markets long term? What needs to happen for household debt levels to flatline or reverse? Curious to hear your opinion.
Thanks

Q: Do you consider this is a good time to buy US dollars?

Q: Hello Peter & team,

Read a report that stated bank deposits are up considerably. Reason... It appears People are banking funds without having the opportunity to take their annual vacations because of Covid. Vaccines are in the process of being distributed. There will be an end to the lock down eventually, and when that happens people will be biting at the bit to travel. I know I am.

My question... I'm thinking the beneficiaries of this pent up demand are going to be Cruise Lines, Airlines & Hotels. (plus anything else you can suggest) Are you able to tell us - your loyal 5i family - which companies we should be targeting which will benefit once everyone starts being able to travel again? And if you could, please provide your futures opinion on Air Canada which is still down 50% (approx) compared to it's pre-covid highs. I am seriously considering a strong position and would like to know your thoughts.

Thanks for all you do

Gord

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.