Investment Q&A

Q: Hi Peter & Ryan,

The company I work for recently brought in a speaker, Salim Ismail from Singularity University, to talk about 'exponential organizations'. The basic premise was to discuss the speed of innovation and disruption that's occurring today. The improvements in various technology is doubling every year. I can't help but wonder if I need to rethink some of the companies I've invested in (from your portfolios).

For example, he gives the example of the drive train in a combustion car having about 2000 moving parts, while a Tesla has 17. There's a small company in the US called Local Motors that has a car with only has 50 parts total and takes 1 man hour to assemble, compared to the average combustion car that has 25,000 parts and takes 1000 man hours to assemble. What does this mean for a company like Magna? Also, with so few parts, there won't be a need for car maintenance. The use of autonomous cars, which should result in less accidents - how does this affect Boyd? EV's in China are also doubling every year, now at 5%. It doesn't take long before it becomes a very significant portion of the market.

Another example is the energy sector. The price performance of solar energy has also been doubling every 2 years for the past 40 years. At this pace, the world supply of energy could be met in just 13 years. The costs of solar (unsubsidized) has been dropping and is now cheaper than all other forms in the US. Obvious question is where does that leave the energy and pipeline companies? Maybe we should be more focused on solar panel makers and solar energy storage. Again, the shift from combustion to electrical vehicles comes into play here as well.

If a company isn't going to be a disruptor (like Tesla, Google, Uber, Amazon), they at least need to be flexible and adaptable. is this a key metric when you grade a company?

I'm interested in your thoughts.
Thanks

Q: Forest Stocks.. Why the bounce in the last few days RAK

Q: Morning...what stocks (list of 5)would likely see a good bump over the next quarter with trade issues calming down with China...

Thanks
Matt

Q: 12 years of Tse pain
On Oct 31/07 the Tse closed at 14,625, Cnd dollar was at par to U.S and Wti was $94.51 Dow Jones was 13,930 and 10 yr treasuries were 4.47%
I realize that Tse was strong in resources and weak in Tech ,however there must have been a huge flow of funds to foreign markets
In 2007 was there a restriction on foreign content in RRSPs and did Etfs exist at that time?
Do you think that Tse will soon have its place in the sun as U.S. investors can now buy at a 30% discount?
Is Dec 27 the last day for tax loss selling?
Thank you

Q: This is a market question. Yesterday, markets were up nicely until news of more US tariffs on China came out, then they plunged. But they plunged deeper in Canada than in the US. Would you have a try at explaining why that would be given our valuations are cheaper and US tariffs on China would have no impact on us? It seems every time US markets drop due to China tariff concerns ours go down more. Are we in a bear market in Canada? Morgan Stanley has said the US is now in a bear market and all rallies should be sold because it's going to get worse. Would you advise that here?

Q: I, like everyone else has been getting hit with the recent market volatility. 5% loss to my balanced portfolio. What would you say to someone who only has 3-5 years until retirement. I have been leaning towards growth but perhaps should I look for more income stocks with the downturn in order to transition into income 3-5 years.

Thanks

Q: Hi could you please explain why you think healthcare may be a good place to hide if markets stay week? And does this include biotech without revenue or are you referring top the larger drug companies with stable revenue?

Q: It appears to me that major components of our economy are slowing. Specifically, vehicle sales, home starts and home sales all seem to have stalled or are stalling. Considering the outsized contributions these make to our economy, when coupled with a US - China trade war and increasing interest rates, why would one not sit on the sidelines during this market correction and/or go more into cash?

For example, people often complain about the effect of the price of oil on the economy, but the reality is that fuel and electrical production are ~ 10% of Canada's GDP whereas real estate, construction and related financials make up ~20% and automotive exports are the # 1 or 2 export from Canada.

I can't help but think that things are going to get worse before they get better...

Cam.

Q: I know this isn't an exact science, but can you list what Canadian sectors you think will be the hardest hit by tax-loss selling? Is it a good idea to wait until early December to pick up some companies in these sectors?
thanks,
Paul

Q: This is ugly. I asked you on several times about selling my Financials in both Canada and US (was up 40% on average)) you advised against this? (In hindsight your advise wasquestionable - Question I have now is should I sell some higher risk stocks in different sectors and load up even more on Canadian +American banks . I know you cannot be right all the time but this turned out to be a major miss for me. I still cautiously valve your opinion. Thanks

Q: After a correction like we’ve seen the last week, where do you see as the best place to put money? I didn’t sell anything during the pullback. I have a long time to wait, and am ok with risk. Would you recommend long term value stocks (such as dividend aristocrats, banks, utilities etc.) or more fluctuating stocks (such as tech, pot, faang etc)? Where do you see the better bounce back? I use all available drips.

Q: According to Bank of America while individual investors are still buying stocks, institutional investors are selling. Is that a bearish sign ? Typically professionals exit the market before a major downturn and retail investors as always late in the game throw their money into the market at a wrong time. What are you thoughts on this?
I have recently bought SIS, PBH and other 5i BE stocks. I had placed some stink bids with my buy price atleast 10% below the price about a month ago and all those transactions went through to my surprise. The stocks are still falling further. I know for long term investment one should not worry about 10-20% fall in good companies but are institutions selling the companies followed by 5i portfolios and may be they are waiting to come back in at a much better pricing in near future ?

Thanks for the great service as always
Ninad

Q: EquityClockOct 24th, 8:07 am
US New Home Sales down 8.9% YTD, weakest performance since 2008.

Given that housing is known (or so they say) to be a predictor of how well the economy is doing.....what are your thoughts on the above news? Should we worry or at least be cautious?

Thank you!

Q: Over the next year or so I'd like to transition into some US names. I also plan on travelling a fair amount to the US as well. Can you advise on how you feel the Canadian dollar will do.

Also, can you advise on the current state of the economy. Today's increase followed by verbatim that there will be multiple (more than expected) I find concerning for the Canadian economy. We are late in a cycle (as per prior length of cycles) and we this will certainly impact discretionary income significantly. Not even considering an uptick in mortgage defaults which I would imagine would rise just on the basis of simple economics... I guess my question is, do we really see rates rising quicker than expected? Just seems surprising to me.

Deduct as many credits as you wish.

Q: Hi there,

It seems like in this quarter, good results are being punished. Over the last several years this did not seem to ring true. It seemed like good results were rewarded - even on negative sentiment days - however now it seems like good results are received poorly. Does this usual indiciate something much larger going on in the markets?

Thanks

Q: The period November to March is usually a strong market. Should I start putting money into stocks starting in November. Outlook is still good for 2019. If Trumps tariffs come off against China this would help outlook
What is your outlook for 2019 ? Increased profits for US Companies ? A strong stock market in 2019 ? RAK

Q: Bank of Canada just raised the key rate to 1.75% and drops its pledge to move gradually. What's Mr. Poloz seeing that the rest of us are missing because the TSX is singing a much different tune? I hope it's not the part time jobs from the recent elections in Ont, Que & NB. We're a little removed from what's happening in Central Canada but I can safely say the Alberta economy is not running at full capacity. In fact one of the largest land developers in Calgary just recently let go 40 office workers.
It's not the first time the BoC has been offside and had to reverse course. They seem to focus too much on a few key data points and ignore the economy as a whole.

Q: Good afternoon folks:
Is this a healthy correction plus tax loss selling as well? Could u please give your opinion on what retail investors should do in this volatile environment?

Q: Is there an end to this stock slaugther?

Q: Hi there,

I was watching CNBC earlier this morning and they were mentioning awaiting a wash out in the markets before it things can become positive again. Do you believe in the theory of wash outs and is today’s performance reflective of that occurring?

Thanks!