Investment Q&A

Q: I've been trying to understand these markets and failing. Much of the wild swings of volatility seem to be associated with fears of China and trade woes. I understand why companies which do a lot of business with China, or source products from there would plunge on such fears. But I haven't been able to figure out why trade fears would cause grocers, REITs and utilities to plunge 2%-3%, as they did today. I mean, how is China or trade going to affect the profits of Chartwell Retirement Residences, or Loblaw, or Algonquin Power? The TSX is down around 1% but these are all down 2%-3%, as are most of the utilities and REITs. Are people just panicking and selling everything in sight?

Q: Hi I’ve read that markets are fairly valued based on forward PE of 15 or so. I’d like to look at this from a bigger picture, the total market cap to GDP ratio, the so-called Buffet Indicator. In the past 100 years, this is showing extreme over-evaluation currently 151% exceeded only by the 2001 Tech bubble, 161p. If rates continue to creep higher I can’t see how this will end very well. Then again, if the they peak and then fall, the over evaluation is at least buffered, Your thoughts ?

Q: Good Afternoon ,
With all this recession talk lately have you ever thought of building a model portfolio that will do well or at least hold its own during a recession? Personally I think the economy is in pretty good shape and the probability of a recession occurring in the next 12 months is less than 20%, odds certainly pick up past that as we are getting later in the cycle and could certainly see a recession within the next 24-36 months. Is a recession portfolio something you are considering? Or will you tweak the B/E model when the time is right to help mitigate some of the downside? For example a larger weight in staples, telecom, utilities, maybe some gold and cash? I feel the Income model is certainly more defensive in nature, perhaps an investor could move from the B/E model to the Income for a period of time ? I realize the average recession only last around 9 months give or take but I also believe that markets can go down significantly during recessions 20-30%. Any thoughts on a strategy here and how to better position a portfolio for the potential of a recession in 2-3 years time?
Thank-you

Q: why did tfii drop so much today? Also when do you think there will be a turn around in the market. I know this is not an easy question and there are many factors. T Steve

Q: Im looking at the Dalio/Robbins "All-weather Portfolio". Do you have any comments about it fundamentally? They both say its about diversifying the risk rather than the sector or products in order to increase the chances of making money in almost any market and decrease losses.

Can you make recommendations for each category please? They also recommend low cost etfs to get further diversification within each category. I would still keep a small amount of cash aside for higher growth names to "play with", so any profit taking would potentially go into the All Weather Account.

What they lay out is:

30% Long term bond (20-25 year)

15% Intermediate Bonds (7-10 years)

30% Stocks

7.5% Gold (possibly a bouillon etf, or possibly just gold with no etf)

7.5% Commodities


Please deduct what you feel for credits since this is a multi part question.
Thanks

Q: Hello Peter
I have question regarding "dead cross" on daily frame of $SPX S&P500 (EMA50/200).
If one would sell all portfolio at dead cross time in the middle of October 2000 or beginning of January 2008 that person would save about 50% of losses and about
4,5 years of recovery . What is your or your technical analyst opinion about "dead cross" and current situation compared to 2000 & 2008 corrections.
Thanks.

Q: Further to my earlier question today about the so-called predictive value of the inverted yield curve, I think recent stock market action is not due to such a prediction but more due to journalist hype and general equity anxiety. As pointed out yesterday by Stan Wong on BNN, "An inverted yield curve, where short-term rates are higher than long-term rates, has historically been a precursor to an economic recession. We note however that these (recent; ed.)short-end measures of yield curve steepness have not been reliable precursors to recessions. As a recession indicator, the more reliable yield curve spreads have tended to be those with larger maturity gaps such as the two- and 10-year, which still currently indicates a normal yield curve." I do recognize that your table of two days ago did reference the 2-10 yield gap but I still think if a prediction hasn't materialized in 12 months or so, it isn't much of a prediction.

Q: In one of today's questions, you note "The inverted yield curve has worried some, as it does tend to predict recessions." This statement has an air of certainty that seems to be at odds with the table of data that you published the day before showing that recessions on average came 20 months after the yield curve inversion. What value is there in a prediction that takes on average 20 months to materialize. I would bet a correlation between not having a recession for ten years and having one in the next 2 to 3 years is even better and just as useless. Do you really want to propagate this myth?

Q: With so much blood in the markets and tremendous volatility, is the future (next 1 to 2 years) really as bleak as the current prices indicate?

Q: david rosenberg just publishes an article in the globe ignore the yield curve at your own peril, the crew at 5i seems to me far more optimistic than this article indicates, furthermore the market action seems to indicate rosenberg is right on,so my question is who is right andshouldn,t we all be raising much more cash including 5i portfolios. dave

Q: Given the current volatility in the market there are a lot of analysts heads making bold predictions. Recently I heard one analyst say that "historically double peaks in a period of heightened volatility signals the end of a bull market". You've taught me there is always an opposing view-so is this statement simply that or is there some credence to it. Thanks for all you do.

Glen

Q: With the 10/2 year treasuries spread now at 0.11 for December 4, 2018. Would it be prudent eye up good quality stocks, in preparation of a recession coming?
And is this something you are watching?

Q: Is there sector rotation happening? if so which sector looks better ?
thank you!

Q: Hello Peter & Ryan,

After 2 incredibly gut wrenching months on the markets and the so-called repricing of equities, today the markets were cheering and have pushed indexes on both sides of the border into what appears like a 'relief' rally>
My question is a 2 part question:.

1. I would really like your insights into what were market participants betting on today and perhaps going forward. Is this possibly a "head fake" setting the market up for another wild journey or do you think that the market believes that concerns around: (a) interest rates (do not have much further to go) and, (b) that the US and China might be able to agree on a truth of sorts this weekend.

2. If the above concerns (question 1) become reality in the next month or so, what is your advice to members? What should investors chip away at in order to perhaps recover losses and defend their positions. I realize this a very broad question, but would appreciate your top 6 defensive picks, regardless of asset classes, that will boost our portfolios in the next 3 to 5 years.

Thank you very and much appreciate your opinion,
Joseph

Q: I am selling visa either this year or next year. Realising that you can not time the market and considering currency exchange could you advise a possible time to do this. Would this stock have a sharp drop in a recession. Do you think the Canadian dollar will weaken. A lot here so take credits as required. Thank you for the service.

Q: Hi Peter and Ryan: Thanks so much for your calming responses to the current volatility in the markets. This is my third time through a downturn since retiring in 2000. It isn't much fun, but intellectually I know that the market doesn't go constantly down as well as it doesn't go constantly up. Your well thought out reasons helps to remind me of this.
My first question is: in what sector do you place Csh.un.? It works best for me in Income Trusts, as that is why I have it. The TSX places it in Real Estate.
My second question is; is this a good time to purchase an ETF such as VEE and or FEZ? I am overweight in Canada and the U.S. and underweight in Emerging markets and Europe.
Thanks so much. Your advice is wonderful for a small investor such as myself.
Cathy

Q: Hi there, this is not exactly a stock related question but more of a general investment question. Between buying an investment condo property in Toronto (25% down) versus investing in the stock market (with no investments with margins), which do you feel would have a greater return over 15 - 20 years? Thanks!

Q: Do you believe that this is the bottom and good time to bring new money or you would rather wait till there is some better sign?

Q: Hi,

Donald's analysis regarding Fairfax returns was quite interesting. You mentioned that timing is everything. The long-term MACD (a monthly trend/momentum indicator) for the S&P 500 now making a bearish crossover.A bearish crossover (sell signal) occurred at the 2000 tech bubble peak, the 2007 market peak, and the intermediate market peak in 2015. I came across this article and would like to get your opinion on it and keeping in mind timing as a big factor should we reduce the risk by lowering our percentage of stock holdings and get back in at a better time.

https://www.financialsense.com/blog/18799/markets-long-term-momentum-just-went-negative

Great service
Thanks
Ninad

Q: HI there: I am still in comfortable profit margin from investments in the three stocks above. I wonder what you think about taking profits (now 20 % lower for Apple) now and holding some money on the side, or is buying on this dip a good idea. Especially re Apple.