Investment Q&A

Q: 5i does a great job of alerting us to stocks good for buying. But I am wondering if you view it as also within your sphere to alert us when to sell (selling suggestions seem to come only after a problem and a large drop in stock price). For example, when a high-beta stock is at an all-time high maybe it's time to sell (or is the idea that you sell only enough to re-balance). But I have ringing in my ears from lots of sources "let your winners run". But it's hard to see a winner go up +70% over a year only to see it drop 80% in a few days (estimating here). I guess the game plan is if nothing fundamentally changed the stock will eventually recover the drop and then some.

Thank you for any insight you can provide on this.

Q: Hi guys:
In this correction, companies are so called on sale. Unfortunately retail investors only have so much money to deploy to buy shares. For example I own cargo jet and have done great on the name. Would it be wise to sell the winner and take the cash and add more shares to a savaria , New flyer , ccl , or pbh for example and dollar cost average. Or should I just stay put for my entire portfolio.
Thank you
Mark

Q: Are we near capitulation yet?

Q: AS per a question August 24 of this year I listed 10 stocks in my TFSA that were sound favorites at the time and i was down and down 7 percent.I have held on due to yours and fund managers advise and am now down 30 percent and am starting to wonder why hold on.I thought the market was close to being done a small correction but starting to feel total capitulation isn't close yet but may happen.High risk tolerance i guess i am not if the correction ends up 50 percent.Will take years to recover.

Q: I have followed your research and recommendations for a couple of years and have enjoyed the ride. I began with a liquidity of 'say $500k' so to speak. I invested approx half over a short period of time and kept the residual in cash. At my current age of 69, and having developed a distinct aversion to loss, I felt comfortable in maintaining this significant liquidity position. Now, with the markets in turmoil, rather than selling into the market, I am tempted to 'average down' and let go of the cash position I've maintained. I will not be in need of this 'fund' for at least 5 years or so. Would you recommend that I take this posture of buying more of what I have (which includes most of the companies you have in your balanced equity p/f), and if so, which stocks in particular would you recommend I add to.
Thanks,
cj

Q: I note that you have said (in Saturday's FP) that the market is currently not so worrisome because for one thing the VIX has not spiked above 30. Yet I have heard another commentator cite the same fact about the VIX to say we have to have a spike in the VIX before we hit the bottom and so the market will fall more. Same metric but to you it's good and to the other guy it's bad. Can you reconcile these two viewpoints?

On that, while the VIX may indicate not much fear or panic, there sure does seem to be a lot of panic based on the 11-20% drops I've seen on several stocks. Is that because these sellers are just not the ones into options and therefore they are not influencing the VIX?

Thank you.

Q: Greetings,

From now to about 12 months are you able to sense which 3 sectors are undervalued and which 3 sectors are overvalued ? Is there any sector in particular that stands out as ready to take off or conversely ready to crash ?

Thank you and Regards.

Q: Recently President Xi gave a speech indicating the intention to open up the Chinese economy, including " lowering tariffs for autos and other products and enforcing the legal intellectual property of foreign firms".These are things the Trump administration is seeking. Also in a recent dinner talk David MacNaughton indicated pressure from American farmers to reach a resolution.

Have you any thoughts on the possibility of the trade dispute being resolved and which of the 5i stocks would respond most positively?
Mike

Q: Hi Team! I'm wondering what might move this market to a better place where there is some momentum for stocks. It seems that all indicators seem to point to a slowdown or downturn for stock markets. While valuations are more realistic, long term interest rates haven't moved up that much indicating that the economy might not have longer term strength, the market has been good for some time, the benefits from US tax cuts have been digested, stronger earnings seem to have petered out a bit and so in all of this as a layman I'm looking at whether I should be more defensive and perhaps move some funds to cash before things get ugly. Is the recent volatility perhaps not a warning sign that markets are bracing for a tougher session ahead. Your thoughts?

Q: Hi 5i,
Thanks for the reply to my previous question on USD etfs. I had also asked "What percentage weighting would you have for more growth, medium to high risk tolerance and long term hold ?" The etfs in question are QQQ, VOO or HXS, IPAY and IWO.

Thanks as always.

Q: Just my 2 cents..having been with 5i for 4 and a half years I gave learned to trust your opinions and then do my own due diligence. These are difficult weeks and the market is fearful. But it is still here after many many years and decades of ups and downs. When we stand back and look at the charts....we are up over the years. This is an opportunity to slowly dip into some of our favourite holdings. The world and hence the market has always had problems and always will. To those who doubt 5i opinions...stay the course...and do your own research as well. I'm glad I have.
Post at your discretion.

Q: Dear 5i
If you had 6 months before you were planning on retiring and considering the volatility in the markets, what percentage of fixed income vs equity would you have in place in your portfolio ?
Thanks
Bill C

Q: It seems like a lot of companies are getting decimated on slower growth and future lower guidance - and in some cases even good results are also getting decimated. This does not seem to be happening in isolation and feels like a broad sentiment. Is this the sign of a weakening market? Does this typically indicate something occurring in the near future?

Q: Hello,

Now that markets have certainty and are digesting the US mid-term election results, what sectors do you believe will benefit? Im looking for a few opportunistic US ETF investments to take advantage of areas that got beat up in (Red) October and are most likely to recover/outperform.

Thanks,

Kuldar

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