Investment Q&A

Q: Everyone, what do you see for the remaining part of 2025? Clayton

Q: A 2 part question - 1) How frothy do you find the market and would you take a bit off the table?

2) If you did take sell some stocks, what’s your favourite Money market fund/ETF, in terms of high yield and low risk/safety?

Thanks,

Cam

Q: I read an opinion piece in the Globe & Mail on July 25/25 titled "A billion-dollar bet on artificial intelligence is about to hit reality." The gist of the article was that companies are pouring billions of $'s into AI on the premise that it will "lift global GDP by trillions, create entirely new industries and transform how we work." That is to say, the underlying bet is that machines will eventually deliver what humans can’t: scale, speed and 24/7 output. The author believes that while there will be some benefit from AI, it will not be as big as people believe. He says, user results to date remain mixed. More than 80 per cent of businesses using AI technology are not yet seeing significant earnings gains, and most (new) AI deployments have a failure rate of up to 80 per cent. Yet, the spending keeps increasing even though results underwhelm. An MIT economist and Nobel Laureate Daron Acemoglu estimates AI may lift U.S. GDP by a mere 1.1 per cent to 1.6 per cent over a decade, translating to annual productivity gains of 0.05% (nowhere near the level implied by current valuations). If this opinion turns out to be true, I'm wondering if the (tech) market is setting itself up for a massive fall or correction down the road (not unlike the dot com bubble burst of 2000). I'm curious as to what 5i's view is?

Q: When I short stocks I start at the top and work my way down. Currently I am looking at problems in the U.S. economy which I think are somewhere between serious and more than serious. In this case I am looking at how a slowdown in consumer spending will dovetail with sectoral effects of tariffs and international policy responses to tariffs. So I have two sectors in mind for shorting, agriculture and manufacturing. Agriculture seems difficult because many of the companies seem to have been hit already. But if that continues it could put a squeeze on Potash. More interesting, at least to me, is the potential double (triple?) whammy that will be felt by U.S. automakers with a weakening economy, higher input prices and a less than favourable international sentiment landscape. These latter issues point me to shorting GM rather than Ford because I don't want to pay the higher divvy on Ford while waiting for the thesis to play out.
Apologies for the overly long question, but what do you think of my overall thesis, and specifically GM as a short and are there any other sectors and/or companies that you feel are vulnerable right now. Thank-you.

Q: A colleague of mine, who is both a student of history and risk adverse, has suggested there are significant parallels between what is occuring in the market today and market conditions leading up to the 1929 great depression. In particular, he points to what he believes to be grossly inflated p/e values across all sectors of the North American market. I do not share his views and would be interested in your thoughts - backed up with a few pertinent statistics - regarding both my colleague's historical comparison to the late 1920s and current p/e values. (I am well aware books could be written on this subject, so looking for just your top-line opinion.) Thank you.

Q: I believe cash flow is a better measure of profitability for E & P companies. Would that also apply to software companies? Or would EV/EBITDA be an even better measure for software companies?

Thank you,

Q: hello 5i:
recently, someone asked the following question:


Q: What role do charts play in your ratings/recommendations?
What indicators do you most favour?
What formations do you feel are most helpful in your assessments?

Thank you,

John
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Asked by John on August 01, 2025
5i Research Answer:

One of the most important ways that we use charts in our views of individual stocks is based on momentum. A stock that is hitting new 52-week highs, showing a strong uptrend of higher highs and higher lows is an indicator to us that something is likely going right at that company.

Aside from trends and momentum, some employees of the firm like to use RSI, bollinger bands can be important for potential breakouts. For chart formations or set ups, we have seen a lot of 'cup and handle' formations work recently, as well as 'inverse head and shoulders patterns' in the broader markets.

Most importantly, we have found that using a longer-term RSI coupled with historical forward return data, and strong fundamentals to provide one of the most interesting combinations.

Please elaborate on what parameters are used for longer term RSI (eg 7, 14 et), and if you are referencing, for example, a 5 year weekly chart. What is meant by "historical forward return data": is this the amount of meeting/beating earnings projections? Personally, I use longer term PPO as I've found its helpful. Comment?
thanks
Paul L

Q: In your response you gave to Jon on August 1 you said that one of the most interesting combinations you use for stock analysis is "historical forward return data.

To me thats an oxymoron 'historical forward return'

What do you mean by that.

Thanks

Sheldon

Q: You often speak of money on the sidelines. I understand the logic of this as people want higher returns and eventually get lured back to equity markets. But can you provide some granularity of where the sidelines are? Are we talking GICs, Bonds, cash, Gold, money market funds or what?
What do you think about the thesis that investments in money market funds simply never come back to equities but rather move from shorter to longer duration vehicles?
When speaking of this move to the sidelines, are we talking mostly about individual investors? And finally where is this information available?
Thank-you.

Q: So I’m thinking if Trump imposes a 15 % tariff on all countries , how is Canada’s competitiveness changed for all countries except the US ?
Under CUSMA 90% of all trade in goods are tariff free. It will be the renegotiation of this agreement in 2026 to be most important.
How’s my thinking? Thanks. Derek

Q: An advisory service that I follow on X seems reasonable and has made the following comment today which I have seen variations of popping up with more frequency:

"Markets speak louder than headlines.

If good news can’t lift prices, risk is rising.
If bad news can’t sink prices, a bottom is forming.

Distribution has been underway for 2-3 weeks, lots of weakness under the hood. The indices are the last to roll over."

Is 5i of the mind that the market is running out of gas in the near term and poised for a pullback? I know that you are tilted more bullish in the long term but would you suggest waiting on new deployment today on the assumption that comments like the above are correct or at least likely? If you could explain in detail whether you agree or disagree I would appreciate it.

Q: Further to some news commentaries today, do you have any thoughts on market reaction if Trump discontinues trade negotiations with Canada and just imposes a flat tarriff? If that does happens can you suggest some income stocks that are potentially less at risk? Thank you

Q: It seems that Japan's economy is in trouble and that we should all be taking note. The Japanese are the largest foreign holder of US Treasuries . If they start selling those Treasuries what impact would that have on the US economy and on the rest of the world ? There is an article in the Financial Post this morning entitled "Japan's Bond Market is flashing Red" Why investors should pay attention. Your comments would be most appreciated.

Q: I understand it is impossible to predict, but do YOU feel it’s wiser holding cash at these All time highs? Wait for a drop and pounce? Or buy at these numbers as All time highs indicate excellent businesses, assuming a long term hold.

I am about 25% cash. Too much in this market ? Thanks

Q: What is the Bloomberg U.S. Pure Momentum factor index?

Q: A question of how to take profits on a stock that’s has run up. If a stock has run up 80% for example, do I take the initial cost base off the table or do I take the profit off the table to redeploy. Idea is to keep the stock in play but also take either/or and reinvest it

Q: Do you know of a site that lists the component companies of the TSX Venture Index by weight in the Index? All I can find is an alphabetic listing, and a top 10.

Q: In the Globe and Mail, July 16, there was an article by Scott Barlow called "Valuations and market concentration are reasons for concern." He likens the current Technology sector to mirror many of the same realities as the 2000's- before the dot com bust. What is your opinion?
As always, Thank you for the fantastic service too and helpful guidance. Ric

Q: I am currently taking CSC and in the textbook they talk about negative interest rates happening during Covid in the US and that they have happened in Japan or in Europe. I don't understand why firms would choose to buy bonds that guarantee them a loss of money when in theory they could choose to just hold cash. Could you please provide some clarification on why firms or people would buy (nominal) negative interest rate bonds?

Q: Everyone, as an example Brookfield has a number of companies under management. I assume CSU will be doing the same. How many companies under the same umbrella should you have. BAM and CSU are great companies with superior management but when is enough enough? Clayton