Investment Q&A

Q: I noticed an interesting thing the other day, with the CPI announcement in the US causing a sudden severe tech market downdraft. Tech stocks such as Amazon went down about 6% and have stayed there. Smaller Canadian tech stocks didn't however. I hold both Converge and Topicus and they are both trading higher than they were two or three days ago. Does this decoupling mean that smaller Canadian tech stocks may have bottomed? Ie. all of the weak shareholders have been flushed out and mostly long term holders now hold the shares?

Q: Hello 5i, What sectors would you be looking to invest in and in what countries? This is for long term with a buy and hold strategy? Thanks

Q: Hi Peter,

Over the next five to ten years, what is your expectation from a risk-return prospective for the following asset classes? Please provide your ranking with a brief explanation for your rationale.

Annualized returns for the past ten years are noted below as per BlackRock:

U.S. equities – 13%
Canadian equities – 8%
Infrastructure – 7.3%
Japan equities – 6.6%
REITs – 6.1%
European equities – 5.3%
China equities – 4.9%
High yield bonds – 3.4%
Emerging Market equities – 3.3%


Thanks George

Q: Hi,

Can you give 5 small and midcap stocks US and Canadian that fits the category "that have purely domestic revenues and don't have to worry about recessions" as mentioned in your article in National post.

Thanks.

Q: The headline from the Globe and Mail, after the stock market closed on the 13th of this month - Surprise jump in U.S. inflation sends stock markets tumbling, and this - Dow sees worst one-day selloff in more than two years as fears of another large Fed rate hike rise. For me, dipped my toe into the turbulent waters and added to existing positions, well, somewhat. Now I'm wondering  - what the rest of the week will be like. and even for the next week??? Your observations from past experience would be much appreciated....and ready me with some insights about what to expect and also ready myself about what to do next..........Much thanks........Tom

Q: Hello 5i. Can you explain some market psychology. First of all who is buying shares that are being sold in this market downturn. How can the markets get spooked one day and fall 5% and yet climb 2-3% next day. Its been known for a while that the fed will be raising rates to tame inflation and yet the market reacts as if this is a surprise. Very confusing market. What would be a few indicators that we have reached a bottom in this bear market and are back in a bull market?

Q: Hi Peter, Ryan, and Team,

If we can trade with zero commission, and were just starting out with a TFSA, which of the following two options would you recommend, and why?

1. The Canadian Money Saver Model ETF Portfolio
2. The ten stocks in the "Beating the TSX" as described in https://dividendstrategy.ca/btsx-portfolio/, and has also been featured in the Canadian Money Saver from time to time.

Thanks as always for your pertinent advice.

Q: In early July, I asked whether you thought it was better to lock in a mortgage rather than sticking with a floating rate.

At that time, you thought staying with a floating rate was better.

Wondering if your thinking has changed on that given how things have developed since.

Q: I am a retired income investor. All my income except CPP comes from my investments. Right now I am quite well diversified and I did not go to much cash so far nor do not intend to. However, I am now thinking that I should make some changes to be underweight some sectors and overweight others. Right now I am overweight ENB (I consider it a utility), BEP.UN, T, SLF, the Cdn banks and BCE. I also own a lot of the various BMO covered calls ETFs. Two areas I am light is Consumer Staples which the gurus say will hold up well now and I hold no US stocks. One can argue whether we are now in recession or it is coming but I am sure it is or will be real especially since our government says it does not think about economic policy. I am thinking of reducing the covered calls and increasing my exposure to stocks because I believe the stocks will perform better during and as we come out of this. This will further skew my diversity but these are not normal times.
I would like your thoughts on this and a recommendation for "safe" income producing Consumer Staples and a US ETF.
Many thanks

Q: Hi, could I please have your view of the Canadian inflation rate over the next 5 years. Do you believe we could return to a scenario of very low inflation and zero interest rates or is inflation likely to plateau at a higher level (or much higher level) and what might that level be? Thanks.

Q: Today, do you see more future growth from owning a S&P 500 etf like VFV or from a balanced equity (BE) portfolio? I own all the BE stocks in my portfolio, and I have some new money to invest. Which 4 BE stocks would you over weight at this time ie what is your highest conviction stocks? Could you give a brief reason why? Would you wait until the US Feds raise rates coming in September? The markets dropped the last time the Fed raised the rate. Do you know the date? Or just invest right now?

Q: What are your highest conviction "value stock" picks, for long term total return, right now? Thanks!

Q: Dear Peter et cal:

Two part question. You may dedut as many credits as you feel fit.

1. There are a few experts who predict 60/40 portfolio is finished for several years! I was a subscriber to Portfolio Analytics for a while and it repeatedly told me that given my answers to your algorithms , I have to stick to 60/40 split.
What do you think about 60/40 portfolio in general,, especially for the many in the pre/semi fully retirement stages. No need for personal answer. Just a general overview answer would be fine.

2. If you were to construct an ETFs based portfolio TO-DAY from scratch, would it be different from the one that we see in Canadian Money Saver? What would it look like ,if it is different? 80/20? or 70/30?

As you have indicated that you can give personalized answers, please feel free to answer in general/overview/big picture terms.

Thank you in advance
Mano.

Q: Further to Daves question and response, this week a guest on BNN mentioned we are no where near seeing a turn in the market until the Fed makes the last rate decrease. This could well be next year or and 2024.
What are your thoughts and thanks
Rick

Q: I feel that 5i has the belief that if you are a long term investor you will be OK with the downturns that we are having now. Stay invested and you will OK in the long run. Yes, overall the market has always gone higher over time, but you can get caught if you bought into the highs and are now down 50 to 80%. Oil stocks have been the darling in the last year, but if you bought the same ones 10 to 12 years ago, some are still off 50 to 80% from there highs, so this really makes you a long time investor. I feel that are many growth stocks that were bought when you thought the market would always go up will now be looking at decades to recapture there cost. Sometimes a better market does not even help some of these stocks recover.
Thanks again

Q: Hi, This week's sharp decline in Pipeline ( ENB/TRP and Others) and Utility (FTS etc ) stocks - Do you think, it is a result of market's renewed fear of continued rate hikes into 2022/2023, as suggested by FED Chair on Friday and re-iterated by other FED Presidents over course of this week including Cleveland FED President, Mester, Today. Pipelines and Utilies sector has performed well this year, but may be, due to its higher yield, is causing some worry to investors. Your comments, co relation of high rates and other factors, impacting these sectors will be much appreciated. Would it be prudent to underweight the sectors, in near term. Thank You

Q: for the whole year when you get a question on a stock, you have been saying the same thing-we like the company but we need a better market backdrop,we think its worth holding.
but the reality is the market backdrop is not getting better-its getting worse, actually far worse and it could continue well into 2023 and 2024-and a recession is obvious if not already happening.
personally i have liquidated everything except some oil and gas stocks and some long dated options,. i also think your comments and bi weekly updates are way to positive.
remember jerome powell has gone of the rails and has numerous flip flops and macklem is not much better-can you comment.dave

Q: The TSX solidly outperformed the SPX from early 1999 to early 2009 and the SPX solidly outperformed the TSX from then until early 2020 and we’ve been chopping around since.

Is it time for the TSX to outperform the SPX again, for at least a few years? Is this essentially a question of how strong will tech be going forward?

I noticed that during the TSX outperformance from 1999 to 2009 oil went from $11 to $140. So maybe it’s also a question of where oil is going.

Q: I am looking for advice on how to handle the small cap growth stocks in my TFSA. I find it more difficult to sell a stock rather than to buy it as either greed or ignorance or dismissal of all the relative facts get it in the way. For example , I rode EGLX all the way to nearly $10.00 only to watch it fall to its present price of my initial cost of around $ 1.90. The market was strong, it recently listed in the US, ; things were great but then they weren’t. I need some non emotional, logical tools with which to make selling price decisions on these more volatile stocks. A suggestion of some technical measurements for these types of stocks would be helpful.

I have considered a stop loss formula of say a certain % increase would trigger a certain % stop loss order. For example at a 50% increase I would implement a sell order at 10% below current price or a 100% increase ( to be so lucky again) would trigger a sell order of 20 %. Being human I would probably kick myself if watching a 100% gain ( actually only 80% if I used this formula )go on to a 150 % gain, only to be stopped out at a much lower price !

Thanks
Derek

Q: Now that Powell has come out with a higher-for-longer interest rate plan at Jackson Hole, any thoughts on when high growth tech shares might finally begin to recover? 6 months? A year? Two years? Thx.