Investment Q&A

Q: Good morning,

I recently started selling puts and put credit spreads in SPY, QQQ, IWM and AAPL, these being among the most liquid underlyings with very tight bid-ask spreads. Things have worked out well, so far, as the market has been moving higher and higher.

I'm told that my positions are highly correlated and should consider underlyings that are not as correlated to the broad markets. Could you suggest some underlyings that I can consider? I prefer liquid underlyings so that I can exit them quickly in the event the trade goes against me.

Thank you

Q: Hi 5i,

I enjoyed your article on Ron in the FP and his financial practices. My practice as well is to hold only equities and no bonds. Like Ron, I have an indexed DB pension plan, which serves as my fixed income. Are you comfortable with an all equity portfolio for an investor in these circumstances?

Thanks again
Dave

Q: The data currently coming from Israel and the UK indicate that the vaccine efficacy is waning, earlier than many predicted. Given that most Western countries have employed a vaccine strategy to address Covid, I would like your advice regarding how to position a portfolio in the event of a Black Swan event.

In the fall, we will likely have another flu/virus season in northern US and Canada. Basically, I see 4 possible scenarios of decreasing probability but increasing risk: (1) the vaccine acts as advertised and we have few cases/deaths; (2) the vaccine is less effective than expected and there are many cases, but few deaths; (3) the vaccine is not effective and there are both many cases and many deaths; and (4) as has been suggested by some top scientists, there are long-term risks with these mRNA vaccines and deaths/ adverse events are much greater than if no vaccine was taken.

If an investor has concerns about scenarios 3 and 4 in particular, but is hopeful that such an event does not occur, how should one best position the portfolio. Should one stay fully diversified sectorially and geographically in stocks? Should one consider increasing allocations to gold, cash, bonds, etc? What are your thoughts?

Many thanks for your insightful advice.

Q: I want to understand the economic and financial impact of the Fed’s tapering it’s bond purchases. Is there a good source(s) that discusses this topic in detail and what the difference in impact compared to raising the Fed’s rate?
I would also appreciate a summary response from you on this.
Thanks.

Q: what sectors could really be affected badly if interest rates go up significantly? thank you.

Q: What sectors on the TSX are going to be strong in the next 3 months?

Q: Were do you see the US markets going in the next 5 months?

Q: Hi, My respected 5i team
During the March 2020 market correction, your team provided a special report which was a big help for me to take advantage of the market correction. I bought some solid names at a discount as the report recommended. Are you guys still doing this kind of special report in the future?
Could you please recommend 5 solid names to buy in Canadian and US markets respectively if there is a market correction again? Do you think it is a good time to buy them now during the current market  drawdown?
Pls list the names in the order from your most favorite to the least. Thanks in advance!

Q: It looks like around Seven AM this morning the Canadian dollar abruptly shot up a more than 1%, thus wiping out any gains I might make for the day. Any idea what the cause was? Any predictions about where the dollar-dollar ratio is headed in the near term? I hold a lot of US stocks in unhedged Canadian ETFs and am now reconsidering the helpfulness of hedged products.

Q: Hello. I am looking to add a name or two that has been weaker over the last month or so that offers some good value and above average prospects. Could you please suggest a couple names in both US & Canada that look interesting here? PS I have enuff financial exposure currently too. Thank you

Q: I hope all is well. My portfolio is reasonably well diversified (in my opinion) and I have some extra cash to invest in an unregistered account. Would you have any reservations about investing in theses three stocks equally i.e., NVDA, QCOM, MU (it would be a relatively small position in each). I know you like the first two but I don't understand what the issues would be with MU. Thanks again.

Q: Where do you see the greatest value in the market these days? Cdn Banks always seem like a go to when in doubt, ZWU also seems reasonably priced. Any thoughts on ETF's or specific companies that are positioned well? Thanks as usual.

Q: I believe that inflation is going to hit hard.
What compagnies or type of investment do you feel could benefit?
thanks
Sherrill

Q: Precious metals having a good day today, assuming its mainly because of the hot inflation numbers coming out. Do you see these stocks having more room to run? I own the above. Can you rank the above stocks in terms of the inflationary environment and which have the best growth and potential. Which sectors would do the best? Also I'm low in energy, would that sector do well if inflation persists or is it mainly driven by energy prices? Do you still see inflation as transitory or more persistent? Thanks!

Q: There has been talk recently about averaging down. Awhile back 5i seemed to like AT and EGLX, and my price on it was in the $12.00 range. Since they were favourable about people having this, I averaged down at the time it was $7 and change, it is now down over the past 5 days 16.9%. What I have read lately with 5i, it seems now I should not have averaged down. I am happy I didn't with AT down 9.4% in the past 5 days. Once a stock goes sour - rule of thumb it usually stays sour? On another note, PINS was having a nice recovery, but over the last 5 days it is down 10.2% - I averaged down on that one 4 or 5 months ago. In the future, I don't think I will be averaging down.
Your thoughts are always appreciated.

Q: Hi Everyone! Me again. I have been listening to some financial podcasts and the discussion came around to a liquidity crisis which these folks are predicting may happen in the fall. Now taking this all with a grain of salt, what , in a nutshell , is a liquidity crisis and under what circumstances could this becoming our way??? Cheers again, Tamara

Q: When financial aids due to pandemic shut down measures end do you expect market downdraft? In Canada the CERB will end on Sept 25, 2021. Not sure when the U.S. financial aids will end though.

Q: Due to the global rubber shortage, I'm thinking it might be a decent time to enter this segment. I'd appreciate your opinion on this, and also your suggestion on which of these three companies you would suggest the most. Thanks.

Q: With regard to any ETF, do you prefer CAD hedged or not?

Q: This is more of a "HOW TO" type question. There are 2 strategies that I've been thinking may help me react to the next down event like Covid 19, 2023. One is to sell everything early and buy back in once the markets level out. The other is to just buy dividend paying stock and get paid while waiting for the inevitable return of the market.

So, if I adopt strategy 1, how would I actually go about it? It seems obvious there would be more sellers than buyers so would you simply sell at Market and hope you recoup enough $ to rebuild your portfolio, or would you use Limit (ie you feel the market will fall 20%, so set a low limit where you feel below it maybe to damaging or to low $$ with which to rebuild, but low enough where you may get more buyers than sellers using Market.

In strategy 2, the assumption would be No Economy could ever go to zero, there is always some companies who make it through black swan events. So how would I identify those dividend payers who could maintain their dividends or a portion of their dividend in dire market conditions?