Investment Q&A

Q: In one of your answer of yesterday, you said: Right now, growth companies, relative to large companies, are the cheapest they have been in nearly 30 years.

Can you talk more about this fact and give examples please.

Thank you :)

Q: Hello,

How much is the market at risk if Russia invades Ukraine. Could we see a significant pullback and would you want to own a certain asset class to protect your portfolio from this geopolitical event.

Q: I would very much value your opinion /comments about Larry Swedroe's October 11, 2013 article in ETF.com entitled "The 'Black Hole Of Investing'" ( https://www.etf.com/sections/index-investor-corner/20092-the-black-hole-of-investing.html ) about why small cap growth stocks are the worst-performing segment of the investment market. And why you recommend them in your Growth portfolio (IWO) instead of small cap value, for example - Thank you.

Q: Looking to diversify geographically by adding US names. Do you see any reason NOT to use approx. 20% of my cash to buy USD tomorrow to buy US stocks?

Q: Hello 5I,
I have one spot open in my portfolio for a high growth stock. I bought a bunch in the pullback but have $$$ to add ideally a long term core holding. The question is do I jump in now after so much has ran so much so quick? Or wait for volatility to create more opportunities. I am looking for a screaming buy in order to spend this money if that gives you any context.
Thanks

Q: Hello,
I have a general question regarding Portfolio Analytics.
At what point or range should one proceed with a rebalance either for the geographical weightings and/or the sector weightings?
For example, my geographical weightings show the following:

Increase Canada by 0.85%
Decrease U.S. by 0.65%
Increase International by 0.35%

Similarly for sector, i.e.:

Increase Technology by 0.21%
Reduce Real Estate by 0.49%
Increase Utilities by 1.64%
Reduce Health Care by 1.37%

All other sectors fall within the ranges shown above to one degree or another - only Consumer Cyclical at an increase of 0.07% is really close.
So, as a "Rule of Thumb". what kind of range should we accept as being close enough to not worry about? 0.25%, 0.50%, etc.?
For what it is worth, the portfolio is large enough that a 0.0015% adjustment would be acceptable in terms of keeping the trading cost at an acceptable level as per previous comments you have made pertaining to that aspect of the process - if that makes any sense ....
Many thanks as always!!
Cheers,
Mike

Q: This month end rally maybe linked with buying by fund managers either to be fully invested or by artificially pushing up prices to base their bonuses upon...or short cover rally or new money entering the market...what's your view?

Q: Regarding Jerome Powell, is quoted today as saying he "Pointed to an economy in 'a different situation' from the last interest-rate hiking cycle, highlighting a tighter labour market, the fastest inflation since the 1980's,"
The 1980's were great for interest -- I locked in a GIC for 5 years at 17% annual compound growth.
For the outlook today, can you provide any advice on what to do an what not to do give the outlook above,
Thanks for your valued advice.

Q: I hold these 8 equities in one part of my portfolio. I am not sure if it makes a difference, I am up on some and down on others.

The approximate weight and the gain / loss is shown for each. ATZ (3%, +17%); CNR (4%, -7%); CM (4%, +8%); Acuity Ads (0.5%, - 37%); MG (4%; - 11%) RY (6% + 5.5%).

I wish to free up about 2% of the portfolio for a cash requirement. Taxes are not an issue.

Two questions: First, if you were me, which / what would you sell to free up some cash? Second, is there anything here that should be let go because it is time to move on from it? I know AT is too small to make much impact but I am inclined to continue to hold it, for a potential bounce. Many thanks

Q: Hello Peter,
I think of your investment style as growth oriented long-term investor. But at the same time, you have been a portfolio manager and adjusted portfolios to manage yearly returns as well. You have experienced and managed similar downturns as they go through corrections in a rising rate environment. I would appreciate your opinion on how to adjust the portfolio in the current environment.
With the US (and Canada) central bank expected to raise rates about 4 times, the dollar index should be strong? That should not be good for commodities, particularly for gold and silver. But then inflation is going to be high too. What does it mean for gold/silver stocks and how would you adjust the portfolio weight as of now; and the bias between large (AEM, FNV,PAAS) and small caps such as KRR, MMX and WDO.
And the growth stocks, in particular technology stocks- FAANNGS (including NVDA) and other very high valued stocks such as AFRM,UPST,CRWD, DOCU,ROKU,TTD etc. I feel they will rebound but not much. Would you hold them through to the year end or rotate into traditional financials, commodities, and cyclicals in the near term. If rotating, would you do it immediately? Would be grateful if you could include your suggestion for the individual stocks too.
Finally, the persistent downward drift of ATVI – am I missing something? Did we learn anything from the microsoft call yesterday?
I know this has multiple questions and you deduct credits accordingly. I am very interested in learning from you - how you would go about portfolio adjustments and beat the market come December 2022.
Regards
Rajiv

Q: I never bought a REIT because I own another investment condo in Toronto. Would you factor that to your entire portfolio or add another REIT unrelated to residential like MPW, AMT or something industrial? If you would add regardless of having another income property, what would you add?
The condo rent has positive cash flow and the equity is about 3 percent of my overall portfolio. Analytics suggests a 4 percent REIT holding.

Q: What are you thoughts on the FED meeting today? It sounded like the Interest rate path has not been decided yet, and would be revisited at the next meeting.

Do you think they can continue to kick the can down the road, and what are the implication if they keep doing so?

Q: Hi Team,

On a scale of 1 (nothing alike) to 10 (identical) how do you rate the similarity to this tech meltdown with the late 2018 version?

Thanks

Q: Hello 5i team,
Need to build equity portion of a portfolio for a recently retired almost senior citizen.
Very conservative, sleep at night stocks. Not needed for at least 5-10 years.

Need about 10 for RRSP and 4-5 for TFSA.

Do you agree with above stocks or would you pick others?
No oil stocks and no significantly cyclical stocks.
Don't need to be dividend payers but looking for total return of 5-8% or more per year on average.
Can you provide about 12 choices including above suggestions if you agree for RRSP and 4-5 for TFSA.

Take as many credits as needed.
Thank you so much for this great service.

Q: when the stock market drops like it has during January 2022, I wonder who is selling???


is it dominated by traders, aka those jumping ship for future positions down the road, or retail folks bailing out of an ETFs in great numbers or institutional investors like pension plans which would surprise me?

what is your take?......I ask this as it is a head scratcher for me, especially as it isn't like other declining sessions in the 2000 era but rather about
expected rate increases and, to some extent, inflation in the short term

..........thanks for your insight.....Tom

Q: Can I please have your top 5 US and Cdn consumer non cyclical stock choices ?

Q: Hi there,

I am seeing an increasing number of questions from people looking to exit their technology holdings and wonder (as I read your banner at the top of the page about doing nothing) if now is perhaps too late to be exiting. I understand that people may look for safer havens but I would like your opinion on whether or not people with a 5-10 year horizon and an appetite for risk should be scaling into many of the higher quality names rather than selling at what appears to be nearing a bottom. I can't help but think of so many who bailed out of oil stocks when things appeared dire and then didn't get back in for the massive rise.

Q: What do you think will happen to the Canadian dollar vs the US dollar when the Bank of Canada eventually raises interest rates?

Do you think there are any other short-term factors that might significantly affect the Canadian dollar vs the US dollar?

Q: Hi there, your comment is very true regarding the following;

All views should be considered and taken into account but this group has been quite bearish for probably a decade now, so eventually they will be right. We have a hard time imagining a 50% market crash. For context, the S&P 500 trades at about 20 times forward earnings, so a 50% drop would lead to the S&P 500 trading at 10X. Of course, earnings could also drop but we are not sure we see a high probability scenario where across the broad spectrum earnings/profits get cut by such a large degree.

However, your last sentence is what intrigued me the most! And looking forward, as the markets always do, maybe the markets foresee three quarters ahead for this year, and revenues/earnings/profits won't be as robust as they were for growth companies now that covid is really in the rearview mirror, with vaccines establishing normalcy (the new normalcy that is) going forward once again!

Thoughts looking forward six to nine months ahead for growth companies?

PS: Growth Companies will no longer get an easy pass any longer (as they have during these crazy Covid times), they are going to have to truly prove themselves as being relevant going forward, earning a buck or two or three..., in a cut throat world competing against one another! Everyone is done with Covid... and its time to move on with normalcy once again, as best as we all can, including the markets! :))

Q: Gentlemen: With Gold, Bonds, Money market funds, CDs, Emerging markets and cash all paying less than inflation, diversifying a portfolio to say 50% non equity as advised with aging, is a joke…. Where do you recommend looking for 2022?