Investment Q&A

Q: If the fear of higher interest rates was causing the share prices of tech companies to fall, why would share prices rise today (April 13) with the announcement of a 0.5% rate increase?
Puzzled...Steve

Q: Consensus is that a recession is coming, question is when. When the recession hits will that be a precursor to a bear market? If so will that be cyclical or secular?
You recently answered a question stating that recessions typically last less than a year. If so that would suggest it may be a precursor to a cyclical bear market but not a secular (multi year??) bear market.
Many pundits suggest we are in the late innings of a secular bull market, which started in 2009, I wonder whether this imminent recession would be the precursor to a pending secular bear market, thoughts?

Q: Hi 5iTeam,

I would like to find out how stock markets did in times of high interest and inflation rates. Would you please shed some lights as to how the US and Canadian stock markets did in late 1970s and early 1980s.

And indeed if there were significant pullbacks during these periods, how long then did it take for the markets to recover.

As always thanks for your invaluable service.

Best Regards,
H

Q: I recently read an article you published earlier this year which purports to show that if one misses just the best ten days in the market over 10 years their average returns will be half that of one who was in the market the whole time. While I may not be quoting the article exactly, I have read numerous articles over the years suggesting the same thing - that time in the market is key to higher returns and that only a few days can significantly impact long term returns. You have suggested the same thing when you speak of cash being a drag on returns and that investing all available cash at one time is better than investing portions over a pre-determined time frame.

On the other hand, you have often spoken of waiting to invest only in companies showing positive momentum or that one could buy partial positions over a predetermined time frame to ensure that there is some protection should that stock price continue to decline. However, both of these strategies seem at odds with the "stay invested for the best long term gains" noted above.

I suspect that staying invested at all times is the best strategy for long term growth and that the go slower strategy is more to help those whose risk tolerances don't allow for paper losses immediately after investing.

Would you agree with my conclusion? Can missing just a few days significantly impact overall gains? And finally. if this is true, how does one incorporate buying only into momentum-positive companies into this strategy?

Appreciate your insight.

Paul F.

Q: Hi, At times like these when positions at companies like Shop and Nvda are eroded..when does it make sense to add? Should one wait until the interest rate cycle is over and wait for the tides to turn? What indications should you look out for for growth stocks to rebound? Thanks. Shyam

Q: What do you think of this company?

Q: Hello

This question is mainly for Peter because of his long experience.

It is obvious that rates will rise significantly in 2022 and maybe 2023 due to high inflation. And at the same time it also seems very likely that there will be a recession in 12 to 18 months. My question is how can central banks react in such an environment? Will they start cutting rates when the recession is on the horizon or is it possible that they will leave them stable for a more or less extended period, even in a recession?

Thanks

Q: Hello, I am learning as I go, so maybe this is an uninformed question: if a stock that is traded on both the Canadian and U.S. market (e.g. FTS, AQN,BEPC), is purchased on the U.S. market, is that considered to be adding to my U.S. exposure? Is the exposure/allocation based on the market it is purchased in (CDN vs US) or is it based on the country that the company is located in as displayed in their profile details? My Canadian exposure is quite high right now, so i'm trying to learn to rebalance. thank you

Q: ON Jan 18 of this year I asked you guys what I should do with my CTC money that I had after I sold the stock.

Here's the stocks and their performance since then"

TFII -(13%)
MG- (19%)
WSP - (-4%)

So obviously the 2 top ones have been clobbered in a period of 3 months. I own them, do you still believe these are the best place to be invested given the economic outlook currently or should I sell these names and purchase others?

Thanks


Sheldon

Q: To protect an account could you purchase a put (leap) for the SPY etf? Also how large does to put purchased need to be per $1m in equities.

Q: I would appreciate your thoughts on asset and sector allocation if one believes we are approaching a recession. Thanks for a great service.

Q: Please give me your outlook re the lumber market in the next year in light of rising interest rates, would you consider it a sell or hold and if a sell would you give me some sector areas to redeploy the money.

Q: Nutrien's stock fortunes have been rapidly diverging from that of the big American fertilizer companies over the last month. To what do you attribute this?

Q: Some talk of chances of fed engineering a soft landing are low. Inflation too high and it isn’t transitory and tightening will likely put us into a recession in 2023. Is a recession a very likely scenario for 2023?

Q: Between January and March of last year (13-16 months ago) I sold my bond holdings in ZAG and CLF and moved the money into the short-term bond fund ZST. As a capital preservation strategy it limited the downside from rising interest rates. ZST is down 2%, while CLF is down 6% and ZAG 9%. I saw an analyst on BNN this morning recommend it is time to start easing back into longer term bonds. It feels a bit early to me. Won't the short term bond funds benefit first from rising rates while the longer term funds will continue to decline? If capital preservation and rate of return are weighted about 50/50, what do you think of moving back into longer term bond funds at this time and would you do it gradually?

Q: oh Ross Healey....on Market Call.......yes Garth and another person, everyone has an opinion but Ross's is like outside the standard deviation and by a wide margin me, surprised BNNBloomberg invites the "heel" onto the show
I'll take 5IR anytime.......Tom

Q: I fully agree with your long term buy and hold of strong companies philosophy which is why I am so happy subscribing to this website.

Recently, I've been wondering how cyclical stocks like those above fit into that philosophy. I don't want to become a trader, but I am wondering if I should sell these at a relative high and invest in companies that are more likely to grow steadily over the long term. These ebb and flow companies seem more suited to a trader.

Given that investment strategy, would you sell companies like this at the good point in their price history?

Thanks as always.

Kevin

Q: the metals are taking a shellacking today, do you know the reason?

Q: Are there any indicators a recession coming?

I ask as nothing makes much sense at the moment. I run my own business, and there is a lot going on right now and feel the sand shifting underneath me.

COGS is going up like crazy, there is wage inflation, inflation in general, and interest rate increases on the horizon. I notice retail customers are bit slower than before and shipping is going up.

I don't get a good sense that things can continue like this.

I know inflation doesn't normally cause recessions, but interest rate increases can.

Should I not worry about it and just let my balanced portfolio go through the process.

Or do I position some Cash or more recession proof companies into my portfolio?

Sorry lots to unpack, but the Tea Leaves aren't giving me anything yet my gut feels something;)

Thanks Colin.

Q: Hi 5i!

Usually the CAD gets stronger compared to the USD when oil prices rise. This time around with oil above 100$ the CAD did not really follow suite. It does look like it has started to move up. In the short term( 3 to 5 months) Where do you see the CAD going. Any chance your amazing crystal ball see it going to 85C?

Thank you!