Investment Q&A

Q: The Schiller P/E ratio is 37.21 today, higher than it was on Black Friday, 1929, and second only to it's maximum of 44.19 in Dec. of 1999. This overvaluation is confirmed by the Market Cap / GDP ratio. Those extreme highs were followed by extreme corrections. How should we prepare against such an eventuality?

Q: Hello Peter and Team,

Looking to for an inflation hedge for my Son's mother in law. She just sold her house and has all her money in cash. She isn't very comfortable with investing so gold won't work. We are slowly putting her TSFA contribution in VBAL as we need some growth for the future (approx. 25% of the cash), but that is all she is comfortable with investing. What are your thoughts on ZRR? Is there any other product you would recommend as an inflation hedge?

Q: Hello 5i team:
This is a suggestion and a question!
Not at all hypothetical or a thought experiment.
In the main newspapers G&M, FP and magazines like Moneysense there is a real case history of people who submit their stories and ask for suggestions. Names and identities are of course masked.
It will be nice to see such a feature say once a month in your blogs!

Question: If you were to construct a portfolio(s) with ETFS spruced with some stocks that generates 80k per year, how much capital one would need? You may want to apply your approach of Income/Balanced/Growth portfolio.
Your growth portfolio has done exceptionally well thanks to some highflyers like SHOP. But one can't rely on such phenomenon all the time! Hence my ETFs based approach.

Q: USD vs CAD crystal ball question. The chatter i am seeing is presure on the USD and a loss of stature for the USD as the fiat currency of choice globally. It is still number one and the benchmark but not the rock it used to be. IF the USD continues to stumble AND resources that are lagging strenghthen it could create a negative headwind for my USDvsCAD holdings and favour putting money in CAD or hedged investments. Would it be wise to hedge for this possible outcome, is it likely in the next 6-12 months. In your reply feel free to go down the rabit hole of predicting the end of the Fiat currency model as we know it...

Q: Hi 5i team : what level of cash do you recommend in a portfolio ?, this outside the requirements of cash required for our own expenses (so not to sell stocks when the market had crashed/bottomed due to cash needs) . In the market environment as today , is 5%, 10 % ?, or in between ?, does it change according to the market condition ?, thanks

Q: Prior to the Covid pandemic I was stockpiling cash in anticipation of a long, overdue market correction. Still buying and selling but mostly selling. I can imagine that a lot of us retirees where doing the same. Most of my portfolio I left untouched assuming yield protected it from a major downturn. Wrong!!

I never really sold but waited for the portfolio to recover as value came back in fashion. I also bought beaten down value stock (banks, insurance companies and large, unloved tech companies, etc.) as this progressed.

My question to you is this. Has my generation (approx. 140 yrs. old) stockpiled enough cash going through this to continue driving this recovery up. I suspect that this is a difficult one to answer but I didn't have anything better to do since I was dropped from the Olympic Team.

Q: Just a general question. With markets at all time highs, but the virus is still a big part of our lives. While the market is forward looking, a lot of damage has been done. In addition, this would be the first recession with only 1 wave of selling as opposed to multiple waves. Do you think there are near term risks or are we just headed higher and try not to overthink it, but leave some cash on hand for future opportunities? How much cash? 20%?

Thanks,
Jason

Q: Is this a good entry point on these two airlines? Or should I wait until the new year?

Q: If there is a post-U.S. Thanksgiving (seasonal) rally, which sectors do you expect to be strongest?

Q: First I have to say thank you! My RRIF and TFSA are certainly healthier due to info gained from 5i over the past couple of years.
My questions pertain to my Rif where I have recently inherited 2 mutual funds; Dynamic 1560 Strategic Yield Fund and Dynamic 031 Global Dividend Fund (mers 2.15-2.23%). The remainder of the Rif is comprised of Canadian stocks; old TSX 60 stalwarts and/or stocks from your income or balanced portfolios. The Dynamic funds each account for approximately 20% of the total Rif and around 13% of total investments.
Questions
1. Are there better ETFs/Funds you would suggest for exposure to US and global markets?
2. What is a reasonable weight for an individual ETF/fund within a portfolio?
3. What is a reasonable percent of one's portfolio to allocate to US markets? and to global markets?
TIA
(Good to see Peter on BNN yesterday.)

Q: Do you think Tech my trade sideways for a while as the valuations may have to catch up? I am overweight Tech still and i am finding it hard to sell some of the stocks that have been good to me. Which sectors might you overweight or lean to now with the news that some vaccines may be out in the next 3-6 months?
Thanks

Q: Hello,
With the media and other financial write ups all talking about this great sector rotation out of growth and tech stocks into value stocks seems a little over blown to my logical mind.
Its made to sound that stocks , in the "Packaged software " sector like
-LSPD, DND, REAL, NVEI ,VEEV etc are part of that big rotation.
When I think about this, I beg to differ and am of the opinion that these stocks will become even more relevant in the future of our economy irrespective of Covid.
Have I lost my "marbles" or being too naive to think that way?
Your feedback is always appreciated.
NB* I do own these stocks that I mentioned.
Thanks,

Q: Hi 5i team,
Last week was about the 4th big rotation from growth to value this year. This morning Moderna announced success with its vaccine. All the fund managers are now adding extra 10 lb. value weights to their barbells. My barbell has been heavy on the growth side. While you often give target sector weightings, you don’t tend to do it between growth versus value. I know you are growth managers for the most part but does this 2nd vaccine and change in market sentiment now give you pause to consider placing more of a value tilt on one’s portfolio?
Thanks again for the insight.
Dave

Q: Peter; We had a Trump rally when he was elected- could we another one if,as, and when he leaves?
Rod

Q: With one news there is a possibility that some other firms might also be sucessful in finding one so if more good news come in which stocks will benefit?Or do you think
market has over reacted with pfizer news?

Q: I would like to get your opinion on where you see the markets headed between now and the actual release date for a vaccine? I can’t think of any catalyst to drive the markets higher considering they have recovered all losses since March.
Thanks

Q: Given the current environment, No economic growth and slow downs in everything including resource companies, (mining, agriculture, etc) because of the pandemic. Are higher prices for commodities not coming across the board? Would this not be considered the set up for Stagflation? Moreover, how will global liquidity by all western governments contribute to this?
Your thoughts are appreciated.
Regards.

Q: It feels like the USA might slide into a civil war in the next few months (i hate that i have to even consider that awful outcome) . Do you ignore the possibility and remain diversified? Or rather take some profit now while the market is riding high and move to a higher cash position (what percentage might you suggest) while waiting it out for 3 months?
I know you cannot predict the future but is this even on your radar?

Q: Mott Capital U.S. (a guest on S.A.) commented on Nov. 11 that in reality the point of no return for high flying tech stocks may be here. Do you feel this is a fair comment? I greatly respect 5i's opinions and information received.
I was logged into 5i a previous guest was trying to find some information and it was mentioned something to do with the footer. Where would I find this footer? In times like this it is good to have 5i on our side.
Thank you.

Q: Retired dividend-income investor. Now that there is a bit more certainty regarding the outcome of the USA election, can you provide an update as to the "big picture" investment world for the next year or so?

We kept hearing there were basically 3 big issues = USA election, Covid and its related vaccines, and the timing/amount of USA stimulus. Impact from the split Congress? Impact on the severity of Covid and the timing of potential vaccines? Amount of USA stimulus in the near term?

I read the odd question about the potential for a 20% correction on the horizon. There is always a correction around the corner, but do you see us getting back down the the March 2020 lows again?

I'm currently sitting on roughly 6% cash and have been deploying $ into the markets on a steady state basis for the last 4-5 months. Just wondering your thoughts? I was planning to carry on with this strategy, but wanted your crystal ball views first.

Thanks...Steve