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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: The US deficit is expected to be $3.67 trillion, if no further stimulus comes from the feds. Government revenues will be way down. Other governments, such as in Europe and Canada, have unheard-of deficits as well. This is after government debt was already high.
There's also a belief that interest rates will be lower for longer. This seems the opposite of the early 1980's, when there was a general disbelief that inflation could be tamed, and GIC's regularly paid more than 10%.
To me, inflation has become a necessity, and we are about to see a world-wide focus on making debt more affordable by reducing the value of money (an argument for gold or cryptocurrencies). But what about floating rate debt, and 5 year preferred resets? They're priced as though inflation will never happen.
Read Answer Asked by John on April 27, 2020
Q: Hi 5i team, firstly thanks for all the work you do, I’m a new member and am really enjoying the content.

A family member in her early 30’s would like to start investing with a long term time horizon (25-30 years). She has some risk tolerance and is seeking a passive set it and forget it ETF index type of investment strategy. She would make regular contributions and benefit over the long run from dollar cost averaging. Currently she does not have interest in picking individual equities or monitoring market conditions. She has a stable government job that provides a good pension plan and is starting with $10,000 capital.

What are your thoughts on a portfolio starting with the following ETFs; VOO, XIC, VEU, with a weighting of 50% VOO, 40% XIC and 10% VEU for some international exposure? Are there any other ETF’s you would recommend she start with? Do you think the EFTs mentioned provide enough diversity as a starting point? I like the above mentioned ETF's for their low fees and broad exposure.

My thoughts are being that she has many years of investing ahead that ETFs with 100% exposure to equities would provide greater growth potential when compared to ETFs containing a mix of bonds and equities. And that her stable government employer matched pension could be viewed as a bond proxy.

Thanks again for all the great info!
Read Answer Asked by Dylan on April 27, 2020
Q: In my view we are facing a volatile market with many ups and downs over the next thee months at least. I am guessing there is a 70% probability of testing the March lows or going even lower. This suggests to me that I should sit tight and wait for the market to drop before investing my cash. Do you agree ?
Read Answer Asked by Glenn on April 27, 2020
Q: I know u are more about stock but my question is do u think I should change all my Canadian dollars not invested into US funds. Right now about 50/50 in Canadian stocks and US stocks. With Oil being down the growth in US stocks seem much higher to me. I understand just your opinion..
Read Answer Asked by brian on April 27, 2020
Q: I hesitate to ask because I find that some of your subscribers expect you to answer questions which are far from your stated ambit, but at the risk of being lumped in with them let me go ahead anyway. Would you know if the Government of Canada published a budget for 2020-2021, and if so, did it change the capital gains tax formulation? Many thanks.
Read Answer Asked by TOM on April 27, 2020
Q: Hi there : what would you recommend to protect the portfolio from a high inflation due to all the stimulus packages for the pandemia ?, gold (i.e CEF) , or ENB (with physical assets that will go up in value if inflation goes up). Are shares of financial companies (i.e. TD) protected against inflation ?
thanks
Read Answer Asked by Alejandro (Alex) on April 27, 2020
Q: IF and that is a big IF we have all missed the bottom on American larger caps should I be now focusing on US small caps and International markets? When I look at SPY and VIG all th money has jumped into American large caps and more or less erased the huge loss and pairs back some of my gains from 2019...so huge collapse gone...for now. I've topped up some VIG but missed on SPY. When I look at US small caps they are lagging and I assume this is due to the higher risk and lower volume, Same story for Europe, International and emerging markets. So my question is should I be shifting to adding IWO, XEF, and VE. I need to add some international content to my portfolio anyways as I am a bit light at 12% international ( developed) and 10% emerging markets. If you agree or don't strongly disagree what ETFs do you recommend right now ( I already hold the one mentioned). I am leaning toward a bit of IWO and larger positions in VE and XEF.

5 year window, high but slowly lowering risk tolerance, Balanced portfolio follower ( shifting slowly to income follower), overweight canada (40%) and US(40%) ,
Read Answer Asked by Tom on April 24, 2020
Q: What are the chances of the current economic turmoil leading to Debt Crisis and / Mortgage crisis.
Read Answer Asked by Vinod on April 20, 2020
Q: Hi Peter and Ryan.
I am not surprised that the stock market (especially in the US) rebound nicely. However, I have deep concern that the US is going reopen its Economy quickly. I think they will make the Economy worse if they reopen too early without mitigation plans. (e.g. testing, isolation, tracking for broader population). I also concerned about the magnitude of QE everywhere in the world. I am NOT a fan of gold. I don't believe its value. The bond yield is historical low and next to negative. I feel there is nothing I can invest safely. I would like to place 30% of my retirement fund into something safe with a long term growth that can beat inflation at least. I feel I am stuck with the stock market. What is your opinion?
Read Answer Asked by Yiwen on April 20, 2020
Q: The VIX is below 40 this morning. Is that a sign that the worst is over or are investors becoming dangerously complacent. How does 5I interpret the recent movements of markets.?
Thank You
Read Answer Asked by Clarence on April 17, 2020
Q: I'm hoping you can help me, as I'm struggling to determine where to deploy cash right now.

I've been following your advise to not try and time the bottom, and have been adding to positions every 2 weeks - starting initially with tech stocks that have done well for me over the past 3 years like SHOP, KXS, and CSU.

Now most of my tech stocks have bounced back to record highs, so I'm not sure what to do next.

Should I add to stocks that remain down a lot, but whose business prospects are now more challenging for the foreseeable future (ie. CAE, DOO, MG, LSPD, AW.UN)? Or should I invest in companies that are down a little, but have not performed well for me in the past, but which I continue to hold for diversification (ie. BNS, GUD, PBH, SIS, CCL.B, SJ)?

I have a 25 year time frame, with a higher risk tolerance.
Read Answer Asked by Andrew on April 17, 2020
Q: Negativity re Covid 19 seems to be decreasing and attention may be switching to the economy, beginning with this weeks reports. Everything I'm reading suggests that the massive testing required to safely open the economy just isn't there, and a vaccine is far away. Meaning a later rather than sooner scenario for business as usual. Today's retail numbers and bank earnings have moved the market lower and only reflect March's partial shutdown.Do you see the markets recent Covid 19 optimism, being replaced by economic negativity, with markets deteriorating further towards Q2 numbers. I have a large cash position and cognizant of your buy slowly strategy, but can't help thinking the worse is yet to come.
Thanks Peter.
Read Answer Asked by Peter on April 16, 2020
Q: What instruments do you use to determine an inverted bond yield curve?
Do you think we had one last year?
If an inverted yield curve [bear argument] occurred, what would signal it's reversal [bull argument].
Read Answer Asked by Douglas on April 16, 2020
Q: Hi there, this 2 week rally is starting to look look and feel a V while many market commentators on BNN/Bloomberg/CNBC seem to say we will retest the lows and possibly even go lower - more of like a U or W or L. Obviously the situation we are in as a society and economy is out of the ordinary, but as professional investors, what is your opinion on where we go from here? Is this rally the real deal, or is it a prolonged dead cat bounce? How do we interpret these moves and what are some general signals to watch out for?

Thanks for your guidance!
Read Answer Asked by Michael on April 13, 2020
Q: Governments are going to put a lot of money into the system because of the corona virus. I have been told that this can lead to inflation. Which sectors,and companies, will benefit?
Read Answer Asked by James on April 13, 2020
Q: As the market starts to recover, can you please give your opinion on what sectors do you expect to recover faster than others. Thanks
Read Answer Asked by Nancy on April 13, 2020
Q: Happy Easter. I have only been subscribed to your service 3 weeks and I already know it will be invaluable- thank you. I have started 1/2 postions in all 4 of these companies as per your recommendations. I have a 5yr plus time horizon and I am very comfortable with volatility. What I am struggling with is in how to approach taking larger positions in all four, when I suspect they will report in very different fashiosn over this quarter, the second and third quarter, and maybe several more. From reading your responses to the questions, GSY could report just fine and continue showing ok results. LSD will likely look so-so for a few quarters but has some recurring revenue. Finally, DOO and GC will likely look terrible for several quarters with poor boat/ATV sales and nobody sitting at a poker table in a big room with others. If I am a long term investor do I just dive into full positions in all of them in what could be great valuations 5 years from now? Do I approach the four companies differently? I understand your comments on slowly entering into this market because it may have dips over the next 1/2 year and they could be lower, but if i am looking 5 years out do I care, not wanting to chase if we proceed slowly up from here? Thanks in advance.
Read Answer Asked by Brian on April 13, 2020
Q: This is a kind of crystal ball question. I have had trouble getting through to BMO yesterday and today. When I finally got through, the agent told me that one of the reasons for the slowness is that everyone is trying to rig their accounts for option selling. I wonder if this is a signal that the end of options season is getting close. I have made quite a bit of money on options myself in the last couple of months and would like to keep it up. But, I have a nagging worry that although I might make some money on options, if an upturn comes , I may miss out on getting some good companies for the long term. I read an adviser recently, for instance, who predicted that we may not have as long to buy as we think. Things could be turning up in just a few weeks. From your experience, can you give any advice on how to look at this situation and best handle it? What signs to look for when things begin to turn, and how much time will there be to leave one strategy behind and jump on the other. I realise this is a bit like crystal ball gazing. Bu,t, you have more experience that I do in the markets and probably can foresee the future better than I can.
thanks
Read Answer Asked by joseph on April 09, 2020
Q: Hello peter and team,
I’ve been following Peter since he use to run Sprott mutual fund. appreciate over the years how much I learned. “The BIG picture of investment “
1.Currency is another form of hedge. Served me very well till today on many occasions
2. Diversification. Surely enough I have to believe it
3. Weed stocks valuations and Big picture outlook for Energy sector in general. No regret to miss the boom and bust. Sleep well! Healthy investment ha!
Here is my other questions:
1 Ignore the market indexes up and down, I have 50/50 split between S&P/Nasdaq( actually tech portion is over my 50% as SP has 25% tech), what’s your outlook the growth and earnings for the tech sector compare to the rest of the groups during the Q1 2020? Less impact or nearly the same as overall market
2 when people overstocked toilet paper instead of shopping for good companies in stock market in March, thinking about post virus investment strategies, What we learned from WFH, human can’t live without tech. It has changed humans life forever? I remember the article your investment thesis is simple, buy apple or blackberry? Go to the mall and airport have a look.
Looking forward to reading Peter’s articles on financial post !
Thanks you and team, keep up the great service

Read Answer Asked by LEI on April 09, 2020