Investment Q&A

Q: My outlook on the market is that there is a lot more downside risk than upside potential. I am thinking to use bull and bear ETF's to reduce market risk in a pair trade of sorts. For example, go long NASDAQ (QQQ) and short S&P (SH). The other one I'm thinking about is long investment grade (LQD) and short high yield (SJB). What do you think of the strategy generally? Secondly, what is your opinion on my choices?

Q: Hi Peter
I hold ZSP in my TFSA account. Is it a good idea to add XMC to compliment ZSP? The US equivalent of XMC is rated gold rated by Morningstar. Can you comment on XMC and if it is a good core buy for a long term hold?

Q: Would you deploy a large amount of cash in the market today if safety of principal was your primary concern...and if so, in what? Are US dollar based investments safer than Canadian or international. Thanks.

Q: Wondering what you think of this BMO ETF, hedged to Cdn dollars. Volume seems to be anemic. It is a world ETF, 66% US, 31% EAFE, 3.5% Canada. Would you prefer one with solely US S&P 500 companies?
Thanks
Steve

Q: I am young investor building my first portfolio during these tough times. Having not been through a financial crisis before I am struggling to know how to proceed. Are you still in the camp that the markets are overvalued right now and need to chill? I keep waiting for pull backs but things keep going up (S&P approaching 3000). Do you think a pull back will come?

Related to the above, in your May 5th update you said "in our view, slow buying at good prices continues to be a solid strategy and we think 2020 prices will look attractive in two to three years from now". Looking at some of your favorite US names in recent Q&A (AYX, TEAM, DOCU, etc) they are at highs. How does one determine "good prices" in these situations (e.g., one day pull backs? overall % reduction? buy into momentum and remain optimistic?)?

Thanks for the fantastic service and for educating young investors like myself.

Q: Befuddled - that's me. Got a list of stocks I would like to add too or establish new positions in, both in Canada and US.
But do I do it now or just continue to hold off?
After the major market bottom, I thought there would be a technical correct......never happened
Then there was the FOMO...and I took a pass on making stock position buys.
Now, the markets are still moving up, and up.
Now what do I do?....like stay put and wait until after the second quarter results as the there is no end to the covid-19, just changes in phases, at least so far.
What is 5iR's suggested tactic, aka approach???
.........Keen to e-read your take.......Tom

Q: I am starting a new portfolio, totally separate from my existing ones due to different ownership and would likely sell after 3 years. What sectors do you think will have the most positive movement in the next three years?

Q: I would like pics on shorting the market at this time. thx J ETf" s included.

Q: With an outlook that there is substantially more downside risk than upside potential in the markets, does it make sense to set up some pairs trades to reduce market risk. I don't short stocks, so I was thinking to use bull and bear ETF's. I had in mind (1) long NASDAQ (QQQ) / short Russell (RWM) and (2) long Investment Grade Bonds (LQD) / short High Yield (SJB). First of all, what do you think of the strategy and second, do my selections seems reasonable? Thanks for your valued advice.

Q: Hi, Covid19, China vs USA trade, Upcoming USA Elections, etc. How do you see the markets behaving to the end of 2020, should We be alert and think about selling/parking some cash for next year?
Thanks 5i.

Q: What do you think is the probability the Bank of Canada will resort to a negative interest rate, and if so, what would be the best investment strategy? What ratio of cash, bonds, gold, silver, and stocks? Thank you. Bob

Q: Good morning with the increased sabre rattling from the Trump administration against China my mind goes to what if we end up in a trade standoff. Just looking at North American stock sectors which will be effected the most and which offer the best protection if the dog pooh should hit the trade fan?
Thanks David

Q: Hello,with all the recent debt taken on by governments all over the world,this has kind of brought gold into the spotlight as a possible “safe haven” do you think Paul Tudor Jones strong endorsement of bitcoin would be a competitor for investment dollars in that space or am just misreading this
Also do you think with this tremendous amount of government and consumer debt load,do you think gold could be a good investment going forward for at least a possible 1-3 years and maybe even much longer depending on when balance sheets of governments start to look better thanks

Q: Hello,
I was about to question when I should make a significant buy in my kids’ TFSA’s, and should I wait until 2nd and 3rd quarter earnings are out which could substantially affect the market to the downside. Then I read your article: Unintended Investments consequences from Covid crisis. You seem to have answered that very well in that the Central banks of the world have a “put” on the floor of the world’s markets and the worlds’ governments have politically put cash in the hands of those who need it most somewhat enabling the economy.
So in other words, you would suggest to get a move on and start investing before the expensive market becomes more so?
Cheers,
Rick

Q: I believe recently discussed a maneuver to exchange CAD to USD. Is that something I can do in a self directed I trade account?

It seems to me that if this is a dead cat bounce in the market and there is another test of lows that having USD would be a good hedge. What are your thoughts on the best currency to preserve capital?

Q: I am trying to understand what is going on with the market. While the drop that happened was expected the fall was exaggerated by virus implications. The market now seems to be back to where we were before the drop which by some accounts was overdone and ready for a fall. Yet now there are even more reasons for a storm to occur.
Please, any thoughts you have to make sense of this.
Thank You,
Peter

Q: Can you confirm my understanding of what is happening: Deflationary pressures based on lockdowns/economic slowdowns due to COVID-19 and Inflationary pressures based on bond purchases/stimulus from central banks around the world.

If this is relatively (and simplistically) correct, do we have a belief on which pressure will win out over time?

Q: What equities would you expect to perform well in a currency devaluation environment (large deficits funded by money printing)? Thanks.

Q: I had some cash on the sidelines in March and managed to buy at some lows.
Im actually in the black now overall and of course my emotions (I think greed) take over and I think I should sell a portion in preparation for another dip - maybe a big dip after some of the reality of the impact of covid 19 is realized.
I bet you hate questions like this but, would you sell a third and see or just ride it out ?

Q: Good Morning 5i Team,

Employment numbers are coming out tomorrow and they will be dramatic.

Do you have any thoughts on how the unprecedented job loss reports might effect the markets?

Thanks for all you do

gm