Investment Q&A

Q: Hello 5i,
I read your answer to Jim today re: COVID 19 and a "second wave".
While I realize this virus is unique and how it reacts is somewhat unknown, your comment about a second wave happening now in the US was expected gave me pause.
My understanding is a second wave happens after a marked decline in initial infections(New York/New Jersey). As I see what is happening in the US now it seems this is a continuation of the first wave due to poor management in the states showing increases and that a true second wave could affect New York and New Jersey (and the rest of the country) later this year. I'm hoping for the best but fearing the worst is yet to come. I would appreciate your feedback!
Thanks
Dave

Q: We are now down about 7% on the S&P from the recent high. The virus is rising vigorously in parts of the U. S. If you guys were traders ( which I know you are not) would you see this as a signal to take profits and raise cash?? Or, to put it another way, do you see a likelyhood of a correction back close to the 200-day average, where we are now?? Thanks Jim

Q: I am well past retirement and trying to consolidate my stock holdings into ETFs. I. may not last long enough to complete this transition, but I'm moving in that direction! My latest thought on this is to divide my Canadian equity between ZLB and CDZ the first for stability, the 2nd for dividends, and for US equity ZSP. I'm staying away from other International stocks at this stage. Does this seem reasonable?

thanks

Q: As much as I dislike US leadership at this time I'm concerned about market impact if the other guys get in particularly to my energy stocks. I'm considering going to 50% cash to await the results. Is there anywhere to park cash that would provide the highest return before the election and where would you invest after? Am I being too pessimistic?

Q: We often hear that the market is doing well because of the Fed. It has printed money to buy treasuries in an unprecedented amount. The proceeds from the sale of the Treasuries is sitting in the Treasury General Account (TGA). The TGA normally has $300 - 500 billion to cover a few days of spending. It now has over $1.5 trillion, supposedly for COVID related spending. There is a theory that the Treasury is delaying the spending of the $1.5 trillion in the Treasury General Account until closer to the election, so it can hand out some goodies. Once this money hits the money supply, it will give the markets and economy a "sugar rush" creating a hyper-bubble. Then, after the election ... Look out below! Can you please comment on this theory.

Q: Hello,

With Bank of Canada growing it's Balance Sheet, what will this mean for the stock and housing market in Canada? Do you expect further asset inflation? What do you recommend Canadian investors do?

Thanks!

Q: Hello 5i,
I invested in some US stocks when USD/CAD was around 1.42. Those stocks went up but the progression of USD/CAD down ate into the profits. I know that we don't want to predict the implications of FOREX but do you think that US economy will rebound and recover faster and return to higher values (1.40+) and allows Canadians to eke out more profit?

Q: hi there, just wondering about your thoughts on this hedge fund's piece published today and what are your thoughts about equity market in general about a historic bull market?

"Investors could be looking at a ‘lost decade’ in the stock market, the world’s biggest hedge fund warns"

https://www.marketwatch.com/story/investors-face-a-lost-decade-in-the-stock-market-according-to-this-warning-from-the-worlds-biggest-hedge-fund-2020-06-18

Q: Thank you for your reply to my previous question regarding sector weighting and the information on etfs for each sector.

I understand weightings should be a personal choice, however, in the past, you have provided general guidance which I found very helpful, example below:

Asked by M.S. on October 02, 2018
5I RESEARCH ANSWER:
With a conservative tilt: Cons. disc 10%; Cons staples 10%; Utilities 10%; Telecom 10%; Real estate 5%; Industrials 15%; Energy 5%; Materials 5%; Info Tech 10%; Health Care 5%; Financials 15%

Would appreciate if you can provide an update to that , or if 5i decides to stop providing that guidance, I will respect that decision too.

Thanks

Q: My Daughter and Son in law have some funds in savings and want to start investing, for a couple starting out with over 100k what percentage and what etfs would you suggest, when I started I was XIC 30% , XSP 40%, VEE 5% and XBB 25%. That was a long time ago and Im sure things have changed.

Q: I have been following your advice of slow buying. For recovery plays with a one to 3 year timeframe (US election and possible normalcy returning post-COVID) is Canada or US better positioned? If all things are equal I favour Canada to avoid the nuisance of Norbert's Gambit etc. But if there is a compelling difference I'd like to use that to my advantage. I have some XIT, AC, SU and LNF and I am finding it hard to wait for the slow buying due to FOMO. How slow is slow enough? Thoughts appreciated.

Q: Hi
I hold stocks of Starbucks, Parkland, Parklawn, TC Energy.
I would like to get your outlook on these companies going forward in this volatile market. Do you see them as having good fundamentals and re-bounding back in 2021?
With the US election taking place in Nov 2020 and if Biden is elected, how will this affect overall market and will we see the stock market on the downside again?

Thanks
Kristelle

Q: It looks like the corona virus numbers in the states are rising. The fears of a second outbreak seem to be happening. Would you be trimming any of your winning positions right now?

Q: This is a big picture question about the current "incredible" rally.

What percentage would you attribute to
a) Fed's fiscal input including printing money and buying all kinds of bonds,
b) Short covering by both big and small investors
c) FOMO by Institutional investors (smart money) and
d) FOMO by retail investors (dumb money)?

Is there a place or articles one can access to get an idea about these variables?
Many thanks.

Q: OECD is in the news predicting the possibility / likelyhood (??) of historic global recession. What might we see to refute / support this dire scenario?? Thanks, Jim

Q: Hi, my question concerns slow repositioning of an actual 100 % dividend etf and stocks portfolio , for long term and retirement . Concerning the fact that various economical factors are now present for a future inflation (and then future interest raise in maybe 2 or 3 years ?): 1) what sectors will be safer, or even stay "safe" for dividends 2) what category of bond etf could be added to this portfolio , if indicated ? Many thanks ! JY

Q: 5i Office straw poll: What % cash is your group holding in their personal accounts.

With the rebound I am pulling the trigger on a few sales out of managed products I hold ( as part of my shift to ETFs) and am pondering keeping a larger position in cash as protection against a second wave/dip. I typically keep minimum cash.

Q: With 40,000,000 American loosing their jobs I note that on line gaming has picked as has on line movies.
What about on line equity trading. Has there been a move for those at home to open up trading accounts at Schwab, or Ameritrade and other financial institutions. I notice the huge moves in Airlines and Cruise ships and I am wondering if there are a lot of NEW players entering the Stock Market . RAK

Q: Would you acquire a larger cash position anticipating some bloody quarter 2 results? Quarter 1 results seem to only contain the beginning effects of COVID.

Q: Hi 5i Team,

We've just moved my sprite 87-year old mother's $72,000 from her broker to Questrade. It's a non-registered account and we are trying to make decisions on where to put it with special consideration to taxation.

One option I've discovered is Horizon Corporate Class Funds (a company called Purpose also has them).

It's suite of around 15 funds which include a few different equity types (TSX index, Euro and international stocks, and sectors like financials and energy) a few different bond types, and things like dividend and preferred share funds. As I understand it, one can buy and sell within this suite without triggering a taxable sale.

Beyond that, I don't know much about the tax structure so am turning to you. I wonder if you see this as a good place for this money.

Also curious about your opinion on preferred shares in general. They strike me as a good option for my mother's situation but my financial advisor considers them a thing of the past.

Thanks as always for your wisdom on this site. I'm delighted I bought a subscription.

Kevin