Investment Q&A

Q: Do you believe the cyclic trade is back for real and if so, can you recommend 3 stocks Each in the US and Canada? Thanks!

Q: Can you weigh in about US pre-election jitters and what might happen in the stock market this go around?

Q: I have been hearing and reading a lot about "The death of the 60%/40% asset mix. I manage several portfolio's for our family and use different mixes based on age and risk, but for myself (66 ) and my dad (87) I have been at that mix (or close to) for several years now. I feel its has served me well in this correction and am resistant to taking on too much risk. When considering the fixed income it is not all individual bonds or money market holdings I include in the 40% but ETF"s such as CBO,ZAG, ZHY and XSB. Am I right to assume Fixed income ETF'S can be included with with straight up bonds in the makeup of that portion of ones holdings and do you see this mix as a poor choice going forward. thank you

Q: Hi Guys,

Delighted to be a member of this community. Your advice and thinking has been invaluable.

I've been on a long search with what to do with the conservative part of my (and my elderly mother's) portfolio.

The prevailing sentiment seems to be that cash and bonds are safe, and anything touching on equities are higher risk.

I question the bonds though. They go up and down quite a bit during normal times and went down quite a lot during the crash.

Meanwhile, big low volatility companies like Microsoft, CNR and many of the stocks you've recommend as defensive stocks seems to steadily grow during normal times and, when there is a shock, recover quickly.

In short, the defensive stocks seem less risky than the bonds and seem a better option for the conservative money. Am I mistaken in my thinking? Is the industry just stuck in a paradigm of thinking that bonds are the safest thing next to cash?

In that frame, I'd also like to ask where low volatility, dividend and preferred share ETFs sit on that spectrum of safety.

Thanks, as always, for your wisdom.

Kevin

Q: Our new BOC governor said he was expecting to buy 5 billion of bonds every week .First of all where are these bonds coming from and who is dumping them or are they being created out of thin air? I was looking at bond etf's but am a little concerned that the governments seem to be the main buyers lately.An article I read said the US govt was going to lose money on WM bonds that it purchased .Why would a recession proof business need to be supported by the US govt. shouldn't they be able to support themselves on their own cash flow?

Q: I'd like to adjust the split between the Canadian and US equities in my employer-sponsored RRSP. Currently the portfolio is 81% in a Canadian equity fund and only 3% in a US equity fund (the remaining 16% in an international fund). What would you consider a more appropriate Canada-US split than 81% vs 3%? Also, ongoing contributions are being made 100% to the Canadian equity fund. As with the existing portfolio, what would you suggest as a more appropriate Canada-US split for future plan contributions going forward? Looking at a 3-5 year timeline and more potential opportunities and growth on the US side of things. Thanks.

Q: I have heard comments from diverse sources that there will be a massive movement of investment from bonds into equities at some point. Would you comment on this topic as to what catalysts could cause such a move. Does 5I agree with the concept? Has such a shift happened in the past?

Thank You
Clarence

Q: I am trying to access an article that 5i wrote I think in late March or early April about the 10 or 20 stocks to buy in the midst of the pandemic? Thanks for all your excellent advice?

Q: Polls currently indicate that Trump will lose the US presidential election, and the Democrats could possibly win both the Senate and Congress as well. If this were to take place, what do you see as the risks/opportunities for the US market? What sectors/ETFs do you feel will do well in a fully controlled Democrat US government?

Blackrock has recommended that the US will underperform both Canada and Europe over the next 10 years. Do you agree with this assessment? Should investors be reducing their US holdings and reallocate to Europe and Asia? If yes, to what extent?

Thanks again for this amazing service, and your excellent advice.

Q: I'm retired with a defined benefit pension and enough investment income to live comfortably at the moment. What do you consider to be the best protection against a stock market crash followed inflation or hyperinflation?

Q: Good morning... Eric Reguly of the Globe and Mail wrote an interesting article for Saturday’s paper “Big Tech can’t keep rising when the economy is sinking”. He concludes by stating that “The Big Tech companies have had a fabulous run and have saved the broader equity markets from collapsing. But they can’t keep soaring when the economy that propelled them relentlessly upward before COVID-19 hit is sinking.” What is your take on his thesis? Thx

Q: Hi guys,
I am maintaining both rrsp and resp portfolios for my family with time horizons of about 20 years and 10 years, respectively.
The investment strategies have been the same thus far, and I have followed a balanced approach of identifying growth, blue chip and a nominal 15% fixed income in each. I have a combination of ETFs and stocks from your model portfolios.
With the objectives and time horizons in mind, would you deploy the same investment strategies across accounts at this point? Thoughts on what investments you would recommend?

I am also aware of the tax ramifications of the accounts, and am more interested in thoughts on risk and time horizons.

Thanks

Q: What would be the reason why there are not more mergers and acquisitions in this environment? I would think with interest rates virtually nil that businesses would want to buy something in the same space in order to grow. Cheap to borrow right now.

Q: Tech companies are at all time high, it feels that we are again reaching a tech bubble. Is it time to lighten-up on tech companies/ funds/ETFs. What are the signs of reaching bubbles and how does this compare to previous cases of sector bubbles?

Thanks

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!