Investment Q&A

Q: What is your opinion on the $1 trillion+ stimulus and the Covid19 impact on the economy in the next few months or longer? What happens if the general lockdown last a few months? Any chance that it is not as big of a story than reported by the media? I had to drive out of town on Friday and I listened to CNBC for 2 hours. It was so negative I had to turn it off. Is it just me or are they trying to scare people? Thank you for your general comments.

Q: Just read your March 17 Stock Market Update article regarding "Where is the bottom???" and the bear Market histories. Very enlightening.

I have been almost entirely in cash for over a month now and noted your portfolio changes. You mentioned Adding a new 4% position of BMO Equal Weight REITs ETF (ZRE) in the Income Portfolio. ZRE has been very steady since inception in 2010 gaining almost 40% over that time period until the recent unprecedented and understandable 37% drop since Jan 31.

My question is where should we park our cash while we wait out this terrible situation? Should we just leave it as cash? Is the BMO ETF a suggestion for a short term hold? I did read your Trade Rationale and was a little confused by your comment "remove some of the 'tail risks' that might be seen if there are issues at any individual company." Am I right in thinking this is in reference to ZRE being an ETF? Apologies for my ignorance.

Thanks for all you do

gm

Q: I seem to remember in past recessions that I was able to buy bonds of troubled companies like Air Canada and GM with yields in excess of 12%. I just looked on TD WebBroker and AC bonds are YTM 3.5%! No thanks! Definitely doesn't sound like a good risk reward, and there were many other companies with still 'normal' looking yields. Any thoughts on when bonds will be re-rated (or not)? Even the energy sector at some point should be yielding much much higher, with better risk profile than equities.
Alternatively, I always hear that the bond market is smarter than the equity market. Could this be a sign that equity markets have over-reacted? Thanks for all your good work!

Q: Hi,

Could I get your opinion on 2 investment paths contemplating at moment for equity portion of portfolio?

At moment my equity exposure is passively invested in IWO, VGG, VIU, VEE. I am trying to decide if I should sell off this passive postion, in part or entirety, and invest in individual beaten up securities, for example a number from your recent reports for North American exposure.

The objective would be to have a higher return 2-3 years out from this market. Not really concerned with volatility.

Thanks

Q: On Sunday, PBS Wealthtrack aired an interview with a well seasoned advisor, R. Kessler, who recommended to raise cash as the damage to the stock market will get worse before it gets better due to a severe recession etc. His case made a lot of sense, and I would be interested in your comments on this statement.

Thank you!

Q: I have been sitting out this market decline with inverse etfs and HUV. I see the major North American indexes have again broken support and are heading for 2016 levels. 2016 levels would appear to be an important support level BUT the time-frame of the current coronavirus lock-down that could go on, in one form or another, for many months. The Imperial College COVID-19 Response Team in collaboration with the WHO Collaborating Centre for Infectious Disease Modelling and other organizations put out a report on March 16 (available online) that recommends the type of drastic measures we are now seeing implemented globally (social distancing of the entire population, home isolation of cases and household quarantine of their family members, ...supplemented by school, university, and business closures) in order to prevent serious loss of life (2.2 million estimated in the US alone) and huge social and economic impacts. The release of this report is what swiftly galvanized the current global efforts to contain the virus over the past few days. These efforts may seem harsh but are essential to avoid the worst effects of the contagion (as we are seeing in places like Bergamo, Italy).

The report recommends that these measure be maintained (to avoid rebound) until a vaccine becomes available, and that is estimated to take 18 months or more.

Now, we all know markets hate uncertainty. Hence the unprecedented volatility over these past few weeks. I don't see a silver lining yet, except of course the prospect of getting past the pandemic, which is a real possibility now that the correct measures are being taken. Therefore, I don't see a need to buy anything until we have flattened the curve and the markets respond accordingly. Until then we are likely to face further declines (to who knows what levels) with periodic relief rallies. Again, I ask, am I missing something?

Q: On fundamentals (yield/PE revenue ..etc have we reached the levels of 2008 financial crises in particular for banks/utilities and REITS. Can you please explain if majority of REITS in particular residential (eg CAR.UN) would benefit from lower interest rates why are they going down?

Thanks

Q: Larry Berman noted money market levels are approaching highs witnessed after the 2008 crash creating a backlog of buying power, but He also noted that only when that is combined with a vix of about 40 ( currently around 70) will the market give a sign it is likely to turn around. He cautioned any big rebounds now are not a sign the market is turning for the better, we need the vix to come down first. Does this seem logical?

Q: This market is offering a wonderful opportunity to buy quality dividend paying companies at discounts that seem remarkable. I think this is a once in a decade opportunity. For the long term investor, who wants dividend income as well, this is a gift.

Q: So having been through the Great Recession and now the cornea virus, I finally get it. Review your portfolio ,sell those companies whose fundamentals are damaged and possibly beyond repair ( swallow the loss),deploy your cash after things have settled down and there is more clarity into stocks who have the potential to rebound much better than the stocks you have sold. Is that about it?

Q: Hi Peter

What % breakdown would you suggest for Horizon portfolio in cash account under current situation for new money. ( I currently have 50%HXCN/ 25%HXS/ 25%HXQ)? or suggest any changes. I don’t like bonds.

Thanks

Q: Hello 5i
Could you please compare the ‘87 vs the current crash in terms of depth of declines and the time it took to rebound to precrash levels?
Thanks
Dave

Q: Total insanity ! 2 historical drops in a few days?
Nowhere to hide everything is going down(except cash)even then CDN$ 69.17USD this AM. End of the world is coming according to Mr Market. One question I have: Is this the new norm with high frequency traders and market shorts for economic end cycles?
Your view would be very appreciated!

Q: Hi, I'm a retired, dividend-income investor. I took some profits and losses (to wipe out potential capital gains) over the last 5 weeks and am now planning on reinvesting the cash to top up some of my existing equities, up to my desired asset allocation. I want to leg in, in probably 3 waves over the next couple (?) of months, to top up ZWC, AD, AQN, AW, BNS, BCE, LNF, NWC, RY, TRP, WSP.

Can you please indicate which of the above equities you would allocate into which wave (in other words, does it look like the equity is "ready" for an investment OR should I continue to wait for a while)...or not at all (not worth any further investment).

Thanks for your help...Steve

Q: For fun, let’s assume that the markets will be shut down. What would that look like? I assume there would be some warning that they were to close, and that there would then be a lot of selling prior to that. Correct? If they were to close, how long might they close for, and what could we ‘expect’ would happen when they reopened? All very hypothetical, but whatever insights you have would be appreciated.
Also, today I tried to take money out of my personal chequing account, at TD, and they capped withdrawals at $2500 per person, per day. I’ve never had that before. Concerning?
Thank you.

Q: What is the best way to go long on Volatility? What are your thoughts on this?

Q: First and foremost looks like the 5i team is working overtime to keep up with all the questions to ensure us members are not waiting long to get answers. Much appreciated! Compared to 2008 are the governments responding faster this time around and is the play book the same or different this time? Trying to see if all of these measures will have the same benefits as before?

Q: China's economy seems to be coming back. Something I ordered in January has finally been shipped. The streets in Beijing are getting busier and of course the Trump administration seems to have finally taken the threat seriously.
If the current shutdown is successful and the incubation period is 14 days would you think it reasonable to see signs of improvement after a month or so?
Your thoughts are appreciated.
Mike

Q: What has been proving to be non-correlated to equities in this market? From a quick look, not really the usual suspects such as bonds, gold or even bitcoin. I expect the best answer to this question will come with more hindsight, but appreciate your views. Thanks!

Q: retiring next week and now this happens
i will be totally dependent on dividend income
yes, i should have bond income but i don't
ytd shows:
50% of dividend portfolio is <20%>
50% at <37%>
should i sell <37%> portion to protect portfolio?