Investment Q&A

Q: Hi,

Donald's analysis regarding Fairfax returns was quite interesting. You mentioned that timing is everything. The long-term MACD (a monthly trend/momentum indicator) for the S&P 500 now making a bearish crossover.A bearish crossover (sell signal) occurred at the 2000 tech bubble peak, the 2007 market peak, and the intermediate market peak in 2015. I came across this article and would like to get your opinion on it and keeping in mind timing as a big factor should we reduce the risk by lowering our percentage of stock holdings and get back in at a better time.

https://www.financialsense.com/blog/18799/markets-long-term-momentum-just-went-negative

Great service
Thanks
Ninad

Q: HI there: I am still in comfortable profit margin from investments in the three stocks above. I wonder what you think about taking profits (now 20 % lower for Apple) now and holding some money on the side, or is buying on this dip a good idea. Especially re Apple.

Q: 5i does a great job of alerting us to stocks good for buying. But I am wondering if you view it as also within your sphere to alert us when to sell (selling suggestions seem to come only after a problem and a large drop in stock price). For example, when a high-beta stock is at an all-time high maybe it's time to sell (or is the idea that you sell only enough to re-balance). But I have ringing in my ears from lots of sources "let your winners run". But it's hard to see a winner go up +70% over a year only to see it drop 80% in a few days (estimating here). I guess the game plan is if nothing fundamentally changed the stock will eventually recover the drop and then some.

Thank you for any insight you can provide on this.

Q: Hi guys:
In this correction, companies are so called on sale. Unfortunately retail investors only have so much money to deploy to buy shares. For example I own cargo jet and have done great on the name. Would it be wise to sell the winner and take the cash and add more shares to a savaria , New flyer , ccl , or pbh for example and dollar cost average. Or should I just stay put for my entire portfolio.
Thank you
Mark

Q: Are we near capitulation yet?

Q: AS per a question August 24 of this year I listed 10 stocks in my TFSA that were sound favorites at the time and i was down and down 7 percent.I have held on due to yours and fund managers advise and am now down 30 percent and am starting to wonder why hold on.I thought the market was close to being done a small correction but starting to feel total capitulation isn't close yet but may happen.High risk tolerance i guess i am not if the correction ends up 50 percent.Will take years to recover.

Q: The size of the Ontario Debt and ongoing deficit are staggeringly huge and will weigh on the economy for decades. And the resource economy out West is severely damaged. Are these not dominant macro factors that will limit Canadian equity returns for many many years to come? If I had a blank slate of where to invest should I not take one look at the Canadian economic picture and just take a pass, 5% position at most? Tens of billions of capital investment dollars have left Canada for good reason, should not we small investors do likewise? Would value your opinion. Thanks.

Q: I have followed your research and recommendations for a couple of years and have enjoyed the ride. I began with a liquidity of 'say $500k' so to speak. I invested approx half over a short period of time and kept the residual in cash. At my current age of 69, and having developed a distinct aversion to loss, I felt comfortable in maintaining this significant liquidity position. Now, with the markets in turmoil, rather than selling into the market, I am tempted to 'average down' and let go of the cash position I've maintained. I will not be in need of this 'fund' for at least 5 years or so. Would you recommend that I take this posture of buying more of what I have (which includes most of the companies you have in your balanced equity p/f), and if so, which stocks in particular would you recommend I add to.
Thanks,
cj

Q: I note that you have said (in Saturday's FP) that the market is currently not so worrisome because for one thing the VIX has not spiked above 30. Yet I have heard another commentator cite the same fact about the VIX to say we have to have a spike in the VIX before we hit the bottom and so the market will fall more. Same metric but to you it's good and to the other guy it's bad. Can you reconcile these two viewpoints?

On that, while the VIX may indicate not much fear or panic, there sure does seem to be a lot of panic based on the 11-20% drops I've seen on several stocks. Is that because these sellers are just not the ones into options and therefore they are not influencing the VIX?

Thank you.

Q: Greetings,

From now to about 12 months are you able to sense which 3 sectors are undervalued and which 3 sectors are overvalued ? Is there any sector in particular that stands out as ready to take off or conversely ready to crash ?

Thank you and Regards.

Q: Recently President Xi gave a speech indicating the intention to open up the Chinese economy, including " lowering tariffs for autos and other products and enforcing the legal intellectual property of foreign firms".These are things the Trump administration is seeking. Also in a recent dinner talk David MacNaughton indicated pressure from American farmers to reach a resolution.

Have you any thoughts on the possibility of the trade dispute being resolved and which of the 5i stocks would respond most positively?
Mike

Q: Hi Team! I'm wondering what might move this market to a better place where there is some momentum for stocks. It seems that all indicators seem to point to a slowdown or downturn for stock markets. While valuations are more realistic, long term interest rates haven't moved up that much indicating that the economy might not have longer term strength, the market has been good for some time, the benefits from US tax cuts have been digested, stronger earnings seem to have petered out a bit and so in all of this as a layman I'm looking at whether I should be more defensive and perhaps move some funds to cash before things get ugly. Is the recent volatility perhaps not a warning sign that markets are bracing for a tougher session ahead. Your thoughts?

Q: Do you know the P/E ratio on EPS estimates for 2018 & 2019 for the:
- S&P500
- TSX

Thanks!

Q: Just my 2 cents..having been with 5i for 4 and a half years I gave learned to trust your opinions and then do my own due diligence. These are difficult weeks and the market is fearful. But it is still here after many many years and decades of ups and downs. When we stand back and look at the charts....we are up over the years. This is an opportunity to slowly dip into some of our favourite holdings. The world and hence the market has always had problems and always will. To those who doubt 5i opinions...stay the course...and do your own research as well. I'm glad I have.
Post at your discretion.

Q: Here is a list of some of my holdings. Most of them are frightening. TOY, GSY, PHO, COV, TSGI and KXS which I just increased to a full position the other day.
RHT, CXR and SINO FOREST. I have seen them go from dollars to pennies and out of these I am very concerned that TSGI -- one morning I will wake up and it will be pennies and when I go to 5i you will be telling us that you will be removing it from the portfolio and selling it. If it will take years for these to recover, should we not put our money somewhere else until that time comes?
Thanks Dennis

Q: Dear 5i
If you had 6 months before you were planning on retiring and considering the volatility in the markets, what percentage of fixed income vs equity would you have in place in your portfolio ?
Thanks
Bill C

Q: It seems like a lot of companies are getting decimated on slower growth and future lower guidance - and in some cases even good results are also getting decimated. This does not seem to be happening in isolation and feels like a broad sentiment. Is this the sign of a weakening market? Does this typically indicate something occurring in the near future?

Q: In your opinion, what segments of the US market could be most affected both positive and negative by the election results?

Q: Hello,

Now that markets have certainty and are digesting the US mid-term election results, what sectors do you believe will benefit? Im looking for a few opportunistic US ETF investments to take advantage of areas that got beat up in (Red) October and are most likely to recover/outperform.

Thanks,

Kuldar

Q: Hi,

What is your recommendation in terms of no of stocks should be held between US and CDN markets among all the sectors. For Canadian stocks I am focusing on about 22 stocks from the BE, INC and GRO Portfolios with heavy focus on FInancials, Energy, Utilities, Materials and also other sectors. For US stocks I am targeting for 20 - 25 stocks in Industrials, Healthcare,Tech,Con cyclical and Staples primarily large blue chips in growth and dividend income.

Appreciate your guidance as always.

Thanks
Ninad