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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: I just read the report by Eric Lascelles and the team of economists at RBC (Sept 7/18).They give a 1% probability to a modernized NAFTA that produces positive economic outcomes. All the other scenarios are negative with the highest probability (35%) given to the US getting all their demands with of course negative economic effects for all parties. Given this, a sane person has to wonder why we are even discussing changing NAFTA. As investors though, are we better to ignore all of this and assume well managed Canadian companies will adjust and emerge competitive once they know the new rules, or should we try to be more proactive. I am assuming you lean toward the former.
Your thoughts are appreciated.
Mike
Read Answer Asked by michael on September 11, 2018
Q: Hi Peter,

With the TSX not doing much in recent months, are there any sectors in it that are starting to look good? Any sectors that could see some positive movement in the near future? Any recommendations in those sectors? I'm looking for growth with medium to high risk.

Thanks as always. Please deduct as many credits as appropriate.
Read Answer Asked by K on April 17, 2018
Q: The latest Liberal budget seems determined to put the nail in the coffin for Canada's economic future.
Some points from the Financial Post: “Declining business investment remains a critical concern for Canada, which is a signal that entrepreneurs, investors and business owners don’t see the country as a hospitable place to do business. From the end of 2014 to the latest quarter with data, the level of (non-residential) business investment in the country declined by 19 per cent, after accounting for inflation. Among a group of 17 industrialized countries, Canada now has the second-lowest level of business investment as a share of GDP.”

Your thoughts?
What is the mood of investors and business owners that you have spoken with?

http://business.financialpost.com/opinion/morneau-delivers-a-budget-in-deep-denial-about-the-dangerous-territory-were-in
Read Answer Asked by Curtis on March 01, 2018
Q: I, like everyone like rising share values but as an investor still in the accumulating phase of life, lower share prices equal more shares bought every quarter or month. If one is in invested in decent financial instruments and payouts are not cut then the price of the underlying security does not matter unless you have to sell. I remember 2000 and 2008/9. We were due for a correction and we will again survive. Just my two cents worth, Steve
Read Answer Asked by STEVE on February 09, 2018
Q: I wonder if I could get your take on what Jim Cramer says is behind the current mess in the market. According to him most of the problem is hedge fund managers having to sell stocks to make margin calls on heavy, leveraged short bets they made on VIX volatility funds. It makes as much sense as any other reason I've seen. If it was just fear of a rising yield the big banks would be rising, not leading the way lower. https://www.cnbc.com/2018/02/08/cramer-these-4-securities-will-signal-the-end-of-the-sell-off.html
Read Answer Asked by John on February 08, 2018
Q: I have been wondering for some time about market valuations and your recent comment about inflation being bad for markets has raised it again for me. If a market is doing reasonably well and inflation sets in could there be a reset of stock valuations. If so what sectors could get re-evaluated and is it across the board in a given sector or specific to certain size market caps?
Thank you
Clarence
Read Answer Asked by Clarence on February 07, 2018
Q: Any general comments on the current market sell off? Thanks.

(I hate to get into the mode of worrying that this is the start of a bear market scenario - prolonged time of continued losses. The cure to that worry for me would be reasons x, y, and z to be reassured that is not happening at this time. And so, if one just waits it out.. things will eventually come back, and go higher too)
Read Answer Asked by John on February 05, 2018
Q: Please respond as you see fit, private if you deem appropriate.

Although no one can guarantee the future, having a forward vision at least gives some perspective and/or at least an opinion/position to work from. With fixed income rates low and now rising, issues surrounding the potential risks to so called bond proxies, what is an educated guess as to their potential downside risks? Basically, using your expertise, how much might a maximum correction possibly look like? I prefer to hear what I need to know but understand the comments of certain people can create fear /panic for others!

What would you consider the new "Norm" for interest rates both short and long term? Some suggest a period comparable to the 1950s and early 60s where rate structures were low? That said, will savers continue to be subjected to economic repression? Predictions of the short end moving as high as 3% and if so, would say 4% (or higher) constitute a reasonable spread for the 10 year? I often hear analysts use the 10 year rate to model values?

Would real return bonds be a good anti inflationary component since there is also talk of inflation actually picking up more than expected? Is not the yield over inflation fixed and should inflation pick up might a spread with the market occur? Assuming a fixed/ equity portfolio of 35/65 %, what % of the fixed income portion could be considered a ballpark number representing a full weight for real return bonds ?

Rising rates are often the sign of an improving economy and somewhat of a counter weight to offset yield shifts. Some may say my questions want it both ways. My primary concern, years of engineered responses now showing their Achilles' heel and a period of "detox" ahead of us to correct them?

My approach, at least understand all the risks and the options to build a portfolio that matches the conclusions and risks you are comfortable with. There are a few guest on BNN who are even cautioning about too much get rich thinking!

Given I raise multiple points, please feel free to respond with a few bottom line general comments if that is what deem appropriate.

FYI. I go on the site daily with a goal of reading every response. It provides a great base of information and knowledge in a very timely fashion. Keep up the great work and thank you.

Mike
Read Answer Asked by Michael on February 01, 2018
Q: I am noticing that alot of investors are very worried about a market correction. It is a fact that the market will drop at one point but are we overdoing it at this point and time. If the market is to have a correction in the next 12 to 16 months isnt it still time to be invested in the stronger sectors and maby pull back on the weaker ones
Read Answer Asked by James on January 30, 2018
Q: A. With the expected further increases in interest rates in 2018.
Should I anticipate pullback from certain sectors? your opinion please.
if so which sectors, DOES 5i recommend adjusting asset allocation in response to interest rates?

B. I have been a student of the DIY investing for the last 10 years but have no experience with a potential era of interest rate rise and don't know what to expect.

I struggle with this, probably too much media coverage, I would prefer to be a buy and hold, all of my equities are blue chip dividend companies. (but it is hard to see portfolio drop on no news other than interest rate rise.) I believe I am looking for reassurance in this last comment:)

Ernie
Read Answer Asked by Ernest on January 24, 2018
Q: Hello:back In the 1990’s the tsx and the Dow were just about even. Today there is about a 10000 point difference. In general terms, can you explain why this has occurred. Also I have read in several articles that the tsx usually lags the Dow by about six months to a year. (Either up or down). Do you agree with this statement. If yes will the tsx begin to narrow the gap in the next few years?
Read Answer Asked by Valdis on January 16, 2018
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