Investment Q&A

Q: Hi 5I
Do you ever think it is a good idea to overweight certain sectors, for example currently, financials. Unbalancing an otherwise normally balanced portfolio?

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

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

Q: The TSX has not performed very well this week. I think the weak US $ is putting downward pressure on Canadian stocks. Do you agree?
What other factors may be working against the TSX at present.
Thanks

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

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?

Q: A question about Geographic Diversification.
Percentage of Canada, USA and World Stocks?
What is the recommendation? For 2018?
Thank you.

Q: Could you tell me what was the TSX total market return (including dividends) in 2017? Thank you for the great service.

Q: Happy New Year,
I have read recent media reports suggesting that the investment world views Canada as the primary listing location for many speculative "Cannabis" and "Blockchain" companies and that this is hurting overall investment in Canada and the TSX/Venture exchanges.

Any views on this perception?

Robert

Q: For a relatively young investor (mid-30's), is there anything "wrong" with having mostly small and mid cap stocks? Is this ever recommended, or should an investor have a minimum % of their equities as large caps?

Q: I have been using 2.6% as the TSX dividend yield for 2017. Accurate? I read 2.8% somewhere recently. Thanks for your help in clarifying. As always this simple metric is surprisingly hard to find.

Thanks!

Kim

Q: Hi 5i,

Further to your reply to Clarence's question about indicators for a market correction, could you please provide links or info on where/how to track those indicators?

Also, where can I find info on the debt/cash that a company holds? I see various ratios but no actual numbers, even on 5i.

Thanks as always.

Q: What do you think will be the go to sectors or top sectors for 2018

Q: You mentioned in an answer that Small Cap stocks tend to get a bump in January or something along those lines. Can you expand on that in regards to how long historically this period has lasted, do Micro Caps also get a bump and might this be a good time or when is a good time to sell out of some of my more risky holdings that I don't want anymore?

Thanks, new site is great.
Craig

Q: I have $500k in cash to invest. Getting into the market with current economy and market conditions is hard for me to do. I have asked around at other firms and of course the answer has always been "Get in now. why wait", but I believe that they are biased because they will make their fees from me even if I lose money during a market correction.

As an example I did some back calculations using a tool on Steadyhand's web page and the rate of return from 2007 to 2016 compared to 2008 to 2016 is significantly different. By waiting one year the annual ROR changes by almost 100% (5% 2007-2016, 11% 2008-2016). It is interesting how nobody ever talks about this.

I would like to wait until the market correction happens, whenever that may be, but I need some unbiased advice.

I realize that this question has probably been asked before but I think that the answer to this question has to take into account current conditions and where the market is compared to historical norms and averages.

If I was using one of the 5i portfolios it would be the Income portfolio.

Q: You're talked before about not trading early in the day. Could you explain the logic. Many thanks

Q: hi,
1) do you know the current Canada GDP figures, taking out the housing market??
2) what is the long term PE average of the TSX from 1980 until now, and what is the average yield of the same, over the same time period?
thanks, chris

Q: Taking a pessimistic view, if Nafta talks fail, and Trump abandons the agreement, then which Canadian based companies are likely to be hit hardest? i.e. can you provide a short list of companies that get very significant export revenue from the U.S. ?
Thanks,
Philip

Q: I would like your opinion on possibility of NAFTA termination.
What would be impact on Canadian stocks?
What sectors and companies would be most impacted?
Could it trigger recession?

Thanks,
Milan

Q: Hi Peter,

Please list 10 stocks that could see some tax-loss selling but could also rebound next year (good fundamentals, value, etc). I imagine that CRH and CBL could be two candidates? I don't mind any riskier stocks as well.

Thanks in advance.
John