Investment Q&A

Q: What is the best way to reduce the max drawdown in a long term growth investment portfolio that has increased a lot in value over the years? What are some strategies or things for investors to be cognizant of or do over time?

My investment strategy is to buy high quality compounders and hold them a long time. My top sectors by weight are tech, financials, industrials and cons. cyclical. My bottom ones are utilities, materials and communications with energy and staples in the middle.

It always seems like my portfolio takes the stairs up and the elevator down. I'm happy with the returns so far and hold high quality growth names. Are there strategies to reduce the downside while enjoying the max upside? : ) Such as raising cash or hedging (PSQ, SH) at certain times, although this is market timing which I tend to try to avoid. Your thoughts? Thank you!

Q: I would appreciate a sampling of hedges for the NASDAQ 100 & S&P 500 please.

Q: What are your top short ETFs for both US and Canada?

Q: If we were to enter a recession, what are the best short canditates you see, either in USA or Canada? Maybe a few specific companies, but more likely ETF's. Do you ever see a point in hedging?

Q: Hi Team I have not invested in Bitcoin but I am interested in BITI as a hedge as I see Bitcoin falling off and suspect it may the winner on a race to the bottom. I placed a small order and was flagged that there may be MER charges. So 2 questions. Is an inverse Bitcoin pure speculation or a plausible hedge. Are MER charges on ETF's normal? I would also like your recommendations on hedges that may be soflen a downturn....up to 3 questions now!

Q: I want to be better prepared for the next big market correction. I have been keeping ten per cent cash that can be deployed when I correction happens and I know where I want to add to positions and start a couple of new ones, for instance Microsoft. I have never shorted an individual stock but I might consider an ETF that shorts an index. Where should I start my learning? Most of our money is registered accounts which complicates shorting. I am not suggesting I want to do it now but if the market gets forthy next year and the federal banks start to raise interest rates to comabt inflation there is going to be carnage. Thanks for the good service. Glad you informed me about Constellation Software five or so years ago What I gem!!

Q: Hi Guys
I have initiated a short position for my portfolio. I know timing the Market is impossible, but at todays lofty valuations i just felt it was warranted.
I have started very small, 1.5% of my Portfolio. My aim is to continue to slowly add to the position over time, maybe every 3 months or so. My thinking is the longer I'm wrong, say over 3 months I'm down 10 % i can lower my average cost base going forward, by adding another 1.5% to the position. Can i have your opinion please, and at what percent would you top out at on this hedge.

Q: Recently I read John De Goey's Sept 2020 MoneySaver 'Portfolio Insurance' article. His custom-built inverse notes moderate risk by moving in the opposite direction of the market. He advises his clients to use them for up to 40% of their portfolio. Are there preferred Can and US ETFs that do the same thing, and what would your thoughts be about their use?

I have tried to moderate risk by building RRSP, TFSA and to a lesser extent, the unregistered accounts around all-in-one ETFs (VGRO, VBAL and VNCS) using specific growth or income stocks and bonds to augment the ETFs according to the type of account. The US side follow the same pattern but with themed ETFs (ARKK, ARKF, IHI, VIG, VDC, IWO, VHT, SPY). According to Port Analytics, I am sitting at approx 70% stock, 20% income, 8% cash and 2% diversified.

My thanks.

Q: Would you please recommend a couple of inverse etf's or bear funds to hedge the current market enthusiasm. Both Cdn and US pls. Thanks.

Q: In your last article in the financial post, you explained five ways to hedge your portfolio if you think this market has run too far, too fast.... if I want to buy the etf sh, what would be the suggested percentage to allocate compared to the portfolio in your opinion ? Thanks

Q: I know you are not big fans of short etf's but what in your opinion are the best un-leveraged managed and unleveraged index short etf's ? Should an investor be concerned if the etf is using derivatives ?

Q: The Schiller P/E ratio is 37.21 today, higher than it was on Black Friday, 1929, and second only to it's maximum of 44.19 in Dec. of 1999. This overvaluation is confirmed by the Market Cap / GDP ratio. Those extreme highs were followed by extreme corrections. How should we prepare against such an eventuality?

Q: I would like pics on shorting the market at this time. thx J ETf" s included.

Q: When someone puts on a hedge overlay to protect profits on
portfolio what exactly is one doing. Should your clients be doing it
and is it easy to do.Can u give an example
tnx u.

Q: Hi,
I read an article on how a hedge fund made money during the coronavirus sell off. (https://www.wsj.com/articles/how-to-hedge-a-coronavirus-11583321400). Can you give a small primer on how this is done..or typical hedging strategies. Thanks. Shyam

Q: Pro shares -SSO
DO you think this is too risky for average investor? Any way to protect downside risk?

Q: i am interested in an etf that goes up when the s& p (us market goes down) and same for the tsx. the idea is to buy some protection when the market turns ugly. will there be degradation with these etf?( they lose some value as you hole them. i have been suggested sds-n is that a good one or do you have other idea?

Q: BUYING PROTECTION: WHEN to buy? WHAT TO BUY?
From time to time (especially today on CNBC) I am hearing Traders talk about buying protection with volatility in the US at ~16 .... vs much higher last week.
I assume this advice is also linked to the fact that US markets have just finished a “best ever” kind of bounce after last weeks debacle.

Does 5i agree with that strategy?
Would you be inclined to do this automatically when VOL drops to a specific level? If so, what level?
What ETF(s) would you suggest since playing options is not my game?
Would there be a rule of thumb as to how long to hold that “protection” in place?

Thanks for helping to educate me in this area.

Q: I'm looking for ETFs that are the inverse of the S&P 500, the Dow, the QQQ's and the Russel 2000, that trade in Canadian dollars in our market. Can you make suggestions?

Q: Thank you for your HUV recommendation. I am looking for a "short/bear" type ETF or stock to protect against downside. Would you suggest any strategy.