Investment Q&A

Q: I am not understanding why NFLX would be caught up in the tech slide. It's more of a media than a tech stock, no? In any case, these large cap techs with high valuations seem to be suffering disproportionately. I am down considerably from the highs but still up nicely on both of these and am seriously considering getting out now. Do you think that would be a mistake?

Q: In your answer to Claudio's question about Nvidia you state that there is a major tech reversal going on right now. What does that mean?

Q: Dow up 700... Tsx flat..the world has stopped investing in Canada leaving it up to us to finance our companies..
Do we not have any profitable companies or assets worth investing in from a global prospective?. Even our own investors seem to be shunning any new investment in the stock market...When was the last time the countries stock exchanges were diverging as they are currently and what do you see are the fundamental problems?

Q: Financial stocks of every type are getting hammered again today, as they were yesterday. Everything from banks to insurance companies to credit cards and payment processors in both the US and Canada are down between 5-10% in the last two days. Can you draw a line for me on how the possibility of trade disruption between the US and China could account for this? Is Bank of America really worth 9% less today than Wednesday because of Trump's trade tariffs or this just mindless "sell everything!" panic?

Q: There were a lot of people calling into Jim Kramer (Mad Money) about this market drop - as it is difficult to understand him, he was saying don't average done (basically) wait until the market stabilizes, etc. and when the market does, good stocks (i.e. Fang stocks) would be one of the first to lead the market out of this. There was a rate hike and Trump seemed to be going after a trade war with the Chinese which Kramer seemed to be saying was the cause. Two weeks ago Larry Berman predicted there would be a 20% drop within the next 12 months. How do you see this and what are your recommendations? What is a good ETF for Fang stocks? Thank you Dennis

Q: I have a general concern that I would appreciate your assessment regarding both the US and world economies. We have a US stock market that has been rising consistently for some time now. Bond yields are on the rise with increasing concerns about inflation. Now there is a threat of a major trade war as Trump considers placing significant tariffs on Chinese imports. This has been tried in the past (ie 1930) with dire consequences. Sure, US imports of tariffed goods decreased but so did exports as other companies struck back with their own tariffs. And if China, for example, sells less goods to the USA it will buy less raw materials from other countries affecting their economies.. So the risk is a major slow down in world economies. I would expect prices for many products in the US to rise substantially, due to Trump's insular view of how things work with increased pressure on inflation and bond rates. My concern is that all of this could result in a major recession next year. How do you view this situation? I would appreciate your thoughts and analysis. Thanks.

Q: what type of stocks would be less impacted by trade negotiations I would guess gaming stocks and gold? i would appreciate your input thanks

Q: If I wanted to invest in a theme where the real US economy begins to see robust growth from the benefit of the Trump admin's policies that benefit the working class and domestic economic activity, are there any US stocks that you could suggest that may benefit from such a scenario?

Q: Iron ore is a mined and concentrated product. Steel is a manufactured product. While it may be possible to move a steel mill from one country to another or move steel production, you can't move an orebody.
I've only heard Trump's threats to put tarrifs on steel and aluminum. Is there anything in that regarding iron ore? Even if he succeeded in moving steel production to the US, they would still need iron ore, presumably from the Labrador trough, to feed those mills. Any thoughts on this?

Q: Current price $40.57(5yr low),6.62% yield(mainly due to drop in price,partly div.growth)& high $66b debt.A rising interest rate environment,which will be further aggravated if Trump impose tariffs.New York Fed Governor W Dudley stated"raising trade barriers would risk setting off a trade war,which could damage economic growth prospects around the world".Recently filed for potential mixed shelf offering.Will be dilutive & negative if sell shares @ such low price(remember CPG which keeps on issuing shares).However it does have $10b non core assets,of which $3/4b are to be sold In 2018.Have not heard of any sale,maybe not getting the desired price. I have 1/2 position @ $49,so add,hold or sell.Txs for u usual great services & views.

Q: Is there anything you can forecast with regards to Trump's policies regarding tariffs and protectionsm that can negatively effect Stella Jones' operations and eps expectations?

Thanks again for your help.

John

Q: With President Trump wanting tariffs on Steel & Aluminum this will increase cost of goods in the USA much like tariffs on Lumber increases the cost of building housing in the USA. Would this lead to a lower US Dollar and benefit he price of Gold ? What golds do you recommend ? RAK

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

Q: Interested in your thoughts on ARLP. The company is in a sector - coal that nobody other than Trump seems to love. It pays a solid dividend which is well covered by its cash flow, and it paid a dividend through the Obama years, despite some of the regulations brought in at that time. Do you see a place for this company in a well diversified portfolio with some emphasis on safety of capital. Thanks

Q: Is Broadcom still a Singaporean company today? There has been reports in the news media around November 2017 that Trump announced "he" is moving it back to the USA. I hold a significant position in my RRIF. If it is a USA company today, I will have to pay U.S. estate taxes if I die. I will need to sell my position before that happens. Can you look into it's current home country? Is there a reliable website I can go and check the home country of Broadcom from time to time? Thanks.

Q: In regards to the reply to Terry's post, I'm a prime example of that. With all the uncertainties of Trump, US Gov't debt, NAFTA, Canadian housing & credit card debt, Brexit, etc. I've been expecting a correction/pull back for well over a year now. In the meantime I've held off buying ETFs for the US and Europe markets while watching them run up to record levels.
So here's the worse part. Psychologically I have a real problem buying those ETFs at today’s prices when I know I could have bought them much cheaper even though it looks like the run still has a way to go.

I'm sure I'm not the only one in this boat, so if there is any advice as to how to avoid getting into a trap like this, it would be greatly appreciated. Do you think in times of uncertainty, it is better to add monthly into an ETF rather than one lump sum?

Thanks for any help!

Paul

Q: Would you pick CUD or VGG or is there another alternative that you prefer? Would you switch from one to the other?

Q: Thoughts on their 22 Dec announcement of charges and Trump taxes. Call me paranoid, but the timing was suspicious. Is it likely the time to jump ship?

Q: What companies on both sides of the border does 5i think are set to benefit from the recently passed US tax reform law?

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.