Two months ago, who would've thought we'd be at record highs for the TSX, with the S&P up ~20%, NASDAQ up ~28%? The S&P has rebounded nicely, a little more in fact than the TSX since those April lows. The S&P has had a really great run, and trying to reach those all-time highs again (we're 2% away) is a bit tougher. Compare that to the TSX, which has lagged the last couple of years.
He is moving a little out of the US and TSX, simply because he sees valuation discounts outside NA. So he's looking at European and international markets. An uncertain US dollar helps those markets in terms of investment. Falling interest rates outside NA also helps.
He doesn't look for particular countries or regions, he's more company-specific.
Geopolitical risk is always there under the surface. The thing is, Iran doesn't have many friends. Both Assad and Hussein are gone, Hezbollah has been smashed, and Hamas is under ongoing attack. So geopolitically, doesn't think there's a huge risk here. The US is pretty dominant in this area.
Trying to predict Trump is like trying to use a Ouija board. You just don't know, and he sometimes wonders if Trump really knows. In markets like this, it's very important that investors know what they're going to do. He often says that he doesn't know what markets are going to do, but he knows what he's going to do in different types of markets. You need to have a strategy if the market drops 5%, for example. For him, he ignores it. At 10%, he starts paying attention. At 15%, he starts adding back in. At 20%, he adds another 5%.
Look at your asset allocation risk tolerance (and understand what it means), and make sure you have good-quality assets. If markets decline, you can be reasonably confident they'll come back and it gives you a great opportunity to buy more.
The last thing you want to be doing is buying into a market that's at its highs for fear of missing out. The other bad thing is panicking and selling when markets are down. It's the old buy high, sell low; exactly the opposite of what you want.
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Healthcare. He is really focused on pharmaceuticals at the moment, which is about 52% of the capitalization in the healthcare space. Coming into the US election, there is a lot of displacement; a lot of concern about new legislation, new regulation, and particularly the potential impact on drug pricing. If you unpack that a little and look at how these companies go from year to year creating growth and earnings, a very big percentage of it is just US-based pricing powers, the same basket of pharmaceuticals, but just inflating the underlying price. There is a fear that that capability is going to be lost, which would have a huge effect on earnings. The market has set aside the bio-pharma sector saying there is a big risk that it is going to be fundamentally altered by legislation, but he doesn’t see it happening that way. Thinks any legislative or regulatory risk will be rifle shots as opposed to a wet blanket on the whole sector. That gives us a large sector that is really fundamentally re-rated, some of whom will maintain their pricing power through this election cycle, and those are the stocks he is most interested in at the moment.