It's always hard to predict when you'll have a pullback. Historically the weakest month is September, with October being the second weakest. But we went through September with relatively good results. If there were a small pullback, he wouldn't be surprised but he'd take advantage of it.
At times there's a two-tier market, where some of the higher-valuation stocks get lots of love and attention, while other stocks are neglected. Many investors in Canada don't realize that over the last 12 months more than 30 companies have been subject to actual, or pending, takeovers. Our market is cheaper than the US, and it's a call for Canadians to invest in their home market.
Yes. One research report shows that if you take out the performance of gold and silver, and that's about 12%, the TSX is up ~12.7-12.8%. If you're underweight gold and silver as a portfolio manager, your performance hasn't been the greatest. This doesn't always happen in the Canadian market.
He and his team are fundamental investors. The TSX is trading at a cheaper valuation, with a higher dividend yield, and other metrics are good. Over the next couple of years you want to be in hard assets, and Canada has a lot of those.
He's a North American manager, but for new $$ coming in about 75% will go to Canada and 25% to the US. That's how he sees the world.
He's investing in companies that have good hard assets, grow cashflow, and pay dividends. PPL is one example. Its pipelines will benefit from LNG and LNG expansion. Others includes JWEL and KEY. Two of his three top picks are Canadian. Great companies in Canada; you don't always have to head to the US for good value.
Time to take a look. On valuation, much cheaper than overall market. Money is starting to flow in from other, overvalued sectors.
He owns JNJ. Two years ago, spun off consumer division. So now it's just drugs and medical devices. Trading ~14-15x PE. Spending billions to build new facilities in US, so that gets them on the right side of the Trump administration.
Remains to be seen. We're still in early days (or innings, because we love baseball here in Toronto ;) There will be winners, but we won't know who until 3-5 years down the road. It's also about how companies adopt AI. We'll have to monitor the spending and see how effective it is.
Full agenda, lots of trade items. The first meeting was challenging, but Carney showed grace under pressure. The US needs our aluminum, getting about 62% from us. Steel is a bit different, as it's more of a global commodity.
He'd like to see progress on tariffs coming down, and an idea of what's going to happen with USMCA next May. Canada needs to reinforce to the US that we're a friend, steady ally, and good trading partner. Trade, including that with small and medium businesses, is for the mutual benefit of many parties.
In a world that's getting more dangerous, it's good to have allies. Canada's doing a good job stepping up our military in the defense of our North.
For the US administration to save face, perhaps we can give the US a bone (such as importing more goat milk from the US instead of from elsewhere). The US could take more of our aluminum to benefit its aerospace and defense industry.
Poster child for that might be Canadian Pacific. Since the merger with KSU, you can take a railcar from northern Alberta all the way to Mexico. While a lot of goods are covered by USMCA, a lot of business owners want to know what's going to happen next May.
The lumber industry is also having a tough time. He owns no companies in the sector, though he has in the past.
And there's steel. A company like Algoma in Sault Ste. Marie can compete, but not with 50% tariffs. The industry needs relief, so perhaps there could be some compromise here.
Defense industry in Canada is small. He used to own Calian Group, which provides defense services. We need to spend more, and this will come from government. There's now also a movement in the US where smaller, venture-type companies work with the armed forces to test (and sometimes even pay for) fledgling products.
More money will be spent in the sector, and there will be lots of trickle-down beneficiaries. Drone-versus-drone is actually much cheaper than missile-versus-missile. Companies that have good cybersecurity will be employing the best software.
Investing 101: The Impact of Psychology
Everyone knows the market runs on fear and greed. And every day you can get a lesson in human psychology. It is a real-life lab course in human behaviour, whether it is how investors react in a crash, how they react to buying meme stocks with no revenue and no prospects, or how they react to a short seller’s report. An example of the latter this week was alternative lender Goeasy Ltd., whose shares fell after such a report, even though the company refuted claims it is under-reporting credit losses and pointed out the short sellers stand to benefit from a decline in the firm’s stock price. A company can go from loved to hated in a heartbeat. Investors worry about everything, even when they don’t have to. Herd behavior can take over at times, and as the saying goes: Irrational behaviour moves stocks far more than any fundamentals can. There are times when stocks soar on bad news and collapse on good news. When I was working as a young stock broker, the market crash of 1987 was the best psychology course I could ever have imagined. These market psychology lessons are not always fun but they are always interesting.
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Market.Donald Trump made a lot of promises, and you have to position for both extremes. He expects that he is going to try to get through the agenda items which are easier, those agenda items that the Republicans have been pushing for, and ones that will be popular with both investors and the general populace. Thinks he will do the repatriation of capital. There are hundreds of billions of dollars sitting in offshore accounts, not coming back to the US because of very high tax rates. Thinks he will offer the possibility of a 5% tax rate. If this happens, expectations are that there will be $500-$800 billion back into the US, and likely going into a lot of friendly shareholder type share buybacks, dividend increases, special dividends and, as Trump hopes, spur the economy on. Another that is also likely, but to a lesser extent, is the corporate tax rate. Expects it is going to come down, and a 20%-25% rate is likely to happen. Hopes that the protectionist Trump does not come into play. There could be some problems on infrastructure spending, as he doesn’t think the party will be supportive of an increased deficit. Europe is very attractively valued, but you also need to be in the stronger US market as well.