Anastasia Amoroso, Chief investment strategist, iCapital A Comment -- General Comments From an Expert A Commentary COMMENT Apr 11, 2023

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.

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Yes. She doesn't even know what to say. Thinks this might be one of the easiest shows, as every answer will be along the lines of "Good company, but too expensive." Market's in mania territory, more so in the US than in Canada. It's like a runaway train and nothing can stop it.

Doesn't know what's going to make the market turn, but these valuations are unsustainable. Her firm is being cautious right now, only deploying $$ where they see long-term value rather than short-term trends.

Her firm is a conservative shop on a good day, let alone on a day when valuations are this high. You have to balance this with collecting dividends, and they're all about dividend investing. If you're not invested, then you're not collecting that dividend.

They try not to trade, buy low sell high, or time the market. It's all about getting invested, collecting dividends, and compounding them over time.

That said, for new $$ coming into the firm, they're having a hard time deploying it right now.

Canadian valuations are trading at half of what they are in the US, so there's relative value in Canada. In particular, likes infrastructure stocks -- things that are going to support the backbone of the Canadian economy. Things like utilities, pipelines, telcos, energy infrastructure.

Along with collecting dividends, one of their main theses is that increasing power demand is a secular trend. It will continue to increase over the next 20, 30, 40 years. Despite where we are in the economy right now (going into economic weakness and possible recession), power demand is not only defensive but also a growth story that could supersede any short-term economic weakness.

No secret that for months the economic data has been trending negative. GDP numbers in the US were positive last week, but it's backward-looking data. Job numbers have been coming in weak. And with the US government shutdown, we won't be getting as much economic data. 

The economy was saved in the first 2 quarters because a lot of demand and buying were pulled forward. We're now starting to see the impact of tariffs, and inflation risk is increasing.

But the market is not wavering, just continues to go higher and higher.

Sees inflation as more of a risk in the US than in Canada. If we are headed into a recession, then Canada is a bit more ahead than the US on that front. Our GDP numbers are lower, and our employment numbers have been worse than the US for longer. Consumers in Canada are more strapped, with spending that's been slower for longer.
 
Canada's mortgage rules are different, so we have our 5-year resets. Canadians are going to be paying more for mortgages that were locked in at historically low pandemic rates. In the US that's not an issue. US consumer is stronger for now.