Mike Vinokur A Comment -- General Comments From an Expert A Commentary COMMENT Mar 07, 2025

There may be some evidence of that. It's been an eventful first almost-4 months of the year, and especially since so-called "liberation day". A better name might be liquidation day. People are catching on to the fact that the White House says one thing today and negates it the next, which might make investors less trigger happy. 

Hopefully, there's some longer reflection being made instead of knee-jerk reactions to off-the-cuff remarks. A lot of volatility for sure.

Now it's really a disparate group of stocks. Not at all the way they traded for 2024 and 2023. He favours the ones that have recurring revenue. TSLA was the first to report, and it was a bomb on the quarter. 

GOOG skews more to the service sector side of the economy, which is distanced from tariffs. Very robust business, dominant player in Search advertising. He has no undue concerns about that. DOJ lawsuits are usually more bark than bite. 

Cloud business is growing nicely for all involved in it. 

There's a lot going on, and Mark Carney has to win first. We'll see what happens next week.

Carney is showing his hand a little bit and it's a good move. The Trump administration has put themselves in a bit of a pickle here, and they need to see deals. For this market to keep going higher, it needs clarity and a framework of agreement (without, necessarily, all the details). Both the bond and equity markets need to see that. 

Time is ticking against the Americans. Trump likes to be popular. And he wants to win mid-terms that aren't all that far away, especially if they've made this one goof move to put the economy into a recession. The #1 rule of governance is to not put your economy into a recession.

The medicine delivered on April 2 was really too hard for economies to deal with. The reasons we've had rallies since April 9 is because the US has kicked the can down the road by 90 days and has done carveouts for electronics. That 90 days can go by quickly, time is ticking.

Markets are clinging to hope that something will come out of weekend meetings between Trump and other dignitaries attending the pope's funeral. CEO's won't like it if there's no architecture on deals for months and months. People will sit on their hands, economic activity will slow, and the odds of recession will tick higher.

You want to diversify, don't bank on just one stock carrying the load. Look at a mix of fixed income, preferred shares, good dividend stocks with visible dividend growth, robust dividends. Places to look: energy infrastructure, utilities, industrials, financials. These sectors are all in Canada, as well as being in the US and globally.

Especially in markets like these, you want to inch in incrementally and slowly. Same approach with falling knives.

Case for gold is great. Central banks continue to buy it. Interest rates are probably going lower. Weak greenback. But gold is not just about themes, it's about price. It's had such a huge move, you have to respect the chart.

Need to clean up the balance sheet. Capital intensive businesses. Poured a lot of $$ into capex, and then interest rates screamed higher. Four carriers instead of three. Less immigration. Asset sales need to happen as a catalyst. Still a tough time for wireline and wireless.

Know that anything can happen with any stock. But it's a matter of risk/reward and what scenario is more likely.

Questions to ask during tariff threats: How is the customer concentration?

Suppose you have found a company that sustains little impact from tariffs, survived the last recession relatively unscathed, has no debt, and pays a solid dividend and has a low payout ratio. Are you safe? Well maybe, but now you need to worry about other companies. In a recession, many companies experience sharp slowdowns. Some will not survive. If your “secure” company has 65 per cent of its business with another company, now you also need to worry about that other company. Companies with high levels of customer concentration are always riskier but in a recession that concentration risk becomes even more acute. Ideally, you want to own a company with no customer accounting for more than 10 per cent of its business.
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