Opinions
Ryan Bushell A Comment -- General Comments From an Expert A Commentary COMMENT Aug 15, 2025
You might be interested:
Premium contentWe've had a fantastic run since the tariff tantrum back in March/April. Conditions still support further upside.
One of those is that we're expecting further rate cuts in the US, and likely one in Canada this month. As well, AI is still leading the group, but you have to be selective because things are getting a bit pricey.
And then we have very strong seasonality tailwinds behind us at this point. Q4 for the last 10 years has averaged about a 5.3% return, and it's been positive 9 of those 10 years. Finally, look at all the cash on the sidelines in the US -- about $7.3T. With interest rates coming down, some of that cash might move into equities and other risk assets including bonds.
Financials and technology. Likes healthcare for its combination of defense and growth. Some areas of healthcare have not performed well, such as big pharma. Whereas names in logistics and distribution have done well. So you need to be selective.
Pharma at this point is a bit of a value play. But with rates coming down, growth continues to be more of a favourite area. In a falling interest rate environment, growth tends to outperform.
He's not sure you'll find bargains per se. You can find some relative bargains among the larger-cap names if you look at not just the PE, but also the growth in front of them. Some of those names look good, while others have a very expensive PEG ratio. Again, you have to be very selective.
For growth, he looks for at least double-digit teens to maybe 20% earnings growth going forward. PEG ratios that are below 2 or 1.5.
We probably don't have as much dry powder waiting to be deployed. But gold has been performing very well, as has silver. He prefers silver, as it's outperformed gold this year. Banks have recovered very nicely so far this year.
When you look at the grand scheme of things, the US has more depth, different companies, and certainly more companies that are in the growth area. There are also opportunities beyond the NA borders.
In general, they have the opportunity to perform because the USD has been underperforming relative to the rest of the world (not including Canada). So you get the upside in the currencies of the international markets.
Certain international markets are cheaper than the US on a valuation perspective, no doubt about that. US is at high valuations. However, earnings growth continues to look good in the US. The aggregate earnings growth estimate for the S&P for 2026 is 12-13%, very conducive to more market upside.
Really likes the space -- a long-term mega-theme. A lot of companies in the space are a bit expensive right now, and spending can be quite cyclical. The whole area is high beta. He's not in any names right now, too expensive, but will probably be back in some day. As an active manager, he checks names and trends on his radar at least weekly.
In all his conversations with professionals and savvy people, not a single person says "Yup, this is how it should be." Most people think there's a disconnect.
Longer term, if you look at the interest rate policy we've pursued since the financial crisis of 2008, it has destabilized the bond market to the benefit of the equity markets. So equities and valuations have benefited. At the same time, we have an ongoing new paradigm as it relates to AI. And that's feeding off of itself too.
So it's a number of things happening all at once. At his firm, they just look through all of that and assess where we are today in relation to a long period of history, and where are we going in the future? They still like the stable fundamentals of the companies they own.
The theme that will most likely come through in today's show is "For new money, wait for a better entry point."