Mike PhilbrickA Comment -- General Comments From an ExpertA CommentaryCOMMENTDec 30, 2025

We have this AI selloff. It's not that people have stopped believing in it, but they're questioning the economics of the buildout. Will the returns justify the investment? A technological revolution doesn't necessarily guarantee a profitable investment. In the era of railroad-building, many went bankrupt and a lot of people lost money. AI could follow the same pattern.

You want to look for the businesses that are going to capture the resulting productivity gains. Businesses that have moats, durability, and can exploit AI to their productivity advantage. It may not be those who are producing the intelligence. Healthcare is a space that's ripe for disruption from AI.

Focus on diversification. Manage the inflation and growth risks in your portfolio. Make sure you have the risk right during all this market chaos. If your portfolio was uncomfortable during recent weeks, use any year-end rally to get your risk balance on par with your risk objectives.

Yes, you should look at the distribution calendar as we come to the end of the year. Keep an eye that you're not getting returns in excess of what you've been there for.

Market-cap weighted means that you own stocks in exactly the proportions that the market tells you to own it. Whereas in an equal-weight breakdown, you have the same percentage in each holding.

Market-cap gets us into the situation where 40% of the S&P 500 is represented by only 5-6 stocks. That concentrates your portfolio. 

VEE is emerging markets. He'd look to diversify. You need to consider inflation, growth, and the shocks that come from those 2 areas.

If you don't want bonds then he'd suggest having a gold or precious metals ETF. Perhaps add a sliver of bitcoin ETF. Instead of bonds, look for some managed futures strategies (such as DBMF) to provide ballast and non-correlation.

Pros. Especially for smaller investors, you can buy everything the world has to off and pay only a few basis points. Incredibly inexpensive. Instant diversification. Transparency. Liquidity. Some tax efficiencies.

Cons. Trading costs. The spreads can be wider. Products can be complex, with investors not always totally understanding what they're buying. Tracking errors. Construction matters. Over-concentration. Watch the fees you're paying.

Good question to consider. With the funds available, you need to be able to diversify. Your bonds also need to be diversified. You want an inflation hedge. Hard to do with individual securities and takes a lot of time.

ETFs are a tool you can use to build your portfolio. Definitely good for seniors.

The closer calls are to being at, or in, the money, the larger the premium and the more the upside is cut off. You want to look for ETFs that do dynamic covered writing, where they manage the calls as prices change.

And, yes, you can buy it back right away. But if you sold the call at, say, $10 instead of $12, the monetary benefit is different.

The spin we hear from the politicians is making its way into the markets, and markets are spinning. It'll be hard to say what the major direction will be for the next 6 months. Yesterday he was feeling optimistic when he made his notes for the show, and now things have taken a turn for the worse.

There are some green shoots. His dividend recommendations from a year ago underperformed, but are now doing well. Right now, investors should focus on dividend payers rather than on stocks like NVDA.

Some of the consumer staples. Things that are steady and have solid fundamentals. Names like COST, or even some auto manufacturers.

A big divergence happened in October. The last time this occurred was back in March 2000, which is ominous.

He has 2 streams. One is more of a growth portfolio with a tech focus, while the other has some growth along with some predictable, dividend-paying, income-focused stocks. The first portfolio is down, while the second is up.

Given the way the S&P is concentrated in technology, that could be a driver of a down cycle in the S&P 500. Doesn't mean you can't make money, it just means you shouldn't invest in what's pulling the market down.

The biggest problem with people trading stocks is that they like to be too active, or not active enough. You have to be disciplined or it'll mess you up. You see it over and over again.

The 50-day MA is a good spot to set your exit strategy.

This is a very general outline. Say you have 20 stocks for diversification, then each would be 5%. For riskier stocks, though, your weighting might be only 2-3% in a position. A less-risky stock, like a bank name, could be 7-8%. An ETF could be a 10-20% weighting.

But if a single stock is getting above 10%, it introduces a lot of risk. Good to sell off some of that one and add to others (that haven't gone up as much) for balance.

It's a great day to be a boring, Canadian dividend investor ;)  Futures were down last night, but now they're up. Defense is bad today with the Democratic win, renewables are good. 

She read that the win may slow down AI investment with a possible moratorium on data centres, which could be good for AI capex. At the end of the day, does the capex spend make sense and will it lead to monetization? 

Politics and short-term market reactions are great for short-term investors. But at her shop, they're long-term investors and keep their focus on the horizon. Do the long-term fundamentals make sense, yes or no?