Eric NuttallA Comment -- General Comments From an ExpertA CommentaryCOMMENTMar 26, 2026

He's being cautious and defensive. He's been doing this too long to get excited when everybody else thinks the future looks fantastic ;)  You have to take a step back. Valuations are a concern, as is overall bullishness. General public interest in the stock market is very high. In the US, cash levels are very low. 

He gets that Q1 earnings were strong. But he gets concerned about the underpinnings of the economy and perhaps the market, and about profit growth. Growth has been pretty concentrated; the capex spend for the AI buildout has been a huge tailwind. At the same time, deficit spending has continued. In the US, a 6% deficit to GDP is unheard of when you don't have a war or recession.

The stock market itself is producing a wealth effect. People have been running down their savings, and the wealthy are spending some of their excess savings. But that spending isn't across the economy. Consumer sentiment in the US is at an all-time low. He'd rather the economy be driven by employment growth across the board.

As a money manager, he'll always be invested. But when he looks at a stock, he looks for the downside protection.

It involves a bit of asset allocation, and a bit more cash then he's had in the past. It's mostly about the sector and the weights of the stocks he owns. He's taken $$ out of economically sensitive areas such as consumers, financials (his conviction has lessened a bit), and tech (especially those areas that are less sustainable and valuations are high).

He's gone more into energy infrastructure, pipelines, and telecom (for the yield).

He's seen this movie before, when everyone started loving the Canadian banks and the valuations became extended. Great capital, safe, proven in market downturns. But 4x forward earnings is high. There's an argument to be made that bank earnings will be less cyclical than in the past -- loans are diversified, more fee-oriented. But we'll still see the downturn, and capital markets will cease to be a tailwind.

He's significantly underweight the banks. More of a seller. Don't buy into these valuations.

If that were to occur, there's a whole other swath of areas that would be under greater threat of collapse. For example, what's going to happen to a stock like CLS? Ultimately, copper wouldn't be under that much risk.

June can be choppy, and there has been recently. Risk is still there, because the breadth in the US market has been lousy. So, he's cautious US stocks and bullish Canadian. Only tech is beating the S&P while all else is lagging. In Canada, many sectors are beating the baseline TSX. He's buying Canadian tech--it's building a base and trying to break out, such as the XIT ETF. In contrast, US tech is parabolic, and it won't last.

No show today.

Regarding the SpaceX IPO he is interested but not a buyer since IPO's tend to fall from their IPO price. Historically they are down 20 to 25% in their first year of trading. He is not interested in buying on concept alone - there is lots of work to be done on a valuation basis. It is incredibly over-valued. For the same reasons he is not buying into two other big IPO's later in the year. He did buy Alphabet and Facebook, but after their IPO's, waiting for much more visibility of the valuation and fundamentals. As far as sectors go, Healthcare is at a 22 year low and there have been incredible advancements in healthcare. Industrials are also at a great valuation. Money flow is slow, even glacial, but it does flow into sectors with low valuations. Consumer Staples are over-valued.

The question was on the semi-conductor space. You need good quality companies and the right timing. You have to be careful in this and the memory space which have had a great run, some moving parabolically. Keep your involvement balanced through the percentage it takes up of your portfolio. You can use these stocks as trading vehicles and trim as they get too high.

It remains a bifurcated market. Most consumers will still dig themselves out of a hole, living paycheque to paycheque. The other consumers are driving the market and spending.

What they do and services they provide are fascinating to watch. Valuation is extremely rich. Price is up a bit from IPO price. His firm isn't participating quite yet. It will eventually trickle into ETFs, it's been fast-tracked into the NASDAQ 100, not yet in the S&P 500.

The more it goes into ETFs and indices, the more those have to buy it. And that supports the stock. Part of the attraction is Musk, and part of it is FOMO. Money will be made, and money will be lost. The initial over-subscription will push up the price, but where does it go in the longer run? It's wait and see for him.

He's been on the trading floor and around IPOs. That's where the sharks are, so you really have to have a solid system in place to deal with the whipsawing. You really have to know what you're doing.

These are big numbers, and it's just mind-boggling. He just hopes that investors don't get caught up in it too much. Keep an eye on how it trades and how everything trickles out.

We had such a big recovery from the March lows, a fantastic April and May, and now we're running into some volatility. Geopolitics is certainly coming into the formula. There's obviously some profit-taking, and we've seen a lot of great moves in the tech space. A healthy and normal consolidation is in play at this point.

The risks are still there. We still have relatively high energy prices, sticky inflation, a geopolitical situation, elevated yields, and midterm elections coming. When you look back at the history of midterm elections since 1957, the S&P 500 has seen a drawdown of ~17.5%. We saw a bit of a drawdown back in March of ~9%, but multiple and/or heavier drawdowns are possible.

It's amazing that earnings growth estimates have moved from high teens to 25% or so for the year. That's what's really driven much of this market move for the past couple of months.

Really hard to say where energy prices will be. If you look at the futures curve, there's an expectation of oil being at least in the $70s for later this year. That's what the market's working with at this point. But geopolitical events are very hard to predict, so who knows where we'll be in a few months?

It's a bit of a K-shaped economy. Accumulated inflation over the years has had an impact on the consumer. The consumer discretionary sector is relatively weak compared to others such as technology (which involves more enterprise spending). If you're invested in the consumer discretionary space, be careful.