David BurrowsA Comment -- General Comments From an ExpertA CommentaryCOMMENTAug 27, 2026

We're in a really healthy market. The market was heavily concentrated in a few large-cap growth names, which are great companies. Given the economic backdrop, and persistent inflation, money's been moving to hedge against inflation in sectors really well-suited to that environment.

So there are opportunities to make $$ in a bunch of sectors, some of which aren't well-owned. Provides a multi-year runway for investors to build some diversification.

Between 2012 and 2021-22, the US was the only game in town. At the same time, the USD was appreciating. A lot of international investors bought US dollars to get that appreciation as well as US growth stocks.

For international markets outside the US, financials make up the biggest sector and materials are significant. Energy and industrials are important sectors. These sectors are all benefiting in this world.

Now that the USD has been backing off against virtually major currency, and international markets are outperforming, it's only natural that some of those countries say maybe we take some back to our local market. The flows favour international stocks, which are a lot less expensive than US equities. 

Most people are long the US to begin with. So perhaps the opportunity is to focus on those less expensive markets.

At his firm, they have about 28% in financial services (by far, the biggest weight). Generating a lot of free cashflow. Capital reserves are very strong. Continue to beat estimates in different ways.

Great run over last 2 years. Around the world, banks have been strong everywhere. Long-term rates moving higher, and short-term rates relatively low, the spread they can make on their loans is pretty darn good. When markets continue to be decent, then capital markets are strong and so is wealth management. He doesn't see any major change to that.

Can companies pull back 10% at any given time? Absolutely. And they have pulled back over the last 6 weeks or so, but that's fairly typical in a longer-term bull market. He'd be a buyer at these levels. Structural backdrop is supportive.

They typically last 1-3 weeks. Seeing short-term price momentum weaken, and NASDAQ moving below its 50-day MA. These short-term corrective phases normally see a 2-3% pullback.

But what his team is actually monitoring are 10 different technical factors that indicate a transition to phase 3 of their market-cycle model. That's typically when the economy is late cycle, and is the peaking phase of your average 4-year cycle

More broadly the S&P 500, the TSX Composite, and the Russell 2000 remain quite constructive. All are trading above 50- and 200-day MAs. Starting to see early signs of some fraying, so market internals are coming off a bit. Market breadth is weakening a bit.

One of the most interesting things over the past couple of weeks is that the S&P and the TSX are making new highs, while the SOXX (Semiconductor) ETF is heading in the opposite direction.

If you look at the gold futures chart, you can see what looks like the end of the consolidation phase and the start of a new uptrend. He's definitely very constructive on gold.

Appears to be a rotation into gold and away from the growthier areas of the market, which is concerning.

Until last couple of years, lifecos have underperformed the banks. But now, typically a big beneficiary of higher interest rates. This is providing a strong tailwind. Really likes them. He'd be using weakness to add exposure.

Look at a 3-year chart. You can see how, with the Iran conflict, it's broken out of the longer downtrend. For 2026, you can spot the higher lows. Given where we are in the market cycle (phase 3), that's typically where energy is really strong. Economy's running on all cylinders. Geopolitics lead his team to believe that oil is going higher.

The Canadian Energy Index shows that Canadian energy stocks are leading to the upside. The concern is that we're transitioning to phase 3, which is the peaking cycle of a 4-year cycle. If we were starting a new cycle, he'd be very bullish. Markets are toppy, and he's worried about a broader pullback in the net 6-9 months.

Crude corrected quite a bit, while Canadian energy names moved sideways. They're now trying to reaccelerate to the upside. Energy stocks are poised to push higher, and that rising tide should lift all boats. Better to buy the worst stock in the best-performing sector, than the best stock in the worst-performing sector. Energy will continue to see tailwinds over next 6-9 months.

All the banks are doing well in capital markets. If he's correct on the long-term cycle work, seeing a rotation into hard assets -- gold, copper, silver, lithium, oil. That will attract foreign investor interest, who can't invest easily in hard assets but can invest in their proxies (the banks).

He's very bullish on Canada. The banks should continue to work. They're extended here, doesn't mind trimming a bit (especially if an outsized portion of your portfolio). For the most part, technicals are positive.

The US-Canada trade war doesn't change his positioning. He's long term, 5-20 years, so he accepts all manner of macro events. So, he finds businesses that withstand all macro backdrops. The investing greats generally hold a concentrated portfolio and hold them through ups and down. The average holding period for a stock was 5 years in the 1970s, and today it's 10 months. So, it's a competitive edge to hold long. His two main criteria for a stock: the executives and board must be strongly aligned with minority shareholders (meaning they own a big stake in the business); and boast over 20% return on invested capital, which often have moats or other competitive edges.

He didn't expect any. It's relatively de minimis from the perspective of what it really means broadly for Canada. 

Most of it is still noise and bluster with Trump's belligerent style and how he deals with everybody, always. He takes it to an extreme, as far as it will go, and then he starts to bring it back. Question is, when does he start to bring it back? And do we want to bring it back? That's the unknown.

From a political standpoint, if you understand the importance of the US elections and Congress staying with the Republicans (increasingly seeming as though it won't), what can Trump do on the trade file to help with that? In line with that, he probably wants a deal of some sort before the elections.

If you're partisan, you already know which way you're going to vote. The moderate person makes up their mind in the last few weeks. And often, it depends on how they're feeling about things on the day they vote. That will determine where the swing vote will go.

He expects the back and forth to continue even into October.

It's everything. But today, it's magnified on chips. Tomorrow, it'll be something else. Three days from now, it could be back to the Middle East.

All those things are relevant. The thing that matters a lot, in the big picture, is earnings. Right now, earnings are still good and growing. Analysts keep revising estimates upwards. As long as that happens, corrections in equities will be small until the market says "Hmmm, maybe this isn't sustainable."

The US administration is trying to do something about interest rates and minimizing the cost of funding all this debt that will be endless for decades.