Mike Vinokur, CFA, CMT, and CFPA Comment -- General Comments From an ExpertA CommentaryCOMMENTOct 05, 2026

Actually makes a lot of sense. CVE is one of those companies that has a very good operational history in terms of the oil sands. 

He hasn't had a chance this morning to delve into the valuation. But of the heels of the MEG acquisition, the synergies and contiguous lands, and the long-life assets, they're going to make this work. Thinks the market likes it, based on CVE stock being barely off today.

CVE is making so much cash these days, both on the refining side and on the oil side, it won't be a big deal for them to swallow.

This is a very narrow market. We've experienced a stealthy correction since the peak in mid-May. If you look at the US small-cap index, or the S&P 500 equal weight index, the average stock in the S&P is down a huge amount. 

People don't realize this because they're looking at the market-cap-weighted index, and it's just chugging along. It's being held up by AAPL, META, and GOOG. All the big mega-cap tech names. But the average stock this year is not having a good time of it.

Valuations of all banks are extended. Potential credit cycle looming in next 12-18 months, and banks will typically take it on the chin. Not getting the 5-7% yields of yesteryear, so you're not being paid to hold something open to a credit event. 

A mea culpa from him on this one, he was early. Earlier this year, he put forward TLT as one of his Top Picks looking out a year. Since that call, it's down ~7-8%.  But he hasn't changed his mind.

He really liked it at $83-85, and now it's trading at $77.  :)  He likes it even more. Expects a policy response here. The Treasury is going to change the way the mix of issuance in the next quarterly funding announcement (which, interestingly enough, come the day after the US midterm elections). Thinks we'll also see US Congress shift completely to the Democrats. That means gridlock for the next 2 years and less spending. 

What's getting priced in to the market now (not only in US, but all over the world), are yields rising at the long end.

Once we solve the geopolitical crises in the world (Russia-Ukraine, Iran), eventually we'll get a lot more, friendlier, cleaner oil in the world. Long-erm oil prices will go down. The inflation shock and the AI spend aren't going to last forever at the rate it's at today. The rate of change is going to start to improve in coming years, and inflation pressures will come down.

But right here, right now, there's a bit of panic going on.

This will be a big quarter. It's always about what they tell us about going forward. If companies are guiding flat to lower, we have a problem. Expectations for the next 2 years, baked into the market today, are for earnings growth in the mid-teens. 

If companies start telling us those numbers aren't realistic, then the market needs to reprice. Companies are still going to be pretty optimistic, despite various challenges. Everyone's going to tell the market how they're incorporating AI. Even with cost of capital up, margins today are the best they've ever been.

That means we're priced for perfection, and the market can't afford bad news. He's not sure we're going to get that this time around. 

He's a seller with both hands into spring. It doesn't mean that over the next 6 months oil won't go higher. But he looks at the long-term curve in the futures market, and he sees prices going back to $50-60 a barrel going out 3, 4, 5-10 years. Even as India expands its economy. The rate of change of growth is going to come down in the years ahead.

He believes this is a mortgage trust, where they invest in residential mortgages. He doesn't use it, so he's not absolutely sure. It's private, not publicly traded.

Excellent vehicles. Makes a lot of sense in a registered account, as distributions are usually treated as income. Good for long-term compounding and growth in a registered account. Of course, once that $$ flows out to you on deregistration, it's fully taxed anyway.

If you need current income, have it come from something that's more tax-efficient.

If you want to know if this is a long-term bottom for a name, you have to look at a 10-year chart. If it shows that we're back below the previous major low, it's in deep value. But is it a value trap? Cheap, and going to keep getting cheaper? You have to dig in and really understand the story.

Here's a rule of thumb he uses:  Has the company materially changed from the last time it was at these levels? The answer would be yes for revenues falling, big management change, or product changes. Perhaps rising costs in basic commodities have put it under cost pressures that it can't pass through. Permanent? If not, then probably temporary. When those pressures alleviate, we should probably see a nice recovery in the stock. He wishes he could tell you exactly when ;)

When you look at long-term growth, Canada (for him) is not the place for that. We don't have a lot of technology in our broad indexes, or a lot of consumer stocks or healthcare. Growth areas of the future are not in Canada.

He'd want to focus much more on global exposure. Or technology and consumer ideas that would benefit from growth trends around the world. Emerging markets is an example. Some areas come with more volatility, but it's fine for someone with a very long horizon.

See today's Educational Segment.

Value of the CAD
For the better part of the last decade, he's been critical of policy coming out of Ottawa. He thinks there's a change afoot, and he likes what he sees.

The CAD right now faces a lot of headwinds. There's talk of Quebec potentially separating and now Alberta. While those events probably won't happen, at least in the next decade, they're still headwinds (which should be put to rest in short order). USMCA and tariffs are also big headwinds. The international community has a general sense that Canada's uninvestable. A lot of these things are seeing light at the end of the tunnel, and eventually we're going to get a trade deal.

The CAD is pretty cheap here. If he were an international investor, he'd tell people to look at Canada. As Canadians, we already own Canadian dollars. But in your investment account, you probably own MSFT or the S&P 500, or some ETFs related to that.

Interest rates and the prices of oil are, historically, very correlated with the CAD. Right now, we're barely above 70 cents. He believes the fair value is closer to 80. Thinks we'll get there in the next 2-5 years, with the policy changes happening in Ottawa today. USMCA will be solved, Canada will win, but we'll be past it.

A lot of the headwinds in Canada are now potential tailwinds.

Look at ZSP vs. ZUE. In a registered account, ZSP (unhedged) was a benefit over ZUE (hedged). It's now time to have your foreign exposure in US dollars hedged back to CAD. Your breakeven is about 1.4% a year as the interest rate differential (a variable that changes over time).

Returns on AI investments are so high because chips can command any price they ask, and the build is both huge and inflationary. The effects of Trump's tariff policies. War in Iran. Ukraine destroying Russia's refineries. All these things have led to higher inflationary prices for the consumer.

It's been quite disruptive, and consumer confidence has dropped along with that. While that's depressing the economy, AI is pushing it forward. We're probably at a bit of a peak for inflation. It appears that the Americans have been able to open up the Strait of Hormuz for everything except Iranian oil. So the oil situation is improving.

A lot of damage has been done to oil infrastructure around the world, which needs to be rebuilt. Oil will come down, but it's not going back down to where it was.

Yes. We'll talk about a stock later that's put AI into its processes and it's recovered its investment. It's the same thing when we invented the car, the buggy people were all scared. It's that sort of situation. It's a massive change to how the world's going to work, and people are scared.

Fear in the markets has largely been digested in this pullback we've seen. All of a sudden today, the chip stocks are rallying again. Still a lot of moving parts to keep an eye on in the world, just like driving on the highway. But the long-term outlook is very good.

His firm assesses each one individually. They tend not to play unless they think it's a really good idea. Anthropic, for example, they'll let mature in the market before they consider getting involved.