A Comment -- General Comments From an Expert (A Commentary)

The federal election was just called for April 28. The tariffs are on everybody's mind and rightfully so. He's fiscally conservative and socially liberal. The Canadian dollar will be rewarded with a new government that's friendlier to business. It will be a close race. Mark Carney is a significant notch up from Trudeau, being the smartest world leader now in terms of the global economy having run two central banks. Who will negotiate the best long-term outcome for Canadians? Today's rally was naive; tariffs will have a great impact and be inflationary.

With gold at $3,000, he wouldn't add to gold stocks, which have never been cheaper relative to the price of gold, given the fast-rising prices of mining gold. At $3,000, he would sell or buy dips. At $2,700-2,800, load the truck.

We're likely oversold and will see no more than a dead-cat bounce today (stocks rallied on tariff reports). Based on two podcasts he recently heard, it sounds like Trump wants to shift from a taxed-work economy to a taxed-consumption economy largely through tariffs. He expects the tariffs to be far more aggressive than the market thinks. April 2 is a big day. Today's rally is misplaced. He likes the consumption tax for spending more, whereas the harder you work, you should pay less tax. Long-run, this policy will benefit the US, but be very disruptive in the short term, creating sticky inflation. He doesn't love Trump's style, but Larry thinks he needs to do this. The chart shows resistance at the 200-day moving average and a Fibonacci at 38.2%. The market has been toying at 5,750 on the S&P all day. If we can close above there, we could rally to 5,900. We'll see if we reach new highs above 5,900 after April 2, but he strongly doubts it. The tariffs will be much harder than the market expects and we'll see more choppy volatility, and likely fall below that 5,500 low. Bottom line: caution.

Losing Money When Investing: Buying leveraged ETFs

More akin to gambling than investing, leveraged exchange-traded funds (ETFs) and exchange-traded notes (ETNs) use derivatives to try and get two, three, or even four times exposure (up or down) to an underlying asset, such as a stock index. They can be useful for high-risk day traders, but their structure is horrible for investors holding longer than a day. The reset of derivatives results in a natural, ongoing, daily net asset value decay. The leverage works as all leverage does: It’s great when things go your way, and can be devastating when things do not. Let’s look at an example: FNGD is a Microsectors FANG+ Index 3X Inverse Leveraged ETN, tracking the inverse performance of a group of technology stocks. With tech being strong the past five years, its five-year annualized return is a blistering (sarcasm) negative 74.8 per cent, according to Bloomberg LP. Why do people buy these at all? Well, as usual, the answer is greed. At times, these products will soar in a very short period of time. That gets attention and investors want some of the action. But we think they are simply horrible products and it is best to avoid them.
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It seems they are. Whether they welcome it or not is another story. The year has started off with an ironic twist, which is that the on-again, off-again clumsy aspects of the MAGA economic agenda are really rattling investors. And none more so than in the US, which is the ironic part. 

The other major equity indices worldwide pretty much are all outpacing the S&P 500, and most are in positive territory YTD. It's a function of a tremendous amount of confusion. "Uncertainty" is the buzzword of the year, for both households and businesses on both sides of the border. It's sort of boomeranged back at the US administration because the impacts seems to be felt most acutely in the US.

That's true. A month or two ago, the degree of uncertainty around Canadian federal leadership renewal would have been much lower. The polls had been predicting a landslide victory for the opposition. Now, with Mark Carney, the polls are neck and neck.

As for a reaction in the Canadian stock market, we've been talking about a 2025 election since the middle of last year. We knew there would be policy change, no matter which party wins. Realistically, only plausible direction for economic policy has to be in the direction of pro-growth, less red tape, smaller government, less tax. Generally speaking, positive for investors. Markets will probably take this in stride when we go back to trading on Monday.

Losing Money in the Stock Market: Buying Fads

You know what we are talking about here. Nearly every investor has been caught buying a fad that didn’t work out. Cannabis? Check. Electric vehicles? Check. Dot-com companies (for the older folks)? Check. When there is a fad that is attracting investor attention and money it is important not to get caught up. Yes, there are often good companies doing well, and that’s how the fad or bubble is created in the first place. But investors can focus on smaller companies and there are always promoters and brokers willing to extol the virtues of a sector or specific businesses. Stick to the fundamentals. Don’t pay 100 times sales for a tiny company just because it is in a ‘hot’ sector!
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We've had a lot of uncertainty, and a big drawdown (US in particular). He doesn't see a Canadian election having much bearing on the US, which is where his main focus lies.

The new US administration is very unpredictable. There's a lot of uncertainty. Latest consumer and business data show that confidence is waning, people are a bit anxious. Capital spending may be slowing a bit. 

Having said that, these are all short-term reactions. The question really is how long will this uncertainty last? If it lasts a long time, it could feed back into the economy. If it doesn't, then this is a really big buying opportunity.

He doesn't try to predict the future, so advice to individual clients is really based on their circumstances. He tries to prepare their portfolios for different eventualities.

He is seeing some opportunities out there for portfolios. For example, the Mag 7 are down between 15-20%. Some of the smaller, growthier names are down almost 40%. That creates opportunity.

Many of his clients have seen all this before. You don't get deals in the market unless there is uncertainty. Other clients may feel some anxiousness, so it varies by client.

He's very focused on US growth names and his timeframe is multi-year, so 3-5 years. He's not going to go to all cash or pull out of the market simply because there's some uncertainty. That said, he did raise a little bit of cash in anticipation of this uncertainty. He's looking to deploy that as names pull back. Because his timeframe is longer, he's not changing what he does on a fundamental basis.

Copper is certainly a derivative of technology growth. For example, when EVs are growing, that should help copper demand. Electrification of everything is helping copper demand. If the USD weakens (which it's more than likely to in the long term), that will help commodities as well. 

He's bullish on copper, though he can't provide a junior name. But, generally, the drivers are in place for copper outperformance.

Cyclical component and secular component. 

On the cyclical side, thinks we're bottoming on analog, automotive, and so on.

Secular has been dominated the last 3 years by generative AI. Think NVDA, AVGO, and others. He foresees growth here for several years, but the nature of that growth may change. By the law of large numbers, growth will slow down. We're shifting from a purely GPU-led demand environment to a big ramp up in A6 from various hyperscalers as well, as hyperscalers move A6 functionality from low-demand areas to their core workload.

The thesis around space is very simple, far-reaching, and very durable. It's all about launch costs. In the 1980s, the cost to put 1 kg of material in space was $50k. The next generation is forecast to bring the cost down to just 100s of dollars. 

The implication of that is profound, and we should see an explosion of commercial activity in space. For example, there's a company that wants to manufacture pharmaceuticals in space because of the zero-gravity environment. Down the road we may even see asteroid mining, as they're very rich in precious metals.

You could look at AVGO, the clear leader in networking and provider of GPU chips for GOOG. There should also be a huge growth driver in memory, DRAM.

Seeing a significant selloff, fueled by trade war and economic uncertainty across the board. Trade uncertainty leads to profit uncertainty, which explains why the market's been all over the place. Seeing some positives today. High valuations and stalled tax cuts are really compounding investor concerns. Some negative sentiment among consumers is also adding to market volatility.

The one big thing that markets hate more than negative news is the unknown. The S&P 500 has fallen into correction territory of 10%, and the NASDAQ is down 14%. TSX has held up slightly better, but still down.

Pullbacks are part of the market cycle. Historically, they happen 1-3 times a year. Though pullbacks don't feel great in the moment, she believes the market still has upside in 2025. Seeing a rotation from big tech into other sectors and geographic areas.