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

Think about it like this ....

1) Energy security. Canada's pretty much at the front of the line, especially what we've seen recently with the Strait of Hormuz. 

2) Trans Mountain is starting to open up wider, potential for Keystone to increase capacity or build all the way down to the Gulf of Mexico. 

3) Canadian federal government is focused on infrastructure, and looking for trading paths with countries not called the United States because of tariffs.

He wouldn't be overly concerned about any selloff in pipelines right now. Especially since India, Europe, and China are massive importers of oil, and Canada has the goods. Dividend yields are fairly attractive. Opportunities for more infrastructure building going on. Could be a very good time for pipelines over the next 5 years.

See his Top Picks.

It feels very 2007-y to him. Stories you're starting to hear out of the private market space, this fund's having trouble, this fund's gating redemptions. He'd have said that a week ago, even before this giant rally back to all-time highs (one of the fastest in history).

To him, it still feels pretty fragile. When you look at commodity markets and supply chains with the closure of the Strait of Hormuz, that stress is only beginning to show up and will only get worse almost exponentially as the weeks wear on.

He agrees. We've had a lot of bureaucratic boy-who-cried-wolf scenarios since the financial crisis. Even the pandemic was a predicted abyss, but then we sailed through that on a buy-the-dip mentality.

But for his team, where the rubber meets the road is in the physical world. The digital world can run on its narratives, but the physical world runs on real commodities and that's where things are getting constrained. You just can't take 10% of oil demand out of the global market for months on end and not have some impact.

So far we've been able to get through it with some strategic reserve releases and such. It's shoulder season, so the gas supply side isn't showing up yet. But we're heading into a high demand period for oil, and high demand for gas for cooling. There are going to be shortages, and we're going to start to see some pain.

He is, perhaps, hopeful. At this point it's a show-me story for him as an investor. At least the talk is not as antagonistic as it was before. We actually need to see some action.

However, the stability is good. Canada is looking very attractive on a global stage. Big problems in Europe, political polarization in the US where we'll have to see what happens with the midterms.

In Canada we're all starting to come around to having the political will to get some things done on the energy supply side, especially as it relates to LNG. That could be very positive for Canada over the next decade+. We're looking like a more stable place to put capital than a lot of other places.

He's also struggling to put cash to work for new clients. Existing clients have seen a tremendous runup as the Canadian market has reverted to the mean. Some of the energy infrastructure names are now seeing all-time highs, when the last ones were 10 years ago. Thinks there's more to go there.

Still likes energy infrastructure -- ENB, PPL, ALA. Based on what's happened in Iran, especially as it relates to natural gas, more infrastructure will need to be built. Need more secure points of supply around the globe.

Another sector is telecom. Washed out, nobody likes it. But its assets are 100-year assets. Think of a pipeline -- put the capital in the ground to build the pipe, and then harvest the cashflow as product flows through. No different for the telecom companies. An essential service for every person and business in the country, and they're the only companies that own that infrastructure.

There's talk of Telus cutting its dividend. Even if it was cut in half, both BCE and T would yield around 5%. His firm is confidently putting $$ to work in this sector at these levels. The space will look better a decade from now.

Short answer:  WTI and WCS are different grades of crude oil.

Long answer:  WCS is heavier, with much lower API gravity. Actually very little WTI produced in NA today -- it's either a lot heavier and coming from Canada, or a lot lighter from shale.

Syncrude (synthetic crude oil) is upgraded largely by SU and CNQ, and it trades at a level similar to WTI. Recently it's traded at a big premium (about $5) because it has a higher distillate yield (it produces more jet fuel and diesel than average WTI).

Recently, the differential has shrunk. Could shrink further, depending on what happens with turnaround season. There's talk that Canadian oil sands producers are not going to do heavy turnarounds (when they shut down parts of their plants to do maintenance, it reduces production for a month or two, resulting in tightening the market further because there's less supply). Producers have, essentially, been asked to keep product flowing.

Further Iran conflict, and more egress out of Canada, argues for a narrower differential. Of course, anything could happen. It's structurally tighter now that Trans Mountain's online. Trend is that it won't stray too far from the quality differential plus whatever the transportation costs are.

Both he and Rebecca Teltscher spent their formative years at Leon Frazer, where the rule was no more than 20% in a sector, and no more than 5% in any one company. You want to be concentrated, not taking 100 positions at 1% each. Otherwise, it's too hard to keep track of and you lose focus. People do it, but his firm feels they perform best when materially invested in each company. But not so materially that one investment is going to sink the portfolio. Be focused, but watch out for concentration risk.

With more experience, he's learned to let good positions keep going. Focus more on building up the rest of the portfolio than trying to pick a top on winners.

If a position has outperformed (such as AEM, which has gone from a 2% position to 6%), it's good practice to take a percent off and redeploy into something that hasn't done as well (such as BCE or T). On balance, if you do that consistently then you'll do well over time.

Be careful not to claim you know that "a top" has been reached and cut your position back to 2%. Sometimes, good companies keep being good.

His team, too, is nervous about putting cash to work now. They buy what they can at levels they like. Try to diversify the portfolio as much as possible -- on geography and industry. For the rest, they'll be patient and wait. There's always another train coming.

The first 10 weeks of the first quarter hurt, and then everything's come back in the last 3. Reminiscent of 2025.

He thinks we're going higher. The market is supposed to be a future predictor, and 3 weeks ago people thought there would be another TACO. It looks as though the Iran war is in the rearview mirror. Here we are in earnings season, so that's perfect timing.

We're back on the bandwagon for AI.

The last time we were up here would've been Oct/Nov of 2025. Everyone talked about rotation out of growth to value. 

He thinks, rather, that people took $$ out (not completely, just took profits) of the AI infrastructure and picks & shovels buildout. This money was put toward the end users who are truly using AI, and where it's been showing up for the last couple of quarters.

One example of AI evidence is with the big banks. Not only is AI making them more productive, but it's actually generating revenue. Similar examples exist in healthcare, retail, and logistics.

Volatility has increased lately, but long term value will be created. Know what you own and be confident in those stocks long term. Take Berkshire Hathaway for example, which has compounded over time and more than doubled index returns, however, it in 3 years of its 60-year history when it fell over 50%. The market will always test your conviction. Don't miss out on superb opportunites, such as over fears of AI.

The market seems to be saying the war will have little impact going forward, but the oil market is different. The narrative coming out of the White House changes by the war. Futures were down overnight after Washington announced the blockade. As long as the impact is only temporary (a few months), then earnings will matter more. Many companies won't be reporting to the end of March, though a few are. Immediate impact of this war: inflation and higher interest rates. Companies like trucking will be impacted and those with huge capex, too, as rates go up, until there is a lasting resolution to this war. Long-term, if December oil prices break above $80, then there'll be more permanent damage; if it falls below $70, we're past the worst of it and things improve.

He loves precious metals. But they are cyclical and have gone years with terrible performance, as history shows. The US debt story is now coming to roost, and is the biggest catalyst in recent years for metals. The story isn't over. If you're long for 10-20 years, buy the dips. If you're holding 1 year, he doesn't see precious metal prices moving much. 

Mitigating portfolio risk when fixed income won't: the uncorrelated asset class. ETF QAI offers a balance, steady return, outperforming money market or bond market ETFs or commodities. Also hold a world stock ETF and a market neutral ETF. Uncorrelated asset classes can give you growth and reduce risk. 

Seeing a lot of fluctuations. What's really telling about markets right now is this stairstep pattern that's emerging.

We'll see a bad market headline, or something relating to Iran/US, and the market sells off while oil spikes. Eventually we get a piece of good news, and that sends the market higher. Each time that happens, the market move higher is a bit more resilient and the following pullback is a bit more shallow. That tells him that the market's climbing this wall of worry.

Last week on the ceasefire agreement news, we saw oil drop 10-15% on the day. We don't need to see the Strait opened, or a definitive agreement between the US and Iran. We can have some starts and stops. The market's pricing in an eventual resolution. 

Markets really move on the rate of change, and that's what we're seeing here.