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

Likes them because for some time we've seen valuation discounts in international markets and emerging markets. Seeing a breakout in Europe above previous technical ceilings, and seeing that in EMs as well.

Because the USD is not as dominant as it was, you're getting upside on the currency as well.

When you look at the second year of a presidential cycle (ie. with midterm elections), it's always a bit more volatile and choppy. That year can be softer relative to the other 3 years of the cycle.

Throw in the renegotiation of CUSMA and predictions on US monetary policy, there's going to be a bit more volatility. For an active investor, you can take advantage of some of these ups and downs (such as last year, when the S&P dropped almost 20%).

Consumer staples space in the US has really been all about COST. WMT, too, has done well.

Thinks we're mid-cycle of the economic cycle, and really likes cyclicals at this point. Staples are best owned when approaching, or in, a recession.

Many gold names have performed extremely well given rise in gold prices. 

Instead, he owns silver bullion. Has done well, but volatility in January. Silver outperformed gold this past year, and has many industrial uses. He wouldn't put new $$ in until it got to more normalized levels.

He suggests it might be the base metals that have their turn to shine. Starting to see that already with copper prices breaking out. Look beyond precious metals to base metals.

Absolutely. Numbers that came out this morning were very strong, and the futures market reacted accordingly. The market's still pricing in that there will be rate cuts in 2026, but it's pushed them out a couple months. 

It is. There's been lots of focus on AI spending, and that has been quite a big stimulus. When you see the strong US employment numbers, and you hear what's going on around the world, the government spending in most developed countries is massive. 

This, combined with the spending on AI and data centres, is a big catalyst driving economies.

It's on a market-by-market and sector-by-sector basis. At different times, some sectors are very strong while others aren't. Overall, Canada has fundamentally different drivers than the US. 

In the US, over a third of the market is tech-focused. That's what's driven it over time. We're more resource-focused, and last year it was really gold that was a strong driver of Canadian markets. 

Tough call. Gold had a really big move last year. The main driver of gold has been central bank buying, and gold has become the largest reserve currency. 

With the pending appointment of a new Fed chair, people were really worried about a lot of uncertainty in the US. That was really driving gold, and it really came off once the appointee was announced. People are taking it as a positive, and it could be a catalyst that doesn't really drive gold anymore. 

Flawed structure -- pays out the majority of income to avoid taxation. When there's an economic or market downturn, it leaves them vulnerable to a capital raise.

He owns only BEI.UN and MEQ. If you want to be in the space, look for REITs with below-average payout ratios and ones that can do counter-cyclical acquisitions in a cyclical industry (this really adds value).

For him, it's MSFT and GOOG for various reasons. Their cloud services businesses are quite strong. For MSFT, its software businesses and productivity suites are quite attractive. For GOOG, online ad business is phenomenal. The two of them generate more cashflow, and their FCF yields are quite strong.

January indicates what 2026 will be like, a world beyond the Mag 7, strong performance in small caps and outperformance in the equal-weight S&P vs the S&P. Tariffs have been noisy, but have attracted capital to the US while legislation will stimulate the economy for poorer consumers. January so that start of a move into small/mid-caps that will continue. A reindustrialization of the US economy is driving this cycle. The poorer consumer is hanging in, not concerned.

He doesn't know how to value this asset, and can't explain why it's going down or how it can go up. Doesn't invest in this.

S&P equal weight because of earnings participation from the 493 non-Mag 7 companies.

Lots of reoccurring geopolitical intrigue. Under the surface in the market, a lot of long-established trends are starting to quiver a bit. 

Notably, seeing signs of US equity market broadening out -- the proverbial rising tide lifting all boats, rather than just a select (and magnificent ;) few. This is a fresh and welcome sign. The Mag 7 are down low single digits YTD. The S&P 500 was down 1% as of last Friday. However, the equally weighted S&P 500 is up ~5%. Even more telling is that the Russell 2000 is up 7-8%.
 
As to the sectors, we're seeing leadership invert from what we saw last year. Energy and consumer staples lagged last year, but are now at the top of the leader board. Technology has become the laggard YTD.

It's rather a Goldilocks environment. We have economic growth accelerating, inflation moderating, and most likely a more dovish policy stance by the US Fed. Canada's already been there for longer. This tends to be an environment where markets broaden out.

As opposed to markets led by a small group of stocks, markets with broad-based leadership are fundamentally more robust and show greater underlying health and resilience. One analogy is that in battle, the troops need to advance as well as the generals.