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

Likes the space. Most are trading at discounts to NAV, which now properly reflect current interest rates. Balance sheets also reflect current interest rates. In 2022 a lot of them had to refinance their debt, going from 1-2% to 5%. That was a big headwind on their interest expense.

He doesn't expect the same returns in 2026 as in 2025 or for the last 3 years, which averaged 23% annually vs. the historic 8-9%. Tech will remain his largest sector as well as on the S&P; the fundamentals are strong and growth is tremendous. This isn't speculative. He's fully invested and slightly overweight tech. He also favours materials, especially gold, which is a hedge against inflation and the go-to when there's geopolitical risk. Gold stocks remain very cheap with good cash flow. There isn't over-mining and margins remain good.

While the US extricated Maduro and his wife, the government of Venezuela hasn't particularly changed. The people around Maduro still control the mechanism of the state, and they still control many local and regional governments. To suggest that regime change has occurred is probably premature. Not saying that the US can't cause this to occur, but the process of asserting US control in Venezuela, if it's going to progress, has just started. People need to pay attention to that.

There's zero doubt that if the US were to get control of the reins of power in Venezuela, that could begin to change the dynamic of the world oil market. That would impact Canada over time as the Canadian heavy sour crudes, the Athabasca oil sands as an example, compete directly with some of the Venezuelan crudes. In fact, it was Venezuelan and Mexican heavy sour crudes that fueled the US Gulf Coast refining business and led to such demand for Canadian crudes.

Also worth noting that there are substantial opportunities in conventional oil & gas in the Maracaibo Basin precisely because Venezuela hasn't elected to make sustaining capital investments or new project investments. That could open up opportunities for North American companies, but would also present challenges for incumbent producers in other parts of the world, including Canada and the US Gulf Coast.

That's above his pay grade ;)  It'll depend on whether the US has the ability to really effect regime and political change in Venezuela, and how much social turmoil the US encounters from Maduro's hold on at least the poorer elements of Venezuelan society. 

Note that between 6-8 million Venezuelans fled the country over the last 20 years. So some of the groundswell of support that the US may be counting on is a groundswell of support that now resides in Texas, Colombia, or Panama.

It depends on what your portfolio looks like. If you're already stocked up on gold stocks, it absolutely might be prudent to wait before you add to your positions. If you don't have positions in physical gold and gold stocks, the writing is on the wall and he'd average in for portfolio protection starting now.

His outlook globally is pretty good, but in Canada is a little less good. Despite pronouncements to the contrary, it seems the prime minister doesn't like Canada's most efficient industry. When the prime minister says that all financial decisions will be made in the context of carbon, he's speaking loud and clear.

Until we get some clarity that Canada wants to do something that it does very well, you need to be a bit concerned about the outlook for Canadian oil and gas.

That said, Canadian O&G equities are so cheap that they've over-discounted the hostility of the political class to Canada's best industry. 

We've had 3 years of pretty strong markets as a whole. So investors should take a step back and say that earning 15-20% per year is not the normal pace of things. Things tend to be slower than that.  

That said, when you have healthy markets they tend to broaden out beyond a handful of stocks. We haven't seen that on the first day of trading today, but there are still 364 more days to go. He expects the AI beneficiaries to see more downstream spending into the more industrial companies and other technology. Being able to adopt those things should uplift more stock prices than just the usual suspects.

What's funny is that there's no such thing as a true "normal" anymore. Back in the day, normal was a good old-fashioned recession. Back in 2008-2009, there was a credit cycle -- we careened from peak to valley and back and forth.

We're likely to see more of the new normal that we've been in for the past 15 years. What you do want is strong, robust markets that have durability. For that, you need to not have every conversation starting and ending with NVDA. Thinks we'll see more of that this year.

There are so many ways to approach this. But the first step is to update your prior set of facts. Just because you've been drinking Coca-Cola for 10 or 50 years, doesn't mean it's the best company right here, right now. You need to reset and draw a blank page. What are the facts before us today? Critical to focus on what the future of a company looks like.

The past is the past. That's important, and the reason it's important is that we're seeing technological evolution at a faster pace than ever before. We're moving faster than the adoption of the internet and the trend of globalization.

The most interesting geography right now is Europe, primarily on valuation. He doesn't love banks today, but this is the best place to be looking if you do.

Dividend is important, but not the most important thing. The way you get high dividends is with high payout ratios. That brings with it the risk of a dividend cut. You have to be careful. He'd much rather take a lower, but safer, dividend than a higher yield that's a little bit tight.

To buy one of the Big 6, you have to believe that the Canadian consumer is going to be OK. As well as believing that Canadian home prices are going to be OK. The majority of the loan books of the Canadian banks are consumer-related, and those Canadian loan books are extremely profitable for the banks.

He's optimistic on technology, but not as much as the optimistic predictions out there. It won't have a bad year but, boy, has it ever had a few good years so far.

Healthcare has been left in the lurch for the last couple of years. This year should be interesting, as some of the worst fears (claims inflation and battering by the US administration) are starting to dissipate. The year will be more diversified, and healthcare will be a part of that.

It's madness. It's not just the last day of the year, it's the last day of the first quarter of the 21st century. The year and the century began much the same way, with catastrophes.

In the last 25 years we've seen wars, invasions, and terrorism on an unprecedented scale (at least in NA). Global pandemics. Donald Trump elected twice as president. If you thought about what's gone on in the last year or quarter century, you'd think there was no way the stock market could do well. And yet, here we are -- strong US market and an even stronger Canadian market (rare for our market).

Looking ahead to 2026, the lesson of the last 25 years and the lesson of the last year are the same. Politics are interesting to talk about but, long term, they don't have the impact on markets that interest rates do. Should interest rates continue to go lower, then stock markets will continue to rise.

There are 10-11 sectors, but only 3 outperformed the market as a whole -- both in Canada and the US. In the US it was communications, technology, and financials. In Canada, it was financials and materials (mostly gold producers) -- they did so well, they dragged the whole index up with them.

He's hoping to see a bit of broadening out, not just 1 or 2 sectors driving everything. Interest rates really will be the determining factor in that. It's a bit of a guess, but he thinks the material sector (and, therefore, Canada) should continue to do well. The economy will carry on and won't be hurt by lower interest rates. It's a strange situation where they're lowering rates not so much to boost the economy, but to boost the markets. The US president will likely appoint a more dovish, accommodative Fed Reserve chair. Trump wants interest rates lower, as that trends to drive markets higher.

Over the last 25 years, we've seen a very low interest rate policy, but it hasn't really flowed over into the CPI going up, either in Canada or the US, until very recently. But now the Consumer Price Index is being affected, and we've really seen an impact on investable assets (particularly the stock market).