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

Surprised by how resilient it's been. The consumer is still the #1 piece. As corporate earnings come in, he's seeing a lot of announcements coupled with layoffs. That's one of the risks out there and what could sidetrack momentum.

In both Canada and the US it's consumption, for the most part, that drives the overall economy.

We've seen some fiscal policy out of Ottawa that could drive some positive momentum. It'll be up to leadership to continue on that path. If actions follow all the nice words, that could be a lot of potential for Canada. It would be a key driver in the resources sector, materials, and even energy.

If we can start to forge other trade relationships, that would be very positive for Canada.

Hopeful, but these projects take a long time. We need to see some shovels in the ground. The Davos speech last week was fantastic, but can we actually get some physical action and momentum going?

Really tough question. If you already have a position in gold, you're in good shape. He'd look to lower your weight in those positions. He would not take a brand-new position in gold here. Gold's done well, and silver's gone parabolic, so he'd be inclined to take some off the table.

There will be a pullback, and he imagines that it will be quite violent. If you're going to go into something, try XGD. There are also some mixed bullion ETFs.

Mag 7 has come off, and today they're really getting hit. But that's OK. For the market to keep going, you need rotation from sector to sector. Though it may be a "tech wreck" today, of the 11 sectors in the S&P 500, 7 were still positive when he left for the studio. There will be give and take, depending on the day.

He still likes the outlook for technology. The pause may be what it needs to shake out some people, and then it can accelerate again.

Right now, seeing a lot of investment going to capital equipment. So this is the most attractive area in the data centre value chain. As you need more memory and chips, it comes with increasing capex requirements. Attention has shifted from tracking the capex of the hyperscalers (who are investing in the chips) to the chip companies (who are investing in incremental capacity).

Absolutely. She likes memory and other components as well, still very attractive. 

However, as we get further into the cycle, we're going to start talking more about capacity additions on the memory side. At some point, once supply seems to be exceeding demand, these stocks will flatten out. 

Not just yet, but it means that the better risk/reward right now is to invest on the capital equipment side -- companies that provide the machinery to build more memory capacity. That cycle typically lasts longer than the memory cycle.

Uses for space such as broadband connectivity and defense have been around for several years. But these markets are pretty small compared to the data centre trade. From a historical perspective, the space race looks a bit too risky to get involved in.

Now we're talking about data centres in space. The technology isn't very different from what satellites are doing today -- using solar power and having compute on board. The idea is much closer to reality than people think. Launch costs need to decline significantly for it to be economical.

The main company building these centres is SpaceX, the leader in space launches as well as operating satellites. Elon Musk has a lot of know-how in AI and chips. It will clearly dominate the space. But don't underestimate other players such as GOOG. We're going to see a lot of activity here. It's not that in 2 years all the data centres will move from Earth to space. With limited supply and limited launch capacity, there's going to be a lot of potential for returns here.

Her firm discloses all of its holdings on its website, spear-funds.com.

You need to closely monitor all the capacity announcements coming from MU, SK Hynix, and Samsung. Usually after 1-3 years of capex deployment in equipment, that's when you see the market start to stabilize.

The software sector has been treated as a whole, driven by companies with a resilient SaaS business model trading at very high multiples. What's happened over the past 3 years is that people are realizing that a lot of these business models can be replicated with very little effort by using AI. So the sector's come under attack.

The area for investors to avoid (or at least do more thorough due diligence) is that of software applications. Think CRM or HUBS. If the AI solution is equally good, these companies will face competitive threats.

On the flipside, some companies are providing the infrastructure for new entrants to build new tools and applications. This is the part of software that she does like. These tools include cybersecurity, which she finds pretty interesting right now.

There's a real bifurcation between applications and infrastructure. Sticking with infrastructure is the better way to go.

This is what her firm concentrates on.

Her team covers a broad range of companies, and they talk to those companies constantly. They then try to figure out who their suppliers are and where's they're investing next. For every company in the value chain, she knows where its capex dollars are going. Where the money's going is usually where the opportunities are. Boots-on-the-ground research allows her team to see where the puck is going.

The old saying is that what happens in January, so goes the rest of the year, 75% with a good January, and 50% if it's poor. However, the second year in a US presidential cycle is the worst at a 5% return compared to 10% in other years. He's looking at high-quality industrials for opportunities.

Really strong, especially in the small- to mid-cap space. When you look at gold, silver, and commodities in general, you've seen a huge rotation of capital into those areas.

A few factors are driving all this. Deregulation by the Trump administration has been fuelling a lot of companies in the small-cap space. There's also been a rotation in the markets potentially away from high-flying, highly valued tech stocks (especially software) and going into things more domestically related. With huge GDP growth in the US, perhaps the consumer is a lot stronger than people thought -- that should also benefit smaller-cap companies.

On gold and silver, it's probably a continuation of the debasement trade of the US dollar. Foreign central banks are choosing hard assets like gold over treasuries and fiat currency reserves.

His team believes 2026 will be even more volatile than 2025. 

Partially because of geopolitics, partially because not much has been solved within the US government (perhaps yet another shutdown), and partially because valuations have come up (may not be extremely overvalued, but they're still not cheap). And partially because after 3 years of a good bull run, you may see some giveback and it may happen more violently than we'd like.