Paul Harris, CFA
Partner and Portfolio Manager at Harris Douglas Asset Management
Member since: Feb '04 · 3862 Opinions
Rating Card
| All | 
Rating
| 
Big Win
| 
Win
| 
Neutral
| 
Loss
| 
Big Loss
|  |
|---|---|---|---|---|---|---|---|
| 4.95 | 348 32.34% | 285 26.49% | 156 14.50% | 181 16.82% | 106 9.85% | ||
| 1 Month | 4.91 | 11 4.38% | 98 39.04% | 83 33.07% | 57 22.71% | 2 0.80% | |
| 6 Months | 5 | 57 23.08% | 82 33.20% | 31 12.55% | 55 22.27% | 22 8.91% | |
| 12 Months | 5 | 96 39.67% | 51 21.07% | 26 10.74% | 45 18.60% | 24 9.92% | |
| 2 Years | 5 | 98 46.45% | 46 21.80% | 12 5.69% | 16 7.58% | 39 18.48% | |
| 5 Years | 4.83 | 86 68.80% | 8 6.40% | 4 3.20% | 8 6.40% | 19 15.20% |
Stock Opinions by Paul Harris, CFA
He has no idea what's spurring the action today. Having these bounces all the time probably just goes to the fact that we're going to have volatility, up or down, for the next little while. A great deal is due to the uncertainty from the US administration on tariffs and on all kinds of other things.
As an investment manager or someone running a company, you always make investment decisions within a degree of uncertainty. But it's the level of uncertainty we're seeing presently that's so difficult. This is going to lead to a very difficult environment down the road, as people won't be able to make the right decisions for the long term on capital expenditures and such.
It'll be interesting to see what happens with earnings from the big tech companies. At the end of last year, they said they'd be spending billions of dollars on capex. Are they going to pull back because of all the uncertainty?
All the uncertainty is causing consumer sentiment to be negative, and the small business outlook is negative as well. This will definitely cause a slowdown, and probably a recession. That leads to an argument from an investment point of view that you're going to see lower earnings growth on the S&P 500. Earnings growth numbers are pretty high still, and will probably come down, and therefore the PE multiple in the US will probably contract.
A lot of companies are down, and so there are opportunities. There's a great chance to pick up great businesses, at more reasonable valuations for the long term, if you've really done your work.
The risk in the marketplace is that this uncertainty continues. We're seeing that in the way the USD is reacting and the way the bond market's reacting. Usually when we have difficult situations around the world, the USD and bond markets rally (prices go up, yields go down). That's really not happening. There's a notion that the world's looking at the US and saying it's just too unstable. Investors are just deploying capital in their own currencies or into other, non-US currencies. This becomes tricky, as the US depends on people buying their debt.
Trump's issue with Powell is very awkward. Yesterday we saw Trump piling on unnecessary insults. You want the Fed on your side to get you through the difficult time of tariffs. If you get rid of somebody like that, and put in a political person, this leads to the failure of the Fed being independent.
Both have a very large domestic presence, which helps them in this environment. Both had very good numbers last quarter and are very good businesses. As expected, all banks increased credit provisions.
RY will benefit more from its large capital markets business. Volatility helps capital markets a lot; perhaps you won't get the M&A, but a lot of trading goes on with equity, debt, and other derivatives. It's global. Expectation in US of deregulation in financial services; if so, RY will benefit a lot more than NA.
NA is smaller and more focused in Quebec, though the CWB acquisition is changing that.
Both have a very large domestic presence, which helps them in this environment. Both had very good numbers last quarter and are very good businesses. As expected, all banks increased credit provisions.
RY will benefit more from its large capital markets business. Volatility helps capital markets a lot; perhaps you won't get the M&A, but a lot of trading goes on with equity, debt, and other derivatives. It's global. Expectation in US of deregulation in financial services; if so, RY will benefit a lot more than NA.
NA is smaller and more focused in Quebec, though the CWB acquisition is changing that.
Very tough question, and he's not sure where that will be. Earnings numbers on the S&P 500 are high, and they haven't come down enough in the midst of all these tariff issues and the way the world is slowing down. Currently, the S&P earnings number is $260-262, but we may lose a lot of earnings growth this year.
A lot of analysts and market bears talk about coming back to the mean. That's the risk, where the S&P 500 goes back to an average of 16-17x PE. That's the level where you'd want to buy stocks. This quarter's earnings should be good for most companies, as they weren't dealing with tariff issues yet. The quarter after that may be a different story.
The other thing about the S&P 500 is that it's had massive multiple expansion over the years. It's not that earnings went up so much, but that the multiple expanded. So you may get a shrinking of that multiple. Hopefully, it doesn't get to 16x, but that's the downside risk to look for. It would certainly be a great buying opportunity.
Really good run into the inauguration, now fallen. Trial with the FTC over Instagram and WhatsApp is revealing all the dirty laundry, and that's hurting the stock. Not in China, not affected by tariffs. Already using AI in advertising.
Buying here won't hurt you if you have a long-term view. Or, you could try to get it cheaper on all the volatility.
