Larry Berman CFA, CMT, CTA

Sure he does, but even he understands (one would think) that the Fed can't do it at the moment. But when he's out in public, he needs someone to yell at because that's his style. So he's gone after FOMC board members.

Chairman Warsh has set up committees, and defers to the groups' opinions whenever he's been asked recently about rates. He's going to let the data drive things. And right now, the data does not support a rate hike.

Overall, he's interested in its (and other hyperscalers') AI/cloud infrastructure and capex. In particular, this is a stock that hit $400 more than 2 years ago and has gone sideways ever since. 

Trading at 38x forward PE, has never traded that expensively before. They have to get everything perfect. Sales in China will be particularly important.

Not really, but you do have to understand where the distribution comes from. True, some ETFs are tricky that way. It really depends on how it's being presented. Often, when an ETF is growing quickly but hasn't yet earned its stated yield, the return might include a return of capital to reach that yield. What you need to do is look through the ETF and determine if, based on what it holds, it can generate that type of return.

It is yield, as it is paying out that return. But in many cases it's ROC. Some people might call that a tax-efficient way to get income out of a portfolio. 

Gives you growth exposure, but with income. Because you'll never be taxed on your TFSA (and if you have the ability and the risk tolerance), you should use it for maximum growth. You don't want mature companies paying income in a TFSA, you want maximum growth.

He has no issue with this ETF. But perhaps it's better off elsewhere than a TFSA, in a place where it makes sense to have current tax-efficient income.

Cyclical sector, so it's for traders. If you're a value trader, you're looking to buy dips. If you're a momentum trader, you're looking to buy high and sell higher. Pretty significant pullback from recent high. If you're a dip trader, you'll probably do OK.

Sector will do well when economy's booming. He'd argue that we've already priced in the AI boom, so the catalyst isn't there for the next upside move. Economic risk for slowing. Wait for it to go below $100 for decent risk/return.

He's advocated these as opposed to traditional fixed income. The investor's talking about public companies that trade as MICs on the stock exchange. 

There's a difference between a public MIC and a private one. In the public markets, you get the volatility both up and down. You have some growth potential (which you don't have with your typical MIC), but you have a lot more volatility in terms of interest rates or risk to housing in general. If you can handle the ride, and the MIC is large and well diversified, not a bad time or place to put some $$ to work compared to the private ones.

All the private ones are very transparent. They all ought to have audited financials. If one doesn't, then pass; you don't want to be there.

If you take the total world index, your yield is about 1.7-1.8%. If you want 2% or more, you have to have concentration in areas that pay higher dividends.

For example, many tech stocks don't pay a dividend. But there are a lot of dividend-weighted ETFs that give you exposure to Canada, US, international. As a general rule, Canada (banks, energy, lifecos) and international have higher dividend payouts than in the US. Why? Because the US has a lot more tech than everybody else. 

He likes the BMO international covered call strategies. It's a way to get enhanced yield and income in a tax-efficient way.

Look at any of the utilities or banks in Canada -- all have very high quality and stable preferreds, without you having to worry too much about credit risk. As a Canadian, you want a pref that comes from a Canadian corporation if you're in a taxable account (as you get the benefit of a tax credit in there). Don't look to foreign jurisdictions, as the income doesn't get preferential tax treatment.

He can't give a specific recommendation, as he hasn't done a deep enough dive on credit research.

Tax efficient. If it's not paying out the dividend and you're getting a total return, you'll ultimately be taxed on the capital gain and that's more tax-efficient.

Basket of Canadian dividend payers. Exposure to MFC, RY, TD, and so on. Tax efficient.

Investing in AI -- Bull Case vs. Bear 
He came across a new index put out by a group called Silicon Data, which tracks the cost of LLM tokens. In recent weeks and months, there's a high correlation between the cost of the tokens and cheaper alternatives becoming available. Updated daily. Larry's provided a link to this index in his blog.

In general, buy the dip. We're in the early, early stages of what's going to be a multi-decade bull trend. 

Lots of talk about AI bubbles, so he's gone back to look at three of the stock darlings of the late 1990s. At one point, Nortel was over 35% of the Toronto 60 Index. We know what happened there. CSCO and INTC are still around. Pre-crash returns were in the magnitude of 1000% and 2000%. Today's AI stocks have run up 50% and 80%, so we're nowhere near the intensity of the dot-com bubble.

Lots more to come. Be comfortable buying the dips in AI names, but not sure he'd do that today. Thinks there's more correction risk here. But if we get back to where we were a few months ago on some of these names, it'll probably be a good opportunity (especially if you feel you've missed out).

The big US banks report this week and are expected to report excellent numbers, but can this performance continue? The economy is growing. Watch for anything the banks say about consumer sensitivity and inflation, like credit card delinquencies. AI is an exciting story and will shape economies for decades to come but is creating volatility in the market, making it speculative.

It's more important to hear what the US Fed says about trade than the inflation announcement at the next Fed meeting. If we get another sharp inflation number, the US Fed could raise interest rates in two weeks. He doesn't think Canada will see a rate hike. If the US raises and Canadian doesn't, that answers where the risk is in the USD/CAD trade.