Bill Harris, CFA

We just had such a bad year last year. Bonds going down and stocks going down was a once-in-a-century event. Statistically, it's highly unlikely that will happen again. We're having a bounce off of that. He's in the camp that's saying this is a relief rally. He wants to see earnings move through the economy. Last year, we had a really expensive market with low interest rates, and that stuffing has come out of valuations. Next move is all of this cost pressure and the economy slowing has to go through earnings, and that's going to take 12 months to see. Will take a couple of years to play through profit margins across North America. Almost like a slow motion correction. He's still invested, but very particular about what he owns. He's being cautious, patient. 

There have been no big credit events yet. Corporations don't have to pay the higher interest payments right away. They have to wait for a bond to mature and see what rate it's going to roll over to, and that takes time. Interest rates have gotten into the mid-zone of 4-5%, and we have to see how that affects profit margins in all these different industries. Each market has its own dynamics. What's different this time is the incredibly low unemployment rate. We're just coming off Covid, our largest economic and social experiment in human history, as the last time this happened we had 1B people, but now we have 8B.

Pool of money that trades on the TSX and is lent out short-term to the real estate industry. They charge a premium on that. Like owning just the mortgage department of a bank. Payout of over 8% is fully taxable income, not a dividend. Avoid the tax by putting it in your RRSP. Risk/reward is good. One loan didn't go well, with the result that the company is left with a building to sell. Because of this, combined with market nerves about small things, trades at a discount to NAV of $8.40. He'll trade around the NAV. Stock doesn't grow, it just distributes income. 

Do I wait for a low probability of that? It doesn't mean it doesn't happen, and it would be nice not to own things on that day. He's trying to structure the portfolio right now to solve that problem. Maybe we do have a real recession and they can't lower interest rates for all sorts of reasons and the stock market suffers again. If we have this slow motion correction over 2-3 years, can you own the stocks in your portfolio? You need to focus on how much income is a company producing? With a stable, income-producing business, you can capture that income and compound it through this market. Whereas with a biotech company, if the stock goes down, you just have less money. This year, he's building defensiveness into his strategy.

It's grown to a size, with the amount of debt it has, that it's hard to see what it's going to be. He used to think of ENB as a houseplant, just clip coupons on it. But it can't grow. Should cancel the dividend and pay down debt.

Since everyone now has a cell phone, the options industry has exploded. He doesn't do it. He runs a long-only, pension-type strategy. His focus is bringing stability to investments.

Amazing Canadian business. Numbers are spectacular. Relatively good multiple, especially compared to US peers. Big piece is they're going into the US by opening stores methodically. Next 2-3 years will be great. Stock's down on concerns of a consumer recession. Unique brand. Target demographic still employed.

The sector is really tricky. In his income portfolio. Stable business. Don't think of where the stock might be going. Instead, decided if it can generate income for your timeframe. New mine opening around 2027, right when copper supply drops off. Anchor base metal position. See his Top Picks.

Commodity cyclical. Commodity is low again because of the warm weather. Thinks a lot of that is already in the price. Stock should be $25-30. Hoping the commodity tightens up over the summer.

Income-producing stock. Financing acquisitions with debt is not particularly great in this environment. At current price, great income stream at 6% yield. Low volatility. Brookfield's now involved, so it's a core investment for him.

With inflation, mining costs went up. So he moved into royalties, where he remains.

Fear of a slowdown makes him a bit more cautious on the oil space. Would be a lot more interesting around $20. Hard to be enthusiastic on it right now. 

Tricky. In a pension fund, you want to have a rail because they're incredible businesses. Can you replicate this business? No. Extraordinary pricing power. CNR has done a great job squeezing everything it can out of its infrastructure. A few years ago, CP had slightly cleaner story in terms of future profitability. CP now has the full continent and more upside. 

In a pension fund, you want to have a rail because they're incredible businesses. Can you replicate this business? No. Extraordinary pricing power. CP now has the full continent and more upside than CNR. Would love to have a full position, but it's kind of expensive. He's waiting for a bad day to buy more.

He owns a starter position and would like to add. Market is skeptical, so you might be able to get it at a giveaway price. If you're building capex, the market's nervous. Coastal GasLink is massively over-budget, unlikely the company will build one of these again. Lots of project potential in eastern US through gas and infrastructure. Would be highly surprised if 6% dividend gets touched. Defensive.