Ross Healy

He's going to paraphrase Andrew Coyne from Saturday's Globe & Mail: "We're seeing a period of unknown upheavals and, given what Trump's done already, we're talking about upheavals that could go on for 4 years." In the short term, then, what should we be worried about?

When he stands back and looks at the market and how to make money, outside of the fact that Trump is causing wiggles in market moves, what Trump says doesn't mean a great deal to him. 

Looking at the NASDAQ and the S&P 500, the last time that those 2 markets got up to where they just were before the selloff, was back in 2000. Valuations, in price-to-book terms, are back to those levels. Technically and  mathematically, those are very difficult levels to break through. To break through and get higher, you really have to have a very strong economy with something extraordinary happening.

People were expecting and hoping that AI would do all that. Unfortunately, it takes time, just as it took time for fibre optic cable uptake in the 2000s. AI platforms are overbuilt. We're going to have a setback, just like in 2000. So the economy isn't going to be as strong as people expect. With Donald Trump mucking around on the side, it gets even worse.

So it's more of a natural correction. We're at an all-time high, and he expects a fairly large correction.

Going back to 2008, chart shows a beautiful long-term channel, trading between book value and 1.5-1.6x book. Today it's at 1.6x book, so it's very expensive.

Be aware that the market's are also very expensive, and this one goes up and down with the market. What stands out is that about 1/3 of Buffett's portfolio is in cash. If an investor were buying cash, he'd want to buy it at book, not 1.6x book. So, discounting the cash, you find that the stock is 18% overvalued. 

The 1/3 cash position gives investors a hint as to what they should be doing with their own portfolios. Cash is a call on cheap stocks in the future. Wait for an opportunity.

If we're going into a slowdown, this name is expensive. Balance sheet is OK. FMV is ~$147. Immediate downside target of $100 or so. Don't be in too much of a hurry to get in. A lot of other stocks have more upside potential. 

Never look at them lumped together in a group. He's watched them for over 50 years, and a very interesting pattern emerges. RY and NA are up at the crest of the wave, trading at a good premium to book value, but on their way down. Down in the trough are BNS, BMO, TD and LB -- those are the cheap ones on their way up.

Nice run, now having a bit of a setback. But that's OK, that's how it goes with the banks. He doesn't mind buying at these levels.

Trump wants Canadian energy; if he can get it as cheap as he can, all the better. He reiterated "drill, baby, drill". But American producers are sitting on their hands because prices aren't high enough. Prices need to get above $80-90 or even higher before it's going to get attractive again.

He's followed 3 excellent analysts over the years, and at least one is calling for oil at (hold onto your hat) $200 a barrel. That may be excessive, but if it got to $90-100, all the oil stocks would do very well.

He likes the oil patch broadly speaking, as it's fairly low risk. He prefers the junior oils, rather like the junior golds, as those names are overlooked and cheap.

Likes the oil patch broadly speaking, and it's fairly low risk.

All the AI stocks are expensive. Also, the AI infrastructure is becoming vastly overbuilt and revenue from it isn't imminent. This makes them risky. It came off a perfect triple top, and that was the time to take profits.

In a bear market, it'll come down in steps and you might even see a little bounce. But don't confuse a little bounce with a new bull market. It'll be part of a broader narrative that AI stocks are going to be wiped out.

He's bullish on gold. Excellent management. Among the very best reserves, and keeps finding more quality ones.

Still likes it. Juniors are cheap, good value. If things really get going, it'll do well. If things don't get going, not too much bad will happen as it's cheap.

When he chose this last year, he was looking for a bounce. Which did happen, but then everything came unglued. Regulators, competition, and payout ratio is too high. In a downward channel on book value. Earnings are also in a downward channel. FMV has lots of upside potential, but that's the only bright spot. Be cautious here.

He called this one a sell last year, and his opinion hasn't changed even with the pullback. FMV is 60% lower than where it is today. Pattern: goes up, pulls back to FMV, rinse and repeat. AI stuff is overbuilt. Chairman likes to over-hype.

Wonderful product, but it has to be used to make $$. And the people using AI to make money are few. There will be more down the road, but we need to wait. Risky.

Ran into a real meat grinder with an African government (a military dictatorship). Shows the difference between those jurisdictions that are safe and those that aren't. Has NA holdings too, so it's not the end of the world. Stock's cheap. Not a bad buy if gold keeps on moving (which he expects).

Just moved up off the bottom of a very long-term channel. Long way to go to get back to usual high. Still under both Canadian and US regulatory scrutiny. Very well run, aside from a nasty US stumble. Quality and value will come through.