David Burrows

Yes, it seems very clear. June was the first month where there was no central bank tightening anywhere in the world. Only Japan tightened in July. And now clearly we're into a liquidity cycle, which will go on for a while. An interesting time.

Liquidity is the most important thing to think about for asset valuations. 

Rates peaked in October 2023. Since then, bond index in Canada and US rallied 10-11%. If you were in dividend growers, and more recently higher dividend payers, the returns are 30%. 

A lot of people looked at this loosening period and said that you better buy bonds, which is fine. But he thinks there are other alternatives. Longer term, he likes dividend growth as the strategy. At this point in the cycle, not a bad thing to have staples, utilities and pipelines in your portfolio.

Remember that everyone is driven by different decision-making processes. Most important thing to take away is that we've moved from a market where, in June, only 24% of S&P companies were beating the index. And a small number had a big portion of that. In August, 63% of companies were ahead of the index. So the market is broadening, including groups that had not been participating. 

From mid-October 2022 until this summer, financials clearly have led along the way. Industrials have done very well, along with tech. But now pharma is doing well, and so are REITs depending on where you're looking. Utilities, pipelines. Seeing participation from a lot of different sectors, mid-caps are doing better as are value-oriented sectors.

When you have a broadening in the market, that's healthy. Money is being put to work.

A lot of people are very committed to large-cap tech. He is less committed. His weight in tech is less than 10%, about 1/3 of his usual weighting. Not because he doesn't think they're great companies. When you look at the history of semis, when they get really stretched above their 200-week MA, they have a tendency to correct -- either by going sideways, or by price coming back to the MA. Both would be significant.

Habits die hard. A lot of people are very committed to large-cap tech. He is less committed. He owned NVDA from $14, and came out of it a couple of months ago because there are other things to do.

He likes the sector longer term. In the near term, basic materials have pulled back on weaker economic data. He came out of this name when it broke the 200-day MA, technical breakdown. Would love to see the stock get repaired, needs to see bottoming in price action. Future is bright, great company.

Environmental services as a group have been performing well. Recently turned profitable. Lots of opportunity for consolidation. Technically doing well in a sloppy market.

You need to own companies that generate excess cashflow and don't need a lot of financing. The cost of capital is going up. A friend phrased it as: We've had 40 years where the borrower was in control, and now the lender's in control.

He will never pick a bottom -- there are people who are really good at it, but it's not his strength. Weak RSI and broken technicals are not your friends. He looks for fundamentals to show that something is changing for the better, accelerating numbers, and price behaviour that supports that view.

As of yesterday, 80% of companies in the financial sector in the S&P 500 made 21-day highs. The sector's had a broad rally; over 80% are trading above 200-day MA. 25% of his firm's assets are in financial services, overweight. He likes to buy "good, getting better", not "broken, getting fixed".

Going through a navel-gazing transition. Long, dry spell for shareholders of not making money. Market's warming up to it. One to watch, though RSI versus the S&P and TSX hasn't picked up.

Money-making machine, dominant position, great opportunity. Earnings forecast to grow 12-15% a year for next 3 years. Not cheap at 29x earnings. Doesn't own it, but could. Won't be a world-beater but 12 months out, once the easing cycle takes hold, the consumer should start to improve.

He's targeted insurance, largely P&C because it's had a great ability to raise premiums. He also owns large capital markets banks. Both of those get lots of leverage out of a strong market cycle. Fintech like Visa tends to do better when those other companies aren't.

Will be dominant for a long time. Got stopped out of this one. It's in the Mag 7 cohort, challenges of over-ownership that need to be worked off. Not one of the top RSI names. Great business, he'll watch for better spots.

His 3 big holdings are DOL, WMT and COST.

Business jet segment looks great. Financials are getting better. On his watchlist. Secular trend behind business jets is positive. In industrials, his focus has been more on defense -- he owns HWM, GD, and environmental services.

He will never pick a bottom -- there are people who are really good at it, but it's not his strength. Underperforming since January 2023. Bad couple of days on top of a horrible 2 years. Stay away. Weak RSI and broken technicals.

He looks for fundamentals to show that something is changing for the better, accelerating numbers, and price behaviour that supports that view.

Great management and track record. Under-promise and over-deliver. Leader in a sector has an easier time hiring the best employees, as well as lower cost of capital. Hard to kill the leader, or be the laggard and make a turnaround.