Well, hello! It’s time for another weekly edition of Trade Secrets, our newsletter tracking The Globe and Mail’s Trade Off stock market competition. Time certainly flies, when you consider we’re nearly midway through the contest.
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The Leaderboard
If you haven’t reviewed your portfolio of late, now‘s a good time to think about your positioning for the second half. Let’s start with a look at the standings.
A Wall Street guru’s simple message: chill
Our leaderboard reflects the fact that staying nimble matters. Between the trade war tensions and September’s seasonal weakness, many stocks have stumbled. Names that enjoyed momentum in the first half, such as MDA Space, have looked wobblier. Energy and gold stocks have been having a moment, but it’s a macro-driven rally and we know those trades can also twist and turn.
Since it’s tough to know which flavour will win, a top JPMorgan strategist is advising investors to just focus on profits. Mislav Matejka told clients in a note that if analyst earnings estimates continue to climb, that’s a good sign for stocks. And if the stocks you’re buying represent companies with solid profit growth, you should probably just take a deep breath.
Are we in an AI bubble or not?
I’m frequently asked about this, so I decided to ask a top tech analyst for his perspective. Gil Luria, head of technology research at U.S. investment firm D.A. Davidson, joined me on Ticker Take and said he does not believe we’re in a bubble. From his perspective, there’s been too much economic benefit from the AI boom to suggest we’re headed for a bust. Meanwhile, if you’re measuring it based on stock prices, he argues a lot of big tech companies are trading at valuations that are nowhere near some of their historic highs.
Now, that’s not to say Mr. Luria isn’t preparing for both a bullish and bearish scenario. He says if you believe the AI story has legs, stocks like Micron Technology may continue to shine. If you’re in the skeptics camp, he’d argue Apple and Meta are in good shape even if there’s a bust. Interestingly, Palantir is a name that he believes could win in both scenarios, partly because its success in combing through customer data gives it a sticky, fast-growing business.
Invest in rule breakers, not rule makers
That line was a response to a recent post of mine on X, where I looked at 15-year returns for companies that have been disruptors (including Nvidia, Tesla, Netflix and Amazon) compared with the incumbents. To me, it’s a reminder that new ideas can lead to big returns over the long term.
Canada’s growth opportunity
Speaking of big ideas, Prime Minister Mark Carney is hoping to spark some fresh thinking about Canada’s road ahead. Be sure to keep tabs on the The Globe and Mail’s coverage of the Canada Investment Summit, happening this week in Toronto alongside the Toronto International Film Festival.
Getting back to your investments, Rob Carrick recently reminded readers that if negative headlines spoil your retirement plans, you probably need to refresh how you think about retirement planning.
On a related note, if you want to find a financial adviser who fits with your approach, The Globe has a great tool to review many of the adviser options out there.
Happy trading!
Jon
Jon Erlichman is the founder of Ticker Take on YouTube and a contributor to BNN Bloomberg.