Jay Smith, portfolio manager and investment advisor at CIBC Wood Gundy.The Globe and Mail
While some investors expect markets to stop rising – and possibly plummet in the near term – money manager Jay Smith forecasts more growth, driven by interest-rate cuts, government deregulation and favourable tariff negotiations.
“I think this market continues [to go] up,” says Dr. Smith, portfolio manager and investment adviser at CIBC Wood Gundy, part of CIBC Private Wealth, who oversees about $6.5-billion in assets. “People are worried about tariffs, but the worst of the tariffs were put in the market on Liberation Day.”
He notes that U.S. President Donald Trump has eased off many of the tariff rates he announced in April and has done deals with Europe, the United Kingdom and Japan.
“There are still many countries to do deals with, and every time he does a deal … the market rallies dramatically,” says Dr. Smith, whose doctorate is in philosophy. “I expect tariffs are here to stay, but not in the 145-per-cent or even the 100-per-cent range, but more in the 15-per-cent range. That’s a new reality that I think both the market and economy can absorb.”
He also expects interest rates to keep falling in the U.S. and Canada, which should send stock markets higher. And he believes more government deregulation will make capital more available and economies more productive, alongside growth in artificial intelligence (AI).
“The combination of these bullish catalysts becomes hard to ignore,” he says. “I think markets will continue [to go] up at least until 2027.”
Dr. Smith runs five portfolio models for his clients: capital preservation, balanced, global, North American and Canadian.
His North American portfolio is up 14.4 per cent so far this year, as of Sept. 30, and is up 23 per cent over the past 12 months. The three- and five-year annualized returns are 24 per cent and 17 per cent, respectively.
His global opportunities fund is up 14.3 per cent so far this year, as of Sept. 30, and has risen 27 per cent over the past 12 months. The three- and five-year annualized returns are 34.2 per cent and 29.5 per cent, respectively.
The Globe spoke with Dr. Smith recently about what he’s been buying and selling.
Name three stocks you like and continue to buy.
Nvidia Corp. NVDA-Q is a stock I first bought in 2018, when it made the fastest and best graphics-accelerator card and dominated that space before losing its way. I sold it most of it in 2019 and started buying it again heavily in 2021, at a split-adjusted price of about US$19.80 a share, when I realized the company made 90 per cent of the artificial-intelligence chips in the world.
Three years ago, AI wasn’t such a big thing, but people were starting to talk about how it could solve a lot of productivity and performance issues. I continued to buy the stock, including as recently as last week. People say, ‘It’s up so much, you should sell it,’ but the price-earnings valuation is actually cheaper now than when I bought it. Nvidia is the market-leading chip name, and I believe it will continue to benefit from the growth of AI.
Oracle Corp. ORCL-N is a stock I’ve owned a bit of for a long time – initially in the mid-90s and then again throughout the 2010s – but started to take a much larger position recently, in July, at about US$237 a share. It went to US$300 pretty quickly after that.
I bought it after the company had some disappointing earnings announcements, and I saw it was turning things around. Oracle has had very strong bookings, and there’s growth in its cloud database business as well as its AI infrastructure segment.
I see a big runway ahead for the shares with Oracle’s partnership with OpenAI as part of the Stargate AI project. Management has also been focusing on operating-expense discipline, which will improve margins and drive stronger earnings-per-share growth over time.
Taiwan Semiconductor ADR TSM-N, the chip manufacturer, is a stock I started buying in the last part of 2021 and added a bit throughout 2022. I then added a lot more in 2023. My average purchase price over that time is about US$90 a share. The stock is trading around US$300 today.
I don’t often buy manufacturers, but Taiwan Semiconductor is so good at what it does, and it plays into the technology and AI stories. Warren Buffett took an early position in the company before I did and then sold most of his position around US$69 a share toward the end of 2022.
People said to me at the time, ‘Should you be buying a stock Warren Buffett is selling?’ I didn’t know what he was thinking because the numbers looked pretty good to me. Also, after he sold it, I was getting the stock for a better price.
Taiwan is an integral part of the semi-conductor supply chain, and expectations are for a revenue compounded annual growth rate of 20 to 25 per cent a year for the next few years. Demand for chips for AI and its high-performance computing platform will continue to provide strong support for the stock.
Name one stock you sold recently.
BCE Inc. BCE-T is a stock I started selling in 2023, and exited the last of my position a couple of weeks ago. I initially bought the stock in mid-2009, coming out of the global financial crisis. The stock did well during the time I owned it, with a total return of about 380 per cent.
I sold it in part because of the weakness in its average revenue per user numbers, which continued to decline year-over-year as more consumers shifted away from the traditional telecommunication companies. I generally don’t see much growth on the horizon for BCE, even with the recent acquisition of Ziply Fiber, a U.S. fibre-internet provider. And despite the dividend cut, its debt levels are still quite high.
This interview has been edited and condensed.