Ross Healy, senior portfolio manager at MacNicol & Associates Asset Management and chairman of Strategic Analysis Corporation
Focus: North American large caps

MARKET OUTLOOK

The market is really starting to look very déjà vu. Whether I think back to dot-com bubble in 2000 or the Nifty Fifty bubble in 1969, things look the same to me — and I was there. The names have been changed to protect the guilty, but the issue is the same: a massive overvaluation of equity assets. This time around though, the central banks are being proactive and trying very hard to head off the huge stock market declines that followed each of the two preceding bubbles.

We can’t say for sure how this will end, but we’ve been here before and in the past, it has ended badly. It’s nearly impossible to let overvaluations down gently, especially when they’re widespread. Powerful monetary stimulus and share buybacks coupled with huge deficits at the peak of the economic cycle are a formula for explosive equity (and bond) prices that are getting out of control. Investors do not look at balance sheets: They scarcely look at earnings. But they do love stories, and perpetual price motion is the idée du jour.

The burning question is: when might the equity bull market end? Not now, I would think. I will stick with my event horizon being the election on Nov. 3, when the Fed might be allowed to stop its massive stimulus. But I will leave the viewers to seek the answer to the question: if the end-date is Nov. 3, does the market try to guess the top?

TOP PICKS

SCOTIABANK (BNS TSX)

The banks are cheap, but I like to have a combination of cheap, good upside potential and good technical support for the stock. Scotiabank fills all of those bills.

PHILLIPS 66 (PSX NYSE)

Phillips 66 has an interesting chart pattern, is quite cheap from an intrinsic value point of view, has a very nice balance sheet and also a nice dividend to boot.

VANECK VECTORS JR. GOLD MINERS ETF (GDXJ NASD)

As far as gold stocks are concerned, I have recommended a number of them and I try to vary them so as not to be too repetitive.  An ETF of junior gold stocks strikes me as providing a nice spread, especially of the kinds of stocks which are likely to be acquisition targets for the big golds. GDXJ also contains silver stocks as well, so there is some diversification in this field.

PAST PICKS: FEBRUARY 11, 2019

CIBC (CM TSX)

• Then: $110.89
• Now: $109.79
• Return: -1%
• Total return: 4%

BARRICK GOLD (ABX TSX)

• Then: $17.89
• Now: $24.22
• Return: 35%
• Total return: 37%

CASH

Total return average: 14%

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