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


The market is in a Twilight Zone – with all that that term implies. It’s late in the day, but that doesn’t necessarily mean that it is all over right now. There was precious little upside room left in the market (as epitomized by the S&P 500), and indeed, that index came within 3 per cent of our measured intrinsic value (3,075) just before it began to set back. Right now, I would expect that there should be a meaningful low at about 2,550 for the S&P, which is two and a half times its adjusted book value; in times past, that particular value in our methodology has served (and served powerfully) as resistance on the upside in rising markets and support on the downside for falling markets.

The “Twilight” in Twilight Zone implies that it’s getting close to the end of the day (or the bull market), but further, it also implies that misty and even mysterious things can happen, like in the TV series. Investors can become overly excited about certain stocks and send them far beyond any realistic values which are supportable by their true fundamentals. The FAANG stocks and Bitcoin come to mind. Right now, cannabis is all the rage. Just look at the uptake of the stuff in Colorado after 10 years of being legalized for a reality check. (In the meantime, have fun if you can withstand the risks).

My own guess – and it’s a guess because the market values are generally fairly poor – is that, like in the market peaks in 2000 and earlier in 1973, there will be many good opportunities to trade in this market for a while, but “investing” is now a thing of the past from an overall market perspective. We all know that President Trump will be leaning on the Fed to act if there’s serious market weakness, so how weak can markets get in the shorter term?

Longer term the market underpinnings, notably in the U.S., are weakening as U.S. corporations in particular take on more and more leverage due to those nice low interest rates. Like 2000-2002 and 1973-1974, this market may take its time to correct, but you should keep in mind that extreme values have never prevailed over longer periods of time.


Ross Healy's Top Picks

Ross Healy, chairman at Strategic Analysis Corporation and portfolio manager at MacNicol & Associates Asset Management, shares his top picks: BCE, Goldcorp and Blackstone Mortgage Trust. *BNN Bloomberg is a division of Bell Media, which is owned by BCE.


BCE’s stock has come down from $63-$64 down to $51.80, which was our own minimum expectation for the correction in this stock. Its intrinsic value upside potential had fallen to exactly zero at the peak, and we had been looking for a setback. Now that it’s here, the upside potential is 31 per cent, the yield has risen to 5.83 per cent, and the fundamentals appear to be strengthening as well. I would expect a decent rebound here, and with the yield, could offer a good return over the next year.


If the markets are weakening and “fatigue is setting in” (IMF comment), then gold stocks may be coming back into their own, as central banks will be called on to provide support. Trump in particular has a two-year leash heading into the 2020 election, and a bear market (or coming out of one) will not work in his favor. He will be pushing hard for stimulus. Gold should shine.


Good yield, cheap relative to its intrinsic value and selling only a bit above book value.




PAST PICKS: OCT.  5, 2017

Ross Healy's Past Picks

Ross Healy, chairman at Strategic Analysis Corporation and portfolio manager at MacNicol & Associates Asset Management, reviews his past picks: Manulife Financial, Home Capital Group and Fortis.


  • Then: $25.43
  • Now: $20.49
  • Return: -19%
  • Total return: -17%


  • Then: $13.82
  • Now: $13.65
  • Return: -1%
  • Total return: -1%


  • Then: $45.22
  • Now: $41.18
  • Return: -9%
  • Total return: -5%

Total return average: -8%

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