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I would like to invite you to like our new Facebook page – look for ‘Todd Kennedy, Senior Portfolio Manager of RBC Dominion Securities’ if you are so inclined.  You can also simply check this link Todd Kennedy Facebook page.  I will put articles and other things there that will not be included on our Website or this newsletter.  It’s new so still a work in progress in terms of building up content.

 

PORTFOLIO MANAGEMENT CONFERENCE JANUARY 2025 Part 3

• Tom Lee (pictured below) is the CEO of Fundstrat.  He spoke at 4PM on Day 2 and people were lined up outside to get selfies with him so I guess that means that he is kind of a big deal.
• Tom Lee’s 2025 Year Ahead Forecast
• He is looking for a good first half to 2025 then tapering off the second half (a bit lower in December than in June)
• Talked a lot about what happens the year after back to back 20% gains but not a lot of samples to get data from
• Year end target for S&P 500 of 6600 is 22 times $300 earnings per share for 2026
• He likes bitcoin and small caps so not for the faint of heart
• Strong stock market is important to Trump
• 2025 will be a tale of two halves
• DOGE will be effective.  Risk may be that it is too effective
• Tariffs and deportations not priced into market
• Mag 7 names too overcrowded
• Manufacturing numbers went down in 2020 (below the key metric of 50) and never recovered
• Fed may make mistakes later this year
• Political divisiveness a headwind

 

Bianco Research Look Forward to 2025

• Economies recover differently after each recession
• Yet, capitalist economies want to grow
• Rates will be higher FOREVER
• Some ratios valuing US market are highest we’ve ever seen
• Stocks won’t drastically outperform bonds the next decade so why take on the risk?
• Bonds used to be disaster insurance but now they actually can provide a return
• Companies aren’t going public because it is a hassle so this will lead to more private credit and alternative investing opportunities
• They have a US$ bond ETF that I will take a look at

 

Alternative Investing Panel

• You will be hearing more about this from us as the space becomes more ‘retail investor’ friendly
• 4 main areas – 1) Private equity, 2) Private credit, 3) Absolute return (long / short), 4) Opportunistic
• They are doing things we can’t do like shorting a sector, taking activist positions
• Picton Mahoney was part of panel and said equities have outperformed the usual soft-landing narrative
• US household equity ownership at prior market peaks
• Market pricing in good news and inflation story is not over

 

Veritas

• Veritas acts more of less like a forensic accountant but they do have macro views
• The S&P 500 is up based on multiple expansion and this weighs on seven companies
• Earnings expectations are high
• Canadian market relatively cheap
• Inflation could be stickier than expected
• The yield curve has un-inverted
• Neither the bond or equity market seems concerned with the 2 points above
• Earnings and growth expectations are bullish
• NVDA investing in ‘customers’ who are then buying product from NVDA.  Seems odd
• S&P 500 up 53% since low of Oct 2022, 7% of this is earnings and 46% is multiple expansion

 

Retained learnings

• Avoid embarrassing losses (does this mean they are OK if not embarrassing?)
• Being negative is alluring because you sound smart (even when you are wrong)
• Being early is like being wrong
• Stay humble

AND:

• If something sounds too good to be true, it probably is (there is no free lunch especially with investing)
• Cash flow more important than earnings (top line vs bottom line)
• Notes in financial statements more important than management commentary
• Emotions have no place in investment decisions
•  

Regards,

 

Todd Kennedy