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BNN Bloomberg Market Call Tonight – July 29 2019 – Past Picks

BNN Bloomburg Brett Girard


While the VIX remains just off 2019 lows, investors must remain vigilant and focus on portfolio management. The average retirement account holds three asset classes: equities, fixed income and cash. On the equity side, we recommend a portfolio of 30 stocks diversified by geography, industry and size of company. For fixed income, a laddered corporate bond portfolio and inflation linked bonds are critical. Lastly, we recommend holding cash in varying percentages to dampen the volatility of the market. An investor’s asset class allocations and the constituents within each asset class should be reflective of their time horizon and risk profile.

Taking this approach means investors can have comfort knowing their portfolio does not need to be adjusted for every news headline. For example, the bond market is pricing in a 0.25 or 0.5 per cent cut in interest rates by the Federal Reserve on Wednesday. Whether the cut happens, the magnitude of the cut is larger or smaller than expected and/or the language around the cut is dovish or hawkish, if an investor’s portfolio reflects their time horizon and risk profile, it’s unlikely any changes are required.

It would behoove investors to focus on the bigger picture. If your time horizon is longer than a decade, be in equities and be patient. The S&P 500 hit new highs 219 times this decade and can continue doing so over the long term.



  • Then: $63.56
  • Now: $65.07
  • Return: 2%
  • Total return: 3%


  • Then: $104.11
  • Now: $137.63
  • Return: 32%
  • Total return: 32%


  • Then: $122.72
  • Now: $115
  • Return: -6%
  • Total return: -6%

Return average: 10%


BAMa           Y           Y           Y
HEI           Y           Y           Y
HDB           Y           Y           Y


Video Transcription


Anita Sharma: Alright, we are with Brett Girard. It is time now for his past picks. Brookfield Asset Management, BAM, maturing 3% since May 27th of this year.

Brett Girard: So, let’s start and just zoom out.

AS: Sure.

BG: This has only been two months.

AS: Exactly. Of course.

BG: And whether it’s up or down, any of these stocks, it doesn’t really matter because it’s only two months. We- we look at holding periods of 10 to 20 years, so this is just a small fraction of that.

AS: We’ll throw up a 10 year in a bit.

BG: Yeah, and the 10 year doesn’t really matter. It’s just for investors out there, if you’re looking two months, even three months, performance, open the aperture and think about the longer term. Because every time you sell it, you’re going to have to pay taxes. So, find good companies and hold onto them for the long-term.

AS: Uh-huh.

BG: On Brookfield, this is- I mean, if you look at the 10-year.

AS: Yeah.

BG: This is a fantastic company.

AS: It’s a beautiful chart.

BG: (Laughs) It’s a beautiful chart. They made the Oak Tree acquisition, ah earlier in the year, so now they’re managing about 500 billion in capital. They’re generating fees off of that capital, and as they sell assets within, they get carried. As an investor, you participate alongside management of Brookfield. So, it’s a really nice way to play infrastructure, real estate, and private equity, that most people can’t access in their portfolio.

AS: Or, if they have in other areas, they’ve been met with scandal and so on and so forth.

BG: Yes, that’s right, yeah. And it’s a Canadian name, so you’re not too worried about the effects because you can buy in Canadian dollars. Because they’re 500 billion of capital, they’re one of, if not the largest asset manager, depending on how you look at it in the world, they have scale. So, scale allows them to write big checks. They can take down a 5 billion dollar, 10 billion dollar asset, that most people it would be the size of their fund or even larger. So that gives them an advantage there, they have resources around the world, they literally invest in almost every developed country, and many developing countries right now. And over the long term, I think that the different types of assets that they have and the ways that they can creatively find these different assets are really interesting. So you know, just three assets that they own—they bought General Growth’s shopping malls in the U.S. at a distressed price because arguably retail’s coming off a cliff. I have a good feeling that Brookfield will figure out how to deal with that. They have pipelines in Colombia, and they have nuclear infrastructure—they actually bought G.E.’s nuclear business Westinghouse, I think last year, or two years ago.

AS: Uh huh.

BG: So for the long-term, fantastic company to hold.

AS: Alright, in the short-term, or maybe a long-term play as well, HEICO Corp. Now this is your play on Boeing, right?

BG: That’s right. Yeah. So, HEICO makes airplane replacement products. They’re a certified dealer of these things.

AS: You happy with this return?

BG: Again it doesn’t-

AS: I know.

BG: Yeah.

AS: But you’ve got to enjoy-

BG: You know what, I’ll take it.

AS: Yeah.

BG: But it doesn’t really matter. Again, we’ve got to look over 10 years and see what the 10 year chart looks like. Uh, it actually happened that it popped the day after I was on, so it just, just read my mi-

AS: (Laughs) Hey, you’re honest. We’ll take that, we’ll take that.

BG: Yeah, yeah. So, so with HEICO what you’re getting is exposure to all of these planes that are coming back into the fleet. So the Max 8’s been out, and now all these planes are coming back in, because there are still routes that need to get flown. So this over the long-term has been a very strong company. They also have an electronic technologies group that doesn’t deal with replacement parts, it actually deals with space. So, as the Jeff Bezoses and the Elon Musks of the world think about space travel, they’re going to end up using HEICO products in their whatever spacecraft or aircraft tend to look like-

AS: Don’t forget Raul or was it Richard-

BG: And, Richard Branson, of course. Yeah with chimef.

AS: Isn’t he the one who’s first? Seems like he’s first to plate there.

BG: Yeah, right, yes. Those-

AS: But you never know, it’s a tight race. It’s interesting.

BG: They’ll all need HEICO at some point.

AS: (Laughs) There you go. All right, let’s round this out with HDFC Bank, it trades in New York.

BG: Yup, so this is-

AS: Now this one you made, okay you’re in the water a little bit, by about 6%, do you own this? Still?

BG: Yes. Yup. Yeah for sure, again-

AS: This is a long-term play? Yup.

BG: Ten to 20 years, right? So what we’re looking here is at the growth in India. The overnight rate in India has come down, but it’s still above 6%, relative to 2 and change where it is in Canada and the U.S. It’s the- India is the second most populated nation in the world. They’re only about 70 million people behind China. And they’re expected to eclipse China, I think it’s in the next two to three years. So, what’s happening is there’s a lot of people moving from the countryside into the city. As people move from the more rural agrarian lifestyle into this sort of urban or suburban lifestyle-

AS: Especially where the tech centers are located. Right? Yeah.

BG: Exactly. Nearby Delhi. They need to get banked. So, they need to go to a bank, there’s going to be deposits there, again, over the long-term, this is a great company, this is something that people should really think about. You know, instead of adding your fifth bank into your portfolio, your fifth Canadian bank, get something international. HDFC is a great way to go on that.

AS: That’s an interesting play because I—and I don’t know the stats offhand— but with respect to India, there’s still like a significant portion of people, and I guess a lot of them are rural-based so that makes sense, that don’t even have access to a bank right now. And I think under a second mandate Prime Minister Narendra Modi, that’s what he’s really trying to change. He’s trying to eradicate the black money situation and really get some more uh, transparency if you will, and get folks who are hiding their money under their mattresses to get to a bank.

BG: Right. And who stands to benefit from that? You know, HDFC is the second largest bank behind ICICI, so they’re you know, front and center with the political agenda there.

AS: All right, so you get a banking play, and you get an emerging markets play. Kind of a two-fer as we say, maybe even a three-fer. All right, Brett, thank you so much for that, we’re going to take a break here on Market Call Tonight. We’re going to be coming back with Brett Girard and your phone calls. 1 (855) 326-6266.

At the end of the video, there is a final slide at reads: DISCLAIMER. Market Call Tonight is intended to provide viewers with information about stock markets and financial activity. BNN Bloomberg recommends you consult a professional financial advisor before making personal investments of any kind. Derivatives trading involves a high risk of loss and is not suitable for most investors. Past performance is not a guarantee of results.

BNN Market Call Tonight – November 2, 2018 – Market Outlook


I’m not convinced that we’re out of the woods yet. These markets still appear to be expensive. Here’s why:

  1. Midterm elections are around the corner. If the Democrats win, U.S. politics will be deadlocked for another two years.
  2. By next spring, earnings growth won’t have the benefit of tax cuts. From what I’ve seen so far, earnings growth for most U.S. companies is at 0 to 10 per cent when not accounting for tax cuts: That’s average at best and not as stunning as many analysts tout.
  3. Emerging market issues have reduced growth for U.S. multinational companies. This is especially those in the technology sector. The same thing occurred in 1997 during the Asian contagion which preceded the bursting of the tech bubble in 2000.
  4. The Federal Reserve should continue on its rate hike policy through December. Rising short-term rates pressure companies as they operate by borrowing in the short-term markets. This slows down their capacity to hire, innovate and acquire.
  5. Wages are quietly rising. The news today was that salaries rose just over 3 per cent. Rising wages is something else corporations have to deal with on the cost side of their businesses.

So what’s an investor to do?

  1. Stop trading and start investing. Share prices are only important when buying and selling. This is similar to your home: The only time its price is relevant is when you buy it or sell it. Since two-thirds of all long-term performance come from rising dividends and the re-investment of those dividends, investors should focus more on the rate of dividend increase, not the stock price or the current yield. Trading actively just pays for your broker’s retirement, not yours.
  2. Hold some cash and wait for better opportunities. In the past decade, it’s been a successful strategy to buy on the dips. But those investors haven’t seen markets like 2008, when buying on the dips could have bankrupted you because the market kept trending lower between December 2007 and March 2009. The cash-on-hand is to buy after a big correction (20 per cent or more), when valuations get cheap. While the market dropped significantly in October, it still hasn’t made it back to where it was at the end of September.
  3. Think about portfolio structure and have a plan in place. Now is the time to have a diversified portfolio to avoid correlation risk (too many names in the same sector) and concentration risk (too much ownership of one stock).
  4. Be patient and unemotional. Emotional investors sold at the bottom of the market in 2008 and never returned. They missed the best 10-year bull market in our lifetime. Be more practical instead, like Warren Buffett. Be an investor in a business, not a speculator, and let the dividends grow.

BNN Market Call Tonight – October 12, 2018 – Market Outlook


Given the market volatility of the past few weeks, it’s important for investors not to lose their heads. Here are some guidelines for getting through crucial market moments:

  1. We’re just entering earnings season. This should reveal if companies’ earnings are slowing because of tariffs and higher input prices. No need to do anything until we see the impact of earnings on stock prices.
  2. U.S. midterm elections are coming up. If the Democrats win the House and/or the Senate, the market could sell off violently as Washington would return to partisan politics and create a deadlock on any future legislation being passed. Again, no need to do anything until then.
  3. From a technical standpoint, the markets still aren’t oversold yet so we don’t really see any screaming opportunities.
  4. In our estimation, the market top on the S&P 500 Index would be 3,700, which would be similar in valuation to the 1929 and 2000 peaks. Conversely, we’d only be interested in adding to our positions with any significance if the S&P 500 fell to 2,200 (20 per cent lower than today) where valuations make more sense. Remember, Wall Street pushes “adjusted earnings,” which are artificial as they don’t include interest on debt, taxes and depreciation.
  5. Holding cash makes more sense than ever. The maximum needed is 20 per cent. There’s no need to go over that amount because you’ll then have to find the market bottom (which nobody has ever been able to do).
  6. Avoid correlation risk in your portfolios. Owning similar stocks would have sent your portfolio down further than most, especially if you’re heavily tech-weighted.
  7. Avoid concentration risk. We hold 30 stocks in our portfolios with an average weight of 3 per cent. If one of them becomes a 6 per cent holding, we automatically sell half. This rebalancing helps protect the downside.
  8. You haven’t lost any money unless you sell.
  9. Time and compounding is how you make money. Two-thirds of all stock market performance in history has come from rising dividends and the re-investment of those dividends. If you want to retire wealthy, you have to let the dividends grow.
  10. If you wish to buy stocks in this market, we suggest you buy only half positions to start and sit back and watch what happens next.

In the end, there’s no reason to try to be a hero in these heady markets. Instead, discipline will carry the day.

BNN Market Call Tonight – March 28, 2018 – Market Outlook


We expect increased volatility across all asset classes – stocks, bonds, commodities and real estate — meaning investors have to be patient and diligent to find buying opportunities. Stock valuations still appear to be stretched. The market could easily go sideways for the next two years until earnings catch up to current prices. Or, in the interim, the stock market could fall 20 per cent  to return to proper equilibrium.

For investors, it’s important to:

  • Hold cash to prepare for market corrections or to take advantage of buying opportunities. We currently hold 20 per cent cash times the client’s equity weighting. If the portfolio is 100 per cent equities, they’ll hold 20 per cent cash. If the asset mix is 50 per cent stocks and 50 per cent fixed income, they’ll hold 10 per cent cash (50 per cent multiplied by 20 per cent).
  • Stop reaching for yield. A stock’s current yield isn’t as important as the dividend growth rate. The average dividend payer on the TSX Index increased its dividends by 9 per cent this year. For the S&P 500 Index, it was 11 per cent. Dividend growth is necessary to offset inflation. Buying a stock with a high yield but no dividend growth means that inflation eats away at an investor’s spending power and the value of the investment deteriorates over time. This is especially bad for retirees.
  • Take advantage of opportunities. If a stock drops 20 per cent more than the overall market performance and there’s nothing wrong with the business model, this often presents buying opportunities.