Things are looking up for active equity investment strategies, said Brian Belski, chief investment strategist with BMO Capital Markets at the Portfolio Management Association of Canada’s annual conference in Toronto on Tuesday.
“We’re entering into a golden age of stock picking,” the famously bullish investor said. “Absolutely, positively, never bet against the U.S. consumer. Never bet against the Canadian consumer.”
Belski — who forecast a 25-year bull equities market in the depths of the credit crisis in 2009 — told his audience that “the United States stock market is the best stock market in the world. Canada is number 1b.”
Canadian stocks may even outperform their U.S. counterparts in the near term as our equity market hasn’t fully priced in the positive effects of a new Republican White House and Congress. “You have to play a game of catch up,” he said, “and the Bank of Canada has been very accommodating.”
Belski is especially bullish on small- and mid-cap equities, calling them “the golden child of the next decade. I think that 10 years out, we’re going to be kicking ourselves that we didn’t own enough small and mid cap in the U.S., especially small-cap value.”
Look for companies that have improved their balance sheet thanks to low lending rates, he advised. “A lot of them are paying dividends now,” he said. “[They have] amazing cash flow, yields are great. And earnings are discernible, meaning understandable.”
Belski recommended technology, consumer and financial equities. “You’re entering into a three- to five-year period where you want to be broadly distributed across all sectors — growth and value, small, medium and large cap.”
Here at home, Canadian banks are “massively under-owned… They’re going to buy back a ton of stock and they’re going to pay bigger dividends.”
Large technology companies such as Apple, Amazon and Google are also key — they have become the new consumer staples. “We used to say as GE goes, so goes the market,” Belski said. “Now it’s as tech goes, so goes the market.”
He delivered all this with a dose of practice management advice too.
“Our job is to give them enough Zantac, Xanax and lithium to slow down in terms of all of the emotions and things that are being thrown in their way,” he said. “Make them money. Be consistent. Be professional.”