FOCUS 2026: A high-quality approach to investing in Canada and the U.S. – Darren Lekkerkerker

00:00.000 --> 00:06.239

Subtitles are AI Generated

 

00:06.239 --> 00:08.041

Hey, Darren, good to have you in Nashville.

 

00:08.041 --> 00:09.275

Hey, Glen, I'm fired up.

 

00:11.478 --> 00:14.447

That was a great discussion from Will and it made

 

00:14.447 --> 00:17.650

me think about how much as his team works together

 

00:17.650 --> 00:20.620

but everybody in Boston works together so well.

 

00:20.620 --> 00:24.190

That's true in Toronto as well where you are residing.

 

00:24.190 --> 00:27.160

I think Andrew's built a really interesting situation in

 

00:27.160 --> 00:29.896

Toronto where you're all in these pods, and you all talk to

 

00:29.896 --> 00:32.365

each other and you challenge each other, analysts,

 

00:32.365 --> 00:35.402

portfolio managers, and that's the same in Boston.

 

00:35.402 --> 00:38.138

What's interesting is when you started earlier in your

 

00:38.138 --> 00:40.607

career you were working in Boston, even though you're

 

00:40.607 --> 00:42.609

Canadian, the team was based in Boston.

 

00:42.609 --> 00:44.511

You must have learned a lot working with all the folks down

 

00:44.511 --> 00:45.512

there.

 

00:46.079 --> 00:49.215

Glen, first off, I want to actually speak to whoever made

 

00:49.215 --> 00:51.951

the itinerary today because whenever you're doing public

 

00:51.951 --> 00:55.088

speaking one rule is you never want to follow the keynote

 

00:55.088 --> 00:57.157

speaker. So Will, right?

 

00:57.157 --> 00:58.825

How do I ... he's an industry legend.

 

00:58.825 --> 00:59.826

Who'd you have dinner with last week?

 

01:00.760 --> 01:03.897

I think it's one of his final presentations, maybe, I'm not

 

01:03.897 --> 01:06.699

sure. How hard is it to follow that?

 

01:06.699 --> 01:09.436

First off, I don't know who made the schedule but I'm going

 

01:09.436 --> 01:10.470

to find you.

 

01:13.706 --> 01:17.710

I started with the company in Boston in 2004.

 

01:17.710 --> 01:20.046

It's been a couple of years since then.

 

01:21.748 --> 01:23.983

I went to school, did my MBA in the US.

 

01:23.983 --> 01:27.887

I was very lucky and very grateful to

 

01:27.887 --> 01:30.990

join the firm. I read all the Peter Lynch books growing up

 

01:30.990 --> 01:32.759

so I was very excited.

 

01:32.759 --> 01:35.762

I think one thing that's great about Fidelity is it has

 

01:35.762 --> 01:38.731

a collegial culture which really

 

01:38.731 --> 01:41.768

allows you to learn a lot from the

 

01:41.768 --> 01:44.838

portfolio managers and from your peers

 

01:44.838 --> 01:48.274

as well. For me, I learned a lot

 

01:48.274 --> 01:51.444

from the different portfolio managers,

 

01:51.478 --> 01:54.013

including Will. What did I learn from Will, if you were

 

01:54.013 --> 01:55.348

going to ask that?

 

01:55.348 --> 01:57.517

He has unbelievable work ethic.

 

01:59.018 --> 02:02.689

He was the top PM when I joined in 2004.

 

02:03.790 --> 02:06.826

I noticed that he went to an exhausting amount

 

02:06.826 --> 02:07.827

of meetings.

 

02:10.263 --> 02:13.233

Fidelity rotates its analysts through different sectors.

 

02:13.233 --> 02:16.336

The least popular sector that I covered was

 

02:16.336 --> 02:19.305

Canadian healthcare stocks in the mid-2000s.

 

02:19.305 --> 02:21.774

Most of them were just terrible.

 

02:21.808 --> 02:24.043

There's a few good ones in there but most of them were

 

02:24.043 --> 02:25.678

terrible companies.

 

02:25.678 --> 02:27.380

He came to all the meetings.

 

02:27.380 --> 02:29.782

I don't think he came for the full one hour but he came for

 

02:29.782 --> 02:32.352

10 minutes, greeted the companies, kind of got an

 

02:32.352 --> 02:35.321

assessment of whether this was something interesting or

 

02:35.321 --> 02:37.690

whether he could learn about a bank shot to another

 

02:37.690 --> 02:40.693

company. I've tried to take that from him and think

 

02:40.693 --> 02:44.097

like, hey, we have this incredible amount of access

 

02:44.097 --> 02:47.167

to corporate CEOs and CFOs and you can learn

 

02:47.167 --> 02:50.203

a ton when you sit down with someone for

 

02:50.203 --> 02:53.039

an hour about their company, that industry so I've tried to

 

02:53.039 --> 02:54.908

take that.

 

02:54.908 --> 02:56.176

It was a great experience for me.

 

02:56.176 --> 02:58.244

That's a great takeaway. Then, of course, you moved up to

 

02:58.244 --> 03:00.713

Toronto with team Canada and now you've got that group of

 

03:00.713 --> 03:03.249

people that you all work together with and the companies

 

03:03.249 --> 03:05.685

that come and visit in Toronto.

 

03:05.685 --> 03:08.321

Obviously, something you've learned when you were in Boston

 

03:08.321 --> 03:10.623

and through the group that you work with in Toronto is how

 

03:10.623 --> 03:13.660

to apply risk controls to what you manage.

 

03:13.660 --> 03:15.862

You've a wall full of Lipper Awards which are about

 

03:15.862 --> 03:17.564

risk-adjusted returns.

 

03:17.564 --> 03:20.433

Congratulations on the success that you've had, the returns

 

03:20.433 --> 03:22.468

but also the risk control that's in place.

 

03:22.468 --> 03:25.238

Why don't we start with the ownership mindset that you

 

03:25.238 --> 03:26.506

apply to your portfolios.

 

03:27.674 --> 03:28.675

Thanks, Glen.

 

03:30.577 --> 03:33.213

Number one I'm focused on investing in high quality

 

03:33.213 --> 03:36.149

businesses. In terms of the ownership mindset, I just think

 

03:36.149 --> 03:39.152

of investing in a company as not buying a

 

03:39.152 --> 03:42.555

stock but you're a minority owner in a country.

 

03:42.555 --> 03:45.725

Maybe that changes my approach, I think a little bit longer

 

03:45.725 --> 03:48.595

term with the company.

 

03:48.595 --> 03:51.731

If you're going to own part of a company do you like this

 

03:51.731 --> 03:53.132

business? Is it a great business?

 

03:53.132 --> 03:54.534

Is it going to continue to be a great business?

 

03:54.534 --> 03:57.370

Is it getting better over time?

 

03:57.370 --> 04:00.373

If there was a financial metric that I would anchor

 

04:00.373 --> 04:03.142

to it would be return on invested capital.

 

04:03.142 --> 04:06.179

Importantly, is it above average but maybe more

 

04:06.179 --> 04:08.781

importantly is it rising? Is it gonna rise over time?

 

04:08.781 --> 04:11.985

Is that competitive advantage going to be sustained

 

04:11.985 --> 04:14.420

or even accelerate?

 

04:14.420 --> 04:15.421

Two, management.

 

04:17.991 --> 04:21.094

Ideally, you want management going to bed thinking  how

 

04:21.094 --> 04:22.462

do I grow the stock price?

 

04:22.462 --> 04:24.297

You can't be in their bedroom, obviously, that would be

 

04:24.297 --> 04:25.298

weird, but we can

 

04:27.967 --> 04:30.503

look at the filings. How many shares do they own?

 

04:30.503 --> 04:33.039

How do they achieve their bonus?

 

04:33.039 --> 04:36.042

I interview, and our team interviews, all of the

 

04:36.042 --> 04:38.645

management teams before we invest, sometimes for many years

 

04:38.645 --> 04:41.914

before we invest, how they executed,

 

04:41.948 --> 04:45.351

what's their approach to capital allocation,

 

04:45.351 --> 04:47.787

which just means investing the excess free cash flow of the

 

04:47.787 --> 04:50.156

company. You want them simply to do the best risk-adjusted

 

04:50.156 --> 04:51.758

return thing.

 

04:51.758 --> 04:54.360

Then valuation, what is the price that we

 

04:55.361 --> 04:57.997

pay. For me, I care more about owning a wonderful business

 

04:57.997 --> 05:01.200

with strong fundamentals over

 

05:01.200 --> 05:05.438

getting the dirt cheap price but, ideally, if we can do

 

05:05.438 --> 05:06.439

both that would be great.

 

05:07.507 --> 05:10.677

With North American Equity Fund,

 

05:10.677 --> 05:13.646

I'm assuming you're, if not the largest shareholder,

 

05:13.646 --> 05:15.915

one of the largest unitholders within the fund.

 

05:15.915 --> 05:18.284

How does that affect what you buy and sell for the

 

05:18.284 --> 05:20.953

portfolio? You've got a real stake in it.

 

05:22.955 --> 05:24.524

How does it impact me?

 

05:24.524 --> 05:26.993

One, I care a lot about that absolute returns.

 

05:26.993 --> 05:30.063

Who cares if you're up 30 basis

 

05:30.063 --> 05:33.066

points or 40 basis points but your

 

05:33.066 --> 05:34.400

fund's down 1%?

 

05:34.400 --> 05:35.802

That sucks, you lost 1%. I

 

05:37.370 --> 05:38.638

think about that too.

 

05:38.638 --> 05:42.041

I don't think about this sort of institutional

 

05:42.041 --> 05:44.744

investing mindset where you have these active underweights

 

05:44.744 --> 05:48.081

where you don't like a stock but it's 5% in the benchmark

 

05:48.081 --> 05:50.616

so maybe you take a 2% position and then you say, hey, I'm

 

05:50.616 --> 05:52.785

3% underweight and then you cheer when it goes down 10%.

 

05:52.785 --> 05:56.322

That sucks because you lost 10% on that 2%

 

05:56.322 --> 05:58.891

position. So it does change the way I invest a little bit.

 

06:00.059 --> 06:04.130

North American Equity Fund is Canada and the US.

 

06:04.163 --> 06:08.134

You also took over the American Equity Fund in January.

 

06:08.134 --> 06:09.602

What excites you about that?

 

06:10.837 --> 06:13.940

It was an incredible honour for me to be asked to

 

06:13.940 --> 06:14.941

run that fund.

 

06:16.008 --> 06:19.645

Why was I asked by our

 

06:19.645 --> 06:21.347

CIO, Andrew Marchese?

 

06:21.347 --> 06:24.517

I think Andrew and the management liked

 

06:24.517 --> 06:27.520

what they saw on the returns for the North

 

06:27.553 --> 06:31.124

American Equity Fund. North American Equity Fund is 70%

 

06:31.124 --> 06:33.092

in the US and 30% in Canada.

 

06:33.092 --> 06:35.528

I think they disaggregated the returns.

 

06:35.528 --> 06:39.699

They looked at the US returns, they were very strong.

 

06:39.699 --> 06:41.467

I think they just wanted me to apply that

 

06:41.467 --> 06:44.504

same approach and process

 

06:44.504 --> 06:46.906

to the American Equity Fund.

 

06:46.906 --> 06:49.108

I'm not gonna say it was easy,

 

06:50.109 --> 06:51.477

you never want to say that when your managers are

 

06:51.477 --> 06:54.580

listening, nothing's easy, but I was able to just

 

06:54.580 --> 06:57.583

take the US side of North American Equity Fund and apply

 

06:57.583 --> 07:00.787

it to the entire

 

07:00.787 --> 07:03.756

fund, American Equity. I just took 70% of a fund, now

 

07:03.756 --> 07:07.059

I'm running the American Equity in this similar way.

 

07:07.059 --> 07:08.795

Okay, that makes a lot of sense, and were you able to do

 

07:08.795 --> 07:10.329

that very quickly?

 

07:10.329 --> 07:13.666

Yeah, I was able to do that over two

 

07:13.666 --> 07:16.702

or three, probably mostly two trading days.

 

07:16.702 --> 07:20.706

The goal for American Equity Fund is to achieve what

 

07:20.706 --> 07:24.043

we've achieved on North American Equity Fund

 

07:24.043 --> 07:25.912

over the past year. What is that?

 

07:25.912 --> 07:29.115

Compound at a high absolute rate of return,

 

07:29.115 --> 07:32.318

beat the benchmark and win or

 

07:32.318 --> 07:34.587

do extremely well versus the peers in the category.

 

07:37.123 --> 07:39.525

Let's talk about Canada and the States.

 

07:39.525 --> 07:42.161

There's lots going on between the two markets these days.

 

07:42.161 --> 07:44.263

Where are you seeing opportunities when you look at the

 

07:44.263 --> 07:45.998

whole of North America?

 

07:45.998 --> 07:49.268

One thing I think is really interesting to talk about,

 

07:49.268 --> 07:52.405

actually there's lots but one thing

 

07:52.438 --> 07:55.708

where we can start, I think super interesting is Canada.

 

07:57.376 --> 08:00.513

I feel like running a North American Equity Fund

 

08:00.513 --> 08:04.016

nobody wanted to talk Canada for almost the past 10 years.

 

08:04.016 --> 08:07.220

Canada's been a really good, sneaky success

 

08:07.220 --> 08:10.456

story. If you had told me a year

 

08:10.456 --> 08:13.860

ago following the

 

08:13.860 --> 08:17.096

unveiling of the so-called Liberation Day tariffs

 

08:17.096 --> 08:20.500

in, I guess, March April of last year that

 

08:20.500 --> 08:23.536

we being Canada would have

 

08:23.536 --> 08:25.505

a sustained trade war with the US I

 

08:26.639 --> 08:29.609

would have thought, wow, I don't know where stocks will

 

08:29.609 --> 08:31.310

be, probably not in a great place.

 

08:31.310 --> 08:33.045

But look at the S&P/TSX.

 

08:33.045 --> 08:36.549

It's done fantastic. If you look at exposed

 

08:36.549 --> 08:39.585

sectors like industrials and

 

08:39.585 --> 08:41.687

financials, banks, up and to the right.

 

08:41.687 --> 08:43.322

They've done really well. Why is that?

 

08:44.457 --> 08:47.426

I think it's because Canada is having an investment super

 

08:47.426 --> 08:48.427

cycle.

 

08:49.028 --> 08:52.498

I haven't used that word, I feel like, since the resource

 

08:52.498 --> 08:55.401

super cycle of the mid-2000s so it's kind of fun to use

 

08:55.401 --> 08:56.736

that word.

 

08:56.736 --> 08:57.904

Why is that?

 

08:57.904 --> 09:00.406

I think number one, in Canada we get a lot of press about

 

09:00.406 --> 09:02.408

the nation-building projects.

 

09:02.408 --> 09:05.144

There's a lot a nation-building projects across energy

 

09:05.144 --> 09:08.247

infrastructure like pipelines, LNG, the

 

09:08.247 --> 09:11.317

Arctic, defence, other sort

 

09:11.317 --> 09:12.718

of infrastructure areas.

 

09:12.718 --> 09:14.253

There's a resource investment cycle.

 

09:14.253 --> 09:17.423

Copper's at $6.60

 

09:17.423 --> 09:20.560

a pound, oil's at $88 a

 

09:20.560 --> 09:24.063

barrel, gold's at over $4,000 an ounce.

 

09:24.063 --> 09:27.066

There's companies trying to add

 

09:27.066 --> 09:28.334

capacity here.

 

09:28.334 --> 09:31.270

Then there's an AI investment CapEx cycle.

 

09:31.270 --> 09:34.140

So Canada has an investment super cycle and it's really

 

09:34.140 --> 09:37.209

benefiting the companies. I think that the best and most

 

09:37.209 --> 09:40.346

direct way to invest in that has been through Canadian

 

09:40.346 --> 09:41.347

industrial stocks.

 

09:43.015 --> 09:46.385

You said earlier that North American Equity Fund is 70%

 

09:46.419 --> 09:47.887

US, 30% Canada.

 

09:47.887 --> 09:49.355

Would you increase that 30?

 

09:49.355 --> 09:52.491

Can you go within

 

09:52.491 --> 09:55.595

certain parameters? How does it go allocation wise?

 

09:56.028 --> 09:58.764

So 70/30 is the long term target.

 

09:58.764 --> 10:00.533

It's very close to that today.

 

10:00.533 --> 10:04.103

I don't think about it in a top-down way

 

10:04.103 --> 10:07.139

to think, hey, I like Canada so I want to get to 50 so let

 

10:07.139 --> 10:10.076

me find the best ideas. Instead, it's more driven

 

10:10.076 --> 10:11.077

by bottom-up.

 

10:11.744 --> 10:14.981

Also, another point when you're asking me about this fund,

 

10:14.981 --> 10:17.149

don't think of that 30% as 30%

 

10:18.184 --> 10:20.987

of a Canadian fund because it's not.

 

10:20.987 --> 10:24.023

I just have best ideas in Canada in there

 

10:24.023 --> 10:27.627

that get to that 30 as opposed to

 

10:27.627 --> 10:30.529

just taking a Canadian find and multiplying it by 30

 

10:30.529 --> 10:30.830

[crosstalk].

 

10:30.830 --> 10:33.265

Well, that makes a lot of sense, thank you for that.

 

10:33.265 --> 10:35.568

AI remains a really high focus for you.

 

10:35.568 --> 10:38.437

I know you were just in San Francisco a month or month and

 

10:38.437 --> 10:40.473

a half ago for a conference as well.

 

10:40.473 --> 10:41.641

Let's hear your thoughts on AI.

 

10:44.877 --> 10:47.913

I think last time I talked to you I was at the

 

10:47.913 --> 10:51.083

Goldman Sachs TMT conference

 

10:51.083 --> 10:52.084

actually last month.

 

10:53.953 --> 10:57.056

I'm bullish on AI demand, I'm bullish on

 

10:57.056 --> 10:59.525

infrastructure companies.

 

11:00.559 --> 11:03.663

Why is that? I think it's a pretty exciting time.

 

11:05.731 --> 11:07.133

I got the Meta Muse app.

 

11:07.133 --> 11:08.601

Do you have that app, by the way, Glen?

 

11:08.601 --> 11:09.535

What does it do?

 

11:09.535 --> 11:12.571

My wife's here, and I've just been playing

 

11:12.605 --> 11:14.974

with it so one of the things that was fun was I was just

 

11:14.974 --> 11:18.711

asking, okay, we're in Nashville, where should we go?

 

11:18.711 --> 11:20.312

Hey, that's a great restaurant.

 

11:20.312 --> 11:22.448

It recommended one of restaurants that my wife was actually

 

11:22.448 --> 11:23.816

pretty excited to go to anyways.

 

11:23.849 --> 11:26.986

I looked on OpenTable,

 

11:26.986 --> 11:29.855

it wasn't on OpenTable, so I was like can you make the

 

11:29.855 --> 11:32.191

reservation? It just went to the website and made it so

 

11:32.191 --> 11:33.492

that was one cool thing.

 

11:33.492 --> 11:36.328

I think it can do a lot more things once you let it

 

11:36.328 --> 11:39.031

integrate more into your life but I'm taking it a little

 

11:39.031 --> 11:40.366

slow and just seeing what it can do at first

 

11:42.802 --> 11:45.771

If we think about AI, demand is

 

11:45.771 --> 11:48.741

up and to the right, very, very strong if

 

11:48.741 --> 11:50.543

we look at the different KPIs.

 

11:50.543 --> 11:53.713

I think that will continue so I'm interested in

 

11:53.713 --> 11:55.247

AI infrastructure stocks.

 

11:55.247 --> 11:57.483

I think it's a little different than earlier in the year

 

11:57.483 --> 11:59.552

where it was almost like a blanket, like all the AI

 

11:59.552 --> 12:01.387

infrastructure stocks went up.

 

12:01.387 --> 12:03.823

I am a little more focused. I'm kind of focused on finding

 

12:03.823 --> 12:06.792

some of the companies with lower P/Es

 

12:06.792 --> 12:09.962

or maybe where there's more of a transformation going

 

12:09.962 --> 12:13.132

on in the subsector, or also companies

 

12:13.132 --> 12:16.235

where they may actually have negative sentiment towards

 

12:16.235 --> 12:19.972

them but we think that there is an AI angle

 

12:19.972 --> 12:21.941

where the market's not as focused on that.

 

12:21.941 --> 12:24.276

That's how I'm thinking about investing in AI.

 

12:24.276 --> 12:26.112

I also like the hyperscalers.

 

12:27.113 --> 12:28.681

Why do I like the hyperscalers?

 

12:28.681 --> 12:30.483

They had a really good ...

 

12:30.483 --> 12:33.452

they didn't do well generally in the first half

 

12:33.452 --> 12:36.422

of the year but they had a really good second quarter

 

12:36.422 --> 12:39.492

earnings. We saw revenue growth  particularly from the

 

12:39.525 --> 12:43.395

cloud business as well as digital advertising businesses

 

12:43.395 --> 12:45.297

increase in terms of orders,

 

12:46.365 --> 12:47.767

bookings, revenue.

 

12:47.767 --> 12:50.803

Margins go up, also, operating cash flow go

 

12:50.803 --> 12:54.240

up. One of the negatives is

 

12:54.240 --> 12:57.409

CapEx. CapEx has been increasing at

 

12:57.409 --> 13:00.479

a rate that is much faster than

 

13:00.479 --> 13:03.249

revenues have. CapEx intensity has gone up.

 

13:03.249 --> 13:05.451

Free cash flow has gone down.

 

13:05.451 --> 13:07.953

I think that over the next couple of years we will see

 

13:07.953 --> 13:10.322

CapEx intensity improve.

 

13:10.322 --> 13:13.659

Why will it improve? I think these investments will

 

13:13.659 --> 13:16.896

scale and result in revenue so you'll see revenue go up.

 

13:16.896 --> 13:19.932

I also think the mix of CapEx between where they're

 

13:19.932 --> 13:22.468

investing between land, buildings, chips, networking stuff

 

13:22.468 --> 13:24.470

will change and improve revenue.

 

13:24.470 --> 13:26.772

I also will think there will be some efficiency gains as

 

13:26.772 --> 13:30.075

some of the companies also optimize

 

13:30.075 --> 13:33.746

their chips in favour of in-house custom chips.

 

13:33.746 --> 13:36.949

I think we'll see CapEx intensity improve,

 

13:36.949 --> 13:39.185

although I think CapEx dollars continue to grow and I think

 

13:39.185 --> 13:42.421

free cash flow gets better. I like the hyperscalers here

 

13:42.454 --> 13:44.089

as well. I'll take a pause there and...

 

13:45.124 --> 13:46.692

Well, it sounds like you've got, like you said,

 

13:46.692 --> 13:49.595

hyperscalers but you also have what you've coined the

 

13:49.595 --> 13:52.097

phrase as AI losers as well.

 

13:52.097 --> 13:55.801

Could you sort of give us an idea from a

 

13:55.835 --> 13:58.571

sector standpoint what are some of the AI ...

 

13:58.571 --> 14:00.606

the balance that you have relative to the Mag-7?

 

14:03.409 --> 14:05.578

When we think about AI losers everyone in the room thinks

 

14:05.578 --> 14:06.579

of software.

 

14:07.413 --> 14:10.549

What also happened in the first half of this year,

 

14:10.549 --> 14:13.719

and maybe towards the end of last year, all

 

14:13.719 --> 14:17.022

of these sort of knowledge-based companies or industries

 

14:17.022 --> 14:19.491

went down.

 

14:19.491 --> 14:21.594

The share prices went down and people thought, okay, there

 

14:21.594 --> 14:24.530

was a risk to the terminal value here.

 

14:24.530 --> 14:27.066

For some of them it may make sense, I think for others it

 

14:27.066 --> 14:30.035

doesn't make sense. For me, I took a look through

 

14:30.035 --> 14:33.005

that list of companies and I found some really, really

 

14:33.005 --> 14:35.541

good companies that were trading at very cheap multiples,

 

14:35.541 --> 14:36.809

cheaper than historical.

 

14:36.809 --> 14:39.812

Some of them the fundamentals are good and strong and

 

14:39.812 --> 14:42.915

getting better, some of the fundamentals are more flattish

 

14:42.915 --> 14:45.651

but I'm willing to be a little patient.

 

14:45.651 --> 14:48.787

So what were some of the areas that I found exciting?

 

14:48.787 --> 14:51.690

I think number one within healthcare.

 

14:51.690 --> 14:53.726

I like healthcare, by the way. I think it's good to invest

 

14:53.726 --> 14:56.362

in healthcare. It's like a defensive industry, it's not

 

14:56.395 --> 14:57.363

cyclical.

 

14:58.063 --> 15:01.000

It tends to have a low correlation to AI so I can balance

 

15:01.000 --> 15:03.402

out my portfolio. I want to have a balanced stable

 

15:03.402 --> 15:05.971

portfolio when I invest.

 

15:05.971 --> 15:08.307

Within healthcare, though, I found the pharma services

 

15:08.307 --> 15:10.075

companies very interesting.

 

15:11.510 --> 15:13.646

Think of these companies as the picks and shovels companies

 

15:13.646 --> 15:16.348

for drug companies. I don't want to invest in biotech

 

15:16.348 --> 15:17.783

because I feel like there's too much risk.

 

15:17.783 --> 15:20.953

What if they don't succeed on the drug

 

15:20.953 --> 15:22.588

trial and the stock's down 30%?

 

15:22.588 --> 15:25.424

I don't want to own that and be up here telling you, okay,

 

15:25.424 --> 15:27.826

so here's why I thought ...

 

15:27.826 --> 15:29.595

I don't want to have to explain that. Instead I'm going to

 

15:29.595 --> 15:31.063

invest in the picks and shovels companies.

 

15:32.998 --> 15:36.101

The share prices were kind of hurt earlier

 

15:36.101 --> 15:38.871

in the year because they were considered AI losers.

 

15:38.904 --> 15:41.874

Meanwhile, the end markets where their

 

15:41.874 --> 15:44.276

customers are in were starting to pick up and get better,

 

15:44.276 --> 15:46.845

and they were getting better from trough levels.

 

15:46.845 --> 15:48.814

I think that's been an exciting area.

 

15:48.814 --> 15:52.084

The thesis was they're

 

15:52.084 --> 15:54.520

cheap because the market sees them as AI losers, end

 

15:54.520 --> 15:57.256

markets are at trough getting better.

 

15:57.256 --> 15:58.691

Actually, I guess that's the key thesis.

 

15:58.724 --> 16:01.827

I think what's happened since then, I think the market now

 

16:01.827 --> 16:05.130

appreciates, well, there's some AI benefits here too

 

16:05.130 --> 16:08.100

because AI may result in more drug compounds

 

16:08.100 --> 16:10.602

and better drug compounds for clinical trials and

 

16:10.602 --> 16:13.872

pre-clinical drug trials so there's actually more

 

16:13.872 --> 16:14.873

demand.

 

16:15.607 --> 16:17.710

We've seen that pick up, that's been good.

 

16:17.710 --> 16:19.845

Some of the other areas are professional services,

 

16:19.845 --> 16:23.248

insurance brokerage.

 

16:23.248 --> 16:25.451

It's a really good business over time.

 

16:25.451 --> 16:28.587

I think right now the fundamentals are softer because

 

16:28.587 --> 16:31.523

the end markets of

 

16:31.523 --> 16:34.426

the property and commercial insurance, the rates are coming

 

16:34.426 --> 16:36.362

down. Casualty is still okay.

 

16:36.362 --> 16:40.065

I think there's really good opportunity here to

 

16:40.065 --> 16:41.734

buy them cheaply, good businesses.

 

16:41.734 --> 16:44.203

They compound their earnings quickly, they deploy the

 

16:44.203 --> 16:47.172

capital by buying other companies. Another area is

 

16:47.172 --> 16:50.109

commercial real estate of brokerage where it got

 

16:50.109 --> 16:52.745

hit with the AI loser tag.

 

16:52.745 --> 16:56.081

I think we're going through a commercial real estate cycle

 

16:56.081 --> 16:58.884

here, although recently it's being pressured a little bit

 

16:58.884 --> 17:00.519

by higher rates.

 

17:00.519 --> 17:03.455

What I learned from you in Vancouver when we talked last

 

17:03.455 --> 17:06.191

month is that although someone might look at your portfolio

 

17:06.225 --> 17:09.161

and think he's got a lot of focus on AI, as

 

17:09.161 --> 17:11.296

you've just talked about, there's the other side of it as

 

17:11.296 --> 17:13.399

well. You're quite balanced, which is always good to know

 

17:13.399 --> 17:15.734

about your portfolio, and that ties back to your risk

 

17:15.734 --> 17:18.704

[inaudible] too. Let's talk about Canadian banks as part of

 

17:18.704 --> 17:19.705

that balance.

 

17:20.305 --> 17:23.475

I brought it up a little earlier as a secondary

 

17:23.475 --> 17:26.678

way to invest in this Canadian investment super

 

17:26.678 --> 17:27.679

cycle theme.

 

17:28.280 --> 17:31.683

My first pick, by the way, would be Canadian industrials.

 

17:31.683 --> 17:34.720

Within Canadian industrials I think the areas that I like

 

17:34.720 --> 17:37.923

best are construction, either directly firms

 

17:37.923 --> 17:41.093

that do construction or companies that sell

 

17:41.093 --> 17:43.729

capital equipment into construction.

 

17:43.729 --> 17:46.198

Some of the companies, too, are the sort of dealers of

 

17:46.198 --> 17:48.500

construction equipment. I also think these are just

 

17:48.500 --> 17:49.668

fantastic businesses.

 

17:51.103 --> 17:53.572

I think if you could be born into one of these businesses

 

17:53.572 --> 17:55.474

that'd be great.

 

17:55.474 --> 17:56.708

Because of margins?

 

17:56.708 --> 17:57.976

Well, the margins on sale?

 

17:57.976 --> 18:00.579

I think it's because of return on invested capital.

 

18:00.579 --> 18:03.449

I think it's less cyclical than companies that just make

 

18:03.449 --> 18:06.518

and sell construction equipment because when

 

18:06.518 --> 18:08.954

the cycle is at a lower point you still have the used

 

18:08.954 --> 18:11.156

business, you have the parts and service businesses, the

 

18:11.156 --> 18:12.157

support businesses.

 

18:12.925 --> 18:16.128

I think these businesses are doing really well because of

 

18:16.128 --> 18:18.997

this investment super cycle that's going on in Canada, the

 

18:18.997 --> 18:22.134

nation-building projects that I mentioned, resource

 

18:22.134 --> 18:25.137

CapEx and as well

 

18:25.137 --> 18:26.472

the AI capex.

 

18:26.472 --> 18:29.441

You asked about banks, that's a long intro to

 

18:29.441 --> 18:30.843

actually get to your question.

 

18:30.843 --> 18:32.377

This is all part of your diversity.

 

18:32.377 --> 18:33.445

Let's talk about banks.

 

18:33.445 --> 18:35.447

I want to be direct.

 

18:35.447 --> 18:37.182

I like Canadian banks.

 

18:37.182 --> 18:40.953

They've had a very strong year, as you know.

 

18:40.953 --> 18:44.389

They have been in my top 10 this year in

 

18:44.389 --> 18:45.724

the North American Equity Fund.

 

18:45.724 --> 18:48.193

I continue to like them. Fundamentals are really strong.

 

18:49.294 --> 18:52.464

I think that we're seeing healthy margins,

 

18:52.464 --> 18:55.701

stable credit and very, very strong

 

18:55.701 --> 18:58.470

capital markets in terms of IPOs, equity trading.

 

19:00.572 --> 19:03.475

Oh, and cost disciplines. We've seen margins go up.

 

19:03.475 --> 19:06.712

You've also seen the regulator move from raising

 

19:06.712 --> 19:09.081

capital requirements for these banks, which is a negative,

 

19:09.081 --> 19:12.451

it directly reduces return on capital

 

19:12.451 --> 19:15.354

and that has the effect of either reducing organic growth

 

19:15.354 --> 19:18.323

or reducing higher dividends and capital returns

 

19:18.323 --> 19:21.326

through share buybacks to us, to instead reducing capital

 

19:21.326 --> 19:24.630

levels. I think, in part, banks have high

 

19:24.630 --> 19:27.833

capital levels and I think also, in part, the government

 

19:27.833 --> 19:31.203

does want the banks to fund the nation-building

 

19:31.203 --> 19:33.305

projects through lending.

 

19:33.305 --> 19:34.540

I think there's a good outlook.

 

19:34.540 --> 19:37.676

I think some of the points of concern on the banks right

 

19:37.676 --> 19:40.846

now are higher rates

 

19:40.846 --> 19:45.617

but also more of will the

 

19:45.617 --> 19:48.687

rate cycle flatten, will the curve flatten, which

 

19:48.687 --> 19:54.159

is if banks lend long and

 

19:54.159 --> 19:56.795

borrow short then that would be bad for them.

 

19:56.795 --> 19:58.397

That's a point of concern.

 

19:58.397 --> 19:59.932

They've also done really well so they have higher

 

19:59.965 --> 20:00.933

multiples.

 

20:01.533 --> 20:05.938

I think they have to comp the comp in terms of

 

20:05.938 --> 20:08.674

capital markets. I think that they've done really well this

 

20:08.674 --> 20:10.676

year, can they do higher next year?

 

20:10.676 --> 20:12.244

We've met with all the banks.

 

20:12.244 --> 20:13.612

I think it continues to sound good.

 

20:13.612 --> 20:16.682

I continue to like Canadian banks and be

 

20:16.682 --> 20:18.483

positive and I think it will be supported by this

 

20:18.483 --> 20:19.384

investment super cycle theme.

 

20:19.384 --> 20:20.385

Oh, that's really encouraging.

 

20:21.386 --> 20:24.089

By the way, you seem like you're very excited about the

 

20:24.089 --> 20:27.159

market overall. You're just an explosion of ideas and

 

20:27.159 --> 20:28.627

interesting opportunities.

 

20:28.627 --> 20:31.129

One of the things that you focused on as well is ageing

 

20:31.129 --> 20:32.931

demographics. You wanna describe that?

 

20:34.933 --> 20:37.736

I think that's two questions. It's thoughts on the market

 

20:37.736 --> 20:41.006

and an ageing demographic.

 

20:41.006 --> 20:42.608

Sentiment on the market.

 

20:42.608 --> 20:43.609

Seemed very positive. Constructive.

 

20:44.843 --> 20:48.080

I'm kind of an optimistic person by nature.

 

20:49.114 --> 20:52.484

I tend to think that over time

 

20:52.484 --> 20:56.121

the economy grows, earnings grow, stocks follow earnings

 

20:56.121 --> 21:00.158

so focus on finding the best companies that

 

21:00.158 --> 21:03.262

can grow earnings the most or where it's

 

21:03.262 --> 21:06.131

unexpected, where they're able to grow earnings and the

 

21:06.164 --> 21:07.199

market doesn't think they can.

 

21:08.533 --> 21:11.737

I think right now would say I am bullish on the market in

 

21:11.737 --> 21:14.573

part because I think the economy is resilient and earnings

 

21:14.573 --> 21:17.042

are really strong. I think we're gonna get into third

 

21:17.042 --> 21:20.312

quarter earnings now and consensus has US earnings

 

21:20.312 --> 21:21.613

up 26% year-over-year.

 

21:23.148 --> 21:24.850

It's really strong earnings growth.

 

21:24.850 --> 21:27.486

I think some of the points of concerns are ...

 

21:27.486 --> 21:30.222

a lot of it has to do with the extended conflict in the

 

21:30.222 --> 21:33.325

Middle East which is higher oil

 

21:33.325 --> 21:35.427

which results in inflation,

 

21:36.695 --> 21:38.530

higher rates and the start of a Fed cycle.

 

21:38.530 --> 21:40.866

I think that's a point of concern. I kind of view that more

 

21:40.866 --> 21:44.002

as a headwind for the market but I think that

 

21:44.002 --> 21:45.537

the strong earnings can overcome it.

 

21:45.537 --> 21:48.507

I think the valuation has gotten a

 

21:48.507 --> 21:51.543

little better. It's down from 23 times P/E to 19 times

 

21:51.543 --> 21:53.278

P/E. I think sentiment's better.

 

21:53.278 --> 21:56.381

I think sentiment's very balanced or mixed,

 

21:56.381 --> 21:59.284

or maybe even negative from what I saw a couple weeks ago,

 

21:59.284 --> 22:02.054

to very positive early in the year.

 

22:02.054 --> 22:04.556

I think what you want as an investor.

 

22:07.959 --> 22:11.396

You and I have talked a lot that you know my process

 

22:11.396 --> 22:14.399

but I'll just share it with our friends

 

22:14.399 --> 22:15.701

in the audience here.

 

22:15.701 --> 22:18.170

I'm less of a macro-focused investor.

 

22:18.170 --> 22:21.773

My view is you're

 

22:21.773 --> 22:25.177

better off to spend the time finding the best companies

 

22:25.177 --> 22:28.146

that drive the returns of the portfolio than

 

22:28.146 --> 22:30.048

for me to focus on macro.

 

22:30.048 --> 22:32.150

I think you make more money that way.

 

22:32.150 --> 22:33.719

I think there's always something to worry about.

 

22:33.719 --> 22:37.055

I got promoted to portfolio manager in the impeccable

 

22:37.055 --> 22:40.392

timing, January of 2009, so almost at a generational

 

22:40.392 --> 22:41.927

market bottom.

 

22:41.927 --> 22:44.696

Every year since then there's always been a huge worry, a

 

22:44.696 --> 22:47.833

huge reason to go to cash but it's paid to

 

22:47.833 --> 22:51.002

stay in stocks and be invested.

 

22:51.002 --> 22:53.972

That's my view and I think that

 

22:53.972 --> 22:57.075

you make money by holding something for a long time

 

22:57.075 --> 23:00.345

and having it compound at a high rate of return.

 

23:00.345 --> 23:01.747

My goal, by the way, is to double

 

23:04.349 --> 23:05.851

the capital every five years.

 

23:05.851 --> 23:07.886

I think about when I try to find stocks, I look for

 

23:07.886 --> 23:11.123

companies that I find can do better than a 15% CAGR over

 

23:11.123 --> 23:12.124

time.

 

23:13.158 --> 23:15.894

Get to your second question. You asked about ageing

 

23:15.894 --> 23:17.562

demographics.

 

23:17.562 --> 23:20.065

Ageing demographics sounds like healthcare.

 

23:20.065 --> 23:22.501

Lots of demand for healthcare.

 

23:22.501 --> 23:25.604

In particular, one of the areas that I do invest

 

23:25.604 --> 23:28.807

in that's more direct play on that is senior

 

23:28.807 --> 23:32.077

housing. That's facilities to care for

 

23:32.077 --> 23:33.111

seniors as they age.

 

23:34.446 --> 23:37.482

If it's a service business it

 

23:37.482 --> 23:38.984

shows up in health care.

 

23:38.984 --> 23:41.987

If it's a facilities like property ownership business it

 

23:41.987 --> 23:43.288

shows up under REITs.

 

23:43.288 --> 23:46.358

I generally don't like REITs because they

 

23:46.358 --> 23:48.393

grow very slowly.

 

23:48.393 --> 23:50.162

They've been disadvantaged through higher rates.

 

23:50.162 --> 23:52.264

But I like the senior housing business.

 

23:53.632 --> 23:54.633

Fundamentals are fantastic.

 

23:55.867 --> 23:58.170

What happened is there is a shortage of senior housing

 

23:58.170 --> 24:01.840

care, particularly at the high end, the luxury end.

 

24:01.840 --> 24:04.810

It was further exacerbated by COVID when they

 

24:04.810 --> 24:06.011

weren't able to build.

 

24:07.345 --> 24:09.548

I think for a little while there was a temporary demand

 

24:09.548 --> 24:12.184

drop. There was a concern about some of these facilities

 

24:12.184 --> 24:15.987

but demand came back and the supply wasn't there

 

24:15.987 --> 24:19.291

so the demand over supply deficit

 

24:19.291 --> 24:20.725

has worsened.

 

24:20.725 --> 24:22.761

What you're seeing is you're seeing very, very strong rent

 

24:22.794 --> 24:24.463

growth and operating income growth.

 

24:24.463 --> 24:25.797

Really strong fundamentals here.

 

24:25.797 --> 24:27.165

Good. Thank you for all that. Take a drink.

 

24:28.733 --> 24:30.502

Let's talk about the consumer.

 

24:30.502 --> 24:33.472

Inflation is disappointing people yet the consumer seems to

 

24:33.472 --> 24:35.540

keep buying. What's driving the consumer?

 

24:35.540 --> 24:39.177

Is it all this Klarna buy now, pay later,

 

24:39.177 --> 24:41.012

sort of stuff behind it?

 

24:41.012 --> 24:42.314

Four payments for my burrito.

 

24:46.785 --> 24:50.689

On the consumer, overall I'd

 

24:50.689 --> 24:52.624

say I'm negative on the consumer.

 

24:52.624 --> 24:55.694

High oil prices, higher rates are headwinds for the

 

24:55.694 --> 24:58.930

consumer. Having said that, I still find things

 

24:58.930 --> 25:02.267

I like that are very idiosyncratic ways to

 

25:02.267 --> 25:05.270

invest in there. I think that we'll continue to have this

 

25:05.270 --> 25:08.907

K shaped economy. Companies that

 

25:08.907 --> 25:11.910

can cater to that and serve that well are kind of

 

25:11.910 --> 25:13.745

very well positioned.

 

25:13.745 --> 25:16.281

It's still a huge part of the economy so there's definitely

 

25:16.281 --> 25:18.583

a lot of winners there.

 

25:18.583 --> 25:19.584

There's some losers, too.

 

25:21.019 --> 25:24.022

I find hotels to

 

25:24.022 --> 25:25.824

be an interesting area.

 

25:26.925 --> 25:29.861

Anytime I take my family on vacation I'm reminded I

 

25:29.861 --> 25:33.198

should buy more hotel stocks because the prices are

 

25:33.198 --> 25:35.467

always a little crazy.

 

25:35.467 --> 25:38.169

Tou asked me about that conference in San Francisco, I was

 

25:38.169 --> 25:41.339

blown away by what it cost just

 

25:41.339 --> 25:44.476

for the hotel there. It was not even a fancy hotel.

 

25:44.476 --> 25:47.779

So I like hotels, I also like the business

 

25:47.779 --> 25:50.448

model that they've gotten away from owning the properties

 

25:50.448 --> 25:52.918

to instead being the management company.

 

25:52.918 --> 25:56.354

It's capital light, they're able to

 

25:56.354 --> 25:58.957

grow without spending their capital.

 

25:58.957 --> 26:01.026

It's the property owner's capital instead.

 

26:02.093 --> 26:04.596

They get really, really strong margins that way.

 

26:04.596 --> 26:08.099

That's one area that I do like within consumer.

 

26:08.099 --> 26:09.701

I'm finding some other areas.

 

26:09.701 --> 26:11.536

I actually like cruise ships.

 

26:11.536 --> 26:15.040

I kind of like this travel and leisure theme

 

26:15.040 --> 26:16.174

within consumer.

 

26:17.542 --> 26:20.512

There's a few interesting themes in there.

 

26:22.247 --> 26:24.816

Cruise ships have been impacted, as have many sectors, many

 

26:24.816 --> 26:26.751

companies, from oil.

 

26:26.751 --> 26:28.286

You mentioned oil earlier.

 

26:28.286 --> 26:30.322

Let's go to Global Natural Resources.

 

26:30.355 --> 26:32.157

You don't run the oil component of it, Joe Overdevest does.

 

26:32.157 --> 26:35.126

You have metals

 

26:35.126 --> 26:38.063

and mining, or materials and mining.

 

26:38.063 --> 26:39.064

Tou talked about copper.

 

26:40.265 --> 26:43.501

First off, do you have some thoughts on oil just from how

 

26:43.535 --> 26:45.303

you're working with Joe and just overall?

 

26:47.205 --> 26:49.074

Can't say enough good things about Joe.

 

26:49.074 --> 26:52.243

He's celebrating his 20th year on Global Natural

 

26:52.243 --> 26:55.213

Resources fund this month He's done a

 

26:55.213 --> 26:58.183

great job investing. He runs half the fund which is

 

26:58.183 --> 27:00.885

yeah energy focus and then I run half the fund which is

 

27:00.885 --> 27:04.122

mining and material focus. In terms of your

 

27:04.122 --> 27:07.559

question on oil, I think WTI

 

27:07.559 --> 27:10.762

was like $88 when I woke up this morning.

 

27:10.762 --> 27:13.765

It's down from 112-ish, let's say, at

 

27:13.765 --> 27:16.668

the peak of the conflict. I think that the supply through

 

27:16.668 --> 27:19.804

the Strait has improved a lot but I think

 

27:19.804 --> 27:21.406

inventories remain an issue.

 

27:21.406 --> 27:25.010

I still think production and supply is being held

 

27:25.010 --> 27:28.046

back. I think a lot of it has to do with the conflict.

 

27:29.114 --> 27:32.717

I think if you look at energy equities,

 

27:32.717 --> 27:35.754

what are they discounting? It's closer to $70 or $71 a

 

27:35.754 --> 27:38.089

barrel for next year which seems more reasonable.

 

27:39.124 --> 27:41.693

find that there is a lot of correlation with that front

 

27:41.693 --> 27:43.128

month spot price.

 

27:43.128 --> 27:45.330

I think oil prices are ...

 

27:45.330 --> 27:48.333

personally, I think they're high, and I find much better

 

27:48.333 --> 27:50.635

opportunities within resources, which I'm bullish on

 

27:50.635 --> 27:52.937

resources, to invest in copper.

 

27:52.937 --> 27:54.839

Copper is something I like.

 

27:54.839 --> 27:57.175

I think the fundamentals are very strong there.

 

27:57.175 --> 27:59.644

Copper's done well this year, not as well as oil.

 

27:59.644 --> 28:02.647

I think copper's around 6.65 a pound, it's

 

28:02.647 --> 28:05.650

probably up 15%.

 

28:05.650 --> 28:08.687

I think oil is up so much because of the policy

 

28:08.687 --> 28:10.588

and the war and the extended duration.

 

28:10.588 --> 28:13.658

You also have the risk on oil, which would be

 

28:13.658 --> 28:16.695

a good thing for humanity, mind you, that the war

 

28:16.695 --> 28:19.197

could end. It's hard to see that now

 

28:20.699 --> 28:22.434

but I still think it's a possibility.

 

28:22.434 --> 28:24.803

I think it would be great for the market, by the way.

 

28:24.803 --> 28:27.072

If you had oil come down, inflation come down and rates

 

28:27.072 --> 28:29.274

come down you'd probably see equities rip.

 

28:29.274 --> 28:30.508

But I like copper.

 

28:31.543 --> 28:33.678

Why do I like copper? It's really hard to make.

 

28:35.180 --> 28:38.316

Last year the price ran up and

 

28:38.316 --> 28:41.820

the global copper production, I

 

28:41.820 --> 28:44.823

think it's 26 million tons, was roughly

 

28:44.823 --> 28:46.958

flat year-over-year. This year also will be flat

 

28:46.958 --> 28:48.760

year-over-year. Why is that?

 

28:48.760 --> 28:50.028

They're having a lot of issues.

 

28:50.028 --> 28:53.431

There's one huge mine in Panama that's

 

28:53.431 --> 28:55.867

not producing due to politics.

 

28:55.867 --> 28:59.270

There's a huge mine in Indonesia that flooded that's

 

28:59.270 --> 29:01.072

producing below capacity.

 

29:01.072 --> 29:04.242

There's a huge mine in the Congo which had seismic

 

29:04.242 --> 29:06.044

activity which is producing below.

 

29:07.245 --> 29:09.380

There's Escondida in Chile, one of the world's largest

 

29:09.380 --> 29:11.449

copper mines, which is potentially strike.

 

29:11.449 --> 29:13.151

So there's supply issues.

 

29:13.151 --> 29:14.753

Meanwhile, demand is different.

 

29:16.054 --> 29:19.290

I used to be the mining analyst in Boston for Fidelity

 

29:19.290 --> 29:21.793

in the mid-2000s during the super cycle.

 

29:21.793 --> 29:23.061

Different than then.

 

29:23.094 --> 29:25.764

Then it was China's industrializing and urbanizing.

 

29:25.764 --> 29:28.767

There was this massive demand increase as China

 

29:28.767 --> 29:31.336

builds out its infrastructure and property.

 

29:31.336 --> 29:33.037

You're having globalization.

 

29:33.037 --> 29:35.573

We talked about the BRICS. It's almost the reverse now.

 

29:35.573 --> 29:38.343

You actually have deglobalization.

 

29:38.343 --> 29:40.979

Countries want to stockpile, the US wants to stock pile.

 

29:43.014 --> 29:45.016

Perhaps they may deem it a critical mineral.

 

29:47.018 --> 29:48.553

Different countries want to stockpile.

 

29:48.553 --> 29:49.621

You have AI.

 

29:50.922 --> 29:53.091

AI benefits electrification.

 

29:53.091 --> 29:55.126

There's a lot of investments in the grid.

 

29:55.126 --> 29:58.196

AI and data centres directly account for about 3% of

 

29:58.196 --> 30:00.031

copper demand, moving to 4%.

 

30:00.031 --> 30:03.001

You're seeing growing demand and the supply is

 

30:03.001 --> 30:04.202

just not there.

 

30:05.203 --> 30:07.539

I think that the outlook for copper looks bullish.

 

30:07.539 --> 30:08.673

I like copper.

 

30:11.609 --> 30:14.646

Gold, I feel like I was always scratching my head about.

 

30:14.646 --> 30:17.081

I still like gold. It's been very volatile this year.

 

30:17.081 --> 30:20.084

I think the three primary drivers for gold are

 

30:20.084 --> 30:23.054

intact, which are diversification away from the US dollar

 

30:23.054 --> 30:25.089

and US Treasuries.

 

30:25.089 --> 30:27.125

I think it's the basement trade.

 

30:27.125 --> 30:30.128

The US and countries around the world have large

 

30:30.128 --> 30:32.764

and growing deficits in debt positions which worries people

 

30:32.764 --> 30:35.433

about fiat currencies and three elevated geopolitical

 

30:35.433 --> 30:36.634

risks.

 

30:36.634 --> 30:38.670

We've only got eight seconds left so I'm not going to ask

 

30:38.670 --> 30:40.605

you anything else. It was just wonderful to have you up

 

30:40.605 --> 30:43.141

here. Darren Lekkerkerker, everybody. Thank you.

 

30:45.910 --> 30:50.215

Thanks for watching or listening

to the FidelityConnects podcast.

 

30:50.215 --> 30:53.651

Now, if you haven't done so already,

please subscribe to FidelityConnects

 

30:53.651 --> 30:56.087

on your podcast platform of choice.

 

30:56.120 --> 30:59.991

And if you like what you're hearing,

please leave a review or a five-star rating.

 

30:59.991 --> 31:04.596

Fidelity Mutual Funds and ETFs are available

by working with a financial advisor

 

31:04.629 --> 31:06.331

or through an online brokerage account.

 

31:06.364 --> 31:10.134

Visit Fidelity.ca/howtobuy

for more information.

 

31:10.134 --> 31:14.539

While on Fidelity dot CA, you can also find

more information on future live webcasts.

 

31:14.572 --> 31:19.010

Don't forget to follow Fidelity Canada on YouTube, LinkedIn, and Instagram.

 

31:20.011 --> 31:22.881

We'll end today's show with a short disclaimer.

 

31:22.881 --> 31:26.651

The views and opinions expressed on this podcast are those of the participants

 

31:26.651 --> 31:31.756

and do not necessarily reflect those of Fidelity Investments Canada ULC or its affiliates.

 

31:31.756 --> 31:34.025

This podcast is for informational purposes only

 

31:34.025 --> 31:37.595

and should not be construed as investment,

tax, or legal advice.

 

31:37.595 --> 31:41.366

It is not an offer to sell or buy, or an endorsement, recommendation,

 

31:41.366 --> 31:44.836

or sponsorship of any entity

or securities cited.

 

31:44.836 --> 31:48.640

Read a funds prospectus before investing,

funds are not guaranteed.

 

31:48.640 --> 31:52.377

Their values change frequently and past performance may not be repeated.

 

31:52.377 --> 31:56.414

Fees, expenses, and commissions are all associated with fund investments.

 

31:56.414 --> 31:58.917

Thanks again. We'll see you next time.