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Rosenberg: Investing in the Trump era, my highest conviction ideas, and where the loonie is heading

President Donald Trump speaks during a meeting in the Oval Office of the White House in Washington.

Evan Vucci/AP

Globe editors have posted this research report with permission of Gluskin Sheff + Associates Inc. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following is excerpted from the report:

Well, it's hard to believe that it's been a year since Donald Trump got elected, and at least the good news is that we're still alive. All kidding aside, the question I've been fielding ever since Nov. 8 of last year is how we are investing around Donald Trump. The answer has not changed one iota, which is that we are not investing around Trumponomics at all.

That often raises eyebrows because we all know that the U.S. stock market indices have continued to hit new record highs almost daily, but I would claim that this has had little to do with the President. Actually, if you had owned the basket of Trump stocks the so-called experts told you to own after last year's election, you would have woefully lagged behind.

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And of course, it goes without saying that the top-performing sector by a country mile – and I am talking about technology – was the area we were all supposed to avoid since Silicon Valley would pay the price for not supporting The Donald. And yet the tech universe is up 40 per cent for the year and has nearly doubled the rest of the market. There may be some hope out there that we will see tax reform south of the border, but there is  an array of other factors influencing investor sentiment right now. Ongoing supportive global liquidity growth and the vast majority of companies beating their profits and sales estimates are among the reasons.

That said, excessive valuations and the Fed now coupling its rate hikes with balance-sheet reduction are going to produce some speed bumps for risk appetite in coming months. That and the tapering by the ECB, and the fact that the Bank of England joined the Fed on the rate-hiking front, are all very likely to generate a less calm and more choppy market. Though this actually would be a good thing in terms of opening up some buying opportunities, taking advantage of these opportunities will require having some dry powder on hand.

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