Skip to main content
bnn market call

Michael Smedley.Fred Lum/The Globe and Mail

Michael Smedley is executive vice-president and chief investment officer at Morgan Meighen & Associates. His focus is Canadian equities.

Top Picks:

AirBoss of America (BOS.TO)
Purchased recently at $23.99

AirBoss is a lower profile seasoned industrial name which is nevertheless a North American major processor of rubber compounds into industrial goods. It is timely despite a significant awakening of the stock in the past few months because of a transformational acquisition of Immediate Response Technologies, an American partner of the past few years. This brings a strong component of military, defence and security related production to the combined entity. This serves the U.S. government.

Detour Gold (DGC.TO)
Purchased by me in February 2014 at $9.13

Detour Gold has to be the ideal candidate for a patient gold investor. It has gone through its initial operational phase and is heading toward being the largest producer in Canada – at the 500,000-ounce level.

GoldMoney (XAU.V)
Purchased recently at $5.00

GoldMoney, formerly under the misleading title of BitGold, is not to be associated with Bitcoin. It is unique. It is a rising associate of the gold theme in an unusual way. It is an experimental phase internet-related exchange system that uses gold in safekeeping across the globe to purchase goods in transactions in which the major credit card systems and commercial outlets will use cash equivalents. Subscription to the GoldMoney system is rising at a very fast rate.

Past Picks: August 21, 2014

BlackBerry (BB.TO)
Then: $10.78; Now: $10.02; -7.05%; Total return: -7.05%

NeuLion (NLN.TO)
Then: $1.06; Now: $0.74; -30.19%; Total return: -30.19%

Algoma Central (ALC.TO)
Then: $16.00; Now: $17.55; +9.69%; Total return: +11.09%

Total Return Average: -8.72%

Market outlook:

I expect the seasonal slow market to continue with the same bear market condition, though never recognized, until after bear market is over. That is all normal. It means that listlessness will continue, and the great mass of good companies will remain under pressure. What is unusual is that the interest dilemma is with us this time, and the effects of another and hitherto unknown and powerful force by way of short-term trading influences of ETFs and similar instruments is now rotating prices of individual stocks on a 24- hour basis. This is because the mindless ETF has to respond to the actions of mindful traditional investors and this is now permanent. It will not mean that all hope is lost in the short or the long term and the evidence is that two or three dozen or more Canadian stocks with superb images move up every day. This is much better than in in the 2008-9 extreme bear market, in which, I recall, only the company that eventually became Catamaran (now bought out) persistently rose. On another good note, I would say there is lots of hidden potential for surprise revivals in energy and metals which would give a huge upward push to the Canadian market and the Canadian dollar. I cannot name the day and the time, but it will surely come and normalise the performance gap between the Canadian and U.S. markets.