Barry Schwartz, chief investment officer and portfolio manager, Baskin Wealth Management

FOCUS: North American Small Caps

Market outlook:

Chief Economist of TD says in today’s special report:

“In the near term, it is perfectly clear that interest rates are set to remain far lower than their expected neutral level. Nonetheless, for long-term investors, such as pension funds, investing over multiple business cycles, lower neutral rates will make for a particular challenge.”

In other words, the pension funds and big endowments which have return targets to meet have to:

· Hire companies like Brookfield Asset to manage long life non-trading assets

· Buy more stocks, and likely more non-U.S. stocks

· Say good-bye to balanced portfolios

· Do direct investing in real estate and similar assets like Master Limited Partnerships

This confirms our major thesis, that stocks are mispriced against yield, even if expensive looking against earnings.

Top picks:

Precision Castparts (PCP.N)
Morguard Corp. (MRC.TO)
Google (GOOG.O)